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ATO Interpretative Decision

ATO ID 2004/879

Excise

Diesel Fuel Rebate Scheme: mining operations - transportation of ore concentrate between two beneficiation plants located away from mining site
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the transportation of ore concentrate between two beneficiation plants a 'mining operation' for the purposes of paragraph 164(7)(c) of the Customs Act 1901 (or subsection 78(7) of the Excise Act 1901)?

Decision

No. Provided the beneficiation plant from where the ore concentrate is leaving from is not at the mine site where the ore was extracted, the transportation of ore concentrate between two beneficiation plants is not a 'mining operation' for the purposes of paragraph 164(7)(c) of the Customs Act 1901 (or subsection 78(7) of the Excise Act 1901).

Facts

Ore is extracted from a pit at a mine and transported to a beneficiation plant located away from the mine site. At this beneficiation plant the ore undergoes various beneficiation processes.

When these processes have been completed, the ore is then transported to another beneficiation plant which is also located away from the original mine site. At this second plant, the ore undergoes further beneficiation processes.

Reasons for Decision

Under subsection 164(1) of the Customs Act, a diesel fuel rebate is:

... 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)

'Mining operations' is relevantly defined in subsection 164(7) of the Customs Act as including:

...

(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

...

The mining provisions in the Customs Act contain various references to 'the place where the mining operation is carried on' whereas paragraph 164(7)(c) of the Customs Act refers to the 'mining site'. The important consideration in determining whether a journey between two beneficiation plants constitutes mining operations under paragraph 164(7)(c) comes down to the difference between these two phrases.

The 'place where the mining operation is carried on' is generally taken to include the whole of the land legally occupied for the exploration or prospecting, site preparation, mining for minerals and the beneficiation of those minerals. This includes any land that is legally occupied for the purposes of private roads that connect a mine site to the place of beneficiation of minerals from the mine, or to connect those areas to a public road see Hampton Transport Services Pty Ltd & CEO of Customs W2000/374 AAT Case No 893 (2001); W2000/400 AAT Case No 894 (2001).

'Mining site' is distinct from a 'place where the mining operations is carried on' because it is more specific. A 'mining site' is the area where all of the activities up to and including the excavation of the minerals from the ground occur.

Paragraph 164(7)(c) of the Customs Act uses the phrase 'from the mining site' rather than the phrase 'from a mining site'. This reinforces that paragraph 164(7)(c) only applies to the transport of minerals from the place where those particular minerals were excavated to a place where beneficiation occurs.

It should be noted, if the first beneficiation plant was located on 'the mining site', then the journey to the second beneficiation plant would be eligible.

However, given both beneficiation plants are located away from 'the mining site', it is concluded that the transportation of the ore concentrate between the two beneficiation plants is not 'mining operations' for the purposes of paragraph 164(7)(c) of the Customs Act or subsection 78(7) of the Excise Act.

Date of decision:  4 November 2004

Legislative References:
Customs Act 1901
   subsection 164(1)
   paragraph 164(7)(c)

Excise Act 1901
   subsection 78A (7)

Case References:
Hampton Transport Services Pty Ltd & CEO of Customs
   W2000/374 AAT Case No 893 (2001)
   W2000/400 AAT Case No 894 (2001)

Keywords
DFRS mining
Diesel fuel rebate scheme
Excise
Excise payments

Business Line:  Excise

Date of publication:  12 November 2004

ISSN: 1445-2782

history
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