Dampier Salt (Operations) Pty Ltd v Collector of Customs

[1994] AATA 9734

---

(Decision by: K.J. TAYLOR)

Dampier Salt (Operations) Pty Ltd
v Collector of Customs No. W92/159 Aat No. 9734

Tribunal:

T E BARNETT (Senior Member), S D HOTOP (Senior Member)

K J TAYLOR (Member)

Hearing date: 13 and 14 April 1994
Decision date: 15 September 1994.

Perth

---

Decision by:
K.J. TAYLOR

This matter first started in October 1988 when, as a result of an application for diesel fuel rebate by Leslie Salt for its port operations, Australian Customs Service refused the rebate for those operations. ACS decided to bring all salt producers onto the same basis and accordingly the rebate for the port operations of Dampier Salt, which had been paid for the previous five years, was then also cancelled. Hence rebate was only payable for those operations up to the point of departure from the wet stockpile.

2. The Tribunal in its Leslie Salt decision affirmed this decision and refused payment of rebate for the post wet stockpile operations i.e. the port operations. Paragraph 18 of the Leslie Salt decision reads:-

"18. The applicants claim for rebate of duty paid in respect of diesel fuel purchased for use in its operations up to the point at which the salt is reclaimed from the wet salt stockpile (see paragraphs 4-11 above) have been granted by the respondent."

The applicant in this case is in the same circumstances.

3. However there are at least two factual distinctions from Leslie Salt. Firstly, the operations of Dampier Salt are contained entirely within the property of Dampier Salt and are not on public roads. Secondly, Leslie Salt operates on a batch production process. Whereas, Dampier Salt operates on a continuous process using more than one crystalliser pond with resulting differences in crop composition and uniformity.

Mining Operations

4. I find that the activities at Dampier and Lake McLeod, up to the point of departure from the wet stockpile are "mining operations". I am supported in this view by the following:-

A.

The ACS view before this hearing commenced - the decision under review.

B.

The decision on Leslie Salt which confirms the rebate is payable for wet stockpile operations.

C.

The view that recovery of the mineral is not complete until after harvesting, washing and draining etc. The respondent's only witness, Dr Avraarides, stated that at the point of harvesting at the crystallisers the product was only "crude common salt" and contained the following impurities - the salts of calcium sulphate, magnesium sulphate, magnesium chloride and potassium chloride. It is also worthwhile quoting from Abbott Point Bulk Co. Pty Ltd as quoted in Leslie Salt:-

"The process of recovery includes, in our view, those steps which are taken by a miner before sale, by whatever process, to remove the mineral from that in which it is imbedded or with which it is intermixed."

In this matter, at the time of dumping on the wet stockpile, the water content of the harvested crop contains 10 - 14 per cent water and many salt impurities. The process of recovery cannot be deemed to have been completed at the time of dumping on the wet stockpile.

D.

The statute itself "the production of common salt by evaporation" under the heading of "Mining Operations".

5. In seeking guidance from the authorities on the meaning and use of "mining operations" I found the High Court of Australia in the Commissioner of Taxation (Cth) -v- ICI Australia (1972) 127 CLR 529 to be of minimal or misleading assistance. This decision found that the production of salt by means of evaporation on the surface of the earth was not a "mining operation" as that expression was commonly understood.

6. It was precisely because of this High Court decision and others that the legislation was specifically amended to make the production of salt by evaporation a "mining operation" - by definition. Hence ICI Australia (1972) is of limited relevance in this matter.

7. In essence s.164(7) of the Customs Act says:-

"Mining Operations" means;

.... mining for minerals; or dressing or beneficiation;

and includes:

the production of common salt by evaporation."

8. What constitutes "mining operations" cannot be understood unless "means" and "includes" are given their full and proper meaning and intent. It is simply not possible in logic to argue that sub-para (g) is a stand alone paragraph and can be excluded from the meaning and intent of these two key words and the head provision of "Mining Operations".

9. No matter how much speculation there may be about the difficulties faced by the Parliamentary Draughtsman in making the amendments he has done his best and Parliament has endorsed it in its present form.

10. I find that sub-paragraph (g) is a integral part of the definition "Mining Operations" and cannot stand alone. I also find that paragraphs (b), (c) and (ca) do have application to these salt mining operations.

11. I find as fact that the process of recovery of the mineral common salt continues during the wet stockpile operations.

Saleability

12. In paragraph 43 of Leslie Salt, after a long list of authorities, the decision reads "the Tribunal agrees that the phrase "production of common salt" should be interpreted with regard to the saleability of the common salt produced." This in the context that the relevant provisions of the Customs and Excise Acts should be interpreted beneficially and in a common-sense practical way having regard to commercial considerations.

13. Both of these salt mines were specially designed and built to supply high quality salt to the Japanese chlor-alkali market. Hence there are contract specifications with detailed composition, salt ratios, moisture content etc clauses specifying the quality of salt required. In one case at the McLeod field, the salt produced was below specification and 29 out of 30 customers were lost. The importance of quality control and the sampling every 20 minutes of input to the wet stockpile are part of the production specification requirements.

14. Mr Lewis in reply to Professor Hotop's query "If the salt Dampier produces consistently fails to meet the typical contract specifications .... there would be a market for that salt?" - answered "No, there would be no market for that salt".

15. Dr Avraamides, sole witness for the respondent, agreed that at harvesting from the crystallisers the crude product is incapable of being used for most commercial purposes.

16. I find as fact that the point of harvesting the crude salt from the crystalliser ponds the product is not a saleable commodity and the process of the production of common salt be evaporation has not been completed. The salt only becomes saleable post the wet stockpile operations.

17 For the above reasons I would set aside the decision under review and allow diesel fuel rebate in fuel purchased for operations in the wet stockpile at both Dampier and Lake McLeod venues.

Solicitor for the Applicant: Mr A Sweidan

Mr K. Corke, Customs, appeared for the Respondent