ADMINISTRATIVE APPEALS TRIBUNAL - GENERAL ADMINISTRATIVE DIVISION

[2002] AATA 705

Re BHP Billiton Petroleum Pty Ltd and Chief Executive Officer of Customs

Downes J, President, W G McLean and C Ermert, Members

19 August 2002 - Melbourne

Justice Downes, President, W G McLean, C Ermert, Members.

Introduction

BHP Billiton Ltd (BHP), as operator, is engaged in oil and gas exploration and production on the North West shelf of Australia and in the Timor Sea. The projects are known respectively as the Griffin Joint Venture and the Jabiru/Challis Joint Venture. These projects are situated within a series of offshore mining permits issued under the Petroleum (Submerged Lands) Act 1967 (Cth), being the permits numbered AC RL 2, AC RL 3, AC/P30, AC/P22, WA155-P, WA210-P, WA-225-P, WA260-P and WA290-P. The operations consume substantial quantities of diesel fuel. BHP claims entitlement to a rebate on the price paid for diesel fuel used in the operations between 1 August 1997 and 30 June 2000 pursuant to s 164(1)(a) of the Customs Act 1901 (Cth), on the basis that they are mining operations. A delegate of the Chief Executive Officer of the Australian Customs Service has allowed some, but not all, of the rebate claimed. BHP has sought review under s 273GA(1)(ha) of the Customs Act 1901 (Cth) of the decisions to refuse part of its claims. Identical rebate provisions appear in s 78A of the Excise Act 1901 (Cth). Section 162C(1)(f) of the Excise Act 1901 (Cth) provides for review in this tribunal of refusals to pay rebate under that Act.

2 The operations of BHP encompass activities onshore (including the storage of equipment in readiness for use offshore), exploration offshore with the use of mobile offshore drilling units (MODUs) and production offshore with the use of floating production storage offtake vessels (FPSOs). Work boats, including supply vessels, are used in supporting the operations. The supply vessels ferry materials and equipment from the onshore bases to the MODUs and FPSOs and bring back that which has been spent, used or is no longer wanted. The work boats tow the MODUs from one site to another site and they assist in readying them for departure and in positioning and anchoring them upon arrival. They also provide general support services and play an important role when oil is being transferred from FPSOs to offtake tankers.

3 On any view, the offshore operations of BHP are mining operations within s 164 of the Customs Act 1901 (Cth). The cost of diesel fuel used in drilling and production and in the use of supply vessels in close proximity to the MODUs and FPSOs has been allowed for rebate. Certain onshore activities have also been allowed. However, the delegate has disallowed most of the cost of diesel fuel used in the movement of material to and from the offshore locations. The towing of MODUs and FPSOs from one site in a field to another site in the same field has been allowed, but towing from one field to another field has not.

4 The delegate has also disallowed the cost of diesel fuel used on Troughton Island which is a staging post for the movement of personnel to fields in the Timor Sea. Fixed wing aircraft are used for the journey from Darwin to Troughton Island and helicopters are used for the balance of the trip. The delegate has further disallowed the cost of diesel fuel used in the towing of a new piece of equipment, namely a wellhead platform, from its construction site at Adelaide to a field in the Timor Sea.

5 It is the matters which have been disallowed with which these applications for review are concerned. There are a number of applications relating to different claims but it will be appropriate to consider them in one set of reasons.

6 It can be seen that the issues for determination are broadly whether the cost of diesel fuel used for the following purposes qualifies for rebate under s 164 of the Customs Act 1901 (Cth) or s 78A of the Excise Act 1901 (Cth):

(a) moving goods from an onshore equipment base to oil and gas exploration and production fields;

(b) moving material that is spent, used, or no longer required back to shore;

(d) operating a staging post to enable personnel to transfer from fixed wing aircraft to helicopters; and

(e) towing an offshore oil platform from its onshore construction site to its production location offshore.

7 Section 164 of the Customs Act 1901 (Cth) has contained provisions for diesel fuel rebates since 1982. The provision conferring the entitlement to rebate has been in substantially the same form throughout the life of the section. That form (relevantly for mining operations) was:

164(1) A rebate is … payable to a person who purchases diesel fuel, being diesel fuel upon which duty has been paid, for use by him -
(a) in mining operations (otherwise than for the purpose of propelling a road vehicle on a public road)

Because the relevant provisions of the Customs Act 1901 (Cth) and the Excise Act 1901 (Cth) were, at all relevant times, identical, these reasons will hereafter refer only to the Customs Act 1901 (Cth).

8 If the broad characterisation of entitlement to diesel fuel rebate remained substantially unchanged over a number of years, the meaning of that characterisation did not. "Mining operations" has always been defined in the section. The terms of the definition have changed considerably since 1982.

9 In its original form, the definition relevantly was as follows:

"mining operations" means -
(a) exploration, prospecting or mining for minerals; or

(b) the dressing or benefication (at the mining site or elsewhere) of minerals, or ores bearing minerals, as an integral part of operations for their recovery,

and includes -
(c) other operations connected with exploration, prospecting or mining for minerals that are carried out in, or at a place adjacent to, the area in which the exploration, prospecting or mining occurs;

(d) where minerals, or ores bearing minerals, are dressed or beneficiated, at a place other than the mining site, as an integral part of operations for their recovery - the transporting of the minerals or ores from the mining site to the place where they are dressed or beneficiated;

(e) the liquefying of natural gas;

(f) where natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or

(g) the production of common salt by means of evaporation,

but does not include quarrying operations carried on for the sole purpose of obtaining stone for building, road making or similar purposes;

10 Subparagraph (c), which had the effect of extending the definition because it extended to "other operations connected with … mining" (a so-called "sweeper clause"), was deleted in 1995 and an extended list of mining activities inserted ((a) to (w)). Accordingly, the limiting provision in subpara (c) "that … are carried out in, or at a place adjacent to, the area …" no longer applies. On the function of the original subpara (c) as a sweeper clause, see Chief Executive Officer of Customs v WMC Resources Ltd (1998) 87 FCR 482 at 485-88 per French J, and at 502 per RD Nicholson J and Chief Executive Officer of Customs v West Australian Government Railways Commission (1999) 94 FCR 473 at 479; 43 ATR 78 at 83-84 per French J.

11 These amendments left open the possibility that mining operations might take place away from the location where extraction or production was taking place and might include the transportation of materials to and from that location. In Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1, a unanimous full Federal Court held that the cost of diesel fuel used by special vehicles carrying explosives which would be mixed on the vehicles and delivered to prepared drill holes at mining locations was rebateable with respect to diesel consumed on that part of the journey from the depot where the explosives were kept to the perimeter of each mining location. The journey each way was approximately 150 km. In Esso Australia Ltd v Chief Executive Officer of Customs (AAT No 12919 [1998] AATA 366 (22 May 1998)) this tribunal held that diesel fuel used by supply vessels carrying supplies and equipment between Esso's mainland terminal at Barry's Beach and its Bass Strait offshore platforms was entitled to rebate. The tribunal found that there existed "an area of activity comprising the offshore facilities and [the mainland terminal]" (para 41). Other similar claims failed "on the ground of being outside the geographic area" (para 41). In a related case (Dawson Rockwater Joint Venture v Chief Executive Officer of Customs, unreported, [1998] 1010 FCA, 21 August 1998) Merkel J in the Federal Court of Australia upheld a decision of this tribunal denying rebate for journeys of towing vessels from other parts of Australia to Esso onshore terminals for the purpose thereafter of being engaged in the towing into place and installation of production platforms.

12 Section 164 was amended again in 1997. This is the first case in which the amendments have been considered. The amendments excluded "any vehicle on a public road" in place of "a road vehicle on a public road" in para (1)(a). The definition of "mining operations" was amended, in part, so that mining operations "does not include":

(z) the transport, by any means, of people, equipment or goods to or from a place where a mining operation referred to in any of para (a) to (w) is, or is to be, carried on, or to or from a place adjacent to that place, other than such transport to the extent that it constitutes the activity, described in paras (c), (n) or (s).

Determining the meaning and application of this subparagraph is an important aspect of the task before us in these matters.

13 Section 164 now provides, relevantly to these applications for review, as follows:

164 Rebate of duty in respect of diesel fuel used for certain purposes

…
(1) A rebate is, subject to subsections (2) and (4A) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by the person:
(a) in mining operations (otherwise than for the purpose of propelling any vehicle on a public road);

…
(7) In this section:

…

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;

Note: The meaning of paragraph (b) is affected by subsections (7A), (7B) and (7C).

and includes -
(c) if minerals, or ores bearing minerals, are beneficiated at a place other than the mining site as an integral part of operations for their recovery:
(i) the journey undertaken for the purpose of transporting the minerals or ores from the mining site to that place except to the extent (if any) that the journey involves transportation by sea; and

(ii) the return journey of a vehicle, a locomotive or other equipment from that place to the mining site or any part of that journey if it is undertaken for the purpose of repeating a journey referred to in subparagraph (i) or for the backloading of raw materials or consumables for use in a mining operation referred to in paragraph (a) or (b); or

(d) the undertaking:
(i) of voyages to or from an Australian port by a ship that is proposed to be, or that is, used wholly or primarily in carrying out northern mining activities for the purposes of refitting or repairing the ship or its equipment for, or as a result of, carrying out those activities; or

(ii) of trials in connection with such a refit or repair of the ship or its equipment; or

…
(f) if natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or

…
(n) the supply of water solely for use in a mining operation referred to in paragraph (a) or (b) if:
(i) the supply is to the place where the mining operation is carried on; and

(ii) the water comes from that place or a place adjacent to that place; and

(iii) the supply is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the supply; or

…
(s) the removal of waste products of a mining operation referred to in paragraph (a) or (b) from the place where the mining operation is carried on; or

(t) the disposal of waste products of a mining operation referred to in paragraph (a) or (b) at the place where the mining operation is carried on; or

…

but does not include:
(x) quarrying or dredging operations to the extent that the purpose of the operations is to obtain materials for use in building, road making, landscaping, construction or similar purposes; or

(y) the use of a vehicle (other than a fork-lift, front-end loader, tractor or other similar prescribed vehicle) not exceeding 3.5 tonnes gross vehicle weight, other than such a vehicle that is extensively modified for use underground while it is so used; or

(z) the transport, by any means, of people, equipment or goods to or from a place where a mining operation referred to in any of paragraphs (a) to (w) is, or is to be, carried on, or to or from a place adjacent to that place, other than such transport to the extent that it constitutes the activity, described in paragraph (c), (n) or (s).

