Collector of Customs v Reg Russell & Sons Pty Ltd [1995] FCA 421

CATCHWORDS

CUSTOMS AND EXCISE - diesel fuel rebate - primary production - agriculture - operations connected with the rearing of live‑stock - cartage operations to feedlots and wharves - whether Tribunal in error of law in concluding rebateable - whether question of law.

Customs Act 1901 (Cth) s164

Excise Act 1901 (Cth) s78A

Australian National Railways Commission v Collector of Customs, South Australia (1985) 8 FCR 264

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271

Cowell Electric Supply Co Ltd v Collector of Customs (Burchett, Hill and Carr JJ, 10 January 1995, no 4 of 1995, unreported)

COLLECTOR OF CUSTOMS v REG RUSSELL & SONS PTY LTD

NO WAG 95 OF 1994

R D NICHOLSON J

PERTH

23 JUNE 1995

IN THE FEDERAL COURT OF AUSTRALIA )

WESTERN AUSTRALIA DISTRICT REGISTRY)

GENERAL DIVISION ) NO WAG 95 OF 1994

B E T W E E N: COLLECTOR OF CUSTOMS

Applicant

and

REG RUSSELL & SONS PTY LTD

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER: R D NICHOLSON J

DATE OF ORDER: 23 JUNE 1995

WHERE MADE: PERTH

THE COURT ORDERS THAT:

(1) The "appeal" be allowed so far as it relates to the decision of the Tribunal on 29 July 1994 that the respondent's cartage operations "(v) from feedlot to wharf; (vi) from farm to wharf" qualify for a rebate of duty pursuant to s164(1) of the Customs Act 1901 or s78A of the Excise Act 1901 in respect of diesel fuel purchased by the respondent for use by it off‑road in those operations.

(2) The decision of the Administrative Appeals Tribunal made on 29 July 1994 be varied by

(a) deleting from paragraph 1 the words "(v) from feedlot to wharf; (vi) from farm to wharf;"

(b) by adding to paragraph 2 before the words "be refused" the words "(v) from feedlot to wharf; (vi) from farm to wharf".

(3) The appeal be otherwise dismissed.

(4) Counsel be heard on the question of costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

WESTERN AUSTRALIA DISTRICT REGISTRY)

GENERAL DIVISION ) NO WAG 95 OF 1995

B E T W E E N COLLECTOR OF CUSTOMS

Applicant

and

REG RUSSELL & SONS PTY LTD

Respondent

CORAM: R D NICHOLSON J

DATE: 23 JUNE 1995

PLACE: PERTH

REASONS FOR JUDGMENT

This is an "appeal" under s44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the General Administrative Division of the Administrative Appeals Tribunal constituted by two senior members and a member on 29 July 1994 which set aside the decision under review. The Tribunal substituted a decision which had the effect of making certain rebates of duty payable under s164(1) of the Customs Act 1901 and s78A(1) of the Excise Act 1901 in respect of diesel fuel purchased by the applicant for use by it in certain off-road cartage operations. Relevantly to this appeal the operations were for transportation of sheep in the following numbered categories:

(v) from feedlot to wharf;

(vi) from farm to wharf;

(vii) from farm to feedlot;

(viii)from sale yard to feedlot;

(ix) from feed lot to feedlot.

The applicant purchased the diesel fuel used in the cartage during the period from 4 August 1986 to 18 December 1992. The issue raised by the appeal is whether the Tribunal was in error of law in reaching its conclusion.

Statutory framework

The statutory framework within which the rebate was found by the Tribunal to be payable is in identical terms under each of the relevant Acts, the Customs Act being applicable to imported fuel subject to customs duty and the Excise Act being applicable to locally produced fuel subject to Excise duty. The relevant sections of those Acts provide for a rebate to be granted to a person who purchases diesel fuel for use by that person in primary production (otherwise than for the purpose of propelling a road vehicle on a public road). "Primary production" is defined by the sections to mean, among other things, "agriculture". This latter term is defined to mean, among other things, "the rearing of live‑stock" and to include "other operations... connected with any operations" involving the rearing of live-stock. These provisions have been considered by this Court in a number of decisions, to some of which reference will be made.

