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ADMINISTRATIVE APPEALS TRIBUNAL - GENERAL ADMINISTRATIVE DIVISION

Case [2001] AATA 893

Re Hampton Transport Services Pty Ltd and Chief Executive Officer of Customs

S P Estcourt QC, Deputy President

26 October 2001 - Perth

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S P Estcourt QC, Deputy President.    This is an application to review a decision of the Chief Executive Officer of Customs of 29 September 2000 refusing to pay diesel fuel rebate pursuant to s 164 of the Customs Act 1901 (Cth), in respect of fuel used by the applicant to maintain the private portion of an access road/haul road to and from the Red October mine site south of Laverton in Western Australia and the mine's processing plant near Leonora.

  2  The following facts are agreed between the applicant and the respondent and the tribunal finds:

   

 (1)  The applicant is a company incorporated in Western Australia.

 (2)  Mining operations as defined in s 164(7)(b)(i) of the Customs Act 1910 (Cth) were carried on at all material times by Sons of Gwalia Ltd at the Red October Project pit operation (Red October) which is located approximately 70 kilometres south of Laverton and 230 kilometres north-north west of Kalgoorlie in the south western part of Lake Carey in a salt lake environment some 12 kilometres from Butcher Well on mining leases ML 39/606-612 inclusive, ML 39/411-413 inclusive and ML 39/447.

 (3)  A road (the Red October haul road) which is 86 kilometres in length has been constructed from Red October to a junction with the Leonora/Laverton Highway for the purposes of hauling ore from the Red October pit operation to a gold processing plant situated at the Sons of Gwalia Mine site near Leonora. The operations at that site are beneficiation of the ore from Red October and accordingly constitute mining operations as defined in s 164(7)(b)(ii) of the Customs Act 1901 (Cth).

 (4)  The Red October haul road is predominantly a private road situated on land comprising Miscellaneous Licenses issued to Sons of Gwalia Ltd by the Department of Minerals and Energy under the provisions of s 116 and Regulation 13 of the Mining Act 1978 (WA). An 8 kilometre section of the Red October haul road between Red October and Pennyweight Point Camp incorporates a public road.

 (5)  The first 8 kilometres of the Red October haul road extends from Red October to the western border of mining lease ML39/607.

 (6)  The total one-way road distance from Red October to the Sons of Gwalia Mine site processing plant via the Red October haul road and Leonora/Laverton Highway is 152 kilometres.

 (7)  At all material times between 17 January 2000 and 27 April 2000 the applicant was engaged, pursuant to a contract with Sons of Gwalia Ltd, in:

 7.1  the loading and hauling of gold ore from stockpiles at Red October to the Sons of Gwalia Mine gold processing plant near Leonora;

 7.2  maintaining the Red October haul road and the pit ore pad by applying dust suppression water, surface grading and maintenance of the drains;

 7.3  management of Red October mine pad at the Red October mine site;

 7.4  operation and maintenance of dust suppression water facilities adjacent to the Red October haul road;

 7.5  cleaning up of spillage arising from the above loading, hauling and dumping of ore by the applicant;

 7.6  supply, maintenance and operation of lighting plant at Red October mine site ore loading areas; and

 7.7  cleaning all Red October haul road reflectors and advisory signs.

 (8)  The applicant's haul road maintenance operations consisted of grading the gravel sections of the Red October haul road, pumping water into mobile tanks, transporting it, applying it to the road surface for dust suppression purposes and maintaining drains, using vehicles exceeding 3.5 tonnes gross vehicle weight and other plant and equipment.

 (9)  Dust suppression water and standpipe facilities provided by Sons of Gwalia Ltd for use by the applicant were situated at the following locations:

 9.1  between the Red October haul road and the abandoned pit at Butcher Well;

 9.2  adjacent to the Red October haul road approximately 2 kilometres from Pennyweight Point Camp; and

 9.3  adjacent to the Red October haul road at Red Knob, approximately 9 kilometres south of the Leonora/Laverton Highway.

 (10)  Red October operations include the open pit mine/mining, waste and dewatering disposal, ore haulage, the maintenance of the dedicated haul roads, ramps, stockpile pads, accommodation camp, haul road and ore pad dust suppression water and standpipe facilities, other watering points, and infrastructure such as offices, services areas, and contractors' lay-down areas.

