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Is diesel fuel used in earthmoving, to enable storage facilities to be built, eligible for rebate within the meaning of 'agriculture' in paragraph 78A(1)(aa) of the Excise Act 1901 (Excise Act) as well as paragraph 164(1)(aa), and subsection 164(7) of the Customs Act 1901 (Customs Act), where the activity is performed on behalf of a storage provider?

No. The earthmoving work undertaken on behalf of a storage provider is not an agricultural activity within the definition of 'agriculture' in subsection 164(7) of the Customs Act.

The applicant entity is an earthmoving contractor, which successfully tendered for the earthworks portion of a contract for construction of a grain storage facility on land owned by a cooperative of primary producers.

The applicant entity has submitted that it is entitled to the diesel fuel rebate on the basis that the diesel fuel was used in agriculture.

Under paragraph 78A(1)(aa) of the Excise Act and paragraph 164(1)(aa) of the Customs Act a rebate is payable to a person who purchases diesel fuel for use by the person in 'primary production'. All the relevant definitions are contained in subsection 164(7) of the Customs Act.

Primary production is relevantly to include agriculture. The definition of agriculture includes (at paragraph (r)) the carrying out of earthworks for use in a core agricultural activity if the earthworks are carried out on the agricultural property where the core agricultural activity is carried on.

The term 'core agricultural activity' means an agricultural activity, which is carried out, for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Agriculture is defined as: '(a) the cultivation of the soil; or (b) the cultivation or gathering in of crops; or (c) the rearing of livestock; or (d) viticulture, horticulture, pasturage or apiculture.'

The earthmoving works carried out by the applicant entity do not fall within the definition of agriculture. Although the earthmoving work might be said to have a connection with the 'gathering in of crops', the case law shows it is crucial that there is a sufficient connection between the use of the diesel fuel and the relevant agricultural activity: Australian National Railways Commission v. Collector of Customs, South Australia (1985) 8 FCR 264 and Collector of Customs v. Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1.

As the relevant earthmoving work is preparatory to the construction of a grain storage facility, it is only remotely connected with the activity of 'gathering in of crops' and therefore is not eligible for the diesel fuel rebate.