Tribunal's findings - feedlots

The Tribunal commenced its reasons by stating that the decisions to refuse the claims had been made because the applicant believed that the relevant use of the diesel fuel did not satisfy the requirements of s167(7)(c) of the Customs Act or s78A(1)(aa) of the Excise Act, which are provisions extending the definition of "agriculture" to "other operations...connected with" the rearing of live-stock. However, the Tribunal then continued by stating that the matter for determination was whether the diesel fuel was used in "rearing of live-stock" or "in other operations connected with" such rearing.

The Tribunal recounted that the evidence given to it had been by two witnesses for the respondent and that a "Statement of Agreed Facts" and an addendum to it had been received into evidence together with three other exhibits. The witnesses were Mr Russell, the managing director of the respondent, and Mr Kearnan, a live-stock buyer commission agent for the respondent.

The Tribunal then said:

"The hearing proceeded on the basis that the tribunal should be concerned only with the matter of principle - whether the relevant trucking operations of the applicant qualify for the purpose of the grant of the diesel fuel rebate. Should it be decided that all or some of the journeys do qualify then, it was agreed that the matter would be remitted back to the respondent to deal with the quantum issue granting both parties liberty to apply. Whether the diesel fuel used in those transport operations was purchased by the applicant for that use was not an issue." (emphasis added).

Turning to the agreed statement of facts the Tribunal said it was "accepted by the Tribunal and findings are made accordingly". The Tribunal found from that statement that transport operations included delivery of sheep, owned by others, to feedlots for live-stock destined for live sheep export. The Tribunal also found that the reason "for holding the sheep destined for live export in feedlots, apart from the fact that it is required by law, is to have them become accustomed to eating special pelletised food such as they will be given on the sea journey so as to reduce, as far as possible, trauma and to minimise the mortality rates whilst at sea". It found sheep were held in a feedlot for a minimum period of seven days. The feedlots were found not to be operated by the applicant whose only connection with them was as transport contractor delivering sheep to and from them.

As a consequence of the Tribunal making findings in accordance with the agreed statement of facts it may also be taken to have made the following further findings concerning feedlots:

(a) Feedlots for the purposes of this matter encompass properties that are used as places of gathering and preparing livestock for live export (para4.24)

(b) Feedlots amongst other things are used to quarantine, condition and convert the feed of live-stock from grazing to pellets (para4.25).

(c) Prior to export the live-stock must obtain Australian Customs Service clearance and if relevant health requirements have not been complied with, the live-stock will be prohibited from export (para4.25).

(d) The authority that provides that sheep must be prepared for export at the feedlots derives from the export orders pursuant to the Quarantine Act (Cth) (para 4.26).

(e) In addition, the Australian Agriculture and Quarantine Service produce the "National Standard for Feedlots which prepare sheep for Export by Sea." These deal with shelter, feed, water, health and stocking densities. For example, a feedlot needs to provide palatable feed each day which shall contain adequate nutritional factors to maintain health and vitality (para4.26).

The reasons of the Tribunal then set out an account of evidence given by Mr Russell and Mr Kearnan. In its account of this evidence the Tribunal did not expressly state that it made findings in accordance with the evidence. However, I accept the submissions made for the respondent that the account of the evidence is properly to be taken as findings. The account follows an express reference to findings being made in accordance with the agreed statement of facts. The evidence recounted was unchallenged and subject only to limited cross‑examination. The only evidence was that led on behalf of the respondent. The reasons of the Tribunal should be approached in a non-technical manner: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287.

From the evidence of Mr Russell the Tribunal made the finding that "holding sheep for three weeks will usually improve their condition considerably". While that finding was then applied in relation to particular cartage operations not in issue on this appeal, I regard it as having been made generally. No relevant findings concerning feedlots were made by the Tribunal from the evidence of Mr Kearnan.

Tribunal's reasons - feedlots

The Tribunal said that it had gained great assistance from the decision of the Full Court of the Federal Court in Australian National Railways Commission v Collector of Customs, South Australia (1985) 8 FCR 264 ("the ANR case"). The Tribunal referred to the following passages from the reasons for judgment of Davies J (at 269):

"Once it is accepted that it is not necessary for a rebate that the subject operation be carried out by a person who rears live-stock, it is an inevitable consequence that the transportation of live-stock by contractors which takes place in the course of the rearing of live-stock, as distinct from transportation which takes place for the purpose of sale or other disposal, is an operation of primary production as defined.

