WMC Resources Ltd v Chief Executive Officer of Customs and Chief Executive Officer of Customs v McDermott Industries (Aust) Pty Ltd and Anor

[1997] FCA 1451

FEDERAL COURT OF AUSTRALIA

CUSTOMS AND EXCISE - excise duty - diesel fuel rebate - extraction of natural gas offshore - whether a rebate of duty is payable with respect to diesel fuel used in vessels engaged in supplying and installing a pipeline - whether a rebate of duty is payable with respect to diesel used in vessels engaged in transporting construction materials to an offshore processing facility - meaning of  “mining for minerals” and “other activities undertaken in the preparation of a site to enable mining for minerals to commence” in the definition of “mining operations” as used in s 78A of the Excise Act 1901 (Cth).

Excise Act 1901 (Cth), s 78A

Customs Act 1901 (Cth), ss 164, 164(1)(a), 164(7), 164(7)(a), (b), (c), (ca), (d), (da), (e), (f), (g), (h), (i), (j), (k), (ka), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w)
Administrative Appeals Tribunal Act 1974 (Cth), s 44
Customs and Excise Amendment Act 1995 (Cth)

Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 25 AAR 43, applied
Y.Z. Finance Company Pty Limited v Cummings (1964) 109 CLR 395, applied
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, applied

WMC RESOURCES LIMITED v CHIEF EXECUTIVE OFFICER OF CUSTOMS
WAG 79 of 1997

CHIEF EXECUTIVE OFFICER OF CUSTOMS v McDERMOTT INDUSTRIES (AUST) PTY LTD AND WMC RESOURCES LIMITED
WAG 80 of 1997

LEE J
PERTH
15 DECEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 79 of 1997

BETWEEN:	WMC RESOURCES LIMITED Applicant
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Respondent

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 80 of 1997

BETWEEN:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Applicant
AND:	McDERMOTT INDUSTRIES (AUST) PTY LTD First Respondent
WMC RESOURCES LIMITED Second Respondent
JUDGE:		LEE J
DATE OF ORDER:		15 DECEMBER 1997
WHERE MADE:		PERTH

THE COURT ORDERS THAT:

MATTER NO WAG 79 OF 1997

1. The “appeal” be allowed and the matter returned to the Tribunal for redetermination.

1. The respondent pay the costs of the applicant.

MATTER NO WAG 80 OF 1997

1. The “appeal” be dismissed.

1. The applicant pay the costs of the respondents.

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	WAG 79 of 1997

BETWEEN:	WMC RESOURCES LIMITED Applicant
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Respondent

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 80 of 1997

BETWEEN:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Applicant
AND:	McDERMOTT INDUSTRIES (AUST) PTY LTD First Respondent
WMC RESOURCES LIMITED Second Respondent
JUDGE:		LEE J
DATE:		15 DECEMBER 1997
PLACE:		PERTH

REASONS FOR JUDGMENT

These matters, “appeals” from decisions of the Administrative Appeals Tribunal (“the Tribunal”), raise the proper construction of s 78A of the Excise Act 1901 (Cth) and s 164 of the Customs Act 1901 (Cth) where those sections provide that a rebate of duty is payable to a person who purchases diesel fuel for use in mining operations. The “appeals” were heard together.

In the first “appeal” the Chief Executive Officer of Customs (“Customs”) seeks to set aside the decision of the Tribunal that rebates were payable to McDermott Industries (Aust) Pty Ltd (“McDermott”) and to WMC Resources Limited (“WMC”) in respect of 1,422,137 litres of diesel fuel purchased by McDermott and 1,187,057 litres of diesel fuel purchased by WMC.

In the second “appeal” WMC seeks to set aside the decision of the Tribunal that WMC was not entitled to a rebate in respect of 339,535 litres of diesel fuel purchased by WMC.

WMC is a member of a consortium known as the East Spar Alliance which, under the authority of Production and Pipeline Licences issued by the Commonwealth of Australia and the State of Western Australia, (“the State”) extracts and produces natural gas from the East Spar gas field situated off the coast of Western Australia in an area known as the North West Shelf.

McDermott was engaged by the East Spar Alliance to supply and install, in deep water, a section of the production pipeline (“the pipeline”) that connects the wellheads at the East Spar gas field with the treatment and processing facility at Varanus Island. Varanus Island is situated between the East Spar gas field and the mainland and the length of the pipeline is sixty-three kilometres.

