Collector of Customs v The Western Australian Government Railways Commission (Westrail) [1995] FCA 937

CATCHWORDS

CUSTOMS AND EXCISE - excise duty - diesel fuel rebate - diesel fuel used in rail transportation of coal to alumina refinery - definition of "mining operations" used in Excise Act 1901 - meaning of "connected with" and "adjacent to" -whether transportation within the primary definition of "mining operations".

CUSTOMS AND EXCISE - Federal Court - jurisdiction of on appeal from A.A.T. - whether question of law.

STATUTES - retrospective effect of - proceedings commenced and not determined before operative date - no question of law - whether amending legislation falls to be applied - sub-s 5(4) Customs and Excise Legislation Amendment Act 1995.

Administrative Appeals Tribunal Act 1975

Customs Act 1901 s 164; sub-s 164(1); para 164(1)(b)

Customs and Excise Legislation Amendment Act 1995 sub-ss 2(2), 5(4)

Excise Act 1901 s 78A

Income Tax Assessment Act 1936 s 122

Australian National Railways Commission v. Collector of Customs (1985) F.C.R. 264

Collector of Customs v. Cliffs Robe River Iron Associates (1985) 7 F.C.R. 271

Collector of Customs v. Pozzolanic Enterprises Pty. Ltd. (1993) 43 F.C.R. 280

Cowell Electric Supply Company Ltd. v. Collector of Customs (1994) 54 F.C.R. 1

District Council of Coober Pedy v. Collector of Customs (1993) 42 F.C.R. 127

Federal Commissioner of Taxation v. B.H.P. Minerals (1983) 68 F.L.R. 132

New South Wales Associated Blue Metal Quarries Ltd. v. Federal Commissioner of Taxation (1956) 94 C.L.R. 509

State Rail Authority of New South Wales v. Collector of Customs (1991) 33 F.C.R. 211

T.N.T. Skypak International (Aust.) Pty. Ltd. v. Federal Commissioner of Taxation (1988) 82 A.L.R. 175

COLLECTOR OF CUSTOMS V. THE WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION (WESTRAIL)

WAG 82 OF 1994

LEE J.

PERTH

16 NOVEMBER 1995

IN THE FEDERAL COURT)

OF AUSTRALIA )

WESTERN AUSTRALIA )

DISTRICT REGISTRY )

GENERAL DIVISION ) NO. WAG 82 OF 1994

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL

B E T W E E N: COLLECTOR OF CUSTOMS

Applicant

and

THE WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION (WESTRAIL)

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER: LEE J.

DATE OF ORDER: 16 NOVEMBER 1995

WHERE MADE: PERTH

THE COURT ORDERS THAT:

The appeal be dismissed with 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 82 OF 1994

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL

B E T W E E N: COLLECTOR OF CUSTOMS

Applicant

and

THE WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION (WESTRAIL)

Respondent

CORAM: LEE J.

DATE : 16 NOVEMBER 1995

PLACE: PERTH

REASONS FOR JUDGMENT

This is an "appeal" under s.44 of the Administrative Appeals Tribunal Act 1975 ("the A.A.T. Act") from a decision of the Administrative Appeals Tribunal ("the Tribunal") which determined that the respondent ("Westrail") was entitled to claim under s.78A of the Excise Act 1901 a rebate of duty paid on diesel fuel purchased by Westrail and used in the transportation of coal from coalfields at Collie in Western Australia to an alumina refinery operated by Worsley Alumina Pty. Limited ("W.A.P.L.") at Worsley, approximately 48 kilometres from Collie.

The question of law on which the "appeal" is based, and on which the jurisdiction of this Court is grounded, is the proper construction of s.78A of the Excise Act.

In the proceeding before the Tribunal a statement of agreed facts was presented by the parties. The material facts found by the Tribunal were as follows:

"WAPL manages an integrated bauxite mining and alumina refining operation, in the south-west region of Western Australia, known as 'The Worsley Alumina Project', on behalf of a consortium of joint venturers ('the joint venturers').

WAPL currently mines bauxite at Mt Saddleback, near the town of Boddington. The mined bauxite is then transported by an overland conveyor belt to the alumina refinery - a distance of 51 kilometres - which is situated near the town of Worsley which is itself located between the coastal city of Bunbury and the coal-mining town of Collie.

At the refinery alumina is extracted from the bauxite by a process known as the 'Bayer process' (described below). The alumina is then transported by rail to Bunbury for shipment to customers.