...

Transportation which occurs as part of the processes undertaken in the course of the rearing of livestock or in the course of other operations connected therewith falls within the ambit of "agriculture" as defined."

It also referred to the following statement in the reasons of Sheppard and Burchett JJ at 276:

"The rebate will not be payable in relation to the carriage of livestock unless it can be said that the
carriage of them which led to the use of diesel fuel was in connection with the rearing of them or in connection with other operations ... connected with the rearing of the livestock."

That portion of the reasons continued (at 277):

"Similarly, the transport of livestock from an area in which they are bought in store condition to another area for the purpose of fattening them seems also to be directly connected with their rearing, as does their removal from a drought area to be agisted on land not subject to drought".

The reference to the "purpose of fattening" was a reference to the purpose of enabling the sheep to gain body weight preparatory to sale for slaughter.

The Tribunal identified this as the second category at issue in the ANR case that is, whether the carrier qualified for diesel fuel rebate "in respect of the carriage of live-stock from an area from which they are bought in store condition to another area for the purpose of enabling them to gain body weight preparatory for slaughter". It then held that cartage in terms of (vii) (viii) and (ix) to feedlots as above described fell within this same category. It therefore found that "on the facts proved in evidence" the rearing of live-stock continues after the delivery of the sheep to the feedlot and that the diesel fuel used in transporting sheep to that destination was purchased for use in connection with the rearing of live‑stock.

Tribunal's findings - wharves

The Tribunal found that the respondent's transport operation included delivery of sheep owned by others from feedlots to wharf for export. Wharves were found by it to be sea ports, such as Fremantle, from which live-stock are loaded onto ships generally for transport to overseas destinations.

The Tribunal turned again to the evidence of Mr Kearnan. It found that at the wharf the sheep were off-loaded from the truck into holding pens from where they were onloaded to the vessels for live-sheep export. It found that during the sea journey the sheep were fed on pelletised food which they had been conditioned to receiving in the feedlots and when off‑loaded at the point of destination they were kept alive by continuous feeding and watering similar to that which occurred in the feedlots. The contractual basis for selling live sheep by export was that the exporter is responsible to deliver to the importer's destination a required number of sheep satisfying particular standards of health and condition. It was open to the importer to reject any sheep which had been delivered and did not meet contractual standards. Those were then destroyed, the loss being borne by the exporter.

Tribunal's reasons - wharves

It was submitted on behalf of the respondent before the Tribunal that the sheep sold into the live export market were reared by the exporter at least until the importer agrees to take delivery and incurs the liability to pay under the contract, so that the delivery of sheep from feedlots or farms to the wharf was properly characterised "as an activity in the course of rearing". The Tribunal agreed with that submission and found the rebate payable on diesel fuel purchased to transport live-stock in those two ways. The Tribunal continued:

"On the basis that there is a real and substantial connection with the continued sustaining of the sheep during their export and upon landing at the destination then the applicant's contractual journeys from the feedlots ..., to the wharf would properly be characterised as journeys undertaken prior to actual sale and in connection with rearing the sheep for sale, or disposal, in due course at the delivery location. To put this finding in perspective we merely observe that on the evidence, not to nurture the sheep once they leave the feedlot would be fatal to them and void any contract for delivery overseas of live‑sheep."

In my opinion, despite the reference by the Tribunal to "the course of rearing", its conclusion was grounded on the application of s164(7) par(f) of the definition of "agriculture" of the Customs Act, that is, on the question whether the relevant cartage operations were sufficiently connected with the rearing of live-stock.

Grounds of appeal

The grounds upon which the applicant now appeals in respect of the five categories of cartage operation are that the Tribunal erred, firstly, in characterising the cartage operations to the feedlots and the wharves as being operations connected with the rearing of live-stock; secondly, in failing to give adequate reasons; and, thirdly, in taking into account irrelevant considerations.