The relevant facts, which are either agreed or are not in issue, may be summarised as follows.

The facilities necessary for extracting and treating natural gas from the East Spar gas field were constructed by the East Spar Alliance between February 1995 and November 1996. Production of gas commenced in November 1996.

To recover natural gas from the East Spar gas field the raw gas extracted from two production wells is cooled in a heat exchanger attached to the wellheads, mixed with corrosion and hydrate inhibiting agents and the mixture delivered by the pipeline to the processing facility at Varanus Island. The mixture treated at Varanus Island consists of raw natural gas, natural gas condensate, water and hydrate and corrosion inhibiting agents.

In the treatment process the natural gas is separated from the liquids and the gas is dried and chilled to meet reticulation specifications. The liquids are separated into natural gas condensate and water and gas held in solution in the condensate is removed by distillation and added to the natural gas already extracted. The condensate is stored in tanks for loading on seaborne tankers for export. The natural gas is compressed and delivered by pipeline under high pressure from Varanus Island to pipelines operated by, or on behalf of, the State for the reticulation of natural gas for sale within the State.

All of the steps described, namely, the extraction of the gas and the condensate from the production wells, the introduction of inhibitors when the mixture is brought up to the wellhead, the delivery of the mixture to the processing plant at Varanus Island, and the processing of that mixture is monitored, conducted and controlled by the operation of equipment installed in a control room at Varanus Island.

The rebate claimed by McDermott and allowed by the Tribunal was in respect of diesel fuel purchased by McDermott between March 1996 and May 1996 for use in vessels and barges operated by McDermott to carry out the work of supplying and installing section of the pipeline. The rebate claimed by WMC and allowed by the Tribunal was in respect of diesel fuel purchased by WMC between March 1996 and July 1996 for use in vessels and cargo barges operated by WMC to carry out the work of installing the balance of the pipeline in shallow water.

The rebate claimed by WMC and disallowed by the Tribunal was in respect of diesel fuel purchased by WMC between July 1995 and June 1996 for use in vessels which transported materials, plant and equipment, and fuel from the port of Onslow on the mainland to Varanus Island for use in the construction of facilities, (including the pipeline), required to extract and produce natural gas from the East Spar gas field.

Section 78A of the Excise Act states that a rebate of duty is payable to a person who purchases diesel fuel for use in “mining operations (otherwise than for the purpose of propelling a road vehicle on a public road)”. Section 78A further states that the phrase “mining operations” has the same meaning as it has in s 164 of the Customs Act.

The relevant parts of s 164 of the Customs Act are as follows:

“164. (1) A rebate is...payable to a person who purchases diesel fuel for use...

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

...

(7) In this section:

...

“mining operations” means:

(a)exploration, prospecting or mining 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)the dressing or beneficiation of minerals, or ores bearing minerals, as an integral part of operations for their recovery;

and includes:

(c)if minerals, or ores bearing minerals, are dressed or beneficiated at a place other than the mining site as an integral part of operations for their recovery:

(i)the transporting of the minerals or ores from the mining site to that place; and

(ii)the return journey from that place to the mining site of the vehicles or equipment used in transporting the minerals or ores, if that journey is for the purpose of later carrying out the mining operation referred to in subparagraph (i) or for the backloading of raw materials or consumables for use in a mining operation referred to in paragaph (a) or (b); or

(d)the undertaking:

(i)of voyages to or from an Australian port by a ship that is proposed to be, or that is, used wholly or primarily in carrying out northern mining activities for the purposes of refitting or repairing the ship or its equpment for, or as a result of, carrying out those activities; or

(ii)of trials in connection with such a refit or repair of the ship or its equipment; or

(e)the liquefying of natural gas; or

(f)if natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or

(g)the production of common salt by evaporation; or

(h)the reactivation of carbon for use in the beneficiation of ores bearing gold; or

(i)coal stockpile management for the prevention of the spontaneous combustion of coal if the management is carried out:

(i)by a person who carried on a mining operation referred to in paragraph (a) or (b); or

(ii)by a person contracted by that person to carry out the management;

at the place where the mining operation is carried on; or

(j)the generation of electricity solely for, or the provision of electricity solely to, a mining town if:

(i)the existence of the town is necessary to enable a mining operation referred to in paragraph (a) or (b) to be undertaken; and

(ii)the generation or provision is carried out by the person who carried on the mining operation; or

(k)the rehabilitation before 1 July 1995 of a place at which a mining operation referred to in paragraph (a) or (b) has been carried on if the rehabilitation is carried out by:

(i)the person who carried on the mining operation at the place; or

(ii)a person contracted by that person to carry out the rehabilitation; or

(ka)the rehabilitation of a place affected by a mining operation referred to in paragraph (a) or (b) if the rehabilitation is carried out by:

(i)the person who carried on the mining operation; or

(ii)a person contracted by that person to carry out the rehabilitation; or

(l)searching for ground water solely for use in a mining operation referred to in paragraph (a) or (b), or the construction or maintenance of facilities for the extraction of such water, solely for that use, if the searching, construciton or maintenance:

(i)occurs at the place where the mining operation is carried on or at a place adjacent to that place; 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 searching, construction or maintenance; or

(m)the pumping of water solely for use in a mining operation referred to in paragraph (a) or (b) if the pumping:

(i)occurs at the place where the mining operation is carried on or at a place adjacent to that place; 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 pumping; or

(n)the supply of water solely for use in a mining operation referred to in paragraph (a) or (b) if:

(i)the supply is to the place where the mining operation is carried on; and

(ii)the water comes from that or a place adjacent to that place; and

(iii)the supply is carried out by the person who carries on the mining operation or by a person contracted by that peson to carry out the supply; or

(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; or

(p)the construction or maintenance of storage dams or tailings dams 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 or at a place adjacent to that place; 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; or

(q)the construction or maintenance of private airstrips, buildings, plant or equipment 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; or

(r)the construction or maintenance of power stations or power lines solely 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; or

(s)the removal of waste products of a mining operation referred to in paragraph (a) or (b) from the place where the mining operation is carried on; or

(t)the disposal of waste products of a mining operation referred to in paragraph (a) or (b) at the place where the mining operation is carried on; or

(u)the service, maintenance or repair of vehicles, plant or equipment for use in a mining operation referred to in paragraph (a) or (b) if the service, maintenance or repair:

(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 service, maintenance or repair, or

(v)the service, maintenance or repair of transport networks, vehicles or equipment solely for use in a mining operation referred to in paragraph (c) if the service, maintenance or repair is carried out by:

(i)the person who carries on the mining operation; or

(ii)a person contracted by that person to carry out the service, maintenance or repair; or

(w)the use of diesel fuel at residential premises in:

(i)providing food and drink for; or

(ii)providing lighting, heating, air-conditioning, hot water or similar amenities for; or

(iii)meeting other domestic requirements of;

residents of the premises if:

(iv)the use is by a person who carries on a mining operation referred to in paragraph (a) or (b); and

(v)the residential premises are situated at the place where the mining operation is carried on, or at a place adjacent to that place;

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

The Tribunal determined that the diesel fuel purchased and used by McDermott and by WMC in installing the pipeline was used in mining operations either, in mining for minerals, in activities undertaken to prepare a site to enable mining for minerals to commence, or in the construction of plant or equipment for use in a mining operation at the place where the mining operation is carried on.

With regard to the claim by WMC for a rebate in respect of diesel fuel purchased for use in transporting construction materials, plant and equipment, and fuel from Onslow to Varanus Island, the Tribunal determined that the act of transportation “was a discrete activity which preceded the relevant mining operations and was not a part of them” and, therefore, “was not an activity in ‘mining operations’ as defined in s 164(7) of the Customs Act 1901”.

In the first “appeal” the point of law under s 44 of the Administrative Appeals Tribunal Act 1974 (Cth) (“AAT Act”) is the proper construction of the phrase “mining operations” as defined in s 164(7) of the Customs Act. It was submitted that in the following respects the Tribunal erred in construing that expression. First, by applying to the phrase “mining for minerals”, a meaning that did not exclude the “antecedent activity” of installation of the pipeline; second, by applying to the words “other activities undertaken in the preparation of a site to enable mining for minerals to commence” a meaning that did not exclude the installation of the pipeline; and third, by applying to the words “the construction of...plant or equipment for use in a mining operation” a meaning that did not exclude the installation of the pipeline.

