Issue
Is the client entitled to a diesel fuel rebate under subsection 78A(1) of the Excise Act 1901 or subsection 164(1) of the Customs Act 1901 for diesel fuel used in excavating clay material for use in the manufacture of clay bricks?
Decision
No. The excavation of clay material does not fall within the eligible category of 'mining operations' in subsection 164(7) of the Customs Act, and therefore the client is not entitled to a rebate under subsection 78A(1) of the Excise Act or subsection 164(1) of the Customs Act.
Facts
The client operates an enterprise as an excavator.
One of the activities undertaken by the client is the excavation of clay material which is subsequently used in the manufacture of bricks.
Reasons for Decision
Under paragraph 78A(1)(a) of the Excise Act or 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.
The term 'mining operations' is defined in subsection 164(7) of the Customs Act. The definition pertains to activities for the 'recovery of minerals'. In considering whether an activity falls within 'mining operations', the Full Federal Court has observed 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) 33 FCR 211).
Under the definition of the term 'mineral' in subsection 164(7) of the Customs Act, clay, (other than bentonite or kaolin) is specifically excluded. As clay is not a 'mineral' for the purposes of the definition of 'mining operations', the extraction of clay is not the recovery of a mineral, and is therefore not a mining operation for the purposes of the Diesel Fuel Rebate Scheme.
Consequently the client is not entitled to a rebate under subsection 78A(1) of the Excise Act or subsection 164(1) of the Customs Act for the extraction of clay (other than bentonite or kaolin).