During the course of the hearing of the appeal it was also sought to contend for the applicant that there was an issue before the Tribunal to the effect that rearing was completed when the relevant animal reached a certain point of maturity. I accept the submissions for the respondent that the issue was not before the Tribunal and uphold the respondent's objection to that issue being considered on this appeal. While it is the case that the respondent's submissions before the Tribunal raised the question of the meaning of the word "rearing", the way in which the case was conducted before the Tribunal was that it was contended that the sheep continued to be reared until its condition was perfected. It was not contended before the Tribunal, either on behalf of the respondent or otherwise, that there was a point in the life of a sheep at which it ceased being capable of being reared. In the submissions before the Tribunal on behalf of the respondent it was contended that rearing involved caring and supporting up to maturity and that each of these acts would be said to
finish when the person in possession of the sheep gets rid of it by means of sale for either slaughter or export. It was not an issue before the Tribunal whether "maturity" was reached at an earlier point in time.

That ruling nevertheless leaves for consideration the submission on behalf of the applicant that it had been incumbent on the Tribunal to define what was meant by "rearing of live-stock" and that it had failed to do so with the consequence that, within the second ground of appeal, its reasons were thereby defective.

Question of law

It is of course necessary for the applicant to establish that the Tribunal erred in respect of a "question of law": s44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). What will constitute a question of law for these purposes has been comprehensively reviewed by the Full Court of the Federal Court in Pozzolanic (supra) at 286-9. From there it appears that the question of whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law but the ordinary meaning of a word or its non‑legal technical meaning is a question of fact. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law. However, this principle is qualified when a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words. Where it is reasonably open to hold that they do then the question whether they do or not is one of fact. On the other hand where the evidence reasonably admits of different conclusions as to whether the operations fall within the ordinary meanings of the words, a question of law is involved.

In Pozzolanic (supra) at 288-9 the Full Court continued:

"...the phrase "connected with the rearing of live‑stock" has a different character. Its construction does not merely involve the identification of some activity. The words "connected with" are capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. As Sheppard and Burchett JJ observed in Australian National Railways Commission v Collector of Customs (SA) at 378, the meaning of the word "connection" is wide and imprecise, one of its common meanings being "relation between things one of which is bound up with, or involved in, another": Shorter Oxford English Dictionary. Although the words of the statute are construed according to their ordinary English meaning, that does not mean that their application to a set of facts is simply described as the matching of that set of facts with a factual description. There is necessarily a selection process involved. The range of relationships to which the words apply for the purpose of the Act depends upon a judgment about that purpose. The selection process involved is analogous to that used in determining what causal relationship between conduct and loss attract liability for the purpose of s82 of the Trade Practice Act (1974) (Cth): see Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418-419; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 712-713. In the end this is not a process of fact finding. The facts are found. What is left is a value judgment about the range of the Act and that is a question of law."

It is in that sense that I understand the first grounds of appeal to be contending for error of law on the part of the Tribunal and it was this issue which was identified as a question of law in the supplementary notice of appeal. The first grounds therefore require a consideration of whether the Tribunal erred in law in the value judgment it made about the range of the Act in its reference to the phrase "connected with the rearing of live-stock".

Applicant's submissions

The argument for the applicant on this appeal ran as follows. It is accepted that the rebate provisions of both the Customs Act and the Excise Act are intended to encourage the
activities to which they apply so that they should not be construed narrowly: Pozzolanic (supra) at 289; Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275. It is also accepted that the words "connected with" involve a range of relationships: Pozzolanic (supra) at 288-9 and that the word "connection" is both wide and imprecise: Cliffs Robe River Iron Associates (supra) at 275. It was further accepted that the meaning of the word "connected" needs to be considered in the context in which it is used: ANR case (supra) at 275. Given all this, it is nevertheless contended for the applicant that the cartage operations in issue should have been seen by the Tribunal as falling within those involving transportation which takes place for the purpose of sale or other disposal so that such transportation did not take place in the course of rearing live-stock: ANR case (supra) at 269.

For the applicant, attention was directed to the statement in the reasons of the Tribunal that the hearing before it had proceeded on the basis that it should only be concerned with the question of principle whether the relevant trucking operations of the respondent qualified for the purpose of the rebate. If all or any of them did, it was agreed that the matter would be remitted back to the respondent to deal with the issue of quantum. In addition, the Tribunal said "whether the diesel fuel used in those transport operations was purchased by the applicant for that use was not an issue". It was submitted there was, therefore, no scope before the Tribunal for any findings of the actual purpose existing at the point of purchase of the fuel. The central question was therefore whether any of the posited end uses could properly be characterised as an operation connected with the rearing of live-stock and so attract a rebate.