The Bayer process carried out at the Worsley alumina refinery consists of four main stages - digestion, separation, precipitation, and calcination.

The bauxite is initially ground in grinding mills and is then passed into 'digesters' where it is mixed with caustic soda solution and then heated. In the digesters, under heat and pressure, a chemical reation takes place whereby alumina hydrate is dissolved from the bauxite to form sodium aluminate. The heat in the digesters is provided by high-pressure steam generated in the refinery's boilers. The bauxite/caustic soda mixture is kept at a temperature of approximately 175°C for 30 minutes, and a pressure of approximately 700 kilopascals is maintained in the digesters to prevent the solution from boiling. The result is an alumina-bearing solution ('digester discharge liquor'), together with undissolved impurities. Although steps are taken to recycle the heat and conserve energy, extra steam from the boilers is required to maintain the required digestion temperature. The boilers use coal as their energy source to generate the high-pressure steam required to heat the bauxite/caustic soda mixture in the digesters and to maintain the temperature required to produce the abovementioned chemical reaction.

The next stage involves the separation from the
digester discharge liquor of impurities (such as undissolved iron oxides and silica) which were part of the original bauxite. After removal of waste particles the liquor is filtered, resulting in 'green liquor'.

At the precipitation stage the green liquor is cooled by heat exchangers and then mixed with fine hydrate 'seed' and agitated in tall precipitator vessels, causing alumina trihydrate crystals to form and precipitate. The crystals are separated by filtration and washed to remove impurities.

Finally, the alumina hydrate is heated in calciners to a temperature of approximately 1000°C. The heat drives off chemically-combined water, leaving alumina (aluminium oxide) - a dry, white, sandy material. The energy source presently used to provide the heat required for the calcination process is natural gas. It is not practical to use coal for this purpose because the resulting ash would contaminate the alumina product.

Heat is a crucial requirement in the Bayer refining process described above. Coal is the energy source used in the Worsley alumina refinery's boilers to generate the high-pressure steam that provides the heat required for the digestion process described in paragraph 8 above. This steam is also used to produce, by means of turbine generators, electricity which is principally used as an essential power source for the operation of, not only the alumina refinery, but also the bauxite mine and the bauxite conveyor.

The Worsley Alumina Project is carried on in accordance with the terms of an Agreement ('the State Agreement') - which is set out in a Schedule to, and is given statutory force by, the Alumina Refinery (Worsley) Agreement Act 1973 (W.A.) ["the State Agreement Act"] - the present parties to which are the State of Western Australia and the joint venturers.

Clause 5(1) of the State Agreement obliged the joint venturers to construct and operate an alumina refinery on a site near the town of Worsley. One of the major reasons for specifying the Worsley site was its proximity to the Collie coalfields and to Westrail's Bunbury-Collie rail line and associated rail transport infrastructure. This allowed rail transport to be used as the means of transporting caustic soda, lime and fuel oil to the refinery, and alumina from the refinery to the port of Bunbury. It also allowed the transport by rail of coal from the nearby Collie coalfields to the refinery.

Clause 14 of the State Agreement obliges the
joint venturers to enter into long term contracts for the refinery's coal requirements. Accordingly, long term supply contracts have been entered into with Western Collieries Limited and The Griffin Coal Mining Company Pty Limited - the two coal mining companies operating in the Collie coalfields.

Clause 5(2) of the State Agreement required the joint venturers to:

. request Westrail, at the expense of the joint venturers, to construct a railway between the refinery and Westrail's existing railway system, and to upgrade the existing railway between the point of connection and the port of Bunbury to make it adequate for their requirements as to the transport of alumina and other materials required for the refinery;

. request Westrail, at the expense of the joint venturers, to upgrade its existing railway so as to make it adequate for their requirements as to the transport of coal from an agreed point in the Collie coalfields to the abovementioned point of connection;

. provide and maintain the necessary sidings, shunting loops, spurs and other railway connections, and loading and unloading facilities;

. provide sufficient wagons to carry all bauxite, coal, fuel oil, caustic soda, lime and limestone to the refinery and alumina to the port of Bunbury;

. ensure all wagons are properly trimmed and loaded;

. pay appropriate freight rates, as specified in a schedule to the State Agreement, in respect of all commodities carried in trains operated by Westrail.

