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HMRC internal manual

Oils Technical Manual

Operations in Warehouse: Activities in oil producers' premises

Permitted operations

Operations which are permitted within oil producers’ premises are covered in Notice 179 Section 6.2.

Use of oil without payment of duty at oil producer’s premises

Use of oil without payment of duty at oil producers’ premises is covered in Notice 179 Section 6.2.2

Furnace fuel relief

At certain oil producer’s premises, light oil may be required as fuel for purposes which do not attract duty relief (see HCOTEG82000). However, if the oil is burnt in vaporised or atomised form, use on payment of duty at the rebated rate may be allowed. Prior approval of the furnace operator by MORC is required in all such cases.


Duty-free samples allowed under paragraph 2.5.3. of Notice 179 may not adequately provide for all research activities which a mineral oil producer conducts. You may consider applications and may allow duty-free oil for research involving the testing of oil for purposes of standardisation and development in the production of oil for general or specific use.

Note: This concession relates to use at entered producer’s premises only. Paragraph 2.5.3 of Notice 179 outlines reliefs for deliveries to third parties.

Credit of duty

Credit for excise duty, (allowable in accordance with HCOTEG72000 in the section on ‘Receipts’ in this guidance), is normally granted at the time of receipt into the warehouse at producers’ premises.

Manufacture of “cut-back” goods

A producer may manufacture black varnish, water-proofing compounds, road dressings or similar products, in which oil is used to “cut-back” bitumen, asphalt, etc. At each installation the manufacture is to be treated as either:

  • A duty-suspended operation in which the oil is used duty-free and duty is paid at the time of delivery on the full quantity of any final dutiable product; or
  • An operation in which duty is paid on the oil prior to its use irrespective of whether the final product is dutiable.

In any case of doubtful liability, samples are to be submitted to LGC.

Disposal of residues from refining operations

Oily sludge, oil clay and other residues from refining operations may be destroyed in accordance with the directions of HCOTEG81250 ‘Disposal and/or destruction of duty-free defective oil, waste oil or sludge ex-warehouse’.

Vapour Recovery Operations

For further information on Vapour Recovery Operations see the section on ‘Measurement’ in this guidance HCOTEG178000.