 (11)  In general, the Red October involves the mining of gold ore at the open pit mine and haulage of that ore to provide ore feed to the Sons of Gwalia Ltd processing plant at Leonora.

 (12)  Specifically, Red October involves:

 12.1  mining of ore and associated non-mineralised waste;

 12.2  construction of waste rock landform;

 12.3  mine dewatering;

 12.4  a small accommodation camp;

 12.5  a haul road from the open pit mine to the Gwalia mine and processing facility at Leonora; and

 12.6  limited fleet maintenance and workshop facilities.

 (13)  Sons of Gwalia Ltd has erected signs at the junction of the haul road with the Leonora/Laverton Highway and at other points along the haul road where public access might occur. Those signs read, "Private Haul Road, Sons of Gwalia Red October Project".

 (14)  The applicant, Hampton Transport Services Pty Ltd commenced the contracted operations on 12 January 2000.

 (15)  The open pit mine is located within mining lease M 39/412. The first 8 kilometres of haul road is a private access road located on mining leases M 39/411 and M 39/412.

 (16)  The remaining 78 kilometres of haul road is private access road located on adjacent mining tenements under the provisions of Miscellaneous Licenses numbers 39/118, 39/48, 39/49 and 39/50. The road also crosses various other mining leases and mineral exploration leases owned by Sons of Gwalia Ltd.

 (17)  Access from the haul road to water points is obtained from the haul road along private built roads constructed and maintained under authority of Miscellaneous Licenses 39/51 and 39/52 as follows:

 17.1  39/51 - access to dust suppression water point north of Pennyweight Point; and

 17.2  39/52 - access to water supply for accommodation camp at Pennyweight Point.

 (18)  The Department of Minerals and Energy issues all mining leases, exploration leases and the Miscellaneous Licenses under the provisions of the Mining Act 1978 (WA).

 (19)  Copies of each of the applications for Mining Tenements and the associated Miscellaneous Licenses referred to above, covering the private access road, is attached marked "A", "B", "C", "D", "E" and "F" respectively. The Miscellaneous Licenses were granted as follows:

 19.1  39/48 granted 12 May 1993;

 19.2  39/49 granted 12 May 1993;

 19.3  39/50 granted 14 July 1993;

 19.4  39/51 granted 19 December 1993;

 19.5  39/52 granted 19 December 1993; and

 19.6  39/118 granted 12 October 1999.

 (20)  Development and conduct of the Red October operations was dependent upon Department of Minerals and Energy and the Environmental Protection Authority's approval of the operations contained within the relevant Notice of Intent, a copy of which is attached marked "G".

 (21)  That Notice of Intent referred to as a Consultative Environmental Review covered all aspects of the project including the mine, haul road, water and standpipe facilities and accommodation camp locations. Similarly, Native Title considerations within that Notice of Intent covered the mine, haul road, water and standpipe facilities and accommodation camp locations.

 (22)  Red October was approved by the Minister of Environment subject to conditions on 2 August 1999 in Ministerial Statement 518.

 (23)  No processing of the mined ore occurs at the mine site.

 (24)  Section 91 of the Mining Act 1978 (WA) specifically covers the grant of Miscellaneous Licenses. At sub-section (6) to section 91 it states "a miscellaneous licence shall not be granted unless the purpose for which it is granted is directly connected with mining operations".

 (25)  Construction of the purpose-built private access haul road was undertaken to enable the development and mining of Red October gold ore to commence. It was initially used to transport mining and relevant infrastructure construction plant and equipment. It has since carried mining equipment, mined ore, exploration site rehabilitation equipment, mining personnel, water and consumables (such as explosives, fuel, chemicals and domestic supplies).

 (26)  Maintenance of the dedicated private access haul road which is carried out by the applicant is an important part of the Red October operations.

 (27)  There is no airstrip at Red October.