Clause 8 of the State Agreement, in turn, obliged the State of Western Australia to execute the railway construction and upgradings requested by the joint venturers, to operate such trains and thereby transport on its railways all bauxite, alumina, coal, fuel oil, caustic soda, lime, limestone and other commodities as required by the joint venturers, and to provide all locomotives necessary for these purposes.

As required by clause 5 of the State Agreement the joint venturers engage Westrail to transport their coal requirements from the Collie
coalfields to the refinery.

WAPL's traffic officer has overall control of, and is responsible for co-ordinating, the railway activities associated with the refinery, including the transport of coal from the Collie coalfields to the refinery. WAPL's traffic officer liaises with Westrail, Western Collieries Limited and The Griffin Coal Mining Company Pty Limited, and issues weekly schedules to Westrail specifying the number of trains required for the week, the number of wagons and other relevant details with which Westrail must comply. This ensures that the railway functions are at all times part of WAPL's integrated refining operation.

Western Colieries Limited loads its coal onto rail wagons at the Western No 2 rail siding, and The Griffin Coal Mining Company Pty Limited loads its coal onto rail wagons at the Chicken Creek rail siding. The Western No 2 and Chicken Creek rail sidings are on spur lines running from the Bunbury-Collie rail line in the Collie coalfields. Ownership of the coal passes to WAPL at the point of loading.

The rail wagons are dedicated to carry coal to the refinery and were constructed for the joint venturers specifically for this purpose. Those dedicated rail wagons are owned and provided by the joint venturers, as contemplated by clause 5(2)(g) of the State Agreement.

From the Western No 2 and Chicken Creek rail sidings, the coal is transported to the refinery along the Bunbury-Collie rail line to the point of connection with the spur line leading to the refinery, and then along that spur line to the refinery. The total distance travelled is 44 kilometres from the Western No 2 siding and 48 kilometres from the Chicken Creek siding.

Westrail provides the locomotives necessary to haul the joint venturers' rail wagons from the point of loading to the refinery. However, the coal is at all times the responsibility of WAPL. Westrail staff merely drive the locomotives.

When the rail wagons transporting the coal arrive at the refinery, WAPL unloads the coal at the refinery's coal storage and unloadng facility. The coal is discharged onto the coal stockpile by gravity feed from the rail wagons, which pass over a bridge spanning the stockpile. From the coal storage stockpile, gravity is used to load the coal onto a series of conveyor belts which lead to coal pulverisers. The coal is pulverised to a powder and stored in day bins before being injected into the boilers.

Westrail charges WAPL freight in accordance with the rates set out in the First Schedule to the
State Agreement (as amended). Those rates are based on the number of net tonne-kilometres carried.

In accordance with their obligations under the State Agreement, the joint venturers have incurred the cost of constructing the spur line between the refinery and the Bunbury-Collie rail line, and upgrading the relevant sections of the Bunbury-Collie rail line."

The caustic soda used in the Bayer refining process is transported to the refinery by Westrail from the port of Bunbury, a distance of approximately 57 kilometres.

At the time the Tribunal made its determination the relevant provisions of sub-s.78A of the Excise Act and s.164 of the Customs Act 1901 read as follows:

"78A.(1) A rebate is, subject to subsections (2) and (3) 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 him:

(a) in mining operations (otherwise than for the purpose of propelling a road vehicle on a public road);

...

(7) In this section, 'mining operations', 'primary production', 'residential premises', 'road vehicle' and 'use' have the same respective meanings as in section 164 of the Customs Act 1901."

Section 164 of the Customs Act provides:

"164.(1) A rebate is, subject to subsections (2)
and (3) 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 him:

(a) in mining operations (otherwise than for the purpose of propelling a road vehicle on a public road);

...

(7) In this section:

...

'minerals' means minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic;

'mining operations' means:

(a) exploration, prospecting or mining for minerals; or

(b) the dressing or beneficiation (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;

(ca) other operations connected with the dressing or beneficiation of minerals, or ores bearing minerals, where that dressing or beneficiation is an integral part of the operation for the recovery of the minerals or of the ores, being operations that are carried out in, or at a place adjacent to, the area in which the dressing or beneficiation occurs;

...

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

..."

It was not in issue that the Bayer refining process carried on at the Worsley refinery involved beneficiation of a mineral as an integral part of operations for the recovery of the mineral, namely, alumina.

