British Steel has lost its bid to recover #25m in excise duty paid to Customs & Excise over a five-year period.

Customs hailed the High Court decision as an ‘important victory’ for the public purse ending a legal wrangle that stretched back to 1969.

British Steel argued that relief was due on duty charged on heavy fuel oil burnt in its blast furnaces between 1988 and 1993. The company, which bought oil at prices which included excise duty until the law was changed in 1994, had its appeal restricted to a six-year period.

Legal experts from both sides based their claims on whether the oil was used for creating heat or as part of the chemical reaction taking place in the furnace. But the court agreed with Customs’ interpretation of the law that, as the oil was burnt in a furnace and created heat, no relief was due under the Hydrocarbon Oil Duties Act 1979.

A Customs spokesman said the dispute arose due to differing tax treatment of heavy fuel oil around Europe prior to 1994. ‘The European Commissioners clarified the position in 1994 when they allowed relief from excise duty on oil used in such furnaces by extra statutory concession,’ he said.

‘But prior to that we had no option but to deny relief. The position is now the same for all European steel producers.’

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