Facts

14 Before examining further the meaning of the section it is appropriate to set out the facts in more detail. We can conveniently do this, in part, by reference to material before us which we accept.

15 During the period July 2000 to March 2001, the applicant lodged applications for diesel fuel rebate in respect of 35,669,400 litres of fuel purchased by the applicant for use in the applicant's offshore oil and gas exploration and mining operations, and in various other activities of the applicant associated with those operations, conducted during the period 1 August 1997 to 30 June 2000. The claims were lodged after the fuel had been used.

16 In the decisions under review, the respondent partly refused the claims. Rebate was paid in respect of 24,449,914 litres, and was refused in respect of 11,219,486 litres.

Griffin joint venture

17 The Griffin Joint Venture is described in the affidavit of Mr David Davies-Pellow, sworn on 11 March 2002, submitted on behalf of the applicant. That affidavit reads, in part:

5. The applicant is the Operator of the Griffin oil and gas project. The participants in the Griffin joint venture are BHP Petroleum (Australia) Pty Ltd (45 per cent), Mobil Exploration and Producing Australia Ltd (35 per cent) and Inpex Alpha Ltd (20 per cent). The purpose of the joint venture is the development of the Griffin, Chinook and Scindian oil and gas fields, collectively referred to as the Griffin oil fields.

6. The Griffin oil fields are located in the Southern Carnarvon Basin, 68 kilometres offshore from Onslow, Western Australia on the outer continental shelf slope in approximately 130 metre depth of water. Oil was first discovered in 1989, and production commenced in 1994. The Griffin oil fields have a production capability of up to 80,000 barrels of oil and 40 terajoules of natural gas per day. Initial recoverable reserves are proven at between 115-130 million barrels of oil and 50 petajoules of natural gas.

7. The Griffin oil fields were developed using an FPSO, the Griffin Venture, moored to a disconnectable, catenary, mooring-riser system. Gas and oil are produced from subsea completed wells and conveyed through flowlines to the Griffin Venture, where the oil is stabilised and stored. Gas is dehydrated and compressed by gas compressors and transferred through a 70 kilometre long 200 mm diameter submarine pipeline which runs from the Griffin Venture to the onshore gas treatment plant, known as the Griffin Gas Plant ( the Plant ), located approximately 30 kilometres south-west of the town of Onslow, Western Australia and adjacent to the existing Tubridgi gas field processing plant. The applicant maintains the pipeline and operates the Plant. The Plant has its own helipad, accommodation building and central control room. The flow of gas through the pipeline is controlled by the Griffin Venture. Once the gas reaches the Plant, it is controlled and monitored by a self-regulating system operated at the Plant's central control room. Operator intervention is only required in the event that a malfunction or shut down occurs. Stabilised oil is off loaded from the Griffin Venture by means of a floating hose to an offtake tanker which is temporarily moored during offtake, in tandem with the Griffin Venture, assisted by a work vessel on static tow.

8. … the offshore production facilities are supported locally, onshore from Dampier, 230 kilometres away. The Dampier location was chosen despite the Plant and the town of Onslow being closer, as the Plant is located inland and the town of Onslow does not have the infrastructure to service the large supply vessels used by the applicant to support its offshore operations. Onslow has only a small wharf area. Access to it is via a tidal creek (Beadon Creek) which is very narrow and shallow. Consequently, only small vessels such as small fishing boats and landing barges can be serviced at this location. In addition, road and air transport services to Onslow are limited.

9. The Dampier shore base was chosen by the applicant to service its offshore drilling and production operations as it is the closest location to the Griffin oil fields that has the capacity to service the supply vessels used by the applicant and has the required infrastructure and storage space necessary to support the offshore operations.

10. The Dampier [Griffin] facilities consist of two bases, the Brambles Dampier Supply Base ( Brambles Base ) and the Woodside Energy Limited King Bay Supply Base ( Woodside Base ). …

11. The Brambles Base consists of warehousing (approximately 4000 square metres) and yard lay down holding areas, equipment and material holding areas, shedding, a pipe cleaning facility, an administration building and contractor offices …

12. The Woodside Base consists of covered warehousing (over 9000 square metres) and yard lay down areas, equipment and material holding areas (over 200,000 square metres), shedding, an equipment workshop, a pipe cleaning shed, a sling store, bulk storage plant, administration building, employee amenities, storage tanks and a 230 metre wharf. The wharf has loading points for diesel fuel, water, materials and equipment. In addition, the Dampier Griffin facilities are only a few kilometres from the Dampier Public Wharf. The public wharf is 280 metres long and 63 metres wide. It can accommodate supply vessels of up to 35,000 tonnes displacement and has a storage capacity of 5,469 square metres …

13. The Dampier Griffin facilities play a key role in the production operations carried out in the Griffin oil fields. They have no purpose other than to service the Griffin Venture. Without them, neither the Griffin Venture nor the MODUs would have sufficient quantities of material and equipment to carry out the operations. In essence, the facilities are used to store, maintain, prepare and dispatch all material, equipment and consumables used in these operations.

14. As well as the storage, preparation and dispatch of material and equipment, the Dampier Griffin facilities handle all items and goods returned by supply vessels from the Griffin Venture. These include domestic rubbish, industrial waste and scrap steel components and equipment requiring repair or service.

15. All material and equipment used offshore passes through the onshore facilities; all goods are road freighted to the onshore bases, unloaded, prepared and as required, reloaded into sea worthy containers for shipment offshore.

18 The applicant's Statement of Facts, Issues and Contentions adds:

16. Some of the claims relate to diesel fuel used by supply vessels in the transportation of material and equipment (including water) used during the offshore production operations from the Dampier Griffin facilities to the Griffin Venture and the transportation of waste from the Griffin Venture to shore during the relevant period.

Jabiru/Challis joint venture

19 The Jabiru/Challis joint venture is also described in the affidavit of Mr Davies-Pellow. That affidavit reads, in part:

20. The applicant was also the Operator under two petroleum joint venture Operating Agreements … and conducted activities at two sites in the Timor Sea known as Jabiru and Challis on behalf of the respective joint venture participants during the relevant period. It should be noted that the applicant sold its interests in the Jabiru and Challis joint venture as well as its rights as Operator in June 1998. (The Challis development comprises the Challis field and a smaller adjacent field called the Cassini field. References to the Challis field include the Cassini field.)

21. The Timor Sea is a geographical term used to describe the area of water between the Kimberley Coast of north/western Australia and Timor, bounded on the east by the Arafura Sea and to the west by the Indian Ocean. Each of the Jabiru and Challis fields lie within a geographically and geologically discrete portion of the Timor Sea known as the Vulcan Sub-basin.

22. The participants in the Jabiru/Challis joint venture during the relevant period were BHP Petroleum (through its wholly-owned subsidiary, BHP Petroleum (Cartier) Pty Ltd) (50%), Mobil Exploration and Producing Pty Ltd (6.25%), Norcen International Ltd (14.6875%), Peko Oil Pty Ltd (10.3125%) and Cultus Petroleum NL (18.75%). The participants in the Jabiru/Challis joint venture held exploration Permit No AC/P4 issued under the Petroleum (Submerged Lands) Act 1967 (Cth), from which production licences AC/L1 (Jabiru field), AC/L2 and AC/L3 (Challis and Cassini fields) were excised.

23. The Jabiru field is located offshore from the Kimberley Coast, approximately 300 kilometres northwest of Troughton Island. The Challis field is about 20 kilometres south of the Jabiru field.

24. During the relevant period, the offshore production operations at Jabiru and Challis were supported locally by the BHP Transport run onshore base at Darwin and a transport facility at Troughton Island.

25. The Troughton Island base was set up and operated by the applicant. It provided air transport support from Darwin by fixed wing aircraft and to and from the FPSOs by helicopter. The helicopters were used to transport personnel and small lightweight equipment. Due to payload limitations and costs, freighting in materials by the helicopters was minimal.

26. Troughton Island has little infrastructure. The only facilities on the island include an airstrip, a hangar, accommodation block, power generation and water production reticulation systems, helipads and a transit lounge. … Troughton Island is an isolated, remote location with no fresh water and is surrounded by an extensive coral reef. Setting up a supply base in this location would not have been feasible. Consequently, with the exception of the few items transported from Troughton Island, all material and equipment required to support the Jabiru and Challis Ventures were transported from the Darwin base. The base is located approximately 640 kilometres from the Jabiru field and 630 kilometres from the Challis field. It was chosen by the applicant as the best location for its onshore storage, preparation and warehousing facilities as it is the closest location to the Jabiru and Challis fields that has the capacity to service the supply vessels used by the applicant and to store the relevant materials and equipment used by the applicant in its offshore production operations.

27. The Darwin base has warehousing (approximately 4,900 square metres) and yard lay down holding areas (approximately 41,500 square metres), equipment and material holding areas, shedding, a welding shop, a pipe shed, sling store, an administration building and contract office. The services provided by the Darwin base for the Jabiru Venture and Challis Venture were similar to those provided by the Dampier base to the Griffin Venture.

