Excise - Payments - Diesel Fuel Rebate Scheme - eligibility of a waste stream treatment as an activity for the purposes of 'mining operations'

Does the recovery of an inorganic compound from a waste stream generated by a manufacturing process fall within the definition of 'mining operations' for the purposes of eligibility for the diesel fuel rebate in paragraph 78A(1)(a) of the Excise Act 1901 (Excise Act) and paragraph 164(1)(a) of the Customs Act 1901 (Customs Act)?

Activities involving treatment of a waste stream generated by a manufacturing process are not a 'mining operations' for the purposes of paragraph 78A(1)(a) of the Excise Act and paragraph 164(1)(a) of the Customs Act.

The applicant, in the performance of a contract with a manufacturer, undertakes treatment of wastes generated by the manufacturing process.

The treatment of the wastes results in the recovery of an inorganic compound through sedimentation and evaporation.

The applicant has submitted that the activities involved in the recovery of the inorganic compound constitute 'mining operations' for the purposes of the diesel fuel rebate scheme and that it is therefore entitled to the rebate.

Under paragraph 78A(1)(a) of the Excise Act and paragraph 164(1)(a) of the Customs Act a rebate is payable to a person who purchases diesel fuel for use by him in 'mining operations'.

For the purposes of the diesel fuel rebate, 'mining operations' is defined in subsection 164(7) of the Customs Act. The lengthy definition contains a list of activities that are related to mining for minerals.

A review of judicial authority demonstrates the term 'mining operations' refers to the physical activities involved in dislodging and removing ore from the ground. The Full Federal Court has said that the definition of 'mining operations' in subsection 164(7) of the Custom Act 'progressively expands through the successive subparagraphs of subsection 164(7)'. It also stated that 'at all times, the concept of recovery of minerals is retained as the central point of reference': State Rail Authority of New South Wales v. Collector of Customs (1991) 33FCR 211.

In making its decision, the Full Federal Court had regard to its previous decision Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271. In this decision it stated that the subject matter of the definition in subsection 164(7) of the Customs Act is fuel purchased for use 'in mining operations' and that the relevant activities are those 'activities closely related to the extraction process'.

Although the wording of the definition has changed since it was last considered by the Full Federal Court, there has been no substantive change to the meaning of the term 'mining operations'. Also, the Full Court's findings were more recently followed by the Administrative Appeals Tribunal in Queensland Rail v. Chief Executive Officer of Customs , No Q97/897, 29 April 1998.

The activities involved in treatment of a waste stream generated by a manufacturing process do not fall within the definition of 'mining operations' as these activities are not closely related to the extraction of minerals from the ground.