Before the Tribunal the relevant issues were whether the facts as found fell within paras.(b) or (ca) of the definition of "mining operations" in s.164 of the Customs Act according to the proper construction of s.78A of the Excise Act. The Tribunal accepted that the construction of the statutory provisions should give effect to the beneficial purpose of the legislation. (See: Collector of Customs v. Cliffs Robe River Iron Associates (1985) 7 F.C.R. 271 at 275.)

It was not disputed that diesel fuel purchased by a party other than the mining operator for use in the mining operations entitled that party to claim the rebate payable under the Excise Act. (See: Australian National Railways Commission v. Collector of Customs (1985) 8 F.C.R. 264 per Sheppard and Burchett JJ. at 268; Cowell Electric Supply Company Ltd. v. Collector of Customs (1994) 54 F.C.R. 1.) Underlying the Excise Act is an assumption that the payment to a third party of a rebate on the purchase price of diesel fuel
will result in reduction of the costs charged by the third party to the mining operator.

The Tribunal turned first to sub-para.(ca) and considered the meaning of the phrase "connected with" and was satisfied that it carried its commonly understood meaning, namely, "related to", "linked with", or "associated with". In that regard the Tribunal obtained assistance from the following remarks of Hill J. in District Council of Coober Pedy v. Collector of Customs (1993) 42 F.C.R. 127 at 140-141:

"Clearly there is a spectrum of circumstances extending from those cases where operations are connected in a direct way with mining to those where the connection is remote or perhaps trivial. The Full Cout in Cliffs Robe River Iron Associates rejected the need for the connection to be direct. The same may clearly be said of the decision of the Full Court in Australian National Railways. ...

It seems highly unlikely that the legislative intent was to provide a rebate for diesel fuel used in an operation where that operation had but a remote or tenuous connection with mining. That this is so must follow from the rejection of the rebate claim for the transportation of fertiliser in the Australian National Railways case. Thus, while the connection need not be direct, there must still exist a connection which is real and substantial. It will also then be a question of degree whether, in a particular case, there is a use of the diesel fuel in a connected operation."

The Tribunal then considered the meaning of the words "at a place adjacent to" the area in which the beneficiation occurs and had regard to the remarks of Toohey and Lockhart JJ. in Federal Commissioner of Taxation v. B.H.P. Minerals (1983) 68 F.L.R. 132 at 138-139 where their Honours
considered whether residential accommodation provided for miners by the taxpayer was "at, or at a place adjacent to, the site of the...mining operations carried on by the taxpayer" within the meaning of s.122 of the Income Tax Assessment Act 1936. Their Honours said:

"'Adjacent' is a word that is capable of a broad connotation. It can suggest a relationship like that indicated by 'neighbouring'; but it can also be used in a sense akin to 'contiguous'. We do not think any useful purpose is served by dwelling too long on the dictionary definitions of the word 'adjacent' or synonyms as ultimately the inquiry is to determine the meaning of the word in the context in which it apears, in this case s.122(1) of the Assessment Act. However, the first task must be to determine the ordinary meaning of the word and then see if that meaning needs to be displaced or qualified in some way by the context in which it appears.

One approaches the task of defining the word 'adjacent' with the knowledge that Div.10 in which it appears gives legislative expression to the Australian Government's policy to encourage the search for and winning of metals and minerals and thus affords special concessions to the mining industry. ...

In our view the inquiry as to the definition of the expression 'at a place adjacent to, the site of prescribed mining operations...' calls for a broad approach and not one that is narrow or pedantic. ... The expression is not one which is capable of a precise or uniform meaning. ...

An ordinary and natural meaning of the word 'adjacent' is 'near' or 'close'.

...

It becomes a question of impression and fact in each case whether the residential accommodation provided by the taxpayer is at a place adjacent to the site of the prescribed mining operations."

The Tribunal had regard to the terms of the State Agreement which provided for the construction of an alumina refinery proximate to the Collie coalfields; for coal to be
used as the source of energy to provide steam and electricity for the refining process; for coal to be obtained under long-term contracts with coal producers; and for a railway line to be constructed to connect the refinery site with the coalfields. It was apparent from the Tribunal's recitation of these elements that it was satisfied that if the provision of coal to the refinery could be said to be an "operation" it was an operation that had direct connection with the beneficiation process conducted at the refinery. That is to say, it was a connection that was real and substantial and not tenuous or remote.