20 The applicant's Statement of Facts, Issues and Contentions adds:

Some of the claims relate to diesel fuel used by supply vessels in the transportation of material and equipment (including water) from Darwin to the Jabiru and Challis Ventures and the transportation of waste to shore during the relevant period as well as diesel fuel used at Troughton Island.

Supply vessels

21 The supply vessels' roles within the applicant's production operations are described in the affidavit of Mr Andrew Oliver, sworn on 7 March 2002, and filed on behalf of the applicant. That affidavit reads in part:

38. Supply vessels were on charter to the applicant at all times to support its oil and gas production operations during the relevant period. The air freighting of materials by helicopter was minimal because of the payload limitations and uneconomic costs. The supply vessel's role in oil and gas production operations includes:
(a) Carrying all production and maintenance requirements for the FPSOs which include gases, lubricants, chemicals, replacement or reconditioned equipment such as pumps, engines, turbines, compressors, valves, spool work and structural items;

(b) Carrying bulk cargo requirements which include liquid products such as diesel, glycol, methanol and Jet A1 fuel. Glycol and methanol are used by the FPSOs as an anti-freeze agent to maintain production and pipeline flows. Jet A1 fuel is used for refuelling the helicopters providing aviation support for the facilities;

(c) Carrying materials to the FPSOs to support contractors (such as painters and divers) from time to time and returning equipment to shore after use;

(d) The removal of all waste products except for food scraps from the FPSOs back to shore in compliance with the provisions of the Environment Protection (Sea Dumping) Act 1981 (Cth) which prohibits the disposal of any waste products at sea, except for treated sewage that is processed on board. These waste products include general waste, chemical and hazardous waste as well as equipment requiring repairs, empty containers (which will be re-filled at shore base and returned to the facilities when required - for example, oxygen containers, extinguishers, bulk dry powder, nitrogen and helicopter fuel containers) and materials to be stored at the onshore warehouse because of lack of space on the facilities; for example mooring rope, floating hose spool pieces, spades, fire hoses, bellows, tank leak covers etc;

(e) Carrying supplies from the relevant onshore bases to the FPSOs for the use and consumption by the crews of the FPSOs, including all fresh and frozen food supplies and domestic goods such as laundry soap powders, cleaning solutions, clean linen, plumbing supplies and other household items, as well as safety and medical supplies and equipment;

(f) Providing a static towing facility during offtake; and

(g) Supporting routine or emergency inspection of subsea equipment, including flowlines, where a Remote Operated Vehicle (ROV) is deployed from the back of the supply vessel.

22 The applicant's statement of Facts, Issues and Contentions adds:

60. The role a supply vessel plays in delivering supplies to an FPSO and returning its waste back to shore is essential to the running of the applicant's production operations. As deck space is very limited, an FPSO is totally dependent on a supply vessel delivering the necessary materials so it can continue its operations, as well as removing those materials that can no longer be used. Typically, a supply vessel's sailings to and from an FPSO are planned around offtake. A monthly forecast is prepared by the offshore logistics co-ordinator and is forwarded to the relevant engineers and shore base logistics co-ordinator. Materials and equipment are then mobilised to coincide with the next vessel sailing. …

23 The supply vessels' roles within the applicant's drilling operations are further described in the affidavit of Mr David Telford Mackay. That affidavit reads, in part:

57. Typically, when entering into a drilling contract for the provision of a drilling rig and associated services for exploration drilling, the Applicant, as Operator, is obliged to provide a significant amount of materials and services for the exploration drilling work to be undertaken, some of which include:
(a) Rig positioning services.

(b) Vessels for towing and anchor handling.

(c) Air transportation (helicopters and/ or fixed wing aircraft) for all personnel.

(d) Supply vessel transportation of equipment and materials between the Operator's marine base and the MODU.

(e) Transportation of all materials and spare parts between the Operator's marine base or heliport and the MODU.

(f) Dock and dockside facilities, labour and equipment for loading/unloading the Operator's and contractor's equipment at Operator's marine base.

(g) Transportation of containers for disposing of waste, contaminated cuttings and fluids if required.

(h) Communication equipment as required for use on the MODU for communication with Operator's marine base.

(i) Standby vessel (if required).

(j) ROV and diving equipment services.

(k) Drill stem testing tools and services.

(l) Electric well logging equipment and services.

(m) Mud logging equipment and services.

(n) Mud engineering services and supervision.

(o) Well geological/mud laboratory and equipment.

(p) Directional drilling equipment and services.

(q) Cementing service.

(r) Coring services and equipment.

(s) Tubing and casing running services.

(t) Well test equipment and services.

(u) Repair of drillpipe, drill collars and other in-hole tools.

(v) Cement and cement additives.

(w) Mud chemicals and completion fluids.

(x) Fuel for the MODU.

(y) Casing dope and drift mandrels.

(z) Drilling water.

(aa) Potable water in excess of production by water distillation unit onboard the MODU.

(bb) Drilling bits, diamond bits, coreheads and catchers.

(cc) Replacement of pennant wires, shackles due to breakage or abnormal wear and tear.

(dd) Tubing handling equipment.

(ee) Cementing heads.

(ff) Drilling jars.

(gg) Reamers, stabilisers.

(hh) Fishing tools.

(ii) Mechanical casing cutters, casing spears.

(jj) Replacement and/or repair of any marine, in-hole sub-sea equipment when lost or damaged while in-hole below rotary table or sea level.

(kk) All tubular goods, including casing, tubing, hangers and packers.

(ll) Casing shoes, collars, baskets, centralisers, float equipment, baffles, scratchers, etc.

(mm) Wellheads including casing and tubing heads, wear bushings, etc.

(nn) All running and pressure testing tools for wellhead equipment.

(oo) Mud lab test equipment.

(pp) Waste disposal onshore.

(qq) Cargo baskets and containers for materials and equipment supplied by Operator.

24 The work boat, the Lady Cynthia, was also involved in towing a wellhead platform a distance of 6906 kms from its onshore construction site at Adelaide to a field in the Timor Sea, known as the Buffalo Field. The tow commenced on 24 April and was completed on 5 June 1999. The Lady Cynthia used 343,800 litres of diesel fuel in the course of towing the wellhead platform to the Buffalo field.

25 On 19 occasions work boats were used to assist in towing MODUs either within the area covered by a permit or between permits. The 3 claims relating to the movement of MODUs within a permit area were allowed. The other 16 claims, relating to the movement of MODUs between permits, were disallowed. The disallowed journeys used 1,567,389 litres of diesel fuel.

26 The quantities of diesel fuel disallowed by the delegate and claimed in each of the applications for review before us are described in an Appendix to the applicant's Statement of Facts, Issues and Contentions as follows:

File No	Description	Litres Claimed for Rebate
V2000/1221	Fuel use at Troughton Island Airport	280,000 litres
V2000/1222	Fuel used by work boats to supply cargo (other than water) to offshore exploration and production facilities	3,211,393 litres
V2000/1223	Fuel used by work boats to move drill rigs between permits, between rig on hire and off hire locations offshore and permits, and to move an offshore oil platform from the onshore construction site to its production location offshore	1,911,189 litres
V2001/83	Fuel used by work boats transporting cargo outbound from port to offshore oil and gas exploration and field sites and fuel used by work boats transporting cargo during return trips inbound to port, calculated in accordance with the respondent's apportionment basis	4,715,402 litres
V2001/84	Fuel used by work boats transporting cargo outbound from port to offshore oil and gas exploration and field sites and fuel used by work boats transporting cargo during return trips inbound to port, calculated in accordance with the respondent's apportionment basis	509,612 litres
V2001/188	Fuel used by work boats transporting cargo outbound from port to offshore oil and gas exploration and field sites and fuel used by work boats transporting cargo during return trips inbound to port, calculated in accordance with the respondent's apportionment basis	65,912 litres
V2001/345	Fuel used by work boats transporting cargo outbound from port to offshore oil and gas exploration and field sites and fuel used by work boats transporting cargo during return trips inbound to port, calculated in accordance with the respondent's apportionment basis	232,806 litres
V2001/433	Fuel used by work boats to supply cargo (other than water) to offshore exploration and production facilities, calculated using the weight of cargo (other than water) as a proportion of the weight of total cargo at 10.8 per cent	293,172 litres
	TOTAL	11,219,486 litres

27 During the hearing it was suggested that the actual amount of diesel fuel used on the items in claim V2001/1223 exceeded the amount claimed. It was suggested that the claim excluded the amount of diesel fuel used in towing the Buffalo wellhead. An application to amend was foreshadowed. However, we have since been informed that the quantity is correct and that amendment is no longer sought.

28 The details of the claims are as follows:

Application V2000/1221

29 This application now deals only with the respondent's refusal to pay rebate in respect of 280,000 litres of diesel fuel used at the Troughton Island Airfield. In the original claim, the applicant claimed rebate in respect of 27,504,023 litres of diesel fuel. The balance of the original claim was either granted, or is now the subject of the other applications to this tribunal.

30 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

7. The respondent paid rebate in respect of 19,947,679 litres used as follows:
(a) on drill rigs in exploration and development of oil and gas fields (7,831,086 litres);

(b) during anchor handling to position the rigs (629,527 litres);

(c) on offshore floating production facilities "FPF" (9,017,236 litres);

(d) for temporary movement of the FPF away from approaching cyclones (1,016,000 litres);

(e) at the on-shore gas plant which processes gas received from the FPF (297,150 litres);

(f) during inspection of the pipelines between the FPF and the on-shore gas plant (194,430);

(g) by work boats - used as a safety requirement - during transfer ("off-take") to customers vessels of the oil produced on the FPF (835,233 litres); and

(h) in moving drilling rigs within permits (127,017 litres).

