Issue
Is a rotary peel veneer plant a 'sawmill' for the purposes of section 35 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. A rotary peel veneer plant is a 'sawmill' for the purposes of section 35 of the EGCSA.
Facts
Logs are transported from a forest or plantation to the yard of a rotary peel veneer plant. The logs are debarked and sawn into timber billets in approximately 2.5 m lengths. Logs in the yard are then usually kept wet by a water spray system to minimise drying and splitting prior to rotary peeling.
The billets are placed on a machine that rounds them up (that is it makes the billet into a perfect cylinder).
The process of rotary peeling consists of a log mounted centrally on a lathe rotating against a razor sharp cutting blade. The veneer produced by this process is commonly used for the manufacture of plywood.
The resulting sheet is then sorted into different stacks normally based on moisture content.
The green veneer sheets are then fed into a drier. The dried veneer is then graded and packaged.
Reasons for Decision
A sawmill is a mill in which saws are used to convert timber from one form to another: Re Wesfi Pty Ltd and Collector of Customs (WA) (1984) 7 ALN N8 ( Wesfi ).
The term 'timber' includes trees and constituent parts of trees which are intended for further processing and consumption: Re TJ Depiazzi and Sons and Collector of Customs NSW (1993) 17 AAR 557 at page 561
In the context of forestry as an aspect of primary production, the term 'timber' is applied throughout the process of further reduction in size and shape up to the point immediately before the basic constituent material, in reduced or separated form, is subjected to a secondary process or treatment.
Wood which has been shaped, moulded or cut to size specifically for a particular purpose has been subject to a secondary process or treatment. Paragraph 115 of Product Grant and Benefit Ruling PGBR 2005/1 gives examples of wood that has been subject to a secondary process or treatment. The examples are 'posts, fence pickets, 'tongue and grooved' flooring and architrave mouldings as well as plywood, which involves the gluing together of thin sheets of wood under pressure'.
The veneer produced by rotary peeling undergoes further processing to produce plywood (and other secondary products). Consequently the veneer itself is still 'timber' until it is incorporated into plywood. This conclusion is supported by the finding in Re Brymay Forests Pty Ltd and Collector of Customs, Victoria (1985) ALN N177 that rotary veneer peeling is 'the milling of timber'.
Consequently, the rotary veneer plant is a mill at which timber is converted from one form to another. It will be a 'sawmill' if the conversion is undertaken by means of saws.
A 'saw' is defined in The Macquarie Dictionary revised 3rd edition 2001, as: 1. a tool or device for cutting, typically a thin blade of metal with a series of sharp teeth. 2. any similar tool or device, as a rotating disc in which a sharp continuous edge replaces the teeth.
As the blade of a rotary peel machine has a sharp continuous edge which cuts the timber, the machine is within the ordinary meaning of a 'saw'.
Consequently, a rotary veneer plant is a 'sawmill'.