By the Customs and Excise Amendment Act 1995 (Cth) (“the amending Act”) Parliament redefined the meaning of “mining operations” as used in s 164(7) of the Customs Act. Before the amendment s 164(7) had provided as follows:

“‘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;

(d)where minerals, or ores bearing minerals, are dressed or beneficiated, at a place other than the mining site, as an integral part of operations for their recovery - the transporting of the minerals or ores from the mining site to the place where they are dressed or beneficiated;

(da)the undertaking:

(i)of voyages to or from an Australian port by a ship that is proposed to be, or that is, used wholly or primarily in carrying out northern mining activities within the meaning of this section for the purposes of refitting or repairing the ship or its equipment for, or as a result of, carrying out those activities; or

(ii)of trials in connection with such a refit or repair of the ship or its equipment;

(e)the liquefying of natural gas;

(f)where natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or

(g)the production of common salt by means of evaporation;

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

The new definition, in pars (b), (d), (e), (f) and (g) thereof, retained pars (b), (da), (e), (f) and (g) of the old definition. The new definition also retained the words of exclusion which concluded the old definition. Paragraph (c) of the new definition repeated, in effect, par (d) of the old definition but added words that made it clear that return journeys of vehicles used to transport minerals from the mining site to the place of beneficiation were within the meaning of “mining operations”.

By the amendment the general terms of par (c) of the old definition were deleted and replaced with new paragraphs which spelt out specific activities that were to be taken to be within the meaning of the term “mining operations”. In the totality of the provisions an exhaustive definition of “mining operations” was intended.

Several of the paragraphs show that the expression “mining operations” is intended to be read expansively. For example, by new par (i) the management of a coal stockpile to prevent the spontaneous combustion of coal is included in the phrase. Obviously the act of management of a stockpile to preserve the stockpile takes place after the mineral, the object of the mining activity, has been recovered and stored. Furthermore, by pars (k) and (ka) the phrase applies to the rehabilitation of a place where mining has been carried on, or of a place affected by a mining operation. The relevant part of the meaning of “mining operations” set out in pars (a) or (b) to which these inclusionary paragraphs refer would be that of “mining for minerals”, that is to say, an activity in mining. (See:  Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 25 AAR 43 at 47).

Paragraph (a) of the new definition repeated par (a) of the old definition but added words relating to the removal of overburden and the preparation of a site for mining. Customs submitted that the addition of those words to par (a) reflected the intention of Parliament that the phrase “mining for minerals” have a more restricted meaning than that used in par (a) of the old definition.

I am unable to agree with that submission. There is nothing in the added words to support that conclusion. In the context of s 164(7) as a whole it could be concluded that the phrase “mining for minerals” embraces the activities described in the words added to par (a) of the amending Act. Whether that is so is unnecessary to determine. The apparent purpose of adding the words to par (a) was to remove any doubt that may have arisen by the deletion of the former par (c) that an entitlement to a rebate continued where diesel fuel was used in such preparatory activities.

Perusal of the Second Reading Speech in the Senate of the Minister for Industry, Science and Technology (“the Minister”), the Minister responsible for the Customs and Excise Legislation Amendment Bill 1995 (“the Bill”), and of the Explanatory Memorandum, prepared and circulated under the authority of the Minister, confirms that the meaning of par (a) was not intended to be altered by introducing a restricted meaning for the phrase “mining for minerals”.

In the Second Reading Speech the Minister said as follows:

“The amendments proposed in Items 4 and 8 of Schedule 1 to the bill are to remove the subjectivity associated with the ‘sweeper clauses’, and replace those clauses with an objective list of activities that are eligible for rebate.  This has been done with a view to giving claimants certainty as to the actual activities that are eligible for rebate, and thereby avoiding the costly litigation concerning eligibility circumstances which has plagued the Scheme in recent years.

It should be noted that although the proposed amendments will necessarily narrow the range of activities for which rebate is payable, farmers and miners will generally be unaffected. The intention of these amendments is to put beyond doubt that the Scheme is not meant to provide rebate eligibility for activities which are not sufficiently connected with mining or agriculture; for instance, the provision of a service or utility to a farmer or miner, such as electricity through a grid, or the building of a dam which is intended to supply water to, amongst others, farmers, or the operation of a garbage tip on a former mine site by someone other than the miner, where the resultant filling of the mine site is said to be the rehabilitation of a mine site, and thus connected with a mining operation.”

The Explanatory Memorandum stated, without further comment, that par (a) of the new definition of “mining operations” reinserted par (a) of the old definition. If the words relating to the removal of overburden and the preparation of a mining site were added to par (a) as an amendment to the Bill, that is not referred to in the Supplementary Explanatory Memorandum, circulated by authority of the Minister, which dealt with the amendments proposed to the Bill to remove doubts raised by “the mining sector” as to the effect of the proposed amendments to the definition of “mining operations”. The Supplementary Explanatory Memorandum reaffirmed that the intention of the Bill was “not to affect the eligibility for rebate of persons engaged in mainstream...mining”.