8. The respondent refused rebate in respect of 280,000 litres used at the Troughton Island Airfield. According to the applicant, the diesel fuel was used to generate electricity which was used solely to light the airstrip …

9. The applicant also claimed, as part of the total claim of 27,504,023 litres, a total of 7,276,344 litres said to have been used by its supply vessels travelling from port to the offshore oil and gas exploration, development, and production sites and on return trips to port. The respondent sought further information in respect of those claims. A subsequent decision to partly refuse those claims is the subject of review in application V2001/83 …

31 While the applicant's evidence does not address the point explicitly, it seems from the affidavit of David Davies-Pellow that diesel fuel was only used on Troughton Island to generate electricity. We will proceed on this basis. In his affidavit Mr Davies-Pellow deals with the use of electricity as follows:

26. … All of the electricity used at Troughton Island is provided by two fuel charged diesel engines coupled to two generators. That is electricity for the airstrip lighting, windsock lighting, the helipad and fixed wing apron, flood lighting, hangar power, passenger transit lounge power, the communications centre, the desalinisation unit and the accommodation complex. There is also an emergency backup turbo charged generator.

Application V2000/1222

32 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

10. The applicant claimed rebate in respect of 3,211,393 litres of diesel fuel used during the claim period by supply vessels to move cargo (other than water) to the offshore exploration and production facilities.

11. The respondent refused this claim in its entirety.

Application V2000/1223

33 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

12. The applicant claimed rebate in respect of 1,911,189 litres of diesel fuel used during the claim period by supply vessels to move drill rigs between permits, between rig on hire and off hire locations and permits, and to move the offshore oil platform from its on shore construction site to its production location offshore.

13. The respondent refused this claim in its entirety.

Application V2001/83

34 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

14. The respondent indicated that it would pay rebate for a proportion of the fuel used on journeys transporting cargo to and from the applicant's offshore oil and gas exploration and production facilities. The relevant proportion would be the greater of:
(a) the weight of water carried on outbound journeys as a proportion of the weight of total cargo transported out; and

(b) the weight of waste products of the offshore oil and gas operations returned to shore as a proportion of the weight of total cargo transported back to shore.

The respondent assessed what items were "waste products" of the applicant's offshore oil and gas operations.

15. The applicant advised that in respect of journeys to and from drilling rigs, the relevant proportion for water was the weight of water carried on outbound journeys as a proportion of the weight of total cargo, which the applicant then calculated to be 29.23 per cent of the weight of cargo on such trips ( the rig percentage ). The applicant also advised that, in respect of journeys to and from the FPSOs the relevant proportion for waste products was the weight of waste products carried from the FPSOs as a proportion of the weight of total cargo, which the applicant calculated to be 10.8 per cent ( the FPSO percentage ). These were calculated by the applicant as an average over the periods of 7 months and 12 months respectively to 30 June 2000, based on its records of cargo carried.

16. The respondent accepted the rig percentage and the FPSO percentage as calculated by the applicant, and paid rebate in respect of 2,530,942 litres. The respondent refused rebate in respect of the remaining 4,715,402 litres.

35 This claim requires a little explanation. It relates to an alternative claim by the applicant. The applicant's primary claim is for rebate for all diesel fuel used by supply vessels. If it fails in that claim it claims, in the alternative, rebate for the transport of water and waste products pursuant to s 164(7)(n) and (s) of the Customs Act 1901 (Cth).

36 The delegate rejected the applicant's claim to rebate for all diesel fuel used by supply vessels. However, the delegate allowed a proportion of the fuel actually used which was assessed as representing the proportion of diesel fuel used for the carriage of water and waste products.

37 Water was largely carried on outward voyages and waste products on return voyages. The larger of the proportions as between water and waste products from each outward and each return journey was chosen and that larger proportion was applied to both legs of the round trip. The waste products proportion was calculated by the applicant in accordance with generic categories of goods which the respondent had indicated it would accept from a longer list furnished by the applicant. The applicant now disputes this assessment. We will return to this matter later in these reasons.

Application V2001/84

38 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

17. The applicant claimed rebate in respect of 1,578,577 litres used during the period April 2000 to June 2000.

18. The respondent paid rebate in respect of 822,588 litres used as follows:
(a) on drill rigs in exploration and development of oil and gas fields;

(b) during anchor handling to position the rigs;

(c) on offshore floating production facilities "FPFs";

(d) at the on-shore gas plant which processes gas received from the FPF;

(e) during inspection of the pipelines between the FPF and the on-shore gas plant;

(f) by supply vessels - used as a safety requirement - during ("off-take") to customers' vessels of the oil produced on the FPF; and

(g) in moving drilling rigs within permits.

19. The respondent sought further information in respect of the balance of 755,989 litres used by the supply vessels on journeys from port to the offshore locations and on return trips to port.

20. After the receipt of further information from the applicant, the respondent applied the rig percentage and the FPSO percentage as calculated by the applicant and paid further rebate in respect of 246,377 litres. The respondent refused rebate in respect of the remaining 509,612 litres.

Application V2001/188

39 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

21. The applicant claimed rebate in respect of 146,136 litres used during March 2000 on a drill rig used in exploration of oil and gas fields, and used by supply vessels in travelling out to the offshore oil and gas exploration area and in return trips to port.

22. The respondent paid rebate in respect of 80,224 litres. That included all the fuel used on the drill rig, and the rig percentage, as calculated by the applicant, of the fuel used by supply vessels in travelling out to the offshore oil and gas exploration area and in return trips to port. The respondent refused rebate in respect of the remaining 65,912 litres.

Application V2001/345

40 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

23. The applicant claimed rebate in respect of 1,024,910 litres purchased during the year ended 30 June 2000 and subsequently used by a drilling rig, by the Griffin FPSO, and by supply boats travelling to and from the drilling rig and FPSO.

24. The respondent paid rebate in respect of 792,104 litres. That included all the fuel used by the drilling rig and the FPSO, the rig percentage, as calculated by the applicant, of the fuel used by supply vessels in travelling to and from the drilling rig, and the FPSO percentage (as calculated by the applicant) of the fuel the applicant stated was used by supply boats travelling to and from the Griffin FPSO. The respondent refused rebate in respect of the remaining 232,806 litres.

Application V2001/433

41 The respondent's Statement of Facts, Issues and Contentions contains the following in relation to this claim:

25. The applicant claimed rebate in respect of 293,172 litres used in the period April 2000 to June 2000 by supply boats to supply cargo (other than water) to the offshore exploration and production facilities.

26. The respondent refused the claim in its entirety.

The hearing

42 At the hearing Mr J de Wijn, QC and Mr C Sievers appeared for the applicant and Mr C M Maxwell, QC and Mr R Northcote appeared for the respondent.

43 The tribunal had before it the documents filed for the purposes of s 37 of the Administrative Appeals Tribunal Act 1975 and also affidavits from Mr Robert Thornton, an engineer employed by the applicant, sworn on 8 March 2002; from Mr David Telford Mackay, an engineer employed by the applicant, sworn 11 March 2002; from Mr Andrew David Oliver, an engineer employed by the applicant, sworn 7 March 2002; from Mr Leonard Henry Bunning, a senior taxation adviser employed by the applicant, sworn 18 June 2002; and 2 from Mr David Davies-Pellow, a purchasing superintendent employed with the applicant, sworn 11 March 2002 and 17 June 2002. It was agreed by the parties that the material contained in the affidavits relating to hard rock mining should be considered by the tribunal on the basis that the deponent had little expertise in, and only general knowledge of, hard rock mining activities. It was also agreed that statements in the affidavits asserting what items were waste products were not conclusive and that it was for us to determine what materials were waste products and what activities constituted an essential part of the mining operation. The following documents provided by the applicant were taken in as exhibits:

Number	Description of Exhibit
A	Map of the northwest shelf
B	Map of the Timor Sea
C	Diagram of the northwest shelf and journey distances
D	Diagram of the Griffin Development
E	The Challis Venture, photograph showing a "riser"
F	Photograph of a "jack up" drilling rig
G	Semi-submersible drilling rig
H	Photograph of supply boat and fixed production vessel
J	Photograph of the Challis Venture
K	Photograph of anchor-handling supply vessel

44 During the hearing the applicant furnished the following summary of its claims and how they were treated by the respondent:

Type of Activity	Paid	Rejected (full/part)
Production
Diesel used on FPSOs
Diesel used to move FPSOs away from approaching cyclones
Diesel used by supply vessels to perform static tow during offtake
Diesel used by supply vessels to deliver all production and maintenance requirements for the FPSOs (eg gases, chemicals, replacement/reconditioned equipment)		✓ (full)
Diesel used by supply vessels to deliver bulk cargo to the FPSOs (eg diesel glycol, methanol, Jet A1 fuel)		✓ (full)
Diesel used by supply vessels to return waste to onshore supply base		✓ (part)
Diesel used by supply vessels to deliver materials and supplies to the FPSOs (eg food, domestic, medical)		✓ (full)
Diesel used at onshore gas plant
Diesel used during inspection of pipeline between FPSO and onshore gas plant
Diesel fuel used by supply vessels to tow special purpose production platform from onshore construction site to offshore location		✓ (full)
Diesel fuel used at Troughton Island		✓ (full)
Drilling
Diesel used on drilling rigs
Diesel used by supply vessels to support anchor handling to position rigs
Diesel used by supply vessels to move drilling rigs within permits
Diesel used by supply vessels to move drilling rigs between permits		✓ (full)
Diesel used by supply vessels to move drilling rigs between on-hire and off-hire locations offshore		✓ (full)
Diesel used by supply vessels to deliver materials, supplies and equipment		✓ (full)
Diesel used by supply vessels to supply water to drilling rigs		✓ (part)
Diesel used by supply vessels to return waste to the onshore supply base		✓ (part)

The claims

45 The primary claim of the applicant is that it is entitled to rebate for all fuel used without its needing to rely on the provisions of para (n) of the definition in s 164(7) relating to "water" or of para (s) relating to "waste products". However, an alternative claim was made to the delegate for allowance under these subparagraphs. As appears above, the delegate, having rejected the first argument, acceded to this alternative claim and assessed the quantities in accordance with the rig and FPSO percentages set out above. These percentages were arrived at following correspondence between the parties. Issues arise in these proceedings as to whether the percentage figure of 10.8 properly reflects the percentage of waste products carried back to port.

