Issue
Are the off cuts from timber that has already been milled timber for the purposes of section 35 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The off cuts from timber that has already been milled are timber for the purposes of section 35 of the EGCSA.
Facts
Trees felled in a forest are milled by an entity at a saw mill which is situated in the forest in which the trees are felled. The entity mills the timber to square off the logs and then saw them to standard sizes.
The milling process produces off-cuts that consist of bark, branches and parts of the trunk.
To maximise its yield from the felled trees, the entity transports the off cuts to a chip mill, situated outside of the forest in which the timber is felled. There the off-cuts are chipped down into a size and shape suitable for use in the manufacture of chipboard.
Reasons for Decision
The term 'forestry' is defined in section 35 of the EGCSA as: The expression forestry means: (a) the planting or tending, in a forest or plantation, of trees intended for felling; or (b) the thinning or felling, in a forest or plantation, of standing timber
The meaning of the expression forestry as defined in section 35 of the EGCSA includes: (c) the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation; or (d) the milling of timber at a sawmill or chipmill that is not situated in the forest or plantation in which the timber was felled; or (e) where timber is milled at a sawmill or chipmill that is not situated in the forest of plantation in which the timber was felled - the transporting of the timber from the forest or plantation in which it was felled to the sawmill or chipmill; or ...
The meaning of the word 'timber' was considered by the Administrative Appeals Tribunal (Tribunal) in Re T J Depiazzi and Sons and Collector of Customs NSW (1993) 17 AAR 557 ( Depiazzi ) when it considered whether the chipping of raw waste materials obtained from sawmills constituted the milling of timber for the purposes of the diesel fuel rebate scheme.
The diesel fuel rebate scheme was the immediate precursor to the energy grants credits scheme and was administered under the Customs Act 1901 and the Excise Act 1901 . The Explanatory Memorandum to the EGCSA states that the energy grants credits scheme is to provide equivalent entitlements to those of the diesel fuel rebate scheme. Therefore the decision in Depiazzi is still considered relevant and can be applied to the current situation.
In Depiazzi the Tribunal determined at paragraph 24 that any product that: ... originally was a constituent of a tree that has been felled is capable of fitting the notion of 'timber' within paragraph (d) throughout the course of events when it is subject to a process of further reduction in size and shape up to the point where the basic constituent material, in reduced or separated form, is subjected to a secondary process or treatment.
The Tribunal concluded that the raw waste materials obtained from sawmills that were to be milled at a chipmill constituted timber.
In this instance, the off cuts were originally constituents of trees and are put through a process that will result in their further reduction in size and shape. Accordingly, as in Depiazzi , the off cuts used by the entity in its activities are timber for the purposes of section 35 of the EGCSA.