Strathleven Bonded Warehouses Ltd v Assessor for Dumbartonshire
|14 May 1965
|14 May 1965
|Lands Valuation Appeal Court (Scotland)
Lands Valuation Appeal Court.
Lord Kilbrandon. Lord Fraser. Lord Avonside.
ValuationValueSubjectsDerating"Industrial lands and heritages"Factory for blending, bottling and dispatching proprietary whiskyWhether bottling hall and filled package store to be deratedRating and Valuation (Apportionment) Act, 1928 (18 and 19 Geo. V, cap. 44), sec. 3 (1).
A factory occupied by a company was used by them for the blending, bottling and dispatching of a proprietary whisky known as "J. & B. Rare." All the company's business came from a single customer, who procured and sent to the company both the whisky and the bottles, labels and decorative cartons in which it was ultimately dispatched. In the factory the whisky went through a number of processes, including filtration, before being passed to the bottling hall. There it passed through a heat exchanger, which equalised its temperature with that of the bottles, underwent a second filtration, which produced a final "polish" and brilliance required by the customer for the American market, and was bottled in bottles of a distinctive shape. The bottles were then examined, labelled, wrapped and packed in the decorative cartons, and taken to the filled package store, ready for dispatch, which normally took place within three or four days. In a question as to the classification of the premises for the purposes of the Rating and Valuation (Apportionment) Act, 1928, the assessor, while conceding that the rest of the factory should be derated, maintained that the bottling hall and filled package store should not, on the ground that they were used entirely for processes related to the distribution of a finished article.
Held (diss. Lord Avonside) (1) that the finished article was not merely whisky, but "J. & B. Rare" whisky, bottled in its distinctive bottles and with its special polish and brilliance; that consequently the processes applied to it in the bottling hall were essential processes in its production, and in particular that the second filtration was (per Lord Kilbrandon) an essential process in the manufacture of "J. & B. Rare" whisky, or (per Lord Fraser) even on the basis that the finished article was unbottled whisky, a process of adaptation for sale; (2) that the storage of the cartons in the filled package store was merely transitory and incidental to the processes of manufacture; and (3) that accordingly both the bottling hall and the filled package store were "industrial lands and heritages" within the meaning of sec. 3 (1) of the 1928 Act.
, , distinguished.
At a meeting of the Valuation Appeal Committee for the County of Dumbarton, Strathleven Bonded Warehouses Limited appealed against an entry in the valuation roll for the year ending 15th May 1965 in which premises belonging to them were entered with a net annual value of 23,505, apportioned into 17,394 industrial and 6111 non-industrial. The appellants craved that a bottling hall and filled package store forming part of the premises should be classed as industrial lands and heritages within the meaning of the Rating and Valuation (Apportionment) Act, 1928,1 and shouldbe derated in whole or in part. At the hearing it was agreed that, if the bottling hall and the filled package store were to be derated, the net annual value of the premises should be 23,261 and the rateable value 11,630. The Committee refused the appeal and at the request of the appellants stated a case on appeal to the Lands Valuation Appeal Court
The case stated that the following facts were admitted or held by the Committee to be proved or within their knowledge:"(1) The subject of appeal is situated in the burgh of Dumbarton and consists of approximately 330,000 square feet of modern one-storey warehouse-type buildings. The appellants carry on the business of blending, bottling and dispatching whisky mainly to America to customers' instructions, but, in this respect, 95 per cent of their trade is in connection with one customer, viz., Messrs Justerini & Brooks Ltd. The premises are registered under the Factory and Workshop Acts. (2) Single malt or grain whiskies, either mature or young, are purchased by the customer from selected distilleries and are sent, in this instance, to the appellants' premises for blending, bottling and distribution. On arrival at the company's premises the single whiskies are examined by H. M. Customs and Excise. The next step is the mixing together by themselves of the appropriate whiskies which are to go into the finished blend. This is done by emptying the casks into troughs in the floor and hence the whisky is pumped up into the blending vats, wherein the ingredients are mixed by means of compressed air, which is forced through the spirit. The whiskies are then rebarrelled and undergo a process known as marrying. This consists in allowing the composite whisky to remain in cask a sufficiently long time to