46 On 30 November 2000, the applicant wrote the following facsimile letter to the respondent:

Attached are generic lists of the types of goods carried by vessels on return trips to port from offshore oil and gas exploration and production activities.

As agreed at our recent conference call, please indicate which of the generic types of goods on the attached lists are "waste" as referred to in paragraphs (s) and (t) of the definition of "mining operations" within section 164 of the Customs Act 1901 (Cth) to enable provision of information requested by your letter dated 11 September 2000 and referenced CID C006918832. For this purpose, please use the alpha/numeric references on the lists.

Your prompt reply would be appreciated as there is a Directions Hearing scheduled for December 8 in respect of Appeals to the AAT against rejections of diesel rebate claims and at which the above matters will inevitably be discussed.

…

A. Exploration - (i.e. Drilling)
1. Unused equipment and consumables returned to BHPP store onshore - we always have excess to requirements due to the uncertainty in geology we encounter downhole and for back-up in case of equipment failures - eg steel casing; steel tubing; bagged and bulk chemicals, mud and cement; drill bits; wellheads;

2. Unused consignment equipment and consumables returned to suppliers & contractors onshore - we always have excess to requirements due to the uncertainty in geology we encounter downhold and for back-up in case of equipment failures or unexpected downhole conditions - eg steel casing; steel tubing; bagged and bulk chemicals; mud and cement; drills bits; wellheads;

3. Used equipment for inspection and possible repair before return to BHPP store - eg. rockbits, steel casing, steel tubing and specialist tools

4. Used and recovered used equipment for scrapping as unrepairable - we are required by government legislation to recover and return all that is recoverable including certain downhole equipment when we do a plug and abandonment on a well including a previously producing well - eg steel casing; steel tubing; drill bits, wellheads and associated equipment;

5. Contractors' equipment and consumables used in providing a service to BHPP returned from the Mobile Offshore Drilling Unit (MODU) on behalf of the contractors as part of our contract with them. Such equipment and consumables can fall into any of the above categories

6. Contractors' plant and transportable units used in providing a service to BHPP returned from the MODU on their behalf as part of our contract with them eg Compressors, Hydraulic power pack, office cabin, laboratory cabin

7. Downhole cores and samples for analysis, contractors' machinery and other samples (ie lubricants and fuels) on behalf of contractors for predictive maintenance analysis, used oil from MODU power generating system and other used lubricants from machinery also for analysis

8. Shore-based contractors' rental equipment and any associated consumables used by us on the MODU in completing the work.

9. General waste from the galley, contractors on board the MODU, - eg packaging, empty tins, off cuts in steel and other consumables, old gloves, scrapped wooden pallets, household type refuse from quarters, etc. etc.

10. Hazardous refuse (eg paint, acids, used battery cases) - separately binned and handled

11. Return of empty chiller, freezer and dry goods containers used in the transportation of food.

B. Production - (i.e. Floating Production Storage & Offloading Facility - "FPSO" - &/or Platform)
1. Unused equipment and consumables returned to BHPP store onshore - returned from maintenance and upgrade projects offshore

2. Unused consignment equipment and consumables returned to suppliers & contractors onshore - returned from maintenance and upgrade projects offshore

3. Used equipment for inspection and possible repair before return to BHPP store

4. Used and recovered used equipment for scrapping as unrepairable - we are required by government legislation to recover and return all that is recoverable

5. Contractors' equipment and consumables used in providing a service to BHPP returned from the FPSO on behalf of the contractors as part of our contract with them. Such equipment and consumables can fall into any of the above categories

6. Contractors' plant and transportable units used in providing a service to BHPP returned from the FPSO on behalf of the contractors as part of our contract with them eg Compressors, Hydraulic power pack, Mobile scissor lift, generators

7. Return of machinery and other samples for analysis ie lubricants, fuels, reservoir water

8. Shore-based contractors' rental equipment and any associated consumables used by us on the FPSO in completing projects in maintenance and upgrades. eg Scaffolding

9. General waste from the galley, contractors on board the FPSO's - eg packaging, empty tins, off cuts in steel and other consumables, old gloves, scrapped wooden pallets, household type refuse from quarters, etc. etc.

10. Hazardous waste (eg. paints, acids, used batteries) - separately binned and handled

11. Empty bulk process chemical containers (nb: chemicals used during production) for refill and return to FPSO, empty chiller. freezer and dry goods containers used in the transportation of food.

47 On 6 December 2000 the respondent replied as follows:

In response to your facsimile dated 30 November 2000 in which you sought the ATO's opinion on whether certain items would constitute "waste" for the purposes of paragraphs (s) and (t) of the definition of "mining operations" (s l64 of the Customs Act 1901 (Cth))

Based on the information supplied in your facsimile we advise as follows:
(1) The following items would be considered as waste of a mining operation:
   A4, B4, A9, B9, A10, B10

(2) The following items would not normally be considered as waste of a mining operation:
   A1, B1, A2, B2, A5, B5, A6, B6, A7, B7, A8, B8

(3) In respect to A3 and B3 we advise that if the items in question are similar in nature to those outlined in A4 then we would accept that those items represent waste of a mining operation. If, however, they are more in the nature of plant and equipment, for example those items mentioned in A1 and B1, then these items would not be considered to represent waste.

(4) In respect to A11 and B11 we advise that these items would normally be considered to be waste of a mining operation unless they are in the nature of plant and equipment. For example a polystyrene container versus a portable refrigeration unit.

This advice is not legally binding on the Commissioner, because he cannot give a legally binding private ruling on these issues. However, the Tax Office will stand by what is said in such advice and will not depart from it unless:
• the law has changed since the advice was given;

• a final court decision has affected our interpretation of the law since the advice was given: or

• for any reason, the advice is no longer considered appropriate - for example, if commercial practice has changed, the advice has been exploited in an abusive and unintended way or the advice is found on reconsideration to be wrong in law.

If the change is unfavourable to you, our general practice is to apply the change prospectively.

You cannot rely on this advice if the facts are materially different from those in your request for advice.

If you have any further queries in respect to this matter please contact Michael Hughes on (08) 9268 6713.

48 On 8 January 2000, the respondent was advised that the applicant had calculated the weight of waste goods carried from FPSOs in accordance with the respondent's determination as to what items were waste products. The proportion of the weight of total cargo was 10.8%. This waste to total cargo percentage was adopted by the respondent to establish the proportion of diesel fuel rebate for voyages to and from FPSOs since it exceeded the proportion derived from the transport of water on the outward voyage. It is this proportion which the applicant now challenges on the basis that the respondent's determination as to what were waste products was wrong. The parties have requested the tribunal to determine this matter in principle (if it arises) leaving the parties to determine how any different determination to that upon which rebate was ultimately allowed by the respondent will reflect in different rebate amounts to be allowed.

49 The applicant's primary claim is that it is entitled to rebate for all its uses of diesel fuel which have been disallowed. This is because they form part of integrated activities together amounting to mining operations; because the transport is an integral part of mining operations. If it fails in its primary claim then it claims increased rebate for transport of water and waste products under paras (n) and (s) of the definition of "mining operations".

50 Proportions were calculated both for water carried on outward voyages and waste products carried on return voyages. A percentage of 29.23% representing the carriage of water to MODUs was greater than the percentage for the return of waste products. A percentage of 10.8% representing the return of waste products from FPSOs was greater than the percentage for the carriage of water to the FPSOs. Accordingly, the water percentage (or rig percentage) of 29.23 was adopted for both legs of voyages to and from MODUs and the waste products percentage (or FPSO percentage) of 10.8 was adopted for both legs of voyages to FPSOs. The applicant does not challenge the rig percentage or its use (assuming it has failed in its claim that the whole should be allowed) in calculating rebate for the voyages to and from the MODUs. It has not been suggested that the return of waste products from MODUs should be increased to a percentage above the water percentage of 29.23%. The applicant does challenge the FPSO percentage but on the sole basis that the criteria adopted by the respondent for identifying waste products were too narrow.

The legislation

51 It is now appropriate for us to look at the legislation.

52 It may be accepted that under the legislation as it was prior to the recent amendments claims such as the present primary claim might have fallen within it. The question for us is whether that is still so. That takes us to the meaning of the current provisions. Paragraphs (a) and (b) of the definition of mining operations in s 164(7) are introduced by the word "means:" (the first component). The words which follow will ordinarily be an exhaustive definition. However, the phrase "and includes:" (the second component), which introduces paras (c) to (w), "suggests … an extended meaning" (Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329-30). By the same token, the phrase "but does not include:" (the third component) which introduces paras (x) to (z) must lead to the consequence that where any of those subparagraphs apply the definition is not satisfied. It cannot be the case that facts that would fall within para (a) or (b), if those words appeared alone, will fall within the definition notwithstanding that they are covered by the third component (does not include) any more than that facts which would not fall within (a) or (b), if those words appeared alone, are incapable thereby of falling within the definition notwithstanding that they are covered by the second component (and includes). Each of the components of the definition must be taken in its context. In the end, however, facts attracted by the third component must be outside the definition, and facts attracted by the second component must be inside the definition. Facts attracted by the first component and neither within the second nor the third component are within the definition. In every case it will be necessary to address each component, although a cursory examination may often demonstrate that one or more of the components does not apply.

