Hampton Transport Services Pty Ltd v Chief Executive Officer of Customs

[2001] AATA 894

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(Decision by: Mr S P Estcourt QC (Deputy President))

Hampton Transport Services Pty Ltd
v Chief Executive Officer of Customs

Tribunal:

Member:
Mr S P Estcourt QC (Deputy President)

Subject References:
Customs
Diesel Fuel Rebate
definition of "mining operations"
construction and routine maintenance of "private access roads"

Legislative References:
Customs Act 1901 - S 164(1); S 164(7); S 164(7A); S 164(9)

Decision date: 26 October 2000

Perth

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Decision by:
Mr S P Estcourt QC (Deputy President)

REASONS FOR DECISION

1. This is an application to review a decision of the Chief Executive Officer of Customs of 18 October 2000 refusing to pay diesel fuel rebate pursuant to s.164 of the Customs Act 1901 (Cth) ("the Act"), in respect of fuel used by the applicant to construct a private access road from Yarri Road south of Gindalbie to the Carosue Dam Gold Project north east of Kalgoorlie.

2. The following facts are agreed between the applicant and the respondent and the Tribunal find:

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

(2) Mining operations as defined in ss.164(7)(b)(i) and (ii) of the Customs Act 1901 (C'th) ("the Act") were carried on at all material times by Oriole Resources Ltd at the Carosue Dam Gold Project which is situated in the Pinjin locality in the Northeast Coolgardie mineral field approximately 100 kilometres northeast of Kalgoorlie (near Lake Rebecca). These mining operations comprise open pit mines and an on-site gold treatment plant.

(3) The Carosue Dam Gold Project is located on mining leases ML 219-220 inclusive and ML 166-167 inclusive.

(4) The Carosue Dam Gold Project accommodation village is located 2.25 kilometres south of the main access road adjacent to the mining site.

(5) The main access road to the Carosue Dam Gold Project is a purpose built private road of approximately 70 kilometres in length and is located in the Gindalbie and Arcoona localities. It runs from Yarri Road (a public road) south of Gindalbie to the Carosue Dam Gold Project mine site.

(6) The main access road referred to in paragraph 5 is located within Miscellaneous Licence No. 28/24 issued by the Department of Minerals and Energy under the provisions of Section 116 and Regulation 13 of the Mining Act 1978 (WA).

(7) In the months April to July 2000 inclusive, pursuant to a contract with either Oriole Resources Ltd or their appointed Project Engineers JR Engineering Services Pty Ltd, the applicant was engaged in:

7.1 construction; and

7.2 routine maintenance

of the main private access road referred to in paragraph 5 to the Carosue Dam Gold Project mine site using vehicles exceeding 3.5 tonnes gross vehicle weight and other plant and equipment.

(8) The routine maintenance of the said access road comprised surface grading, loading and transport of dust suppression water and applying that water to the road surface.

(9) The applicant purchased diesel fuel and used 113,169 litres of that fuel in carrying out the activities referred to in paragraph 7 above.

(10) The Carosue Dam Gold Project is owned and operated by Oriole Resources Limited which is a wholly owned subsidiary of PacMin Mining Corporation Limited.

(11) The Carosue Dam Gold Project is approximately 110 kilometres northeast of Kalgoorlie in the Pinjin area of the Eastern Goldfields of Western Australia. It is a one and a half hour drive from Kalgoorlie on a public road and a private road running from the junction of the Carosue Dam Gold Project purpose-built access road and Yarri Road.

(12) The Carosue Dam Gold Project reserves of 19 million tonnes of ore at 2 grams per tonne have been established in three open pits. Planned production is for 2 million tonnes of ore per annum producing between 120,000 and 140,000 ounces of gold per annum with a mine life of approximately 9 years.

(13) Construction of the Carosue Dam Gold Project plant site and private access road commenced during April 2000. Since that time further site works have been conducted and construction of the plant site and access road have been completed.

(14) The Carosue Dam Gold Project is now producing gold.

(15) The Carosue Dam Gold Project open pits and processing plant sites are located on mining leases ML 219-220 and ML 166-167. The Carosue Dam Gold Project private access road is located on an adjacent mining tenement under Miscellaneous Licence No. 28/24. The Department of Minerals and Energy issued the mining leases and the Miscellaneous Licence under the provisions of the Mining Act 1978 (WA).

(16) A copy of the Application for Mining Tenement, Miscellaneous Licence dated 22 October 1999 is attached marked "A". A copy of the Miscellaneous Licence No. 28/24 covering the private access road is attached marked "B". The licence was granted on 28 April 2000.