On the question of purpose, the Court in the ANR case said that the Tribunal there had been in error in considering that the statute required that in order for the fuel to qualify for
a rebate of duty the operation must be seen objectively to be one connected with the rearing of live-stock to the exclusion of a consideration of the purpose of transportation as ascertained by inquiry of the consignor or consignee. Sheppard and Burchett JJ held at 276 that the purpose of the carriage in the sense of the consignors end in view was itself an objective fact which could support the claim (see also Davies J at 269). For the applicant in the present case it is argued that once this approach is taken it is quite clear that the purpose of the transport to the feedlots is to condition the sheep for their journey overseas and to the wharves for export and so in neither case to rear them.

In support of this contention the argument for the applicant also relies upon what was said by the Full Court in Pozzolanic (supra) at 289-90:

"The requirement that the fuel be purchased by the person claiming rebate "for use by him ... in primary production" is a requirement that must be satisfied at the point of purchase. It is a requirement which can only be met if the fuel for which rebate is claimed is purchased with the purpose of applying it to one of the exempted uses. The actual use to which the fuel is put subsequently can be evidence of the purpose for which it was purchased. But that does not exclude inquiry of the consignor or consignee about their objective intentions: Australian National Railways Commission case at 379.

...

Strictly speaking, what was required was identification of the intended use at the point of purchase."

For the applicant it is said that precisely the same question arises here because it is not in dispute that the fuel was purchased for the purpose of using it to transport sheep from the various destinations to feedlots or wharves.

In relation to the Tribunal's conclusions concerning transport to feedlots, it is submitted for the applicant that the Tribunal has made a massive unexplained leap in categorising the cartage operations to feedlots as falling within the second category in the ANR case and that, in particular, the reference by the Tribunal to the evidence of Mr Kearnan is inadequate to support the conclusion the Tribunal reached. Further, where the Tribunal found and relied upon the fact that "rearing of live-stock continues after the delivery of the sheep" to feedlots, the applicant contends it erred in the same manner as the Tribunal was held to have erred in the ANR case because it focussed on an apparently objective determination of what occurred after delivery of the live-stock and did not focus on the purpose of the purchase of the fuel judged by its end use in the transportation.

In relation to the Tribunal's conclusions concerning cartage operations to wharves, it is submitted for the applicant that the Tribunal has fallen into the same error by looking at objective aspects of the transportation rather than the purpose for which the transportation occurred. By focussing on what happens to the sheep, as the Tribunal did in its reasons, it is contended it has addressed matters not in point. As a consequence it has equated rearing with feeding or keeping a live sheep. The submission is that there is a failure by the Tribunal to examine the purpose of the cartage operation to the wharf. In addition it is said that it has, by focussing on what happens overseas to the sheep, considered disposal only in terms of sale and excluded disposal on export. Again it is said that the Tribunal has failed to explain its characterisation of the cartage operations in issue.

The matters raised in the third ground of appeal also relate to the Tribunal's reasoning in relation to cartage operation to wharves. It is said that the Tribunal took into account irrelevant considerations by considering: (a) how the sheep
are kept alive during the sea journey and on landing at the overseas destination; (b) the contractual basis between an exporter and an importer for selling live sheep by export (to which contracts the respondent is not a party); (c) that there is a real and substantial connection with the continued sustaining of the sheep during their export and upon landing at the destination; (d) that not to nurture sheep once they leave the feedlot would be fatal to them and void any contract for delivery overseas of live sheep.

Respondent's submissions

The case for the respondent on this appeal is that it was open to the Tribunal to find that the relevant activities were properly characterised as having been undertaken in connection with the rearing of live-stock.

In approaching the evidence which was before the Tribunal, it is also contended for the respondent that the cartage operations in question should be properly regarded as part of an integrated and overall commercial activity and the characterisation of those operations is not to be undertaken by a process of unreal dissection. Further it is asserted that in the process of characterisation it is important to have regard to the end product sought to be achieved by the cartage operations for the purposes of determining the point at which the relevant and sufficient connection with the rebateable activity ceases.