53 Before turning to the facts of this case it is necessary to look in detail at the components. All 3 of them are relevant here.

54 The applicant is plainly engaged in some activities within the first component. Its activities at drilling and production locations are plainly such activities. Its activities relevant to the disputes before us might also be within that component in the absence of para (z). It is accordingly important to see whether the disputed activities are within the third component as a result of their being covered by para (z), even though they might otherwise have been within the first component.

55 Paragraph (z) is relevantly attracted by the movement of goods to or from a place where a mining operation is carried on. The applicant submits that the paragraph does not apply because all the applicant's relevant activities took place within the one area of mining operations as part of an integrated activity. It seizes upon the idea of "an area of activity" as accepted in the Esso Australia case. It accepts that the transport of goods to BHP's onshore bases from other parts of Australia might fall foul of para (z), but argues that movement of the goods thereafter from base to offshore location and return would not. This might be because the whole area, including the onshore base and its offshore location, is where the mining operations are being carried on, so that the transport is not to or from a place where mining operations are being carried on but within that place. There is one "area of activity". Alternatively, it might be because movement of goods from one location to another, after the goods have been delivered to BHP, is not transport within para (z).

56 The difficulty we see with this submission is that it requires the words used in para (z) to be qualified. The ideas employed in the Esso case, and similar cases, are not helpful because para (z) was not present in the definition when the cases were decided. Transport remains transport even though it is from one point to another in one continuous site. Movement of goods from an onshore base to an offshore location is still aptly described as transport even if the whole can be called one "area of activity". There is no basis for treating movement of goods by a third party to a miner as transport, but similar movement by the miner from onshore base to offshore location as not. What the section focuses upon is an activity, namely transport, and not by whom, or under what conditions, it is carried on. Movement of goods by BHP owned and operated vessels would still be "transport". It is to be noted, however, that the work boats relative to these claims were operated pursuant to long term charters which included the provision of masters and crew under the direction of BHP.

57 The conclusion contended for by BHP also requires a determination that there is only one relevant place where mining operations are carried on, and that where there are onshore and offshore activities the place will be an area including those locations and the area in between, even though that may involve a distance of more than 100 kms. This is "the area of activity". However, we do not think that 2 mining locations and the space between, such as is present here, can be characterised as one place consistently with the provisions of para (z) even where the 2 mining locations are part of one integrated activity.

58 We also cannot see why characterising such an area as one place, even if this was appropriate, would preclude the components also being described as places. If an onshore base and offshore location, and the sea between, can be characterised as one place we do not see that that has the consequence that the onshore and offshore locations cannot also separately be described as places. The fact that it can be said that one of the places where a miner carries out mining operations is Western Australia does not preclude it being said that one place of its operations is, for example, Kalgoorlie.

59 We would add that we entirely accept that BHP could not have conducted all its relevant operations from its offshore locations. It would have been practically impossible for it to do so because of the limited storage facilities available at the offshore locations. We also accept that the onshore operations were controlled from offshore. However, that does not seem to us to affect the above reasoning or conclusions. It may be worth noting that if it had been possible for all its relevant activities to have been located offshore and in close proximity to the drilling and production sites, as would apparently be the situation with ordinary onshore mining, then, even on the applicant's construction of the legislation, it would be unlikely that rebate would be available for the sea transport of the goods to the offshore location, at least if undertaken by third parties before delivery to BHP. However, we accept that it was necessary for BHP to carry out its operations as it did.

Application of the legislation to the facts

60 The words of para (z) are squarely attracted by all BHP operations in moving goods between its onshore bases and its offshore locations. Plainly those activities amount to transport. Equally plainly they are to or from places where mining operations are being carried out. It matters not that the movement is from one place where mining operations are being carried out to another place where mining operations are also being carried out, or that the whole area might also be described as one area or place. We note, however, that we do not consider that that can be said in the present case. Of course, where there is one site and movement within that site, for example from a store to a mine shaft which is 100 metres away, the provisions of para (z) will not be attracted. However, that kind of movement has, in the present case, been allowed by the delegate. Such an approach could not apply where, as here, the movement is over many kilometres of ocean not occupied by the miner and not used by the miner otherwise than as a transport route.

61 Similar considerations must apply where a MODU is being moved from one field to another. Questions of fact and degree will arise for smaller movements. Movements within a field might not be regarded as within para (z). However, in the present case all such movements have been allowed for rebate. In our opinion, movements from permit to permit must fall within para (z).

62 The activities at Troughton Island are part of BHP's transport activities involving movement from onshore bases to offshore locations. As we understand the evidence no substantial activities are carried out there which have any other association with BHP's mining operations. Accordingly, that claim for rebate must fail along with the voyages of the work boats. It is within para (z). We would add that, in any event, the activities at Troughton Island, being solely associated with transportation, do not seem to us to be within either the first or second components in any event.

63 The towing of the production platform from its onshore construction site to its offshore location can not be in any different position. The size or purpose for which the platform was to be used does not mean it should not be regarded as equipment within para (z). Indeed, the contrary was not argued before us. It was suggested that a Draft Fuel Grant and Rebate Ruling (FGRR 2002/DI) issued for comment by the Australian Taxation Office (the ATO) suggested that such movement would be eligible for rebate. Such a ruling neither binds the respondent, nor us, certainly when it is a draft ruling (Re Taxation Appeal No NT95/211 (AAT 10709, 23 January 1996) at para 14 per Deputy President McMahon; The Taxpayer v DCT, No NT96/118 (AAT 11138, 1 August 1996) at para 17 per Senior Member Block, and Quest Personnel Temping Pty Ltd v FCT [2002] FCA 85 at 32 per Gray J). In our opinion the matter is clear and we are not persuaded to change that opinion by anything in a draft ruling which does not address the issue of the effect of para (z).

Extrinsic material

64 In aid of a construction of the legislation which assists with the conclusion to which we have arrived the respondent relies upon the explanatory memorandum issued with the bill which introduced the relevant amendments to the Customs Act 1901 (Cth). The explanatory memorandum included, so far as is relevant, the following:

a) Amendments restricting eligibility in the "mining operations" category
   The amendments in particular relate to the following issues;

   …

   Exclude Sea Transport

   The Bill will exclude the transport by sea of all minerals or ores being minerals (Item 14, pg. 9 of the Bill refers).

   Off-Site Rail, Sea And Public Road Use

   The Bill will exclude the transportation, by any means, of people, equipment or goods to or from the place or places where any of the operations mentioned in any of the paragraphs (a) to (w) of those definitions occurs, other than transport involved in activities specified in paragraphs (c), (n) or (s) of the definition of mining operations (item 21, new para (z), pg. 11 of the Bill refers).

…

Item 6 - Eligibility

This Item affects the eligibility for rebate for "mining operations" under the Act.

This amendment will extend the present exclusion from eligibility in s 164(1)(a) (ie " … a road vehicle on a public road") to exclude rebate for all vehicles on a public road; (sic)
• On 23 September 1996 the AAT handed down its decision in the case of Dyno Wesfarmers Limited v CEO of Customs.

   This case involved consideration of travel undertaken by a specialised explosives truck on public roads, covering average distances of 150km each way between the explosives depot and mining sites to undertake what was agreed to be mining operations at those sites. The AAT held that diesel fuel used in the course of this on-road activity was rebateable.

• The Tribunal found that such on-road journeys were "mining for minerals" within paragraph (a) of the definition of "mining operations" in subsection 164(7) of the Customs Act 1901 (Cth), as those journeys were "an integral part of this activity". This was despite an earlier AAT decision that had found that "mining for minerals" in paragraph (a) carried its ordinary meaning of the actual extraction of material from the ground. The effect of such "integral part of" reasoning is to defeat the clear intent of the 1995 amendments to the Customs Act 1901 (Cth) (inserted by Act No. 87 of 1995), which removed the "connected with" sweeper clauses and replaced them with an objective list of eligible activities.

• Amendments in this Bill will ensure that the transportation of people, equipment and goods to be used in "mining operations" is not to be regarded as actually being that eligible operation.

• This item amends paragraph 164(1)(a) to completely exclude all public road activity from eligibility

• Item 21 in part excludes all transportation of people, equipment and goods to and from places where "mining operations" take place, other than such transport to the extent that it constitutes the activity in paragraphs (c), (n) or (s);.

  …

Item 14 - Eligibility

This Item repeals and substitutes a new paragraph (c) of the definition of "mining operations".

New paragraph (c) of the definition of "mining operations" provides rebate in respect of the transport of the recovered minerals/ores to the place of beneficiation. This amendment:
• excludes from eligibility transport by sea of minerals or ores to be beneficiated - subparagraph (c)(i); and

• excludes from eligibility all return journey transport that is not a direct return journey from the place of beneficiation to the place where the mining operation is carried on - subparagraph (c)(ii);

• it is intended that, in the case of a journey which involves the relaying by stages of different vehicles transporting the minerals/ore to the place of beneficiation, that all legs of the outward journey be potentially eligible (ie subject to the exclusion of sea transport), but that none of the return legs shall be eligible, since none of these can be direct return journeys between the 2 places concerned - subparagraph (c)(ii)

• the Government intends that, in the case of any materials transported to the place of beneficiation for the purpose of use in the beneficiation process (not being the recovered minerals or ores which are actually being beneficiated), those materials are not eligible for rebate.

• Note that all public road transport is already excluded by paragraph 164(1)(a) (item 6 refers).