allow the various whiskies of which it is composed to intermix thoroughly. This is an essential step in the process of blending. At this stage all blended whiskies are retained in bond until the youngest whisky in the blend has matured, i.e., a minimum period of three years for the home market and four years for the American market. (3) After the blending process has been completed, the blended whisky is poured into troughs in the floor and pumped up into the vats in the vatting hall and again roused by means of compressed air. In the vatting hall there are reducing vats and bottling vats. Up to this stage the whisky is considerably over proof. Water is then added to it in the reducing vats to bring it to the strength at which it satisfies the requirements for public sale. The whiskyis then pumped to the bottling vats. The whisky is coloured whilst in the reducing vats. The whisky is cleaned and polished by a filtration process whilst being pumped to the bottling vats. Finally it is piped from the bottling vats to the bottling hall. (4) Output of whisky in casks is less than one per cent but does take place, and the casks are filled directly from the bottling vats. This whisky is exported to certain continental countries on account of the different rates of duty on whisky in bottle and in cask. It is filtered and bottled in these countries before sale to the public. The character and taste of the whisky as a product are unaffected by any processes following upon its leaving the bottling vats. An expert would, and a lay person would not, be expected to notice a difference in clarity and brilliance. The taste would not be different. (5) The materials store building, which adjoins the bottling hall, contains empty bottles, decorative cartons and labels. New bottles are brought into the department, unpacked from their cartons, put on to the ends of the bottling line, decapped by a machine and then pass into the bottling hall. It is necessary for this department to hold up to three days' supplies of bottles, as in damp or wintry weather condensation could occur within the bottles and they require storing in equitable temperature prior to being passed into the bottling hall for filling. In addition dummy display bottles are also labelled and packed in cartons and dispatched from this department and this operation is carried out on a small scale. The majority of the decorative cartons arrive at the premises containing the new empty bottles; the latter are unpacked and their decorative cartons are utilised for packaging in the bottling hall. A certain number of decorative cartons arrive flat and have to be assembled for use in the subsequent packaging operations. The customer purchases the empty bottles, decorative cartons and labels direct from the supplier and sends them for the appellants to utilise. (6) In the bottling hall itself the whisky passes through a heat exchanger, which regulates the temperature of the whisky to equalise it approximately with the temperature at which the bottles are on the bottling line. The whisky then passes through a second filtration plant and then to the bottling machine, where it is bottled automatically. The filtration process is used to polish the whisky by removing a haze or cloudiness caused by the chemical action due to the dilution of concentrated spirit by water, and also to remove impurities or foreign matters from the whisky. The second filtration of the whisky completes this polishing and cleaning process and produces the final polish and brilliance required by the appellants' principal customer. In other similar premises in Dunbartonshire only one filtration plant, of a different type, is used but the appellants deem it necessary to have two plants of the type used by them. After filling, the bottles of whisky are capped and examined by means of an autospector. This is a machine that grips the bottle, turns it upside down and shines a light through it, thus permitting visual inspection of the contents of each bottle. Any bottle of whisky containing impurities, such as dust, small bits of glass, etc., discovered by the inspection is put back into the pipeline and passed through the second filter as already described. After filling and inspection the stoppers are sealed and the bottles labelled, partially dried by hot air machine, wrapped, packed into decorative cartons, which are sealed in the bottling hall, and then taken to the filled package store ready for dispatch. The purpose of this store is to hold, as necessary, packages awaiting transport to the market. All processes are carried out by machinery except for wrapping, which is carried out by hand. (7) Whisky is not now sold to the public from casks. The public demand is for a product of quality which they can recognise. There is a substantial difference between whisky in cask and the whisky known and sold as J. & B. Rare.J. & B. Rare is only marketed after completion of the two...
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