As to the matter of adjacency the Tribunal had regard to the fact that pursuant to the terms of the State Agreement the refinery site had been fixed at a point near the Collie coalfields for the express purpose of meeting the requirement of the State that coal obtained from the coalfields be the source of the energy required for the refining process. The Tribunal appeared to accept that the length of the rail line connecting the refinery with the coalfields was a matter to be considered but was not determinative of the question whether the operation of delivering coal to the refinery site was an operation that was adjacent to the refinery site. The Tribunal was satisfied that the facts found fell within the terms of the sub-paragraph and, therefore, that an entitlement to the payment of a rebate had been demonstrated.

The Tribunal did not determine whether, on the facts as found, the delivery of coal to the refinery site was within the prime meaning of a mining operation as defined in para.164(1)(b) of the Customs Act.

On the hearing of the "appeal" the applicant contended that the Tribunal erred in finding that sub-para.(ca) of s.164 of the Customs Act applied to the facts as found. First, it was contended that the Tribunal could not find that the degree of connection between the operation of delivering coal to the refinery and the beneficiation process in which the coal was used at the refinery site was real and substantial rather than remote. The applicant submitted that the activities of Westrail were connected with the "sale and delivery" of raw materials rather than with the beneficiation of bauxite at the refinery and referred to the decisions of this Court in Australian National Railways and Collector of Customs v. Pozzolanic Enterprises Pty. Ltd. (1993) 43 F.C.R. 280 as authorities providing some support for that proposition.

As Sheppard and Burchett JJ. stated in Australian National Railways at p.277 the question of whether an operation is undertaken in connection with a prescribed purpose or activity involves questions of fact and degree. The different facts of one case will provide little assistance in determining whether the facts of another come within a
statutory definition. In Australian National Railways the pertinent facts involved the distribution and delivery of fertilizer by a general carrier to depots and other sites from which secondary distribution was to be effected. Those facts bear no resemblance to this case. In Pozzolanic it was held that the delivery of grain from the distributor's premises to silos on farming properties could only be regarded as part and parcel of the distribution of the supplier's product and as an operation it lacked the immediacy and directness of the feeding of livestock to be regarded as an operation in connection with the rearing of livestock, the requirement of the prescribed definition. In that case the distribution by the marketer of the product was acknowledged and the question posed was whether distribution could be said to have ceased at the point the product was augered from the delivery trucks. The Court held it could not.

In the present case the requirement that coal be obtained from the coalfields and transported to the refinery is an obligation imposed by the comprehensive terms of the State Agreement which describes the nature of the mining activity to be undertaken by W.A.P.L. The coal and the wagons in which it is carried are the property of W.A.P.L. The rail line to the refinery is constructed at W.A.P.L.'s cost. Although W.A.P.L. is required to commission Westrail to supply and operate the locomotives to haul W.A.P.L.'s wagons and coal, the rail movements are under W.A.P.L.'s control and co-
ordination. The hauling of coal to the refinery is not the independent act of a common carrier delivering goods pursuant to the conduct of its ordinary business. It is a dedicated operation integrated into the refining process for the recovery of alumina being a process W.A.P.L. is required to carry out as part of the mining activity set out in the State Agreement.

Plainly, it was open to the Tribunal to be satisfied on the facts before it that the operation of bringing the coal from the coalfields was connected with the beneficiation process at the Worsley refinery which process was accepted to be an integral part of the operation to recover alumina.

As to the issue of adjacency the applicant submitted that the carriage of the coal for a distance of 48 kilometres could not be said to be an operation "carried out...at a place adjacent to" the Worsley refinery.

Whether an operation is adjacent to the site on which a process of beneficiation is carried out for the recovery of a mineral, must be determined by having regard to the scale and context of the mining activity undertaken to recover that mineral. Adjacency is a relative concept and having regard to the nature and scale of many of the mining operations conducted in Australia, which the legislation seeks to encourage, it is probable that Parliament intended that the
word be used with the broadest meaning, not requiring all elements of the operation to be confined within a space directly abutting the site on which beneficiation is carried out.

Given the careful selection of the refinery site, the dedicated rail link between the site and the coalfields, and the mining operator's supervision of the transport of its coal as part of the management of the refining process carried on on the refinery site, there was sufficient material to permit the Tribunal to find that the activity of mining the coal was carried out at a place adjacent to the Worsley refinery to satisfy the terms of para.(ca).