…

Item 21 - Eligibility

This Item amends the definition of "mining operations" in subsection 164(7) for the following purposes:

New paragraph (x) is inserted to make it clear that quarrying or dredging operations to the extent that the purpose of those operations is to obtain materials for use in building, road making, landscaping, construction or similar purposes are not eligible for rebate;

New paragraph (y) is inserted to exclude from eligibility the use of any vehicle not exceeding 3.5 tonnes gross vehicle weight, unless:
   the vehicle is a fork-lift, a front-end loader, a tractor, or other similar vehicle prescribed in the regulations; or

   it is a vehicle which has been extensively modified for use underground, and, if that is the case, when it is used underground, that use is to be eligible.

New paragraph (z) excludes from eligibility the transport, by any means, of people, equipment or goods to or from the place of exploration etc, initial recovery or the place of the beneficiation operation, other than such transport to the extent that it constitutes the activity in paragraphs (c), (n) or (s).
• (Paragraph (c) relates to transport for beneficiation purposes, paragraph (n) relates to the supply of water and paragraph (s) relates to the removal of waste products)

• This amendment is intended to exclude the reasoning of the AAT in the decision of Dyno Wesfarmers (Dyno Wesfarmers Limited v CEO of Customs, 23 September 1996) that the transportation of things to be used in an eligible mining operation actually is that eligible mining operation …

65 The Minister's Second Reading Speech, made in the House of Representatives on 12 December 1996 (see Hansard, House of Representatives, 1996, pp 8429-33), includes the following:

… The principal changes to the scheme proposed by the bill involve:
1. amendments to address the effects of recent AAT and Federal Court decisions which have had the effect of widening eligibility;

2. removal from eligibility of certain activities under the mining operations category;

…

1. Effects of recent AAT and Federal Court decisions

There have been several decisions in recent times which have had the effect of expanding eligibility under the scheme beyond what the government believes was intended, with consequent effects on outlays. In some areas, the potential financial impact of decision is very significant.

The particular amendments will ensure the continuation of rebate for diesel fuel used in carrying out mining activities but will preclude from eligibility certain activities, best described as undertaken for economic-marketing reasons, rather than the physical extraction of minerals, and activities which essentially involve the transport of inputs-materials for mining or beneficiation.

The government's clear intention is that rebate paid under the legislation should be confined to the narrow definition of eligible activities in the legislation - that is, the intention is not that the legislation be defined broadly and beneficially.

The amendments proposed in this bill are designed to tighten and narrow eligibility. It is the government's intention to continue to adopt such an approach in the face of any future broadening.

The most significant decision which has potential for expansion in eligibility related to an appeal by Dampier Salt (Operations) Pty Ltd against a decision of the AAT in relation to the point at which payment of rebate the recovery of salt ceases.

The Full Federal Court's judgment is considered to be the most far reaching ever delivered in relation to the diesel fuel rebate scheme. It represents a fundamental shift from a scheme based on the concept of an activity, in this case mining, being regarded as a physical act, that is the extraction of a product from the ground, to a concept of the activity being an economic one. …

The amendments to the definitions, particularly beneficiation, make it clear that the physical act of mining or beneficiation is eligible for rebate. It ensures that payment of rebate does not extend to activities involved in getting the product to the marketplace, such as the broad economic factors which were the basis of the full Federal Court judgment.

Several other recent decisions addressed what might essentially be categorised as transport activities. The only transport activities intended to be covered are the transport of minerals and ores for beneficiation at facilities remote from the place at which mining activity is carried out, and certain activities specifically provided for.

Amendments were made to the act in 1995 and 1996 to ensure that activities "connected with" mining were no longer eligible for rebate. The interpretation of the so-called "sweeper clauses" had been a source of contention over the years and generated most of the litigation under the scheme. These clauses were replaced with an objective list of activities that are eligible for rebate.

In the decision of Dyno-Westfarmers (sic) the AAT found that driving explosive trucks over an average distance of 150 kilometres each way between the explosives depot and the mine sites was either "mining for minerals" or "the preparation of a site to enable mining for minerals to commence", as those long journeys were "an integral part of this activity".

The government considers that it is wrong to apply the concept that an activity is eligible for rebate because it is integral to another eligible activity. It is the intent of the diesel fuel rebate scheme to pay rebate only on those activities that are explicitly mentioned in the legislation and not to activities that are said to be integral to, associated with or connected with these activities.

The amendments are necessary to put the intent of the scheme beyond doubt. The approach adopted by the AAT in the Dyno-Westfarmers (sic) case would defeat the purpose of the amendments made in 1995 which removed the "connected with" sweeper clauses.

Similarly the AAT and Federal Court have considered the question of transport of materials-inputs to mining operations and beneficiation in recent times. Rebate is intended to be paid for beneficiation of minerals and ores, including transport where such beneficiation occurs at a place removed from the actual place of mining operations. Rebate is not intended to be paid for the transport of goods-materials-inputs for mining operations or beneficiation.

The outcome of consideration of these issues has varied and this creates uncertainty as to the overall intent.

In the Westrail matter, the Federal Court found that transporting coal to a place of beneficiation by rail was part of beneficiation itself, because the transport was "integral" to having the bauxite beneficiated. This logic was comprehensively reviewed and rejected by the AAT in the Queensland Rail matter. The two decisions cannot stand together. This bill therefore amends the diesel fuel rebate scheme to ensure that only the transport of the minerals and ores to be actually beneficiated receives rebate. …

66 In the light of the conclusion to which we have come it is not necessary for us to rely upon anything in the explanatory memorandum or the second reading speech. However, we agree with the respondent's submission that the material in these documents supports the conclusion at which we have already arrived.

Conclusion on the primary claim

67 It follows from the above that we reject the applicant's primary claim to entitlement to diesel fuel rebate for all diesel fuel used in the operations for which rebate has been denied by the delegate. We must accordingly consider whether the applicant has any greater entitlement to diesel fuel rebate than has already been allowed for the transport of water and waste products.

Water and waste products

68 The applicant's first argument is that since voyages would have been necessary for the water and waste products alone, even if other equipment or goods had not been carried, the applicant is entitled to the whole of the diesel fuel used in each voyage. We reject this argument. It ignores the reality that other equipment and goods were in fact carried on each voyage and it ignores the words "to the extent that" in para (z).

69 We think that the respondent was correct in apportioning the diesel fuel for each voyage between activities that were rebateable and activities that were not. We agree with the respondent that the cases on s 51(1) of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936) are helpful (see Ronpibon Tin v FCT (1949) 78 CLR 47 at 60; 8 ATD 431 at 437-38; Commissioner of Taxation v Northumberland Development Co Pty Ltd (1995) 59 FCR 103 at 107; 31 ATR 161 at 166; 95 ATC 4483 at 4485). A fair apportionment needed to be made. Moreover, it is too simplistic to say that the water and waste products would need to have been carried even if the other equipment and goods were not. Such a hypothetical argument ignores the fact that without the other items the mining operations would not have taken place. Organising transport on the most economical basis by timing voyages appropriately and carrying as much equipment and goods as possible on each voyage is good management practice. We are not required to ignore reality and replace it with hypothetical conduct which is unsound business. Moreover, if one is to enter the unreal world of hypothesis may it not be that less fuel would have been used if the vessels were carrying less cargo; or that fewer voyages with more water and waste products on each voyage would have been undertaken? Speculation and hypothesis is never better than addressing the factual situation present (See Willis v The Commonwealth (1946) 73 CLR 105 at 109).

70 We accordingly reject the argument that BHP is entitled to diesel fuel rebate for all diesel fuel used on voyages carrying water or waste products.

71 Now we must consider the applicant's argument that the respondent's classification of waste products was too narrow.

72 The applicant furnished the following written submissions on this matter:

1. The words "waste" or "waste products" ought to be interpreted according to the ordinary meaning of the words and particularly having regard to the nature of offshore mining operations.

2. The appropriate and applicable definitions of "waste" in the Macquarie Dictionary are "17. anything unused, unproductive, or not properly utilised. … 22. anything left over or superfluous, as excess material, by-products, etc., not of use for the work in hand. … 28, not used or in use: waste energy. … 31. left over or superfluous: to utilise waste products of manufacture. … 32. having served a purpose and no longer of use. … 33. rejected as useless or worthless, or refuse: waste products …"

3. "Waste product" is defined in the Macquarie Dictionary as "a material produced in a process, as manufacture, and discarded as useless when the process is completed".

4. In Water Administration Ministerial Corporation v CEO of Customs 1997 AAT 545 (13 August 1997), the member of the AAT preferred the definition of the conjunctive words "waste products" to the definition of the word "waste" in the context of agricultural activity. In this context, it was held that to be a waste product, the material must have been produced in a process and then discarded as useless after the process has been completed. The member held that water superfluous to the farmers requirements was not waste in the sense of waste product because the water was not produced in the relevant process.

5. The interpretation of the words "waste products" in Water Administration Ministerial Corporation v CEO of Customs 1997 AAT 545 (13 August 1997) is not applicable in the context of offshore mining operations and is to be distinguished on its facts.

6. In the context of offshore mining operations, the words "waste" or "waste products" ought not to be confined to the interpretation given by the AAT in the Water Administration case, but rather, should be given a broad interpretation as per the AAT in Esso Australia Ltd v CEO of Customs ([1998] AAT 366 (22 May 1998), paragraph 20). The reason for this is that in offshore mining operations items used by the offshore platforms and rigs will be returned to shore as part of the offshore mining operations. The reasons for their return will differ, but in each case the item will have been taken out to the platform for use in the process and returned to shore when its usefulness has been exhausted.