To meet the concerns of the mining sector the Bill was amended by adding the words relating to return journeys in par (c); by expanding par (k) and by inserting all of the new paragraphs that became pars (h), (i), (j), (l), (m), (n), (p), (q), (r), (s), (t), (v) of the amended definition.

The foregoing confirms that the longstanding purpose of the rebate provisions, namely, to stimulate or assist the development of mining and the production of minerals, was to be continued under the amended definition of “mining operations”. By s 164(1)(a) it is intended that there be a rebate on diesel fuel used in activities necessary for the production of a mineral, whether the activity is exploration or prospecting for minerals, or steps undertaken thereafter to get mining of a mineral underway.

The scope of meaning of pars (a) and (b) is to be found in the succeeding paragraphs which describe expansively the activities covered by these paragraphs. That is to say the words “means:...and includes:” are used in s 164(7) to convey both the idea of exclusion and of enlargement. (See: Y.Z. Finance Company Pty Limited v Cummings (1964) 109 CLR 395 per Menzies J at 405.) Thus, for example, when it is said in par (b) that “mining operations” means the beneficiation of minerals, by operation of par (c) it extends to the transportion of minerals for beneficiation and the return journeys of the transporting vehicles and, by par (h), to the process of reactivating carbon that has been used in the beneficiation of gold-bearing ores.

By par (q) the construction of plant or equipment for use in a mining operation referred to in par (a) or (b), is an activity in that mining operation. It would be a question of fact whether the construction was for use in a mining operation of exploration, prospecting, preparation of a mining site, or in mining. (See:  Customs v Dyno Wesfarmers at p48.)

Customs submitted that the terms of par (v) which refer to the service, maintenance, or repair of “transport networks” (defined to include pipelines) indicated Parliament’s intention that par (q), and therefore par (a), did not extend to the construction of a pipeline in mining for minerals or as an activity in the preparation of a mining site.

That submission must be rejected. In respect of the mining of natural gas at the East Spar gas field, the use of the pipeline is an essential part of the operation of recovering natural gas. According to the ordinary meaning of the words used in par (q), the construction of such a pipeline would be the construction of plant and equipment for use in a mining operation defined in par (a) or (b), that is, the mining operation of mining for minerals or of an activity undertaken in preparation of a site to enable mining for minerals to commence. It would be contrary to the thrust of s 164(7) to exclude from entitlement to a rebate fuel used in the construction of such a pipeline when fuel used in the construction of other plant and equipment to be used in the same mining operation attracts a rebate. The object of par (v) is to add to the catalogue of activities that are to be taken to be within pars (a) and (b). Under par (v) fuel used in service, maintenance or repair of, inter alia, a pipeline “solely for use in a mining operation” is included. Paragraph (q) has a broader operation than par (v) and refers to “construction or maintenance” of plant or equipment “for use in a mining operation”. Whatever the meaning of the word “maintenance” as used in “construction or maintenance” in par (q) and as used in “service, maintenance or repair” in par (v), there is no requirement as a matter of logic to exclude construction of a pipeline from the meaning of “construction...of plant or equipment” because par (v) has provided expressly that there is a rebate for fuel used in servicing, maintaining or repairing that pipeline.

Furthermore, the terms of par (d) of the definition suggest that Parliament did not intend that the operation of par (q) was to be so restricted.

Pursuant to par (d) a rebate is payable for diesel fuel used in a voyage by a vessel to or from an Australian port where the purpose of the voyage is to refit the vessel to carry out, or to repair the vessel or its equipment after carrying out, activities associated with, or incidental to, the exploration for, or the exploitation of, natural gas in the waters in which the East Spar gas field is situated. If a vessel used by WMC travelled from Fremantle to Singapore to have work done to enable it to carry out the work of laying the pipeline, or to have repairs effected after it had carried out that work, a rebate would be payable on the fuel used for that voyage and used in sea trials. It would be an absurd and, therefore, unintended consequence, if the restricted meaning for par (q) contended for by Customs would have the effect of no rebate being payable on fuel used by the vessel in laying the pipeline but a rebate being payable on fuel used in a voyage taken to prepare the vessel for laying the pipe or to repair the vessel after laying it.