In circumstances where the conclusions of the Tribunal are findings on questions of degree those conclusions are findings of fact and no question of law arises. Unless it can be said that application of the proper construction of sub-s.164(1) of the Customs Act and s.78A of the Excise Act to the given facts permitted only one conclusion to be drawn, no question of law is raised by a finding that the facts as found fall within the terms of the statutes. (See: New South Wales Associated Blue Metal Quarries Ltd. v. Federal Commissioner of Taxation (1956) 94 C.L.R. 509 per Kitto J. at 512.)

On 1 July 1995 the Customs and Excise Legislation Amendment Act 1995 ("the Amending Act") amended the definition
of "mining operation" in s.164 of the Customs Act as applied by s.78A of the Excise Act. By sub-s.2(2) of the Amending Act the amended definition was taken to have commenced on 1 August 1986 and by sub-s.5(4) of the Amending Act the law governing the right to be paid a rebate under the Excise Act in respect of purchased diesel fuel is the law in force on and after 1 July 1995 in legal proceedings commenced in this Court before 1 July 1995 and not determined before that date. This proceeding was commenced and not determined before 1 July 1995.

The proceeding in this Court is an "appeal" on a question of law in the original jurisdiction of the Court. The matter in respect of which jurisdiction is granted by s.44 of the A.A.T. Act is the question of law. That question is the issue qualifying the jurisdiction of the Court and is also the subject matter of the "appeal". The Court is not given jurisdiction to conduct a hearing on issues of fact or to conduct a proceeding by way of review. (See: T.N.T. Skypak International (Aust.) Pty. Ltd. v. Federal Commissioner of Taxation (1988) 82 A.L.R. 175 per Gummow J. at 178-182.)

The question of law forming the Court's jurisdiction will include consideration of whether the Tribunal erred in law and the grant of a substantive order pursuant to the "appeal" will depend upon demonstration of such error. Until that point is reached the decision of the Tribunal stands as a
determination made according to law. It follows that "the law governing the right to be paid such a rebate" as amended by the Amending Act will not fall to be applied unless it is determined that the decision of the Tribunal has not been made according to law and must be set aside.

As the law now stands, and whenever it is applied henceforth is to be taken to have so stood since 1 August 1986, the definition of "mining operation" does not include paras.(c) and (ca). Although the definition is affected by those deletions, in some respects the various sub-paragraphs added to the definition may be said to have expanded the meaning of the phrase. (See: State Rail Authority of New South Wales v. Collector of Customs (1991) 33 F.C.R. 211 at 215.)

If it were necessary to apply the definition as amended to the facts as found I would conclude that the facts disclose that the conveyance to the Worsley refinery of the coal owned by the mining operator is within para.(b) of the primary meaning of "mining operation" as set out in sub-s.164(1) of the Act as amended.

The concept of recovery of a mineral remains "the central point of reference" in the definition of "mining operation" in para.(b). The recovery process is intended to be the key element of the definition. (See: State Rail
Authority of New South Wales at 215.)

As stated above, the commitment of the mining operator to enter long-term contracts to take coal from the Collie coalfields, to provide a dedicated line for the transport of the coal to the refinery, and to use the coal in the refining process to recover alumina are all steps under a comprehensive agreement the mining operator had to make with the State to undertake the mining activity of recovering alumina. The delivery and use of the coal at Worsley is one of a number of integrated steps between excavating the bauxite at Boddington and recovering alumina at Worsley.

It is a requirement imposed by the State that the mining activity be carried out in this way. There is to be no mining undertaking unless it is an operation that comprises the steps set out in the State Agreement. To that extent the delivery of coal to the refinery and the use of the coal in the refining process is an integral part of the operation to be undertaken by W.A.P.L. to recover alumina and, therefore, diesel fuel purchased for use in transporting the coal in the manner described is purchased for use in an integral part in the recovery of alumina and the entitlement to a rebate on the purchase price under the Excise Act is thereby established.

The "appeal" will be dismissed.

I certify that the preceding eighteen (18) pages are a true copy of the Reasons for Judgment of his Honour Justice Lee.

Associate:

Date:

APPEARANCES

Counsel for the Applicant: M.J. Buss Q.C.

C.A. Wyatt

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondent: W.S. Martin Q.C.

G.J. Cotterill

Solicitors for the Respondent: Mallesons Stephen Jacques

Date of Hearing : 20 April 1995

Date of Judgment : 16 November 1995

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