7. In addition, if the interpretation suggested by the AAT in the Water Administration case were adopted, the following items would not be regarded as waste products as they would not have been produced in the process of mining: domestic waste, hazardous refuse such as paint and acids, general waste from the galley such as packaging, empty tins, old gloves, scrapped wooden pallets, household type refuse and equipment for scrapping as unrepairable. It is noted that these items have already been accepted by the respondent as being waste products in the context of the applicant's offshore mining operations.

8. To adopt the definition preferred in the Water Administration case would effectively result in the decision-maker adopting too narrow an approach to the interpretation of the legislation, as recognised in Esso Australia Ltd v CEO of Customs ([1998] AAT 366 (22 May 1998), paragraph 20). Such an interpretation would result in only tailings, gangue or other materials produced during the process of mining being regarded as waste. This approach was plainly rejected in Esso Australia Ltd v CEO of Customs ([1998] AAT 366 (22 May 1998), paragraph 20) in the context of offshore mining operations.

   In that case, the Tribunal held that:

The waste products referred to in section 164(7) are not to be read as being confined to naturally occurring materials such as tailings or gangue. Such a reading, which was urged on the Tribunal by the respondent, would, in the view of the Tribunal, effectively result in the decision-maker adopting too narrow an approach to the interpretation of the legislation. Such a narrow approach, as was pointed out earlier in these Reasons, has been plainly rejected on a number of occasions by the Federal Court. Moreover, the removal of this material and, for example, casing which is pulled out of the well satisfies, in the Tribunal's view, s 164(7)(ka) which describes as mining operations "the rehabilitation of a place affected by a mining operation".

9. In light of the above, in the interpretation of the words "removal of waste products" in section 164(7)(s), the word "waste" should be given its ordinary meaning as set out in the Macquarie Dictionary.

10. The various appropriate definitions referred to in paragraph 2 indicate that materials that are excess materials, materials superfluous to the work at hand, anything unused, unproductive, not properly used, having served a purpose and no longer of use, rejected as worthless and refuse would all be considered "waste" within the ordinary meaning of the word. They are a product of the operations carried out offshore and are therefore, "waste products". Accordingly, the applicant claims that the following returned Items are waste products for the purposes of 164(7)(s):
(a) unused equipment and consumables that are excess to requirements. For example, wellhead equipment, 30 in. conductor, steel casing, chrome steel tubing, bulk chemicals, "mud", chemicals and drill bits;

(b) unused consignment equipment and consumables returned to suppliers and contractors that are excess to requirements. For example, wellhead equipment, 30 in. conductor, steel casing, chrome steel tubing bulk chemicals, "mud", chemicals and drill bits;

(c) used equipment for inspection and possible repair. For example, drill bits, steel casing, chrome steel tubing;

(d) used and recovered equipment for scrapping as unrepairable;

(e) downhole cores and samples for analysis such as lubricants and fuels (eg. predictive maintenance analysis in the case of lubricants);

(f) general waste from the galley. For example, packaging, empty tins, off cuts in steel and other consumables, old gloves, scrapped wooden pallets and household type refuse from living quarters;

(g) hazardous refuse. For example, paint, acids and used battery cases; and

(h) empty chiller, freezer and dry goods containers used in the transportation of food supplies to the offshore platforms and materials handling equipment such as open top containers, mini containers, transport baskets and slings.

   These items satisfy the ordinary meaning of the word "waste" as defined in the Macquarie Dictionary and are appropriate given the nature of the offshore mining operations.

73 The respondent has responded to the applicant's written submission as follows:

The construction of paragraph (s) of "mining operations"
2. Paragraph (s) of the definition of "mining operations" in s 164(7) of the Customs Act 1901 (Cth) refers to:

the removal of waste products of a mining operation referred to in paragraph (a) or (b) from the place where the mining operation is carried on.

3. The paragraph does not refer to the removal of "waste", it refers to the removal of "waste products of a mining operation". In the context of paragraph (s), the appropriate and applicable ordinary meaning of "waste product" is that given by the Macquarie Dictionary:

material produced in a process, as manufacture, and discarded as useless when the process is completed.

4. The Tribunal correctly applied that Macquarie Dictionary definition in Re Water Administration Ministerial Corporation to paragraph (z) of the definition of "agriculture" in s 164(7), which takes a very similar form to paragraph (s) of "mining operations".

5. Applying that Macquarie Dictionary definition, the term "waste products of a mining operation" in paragraph (s) requires that the material be both a "product" produced by the relevant process (in this case the offshore mining operations) and that it be "waste", ie that it be discarded as useless.

6. The definitions of "waste" in the Macquarie Dictionary, although potentially relevant, are not directly applicable, unlike the definition of "waste product". In any event none of the definitions of "waste" referred to by the applicant extends to useful equipment being returned to the applicant's supply bases.

7. The comments at [20] of the Tribunal's decision in Esso referred to by the Applicant were in the nature of obiter dicta. The Tribunal's operative findings were that some of the transport operations in dispute were "mining operations" within the then paragraph (a) of "mining operations", and some were not. Otherwise the decisions under review were affirmed³.

8. In any case, the Tribunal's comments in Esso do not support the applicant's position. The Tribunal found to the effect that the domestic and industrial waste referred to in [19] of the decision constituted "waste products", and that "waste products of a mining operation" was not restricted to naturally occurring materials such as tailings or gangue. The Tribunal did not find that "waste products of a mining operation" included useful equipment being returned to the supply base.

…

The respondent's decision regarding "waste products" was correct
9. As was explained during the hearing:
(a) the applicant wrote to the respondent on 30 November 2000, asking the respondent to identify which of the categories listed by the applicant were "waste" for the purposes of paragraph (s) of mining operations⁴;

(b) the respondent replied in a letter dated 6 December 2000, to the effect that⁵:
(i) the categories listed in the applicant's letter at A4, B4, A9, B9, A10 and B10 were relevant "waste";

(ii) the categories listed at A1, B1, A2, B2, A5, B5, A6, B6, A7, B7, A8 and B8 were not relevant "waste"; and

(iii) the categories listed at A3, B3, A11 and B11 were "waste" unless they were in the nature of useful plant and equipment.

(c) the applicant subsequently relied on that advice to calculate the proportions of fuel used for which the respondent paid diesel fuel rebate. In particular, the applicant used that advice in calculating that, on average, the proportion of "waste" carried from FPSO's as a proportion of the weight of total cargo carried was 10.8%⁶. The respondent accepted that calculation and according paid rebate in respect of 10.8% of the fuel used on transport journeys to and from the FPSO's.

10. Since 6 December 2000, the applicant has provided no material (and filed no evidence before the Tribunal) demonstrating any error in either:
(a) the respondent's decisions regarding the relevant categories of "waste"; or

(b) the subsequent calculations of a proportion of fuel attributable to the removal of "waste", and payment of rebate on that proportion.

11. On the material that has been provided, the respondent's decisions in relation to the "waste" issues should be affirmed.

12. As regards the applicant's categories at paragraphs 10(a) to (h) of its submission, the respondent submits (consistently with its original advice of 6 December 2000) that:
(a) the categories at 10(d), (f) and (g) (equivalent to categories A4, B4, A9, B9, A10 and B10 in the applicant's letter of 30 November 2000) are relevant "waste";

(b) the categories at 10(c) and 10(h) (equivalent to categories A3, B3, A11, and B11 in the applicant's letter of 30 November 2000) are relevant "waste" unless they are in the nature of useful plant and equipment; and

(c) on no reasonable view could the categories at 10(a), (b) or (e) (equivalent to categories A1, B1, A2, B2, A7 and B7 in the applicant's letter of 30 November 2000) be regarded as relevant "waste products of a mining operation".

74 At the conclusion of the hearing it was our understanding that the matter for our determination was whether categories 3, 5, 6, 7, 8 and 11 from the applicant's original list were entitled to rebate. The written submissions subsequently filed by the applicant identify 8 categories which are similar to, but by no means identical to, the rejected categories. Of these 8 categories the equivalent of a number of them in the original list have already been allowed. While we have no difficulty with the substance of the submissions put on behalf of the applicant, we think that the proper course for us, in dealing with the various categories of claim, is to address the categories as they were in the original list. It is only those categories that can be satisfactorily quantified and compared with the rebate already allowed.

75 The phrase "waste products of an agricultural activity" appearing in para (z) of the definition of "agriculture" in s 164(7) of the Customs Act 1901 (Cth) was considered in this tribunal by Deputy President McMahon in Water Administration Ministerial Corporation v CEO of Customs, No N96/1212 (AAT 12111, 13 August 1997). DP McMahon found assistance in the following definition of "waste product" in the Macquarie Dictionary:

material produced in a process, as manufacture, and discarded as useless when the process is completed.

This definition was relied upon by the respondent before us.

76 It does not seem to us that definitions of "waste" are helpful. The phrase presently under consideration is "waste products of a mining operation". To the extent that dictionary definitions assist it is our opinion that the Macquarie Dictionary definition of "waste product" is of the greatest assistance. In the present case the words "as manufacture" in that definition can be replaced with "as mining operations". Useful material cannot be waste products, even if the proposed use is confined to analysis. Nor can material which is to be repaired for further use be waste products.

77 When we turn to the items that have been rejected for rebate it seems to us that whatever definition of "waste products of a mining operation" is adopted the general categories in the applicant's list which were rejected do not fall within it.

78 We note that the delegate was prepared to admit some material within categories 3 and 11 "unless they are in the nature of plant and equipment". The material before us does not show how this issue was resolved. We agree, however, with the delegate's approach. Acting on the material before us we conclude that the delegate made the correct or preferable decision.

79 There was practical good sense in the parties seeking to deal with the issue of what were waste products by producing broad generic categories. However, this practicality comes at a cost. The tribunal can only do its best with what amount to general descriptions. The parties must accept that decisions taken upon general descriptions cannot be subjected to particular analysis.

80 For all the above reasons we affirm all the decisions under review.

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