 (28)  By initial application dated 29 May 2000 (claim reference number WS0011509) the applicant claimed diesel fuel rebate pursuant to s 164 of the Customs Act 1901 (Cth) and s 78A of the Excise Act 1901 (Cth) in respect of the 146,901 litres of diesel fuel used by it between 17 January 2000 and 27 April 2000 in pursuing the activities referred to in paragraph 7 above.

 (29)  Included in the said application was a claim for diesel fuel rebate in respect of 27,129 litres of diesel fuel used by the applicant in maintaining the Red October haul road as described above. The amount of 27,129 litres represents the applicant's estimate of the diesel fuel used by it in maintaining the sections of the Red October haul road that are private access roads.

 (30)  By letter dated 15 August 2000, the applicant amended its initial application (ie Claim No WS0011509) to exclude the said claim for diesel fuel rebate in respect of the 27,129 litres of diesel fuel referred to in paragraph 29 above. The said amended Claim No WS0011509 was duly allowed in full.

 (31)  By initial application dated 7 September 2000 (claim reference No C008733060) the applicant claimed diesel fuel rebate pursuant to s 164 of the Customs Act 1901 (Cth) and s 78A of the Excise Act 1901 (Cth) in respect of the 27,129 litres of diesel fuel referred to in paragraph 29 above.

 (32)  By letter dated 29 September 2000 the respondent advised the applicant of his decision to refuse to pay diesel fuel rebated in respect of any of the said 27,129 litres of diesel fuel.

 (33)  By application made herein pursuant to s 273GA of the Customs Act 1901 (Cth) and s 162C of the Excise Act 1901 (Cth) dated 9 October 2000 the applicant seeks review of the respondent's said refusal.

  3  Section 164(1) of the Customs Act 1901 (Cth) and s 78A(1) of the Excise Act 1901 (Cth) provide that a rebate is payable to a person who purchases diesel fuel upon which duty has been paid for use by that person in "mining operations" (otherwise than for the purpose of propelling any vehicle on a public road).

  4  The term "mining operations" is defined in s 164(7) of the Customs Act 1901 (Cth), relevantly for present purposes as follows:

   

mining operations means:

 (a)  exploration or prospecting for minerals, or the removal of overburden and other activities undertaken in the preparation of a site to enable mining for minerals to commence; or

 (b)  operations for the recovery of minerals, being:

 (i)  mining for those minerals including the recovery of salts by evaporation; or

 (ii)  the beneficiation of those minerals, or of ores bearing those minerals;

 …  

 (o)  the construction or maintenance of private access roads for use in a mining operation referred to in paragraph (a) or (b) if the construction or maintenance:

 (i)  occurs at the place where the mining operation is carried on; and

 (ii)  is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance.

  5  Two further subsections of s 164 must be borne in mind in this case. The first is s 164(7A)(a) which provides:

   

(7A) For the purposes of the definitions of mining operations, operations for the recovery of a mineral cease:

 (a)  when the process of beneficiation ceases … .

 The second is s 164(9)(b) which provides:

   

(9) For the purposes of determining whether an operation is a mining operation: …

 (b)  the paragraphs occurring after paragraph (b) of the definition of mining operations are, subject to subsection (7A), (7B) and (7C) and paragraph (9)(a), to be construed in their own terms and not by reference to paragraph (a) or (b) of the definition.

  6  The applicant's principal submission is that the fuel used in the maintenance of the Red October haul road is eligible for rebate because that maintenance is covered by subpara (o) of the definition of mining operations.

  7  Counsel for the applicant, Mr Sweidan said in argument:

   

The mining operation, in this case is made up of a number of component activities as described in the agreed statement and one of those activities, and an important one of them, is the core road maintenance.

  8  Counsel for the respondent Mr McGowan stated the issue this way in his submissions:

   

… the question is, is whether one can say that the road is the place at which mining operation is being carried on. I'm not saying that mining operations may not be carried on at two different points. But the question is, is the road connecting those points the place at which mining operation is being carried on … .

  9  In answer to a question from the tribunal as to what road would qualify as an access road "at the place where the mining operation is carried on" Mr McGowan responded:

   

Provided it can be said that the road in question is one where the mining operation is carried on, then that is what the definition - that's what the section requires, and therefore that's a factual matter to be determined on a case-by-case basis.