(17) Development and operation of the Carosue Dam Gold Project was dependent upon the Department of Minerals and Energy and the Environmental Protection Authority's approval of the operations contained within the relevant Notice of Intent a copy of which is attached marked "C". That Notice of Intent covered all aspects of the project including the mine, plant and private access road locations. Similarly Native Title considerations within that Notice of Intent covered the mine, plant and private access road locations.

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

(19) Construction of the private access road was an important part of the Carosue Dam Gold Project as is the on-going use and maintenance of that road.

(20) The applicant Hampton Transport Services Pty Ltd was contracted to construct a range of Carosue Dam Gold Project facilities including the plant site earthworks, haul road, private access roads and waste disposal sites. The applicant currently undertakes some of the maintenance of the private access road.

(21) The Carosue Dam Gold Project operations manage and pay for the on-going repair and maintenance of the private access road.

(22) Construction of the purpose-built private access road was undertaken to enable the development and mining of gold ore to commence. It was initially used to transport the Carosue Dam Gold Project mining, processing and infrastructure construction plant and equipment. It carried and still carries mining equipment, processing equipment, exploration site rehabilitation equipment, mining personnel, water and consumables (such as explosives, fuel, chemicals and domestic supplies).

(23) Emergency medical evacuation occurs on that road using the Carosue Dam Gold Project four-wheel drive ambulance.

(24) Gold is transported using that road to Kalgoorlie.

(25) There is no airstrip at the Carosue Dam Gold Project.

(26) The Carosue Dam Project operations included the purpose-built private access road.

(27) By application for Rebate dated 26 September 2000 the Applicant claimed diesel fuel rebate pursuant to section 164 of the Customs Act 1901 and Section 78A of the Excise Act 1901 in respect of 423, 354 litres of diesel fuel used by it from April to July 2000 inclusive in constructing earthworks at the Carosue Dam Project mine site and in pursuing the activities referred to in paragraph 7.1 and 7.2 above.

(28) By letter dated 18 October 2000 the Respondent advised the Applicant of his decision to refuse to pay diesel fuel rebate in respect of any of the 113,169 litres of diesel fuel referred to in paragraph 9 above.

(29) By application made herein pursuant to section 273GA of the Customs Act 1901 and section 162C of the Excise Act 1901 dated 20 October 2000 the Applicant seeks review of the Respondent's said refusal."

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

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

"mining operations means:

(a)

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

(b)

operations for the recovery of minerals, being:

(i)

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

(ii)

the beneficiation of those minerals, or of ores bearing those minerals;

...

(o)

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

(i)

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

(ii)

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

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

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

(a) when the process of beneficiation ceases ...".

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

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

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

6. The applicant's principal submission is that fuel used in the construction and routine maintenance of the Carosue access road is eligible for rebate because that construction and maintenance is covered by sub-paragraph (o) of the definition of "mining operations".

7. Counsel for the applicant Mr Sweidan said in argument that "the place where the mining operation is carried one" is the place that is made up of all of the relevant mining tenements including the licenced area for the road.

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

"... whether its construction or maintenance, it fails, because, again, (o) is express in its terms and permits such a rebate where the activity occurs at the place at which the mining operation is carried on...

What we say however, is this road, where it is constructed, is not a place at which mining operations are carried on."

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

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

When asked by the Tribunal:

"So it really comes down to a question of degree, doesn't it, because if it was a road from the main gate to the mine you wouldn't be arguing about it. If it was a one kilometre road from the main gate to the pit - you wouldn't be arguing about it. If it was a road from the pit to the plant, on the site, you wouldn't be worried about it. But what happens is, you get roads which are quite long, albeit on mining tenements and you say therefore it can't qualify because its not at the place where mining operations are carried out."

Mr McGowan replied:

"Well that's right ...".

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

11. Aside from his principal submission relying on sub-paragraph (o), Mr Sweidan relied upon other subsections of the definition of "mining operations" in s.164(7) of the Act, including as to the component of the construction of the road, sub- paragraph (a), however, the Tribunal finds it unnecessary to consider those alternative grounds of potential entitlement.

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

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

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

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

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

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

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

19. The decision of the Tribunal is therefore that the decision under review is set aside and that the matter be remitted to the respondent with the direction that the payment of diesel fuel rebate not be refused on the ground that the construction or routine maintenance of the private access road at the Carosue mine site, did not occur "at the place where the mining operation is carried on" within the meaning of sub-paragraph (o) of the definition of "mining operations" contained in s.164(7) of the Act.