The essence of the case for the respondent is that there was abundant evidence upon which the Tribunal could conclude that sheep were conditioned in feedlots and on voyages from wharves so that it was open for the Tribunal to find that the cartage operations to those places were connected with the rearing of live-stock. The evidence to which these submissions point comprises the findings of the Tribunal earlier referred to, evidence of both the witnesses Russell and Kearnan, and
references in the "National Standards for Feedlots" exhibited to the Tribunal (to further particulars of which it is unnecessary to go).

The contention for the respondent is that the Tribunal correctly understood the word "condition" as referring to "improved condition", that is to "fatten up". Paragraph 4.25 of the agreed statement of facts thus understood and supported by the unchallenged evidence of Messrs Russell and Kearnan leads, in the submissions for the respondent, to the conclusion that in the feedlot the process of rearing was continuing. In short, the act of improving condition by adding fat for the purpose of sale was relevantly rearing of live-stock and, it is submitted, the Tribunal did not err in so concluding.

The primary submission for the respondent is that it was open for the Tribunal to find that rearing was not complete and therefore the transport to the feedlots or the wharves was relevantly connected with it. However, the submissions for the respondent acknowledged that the position in respect of the wharves is not quite so strong. In the case of the feedlots, it was said, there was abundant evidence before the Tribunal that the process of fattening continued in the feedlots, whereas in the case of the wharves the evidence showed it was more a question of maintenance of existing condition.

The submissions for the respondent also relied upon what was said by members of the Court in Cowell Electric Supply Co Ltd v Collector of Customs, (Burchett, Hill and Carr JJ, 10 January 1995, judgment number 4/95; unreported), to the effect that the sufficiency of a connection is a matter for the Tribunal not the Court. This submission was supported by reference to Pozzolanic (supra) at 286-7 where the Court said that only in exceptional circumstances should the decision of the Tribunal not be the final decision; that the Court will not be concerned with looseness in the language of a tribunal nor unhappy phrasing; and that the reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error. In addition, the Court in that case considered whether the process of characterisation was reasonably open to the Tribunal and it is this approach upon which the reliance is placed for the respondent.

Conclusions

What the Tribunal was required to do was to consider whether the applicant had purchased the diesel fuel for the purpose of using it in an operation connected with the rearing of live‑stock. A purposive test was thus posited for the Tribunal: Cowell Electric Supply Company Limited v Collector of Customs (supra) per Hill J at 14. That purpose must be shown at the point of purchase: Collector of Customs v Pozzolanic Enterprises Pty Limited (supra) at 289-90 cited by Hill J in Cowell (supra). The end use to which the diesel fuel is put can be evidence of the purpose at the time of acquisition: Cowell (supra) per Hill J; Pozzolanic (supra); Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177 at 189-91.

As Burchett J said in Cowell (supra) at 5-6:

"a concentration upon refining the meaning of purpose, distinguishing between primary and secondary purposes, and examining the extent of the actor's understanding of a consequence required to enable it to be described as intended, would be a distraction from the real point in cases arising under s164(1). It is the nature of the activity envisaged rather than the nature of the process of envisaging it with which the legislature is concerned. To become engrossed in the niceties of the latter would be to miss the whole point of an exemption provided to encourage the activity of primary production. From the point of view of the policy and ends Parliament sought to serve, it is not the mental state of the purchaser that attracts
the rebate. Therefore, given that the notion of purpose intent or object implicit in the word "for" can be seen as looking to a purchase of fuel to be used in a way that in fact involves primary production, or alternatively can be seen as looking to a purchase of fuel to be used in a way that is consciously directed to such an involvement, the former interpretation, being the simpler understanding of the nature of the purpose necessary for entitlement to a rebate, is to be referred. It provides a more direct link to that which qualifies for a rebate. Parliament did not provide that rebate for the mental process, but to promote or facilitate the important activity of primary production. As Neaves, French and Cooper JJ said in Pozzolanic (supra at 289): "The rebate provisions are intended to encourage the activities to which they apply. They should not be construed narrowly: Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275."."