  10  The single issue for the tribunal in this case therefore is, what is intended by the legislation to be included within the meaning of the words "occurs at the place where the mining operation is carried on", and on that issue the tribunal was informed by Counsel that there is no authority directly in point.

  11  Aside from his principal submission relying on subpara (o), Mr Sweidan relied upon other subsections of the definition of "mining operations" in s 164(7) of the Customs Act 1914 (Cth), however, the tribunal finds it unnecessary to consider those alternative grounds of potential entitlement.

  12  Apart from mines at which no process of beneficiation occurs at all and ore is simply stockpiled, mining operations quintessentially involve, a place at which ore is removed from the ground and a place at which that ore is processed. Private roads which are necessary to allow either of those places to be reached from public roads beyond, and private roads which connect those 2 places meet, in the tribunal's view, the description of "private access roads for use in a mining operation" for the purpose of subpara (o), the question being, when can the construction or maintenance of such a road be said to "occur at the place where the mining operation is carried on".

  13  If the words "mining operation" in that phrase are construed in the narrow sense of the precise geographical confines of the pit where the ore is removed from the ground or the precise geographical confines of the plant where the ore is processed then the phrase would not permit of any private access road the construction or maintenance of which occurs at the place where the mining operation is carried on. That clearly cannot be the intended meaning of subpara (o).

  14  If on the other hand, the words "the place where the mining operation is carried on", are construed, as is implicit in the respondent's submissions, as meaning the immediate area around the site where ore is removed and/or the immediate area around a processing plant, but not the entire area of a mining lease or leases which embrace the totality of the mine operator's activities with respect to a project, then they will permit of some roads which qualify, but not others. In the tribunal's view, such an arbitrary result cannot have been intended by Parliament.

  15  It is true that many statutory provisions involve, often difficult questions of fact or degree before a judgment may be made as to their application in given situations, however, the tribunal cannot accept that the legislature intended that a diesel fuel rebate would be payable where a private access road was for example, 100 m long, but not 500 m or was 1 km long, but not 10 km or was 20 km long, but not 40 km and so on, without so specifying.

  16  Mining operations by their very nature are more often than not located in the remoter areas of Australian States and in larger States, such as Western Australia, distances from the public road network to excavation or beneficiation sites can be expected to be considerable. So too, the distances between excavation sites and suitably located beneficiation sites. Had Parliament intended that an entitlement to a diesel fuel rebate would only exist in the case of the construction and maintenance of some private access roads, and that such entitlement was to depend on the length of the road, it is unlikely to have set out to achieve that result by the use of such a nebulous concept as "the place where the mining operation is carried on". It would have been a simple matter to have specified maximum lengths for roads which were to qualify.

  17  In the tribunal's view the words "mining operation", in the phrase "occurs at the place where the mining operation is carried on", mean all of the operations involved in mining for minerals and in the beneficiation of those minerals and thus the places at which those operations occur include the whole of the land legally occupied for the purposes of the excavation or extraction process, the whole of the land legally occupied for the purposes of the beneficiation process, and the whole of the land legally occupied for the purposes of private roads that connect that parcel or those parcels of land, either together, or to the public road system beyond.

  18  It follows that, so construed, the construction or maintenance of such private roads, including in this case the Red October haul road maintenance operations, will by definition occur "at the place where the mining operation is carried on". Conversely, private access roads that do not so connect or interconnect that parcel or those parcels of land, for example private access roads to tailings dams, water supplies or airstrips on other parcels of land will not be constructed or maintained "at the place where the mining operation is carried on", even though they may be "private access roads for use in a mining operation referred to in para (a) or (b)" within the meaning of the first part of subpara (o) of the definition in s 164(7) of the Customs Act 1901 (Cth).

  19  The decision of the tribunal is therefore that the decision under review be set aside and that the matter be remitted to the respondent with the direction that the payment of diesel fuel rebate not be refused on the ground that the maintenance of the private portion of the haul road between the Red October mine and the place of beneficiation at Leonora, did not occur "at the place where the mining operation is carried on", within the meaning of subpara (o) of the definition of "mining operations" contained in s 164(7) of the Customs Act 1901 (Cth).