Although the Tribunal may have expressed its reasons in different terms, it did not err in its understanding of the proper construction to be applied to s 164(1)(a), in particular the scope of the phrase “mining operations” where it is defined in s 164(7) as meaning, inter alia, mining for minerals or the preparation of a site to enable mining for minerals to commence.

According to that construction it was open to the Tribunal to find that the installation of the pipeline was an activity in mining or in the preparation of a mining site. The findings of the Tribunal on those questions, therefore, were findings of fact and no question of law arises. (See:  Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287.)

The first “appeal” must fail.

In the second “appeal” WMC contends that the Tribunal erred by failing to have regard to the words “other activities undertaken in the preparation of a site to enable mining for minerals to commence” where they appear in par (a) of the definition of “mining operations”.

It was submitted that in determining that “the transportation of the construction materials is...an activity which is antecedent to, and does not form part of, or occur in the course of, the relevant mining or processing activities” the Tribunal failed to consider whether diesel fuel used in that transportation was fuel used in an activity undertaken in the preparation of a site to enable mining for minerals to commence.

The reasons of the Tribunal suggest that the Tribunal understood that unless the activity in which fuel was used had a temporal relationship with a “mining or processing activity”, no entitlement to a rebate could arise.

As stated earlier in these reasons, the meaning of the phrase “mining operations” recited in pars (a) and (b) of the definition set out in s 164(7), is enlarged by the paragraphs of inclusion which follow. That meaning makes it clear that the entitlement to rebate is not restricted to an activity in a “mining operation” that has a temporal relationship with the production of a mineral. For the purposes of s 164(7) neither exploration nor prospecting is an activity “antecedent” to a mining operation. Each is a mining operation. Similarly, activities undertaken in preparation of a site to enable mining for minerals to commence constitute a mining operation.

The reference in the definition to a “site” does not involve a term of restricted meaning. In the context in which it appears it refers to the area or a location utilized for the mining of minerals. Furthermore, acts of preparation of a site referred to in the definition are not restricted to acts on the site. (See:  Customs v Dyno Wesfarmers at p49.)

Customs submitted if the final words of par (a) are read with the words that precede them, namely, those which refer to the removal of overburden, the meaning to be applied to the words relating to preparation of a site to enable mining to commence cannot be as broad as contended by WMC. It was said that only acts which disturbed or excavated the seabed on which the production wells or the pipeline were placed could be regarded as acts that were in the preparation of a site to enable the mining of natural gas to commence.

The context in which the words are used shows that such a restricted meaning for the words is not intended. As stated earlier in these reasons, the words relating to preparation of a site for mining, and those relating to the removal of overburden, have been added to remove any doubt that may have arisen as a consequence of the deletion of par (c) of the old definition. The words “to enable mining for minerals to commence” suggest a broader scope than acts of disturbance or excavation of land. To restrict a right of rebate to such activities and to deny a rebate for fuel used in substantive works undertaken in preparation for mining would provide a strange result and one inconsistent with Parliament’s intention.

It follows that the Tribunal misunderstood the proper construction of s 164(7) when it determined that WMC was not entitled to a rebate for fuel used in transporting construction materials, plant and equipment, and fuel to Varanus Island.

On the material before the Tribunal it was open to the Tribunal to conclude that the area on which the production wells and the pipeline which connected the production wells with the processing facilities on Varanus Island and the facilities on Varanus Island together were the site on which the mining of natural gas was undertaken by the East Spar Alliance. Therefore, it was open to the Tribunal to conclude that if construction materials, plant and equipment, and fuel transported from Onslow to Varanus Island were used in establishing the wells, the pipeline and the processing facilities on Varanus Island, the act of transportation was an activity undertaken in preparation of a site to enable mining for minerals to commence. Whether those findings are to be made is a matter for the Tribunal. Accordingly the “appeal” should be allowed and the matter returned to the Tribunal for redetermination.

I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee

Associate:

Dated:             

MATTER NO WAG 79 OF 1997

Counsel for the Applicant:	M L Barker QC Andre Sweidan
Solicitor for the Applicant:	Andre Sweidan
Counsel for the Respondent:	G J Gibson QC
R G Maguire
Solicitor for the Respondent	Australian Government Solicitor

MATTER NO WAG 80 OF 1997

Counsel for the Applicant:	G J Gibson QC R G Maguire
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondents:	M L Barker QC A Sweidan
Solicitor for the Respondents:	Andre Sweidan
Date of Hearing:	7 November 1997
Date of Judgment:	15 December 1997