The Tribunal was required to decide whether the respondent purchased diesel fuel for use by it in an operation connected with the rearing of live-stock. The starting point for that consideration was the Tribunal's assumption, based upon the way the hearing had been conducted before it, that "whether the diesel fuel used in those transport operations was purchased by the applicant for that use was not an issue." The reference to "that use" is a reference to the purpose of transporting sheep to feedlots and to wharves. By that assumption, the Tribunal, following the way the case was led before it, was precluded from any wider consideration of purpose such as whether, even if the transport was to feedlots, that was part of a wider purpose of sale or disposal. The Tribunal having been led to that approach by the parties it cannot be the case that it can now be found to be in error because of the agreed approach which it followed. An examination of the questions of law raised in the grounds of appeal show that the applicant still regards the scope of the phrase "connected with the rearing of live-stock" as the issue at the centre of this appeal.

So far as concerns feedlots, I consider the submissions for the respondent are correct when they maintain that there was abundant evidence before the Tribunal to enable it to conclude that feedlots were used to condition live-stock as a pre‑condition to qualification for export. There was therefore an entirely adequate foundation upon which the Tribunal could conclude that there was a sufficiency of connection between the transport of sheep to feedlots and the rearing of live-stock. It could reach this conclusion without defining the scope of the words "connected with the rearing of live-stock" because all that was at issue was whether the conditioning established by the evidence fell within the phrase "rearing of live-stock" as understood in common parlance. The evidence as found by the Tribunal supported the conclusion that the purpose of transporting sheep to feedlots was to enable them to gain body condition preparatory to sale and so for a purpose relevantly connected with the rearing of live-stock. This was not a case of the Tribunal stating that the rebate will be payable if there are objective indications that the transport was an operation connected with the rearing of live‑stock: cf ANR case at 276. Rather it is a case where the requisite use being agreed, the end use colours and determines the character of the admitted purpose. Once it was agreed by both parties that diesel fuel was purchased for the purpose of transporting sheep to feed lots, the question which remained was whether that purpose was one which had the requisite connection with the rearing of live-stock. There was evidence which entitled the Tribunal to conclude that it did and that conditioning in the feed lots was a necessary pre‑condition to qualifying for export and so formed part of primary production as a part of the rearing of the live-stock.

However, in the case of transport operations to the wharves I do not consider it was open to the Tribunal to conclude that the requisite purpose was established. While the Tribunal had before it evidence that sheep were conditioned during their voyage of export, I cannot see how that evidence could support a conclusion by it that such end use coloured and determined the purpose of the transportation to the wharves. Once it was agreed that the diesel fuel was purchased by the applicant for the purpose of transporting the sheep to the wharf for export, the evidence that the sheep were fed and conditioned during their voyage overseas was not such as could colour and determine the character of that purpose. The agreed purpose was itself a statement that the purpose for which such fuel was purchased was to effect the sale and disposal of the sheep by export. The point of primary production had therefore passed and such evidence as was before the Tribunal that live‑stock were conditioned during the voyage of export was not such as could give to the purpose of the transport to the wharves a purpose other than that of export.

There is therefore an important distinction between the purposes agreed by the parties which conditioned the hearing before the Tribunal. In the case of transport to feedlots, the agreed purpose was to transport sheep to feedlots for live-stock "destined for" export. In the case of transport to wharves, the agreed purpose was to transport sheep from feedlot or farm to the wharves "for export". The former admitted of an interim purpose of rearing as a pre-condition to qualification for export. The latter did not. There was evidence which supported the Tribunal's conclusion in finding the requisite connection in the case of the former but, in the case of the latter, the evidence was incapable of colouring the agreed purpose because that agreement carried with it the consequence that the purpose of purchase of the fuel was to effect transport for sale and disposal.

I would therefore allow the appeal so far as it relates to a rebate in relation to diesel fuel used in the transport of sheep to wharves but I would dismiss the appeal so far as it relates to the use of diesel fuel for the transport of sheep to feed lots.

I certify that this and the preceding 18 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson.

Associate:

Date:

APPEARANCES

Counsel for the Applicant: Mr S Bhojani

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr W Martin QC

& Ms N Douglas

Solicitors for the Respondent: Clayton Utz

Date of Hearing: 28 February 1995

Date of Judgment: 23 June 1995

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