BHP Billiton Petroleum Pty Ltd v Chief Executive Officer of Customs

REASONS FOR JUDGMENT THE COURT: 1 This is an application by way of "appeal" under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the "AAT Act"), in the original jurisdiction of the Court, on a question of law from a decision of the Administrative Appeals Tribunal (the "Tribunal"). A bench of three was constituted because one of the members of the Tribunal was the President: see par 44(3)(b)(i) of the AAT Act. 2 The decision of the Tribunal concerned review by the Tribunal (under par 273GA(1)(ha) of the Customs Act 1901 (Cth) and par 162C(1)(f) of the Excise Act 1901 (Cth)) of certain decisions of a delegate of the respondent amounting to the refusal to pay claims for rebates for purchases of diesel fuel used in connection with oil exploration and production on the North West Shelf and in the Timor Sea. The legislation 3 The proceedings before us raise two issues in connection with the operation of s 164 of the Customs Act and s 78A of the Excise Act. Those sections were, at all material times, identical. The matter was argued before us, and before the Tribunal, by reference to s 164 of the Customs Act. No relevant difference between the two pieces of legislation was identified by either party. 4 Section 164 of the Customs Act provides for the rebate of duty in respect of diesel fuel used for certain purposes. Relevantly, subs 164(1) provides that: [A] rebate is… payable to a person who purchases diesel fuel for use by the person: (a) in mining operations (otherwise than for the purpose of propelling any vehicle on a public road); … 5 Subsection 164(5) sets the rebate in the case of par 164(1)(a) at 7.619c per litre. Relevantly, subs 164(5) is in the following terms: (5) Subject to subsections (5AA) and (5AC), the rebate payable under subsection (1) to a person in respect of any diesel fuel purchased by the person for use in a manner referred to in a paragraph of that subsection is payable at the rate of: (a) in the case of paragraph (1)(a) - $0.07619 per litre; … 6 For many years the phrase "mining operations" has been defined, for the purposes of par 164(1)(a), in subs 164(7). The definition has been amended from time to time. We will use the present tense to refer to the section as it stood at the dates relevant to this proceeding. 7 There are three parts to the definition of the phrase "mining operations": it is said to mean what appears in pars (a) and (b) of the definition, to include what appears in pars (c) to (w), but not to include what appears in pars (x) to (z). The definition is in the following terms: mining operations means: (a) exploration or prospecting for minerals, or the removal of overburden and other activities undertaken in the preparation of a site to enable mining for minerals to commence; or (b) operations for the recovery of minerals, being: (i) mining for those minerals including the recovery of salts by evaporation; or (ii) the beneficiation of those minerals, or of ores bearing those minerals; … and includes: (c) if minerals, or ores bearing minerals, are beneficiated at a place other than the mining site as an integral part of operations for their recovery: (i) the journey undertaken for the purpose of transporting the minerals or ores from the mining site to that place except to the extent (if any) that the journey involves transportation by sea; and (ii) the return journey of a vehicle, a locomotive or other equipment from that place to the mining site or any part of that journey if it is undertaken for the purpose of repeating a journey referred to in subparagraph (i) or for the backloading of raw materials or consumables for use in a mining operation referred to in paragraph (a) or (b); or (d) the undertaking: (i) of voyages to or from an Australian port by a ship that is proposed to be, or that is, used wholly or primarily in carrying out northern mining activities for the purposes of refitting or repairing the ship or its equipment for, or as a result of, carrying out those activities; or (ii) of trials in connection with such a refit or repair of the ship or its equipment; or (e) the liquefying of natural gas; or (f) if natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place; or (h) the reactivation of carbon for use in the beneficiation of ores bearing gold if the reactivation occurs at the place where a recovery operation referred to in paragraph (b) is carried on; or (i) coal stockpile management for the prevention of the spontaneous combustion of coal if the management is carried out: (i) by a person who carries on a mining operation referred to in paragraph (a) or (b); or (ii) by a person contracted by that person to carry out the management; at the place where the mining operation is carried on; or (j) the generation of electricity solely for, or the provision of electricity solely to, a mining town if: (i) the existence of the town is necessary to enable a mining operation referred to in paragraph (a) or (b) to be undertaken; and (ii) the generation or provision is carried out by the person who carries on the mining operation; or (k) the rehabilitation before 1 July 1995 of a place at which a mining operation referred to in paragraph (a) or (b) has been carried on if the rehabilitation is carried out by: (i) the person who carried on the mining operation at the place; or (ii) a person contracted by that person to carry out the rehabilitation; or (ka) the rehabilitation of a place affected by a mining operation referred to in paragraph (a) or (b) if the rehabilitation is carried out by: (i) the person who carried on the mining operation; or (ii) a person contracted by that person to carry out the rehabilitation; or (l) searching for ground water solely for use in a mining operation referred to in paragraph (a) or (b), or the construction or maintenance of facilities for the extraction of such water, solely for that use, if the searching, construction or maintenance: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the searching, construction or maintenance; or (m) the pumping of water solely for use in a mining operation referred to in paragraph (a) or (b) if the pumping: (i) occurs at the place where the mining operation is carried on or at a place adjacent to that place; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the pumping; or (n) the supply of water solely for use in a mining operation referred to in paragraph (a) or (b) if: (i) the supply is to the place where the mining operation is carried on; and (ii) the water comes from that place or a place adjacent to that place; and (iii) the supply is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the supply; or (o) the construction or maintenance of private access roads for use in a mining operation referred to in paragraph (a) or (b) if the construction or maintenance: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance; or (p) the construction or maintenance of: (i) tailings dams for use in a mining operation referred to in paragraph (a) or (b); or (ii) dams, or other works, to store or contain water that has been used in, or obtained in the course of conducting, a mining operation referred to in paragraph (a) or (b) and that contains contaminants that preclude its release into the environment; if the construction or maintenance: (iii) occurs at the place where the mining operation is carried on or at a place adjacent to that place; and (iv) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance; or (pa) the construction or maintenance of dams for the storage of uncontaminated water for use in a mining operation referred to in paragraph (a) or (b) if the construction or maintenance: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance; or (q) the construction or maintenance of private airstrips, buildings, plant or equipment for use in a mining operation referred to in paragraph (a) or (b) if the construction or maintenance: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance; or (r) the construction or maintenance of power stations or power lines solely for use in a mining operation referred to in paragraph (a) or (b) if the construction or maintenance: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the construction or maintenance; or (s) the removal of waste products of a mining operation referred to in paragraph (a) or (b) from the place where the mining operation is carried on; or (t) the disposal of waste products of a mining operation referred to in paragraph (a) or (b) at the place where the mining operation is carried on; or (u) the service, maintenance or repair of vehicles, plant or equipment for use in a mining operation referred to in paragraph (a) or (b) if the service, maintenance or repair: (i) occurs at the place where the mining operation is carried on; and (ii) is carried out by the person who carries on the mining operation or by a person contracted by that person to carry out the service, maintenance or repair; or (v) the service, maintenance or repair of vehicles or equipment solely for use in a mining operation referred to in paragraph (c) if the service, maintenance or repair is carried out by: (i) the person who carries on the mining operation; or (ii) a person contracted by that person to carry out the service, maintenance or repair; or (va) the service, maintenance or repair of transport networks that are employed solely for use in a mining operation referred to in paragraph (c) to the extent that the service, maintenance or repair: (i) is carried out on so much of the network as is located at the place where a mining operation referred to in paragraph (a) or (b) is carried out; and (ii) is carried out by the person who carries on the mining operation referred to in paragraph (c) or by a person contracted by that person to carry out the service, maintenance or repair; or (w) the use of diesel fuel at residential premises in: (i) providing food and drink for; or (ii) providing lighting, heating, air-conditioning, hot water or similar amenities for; or (iii) meeting other domestic requirements of; residents of the premises if: (iv) the use is by a person who carries on a mining operation referred to in paragraph (a) or (b); and (v) the residential premises are situated at the place where the mining operation is carried on, or at a place adjacent to that place; but does not include: (x) quarrying or dredging operations to the extent that the purpose of the operations is to obtain materials for use in building, road making, landscaping, construction or similar purposes; or (y) the use of a vehicle (other than a fork-lift, front-end loader, tractor or other similar prescribed vehicle) not exceeding 3.5 tonnes gross vehicle weight, other than such a vehicle that is extensively modified for use underground while it is so used; or (z) the transport, by any means, of people, equipment or goods to or from a place where a mining operation referred to in any of paragraphs (a) to (w) is, or is to be, carried on, or to or from a place adjacent to that place, other than such transport to the extent that it constitutes the activity described in paragraph (c), (n) or (s). Note: Examples of quarrying or dredging operations that are covered by paragraph (x) include operations for obtaining materials for use as concrete aggregate, road base materials, railway ballast, fill materials, building stone or monumental stone. … 8 The application before us concerns, principally, the meaning of par (z), though understood in the context and light of the balance of the definition. The facts 9 The applicant was engaged in exploration for, and production of, oil and gas on the North West Shelf and in the Timor Sea, as the operator of two projects known as the Griffin Joint Venture and the Jabiru/Challis Joint Venture, respectively. These projects are situated within the areas of certain offshore mining permits issued pursuant to the Petroleum (Submerged Lands) Act 1967 (Cth). While engaged in this activity, and for the purposes of this activity, the applicant purchased large quantities of diesel fuel. 10 The activities involved in the above exploration and production are both onshore and offshore. For exploration, mobile offshore drilling units (MODUs) are employed; for production, floating production storage offtake vessels (FPSOs) are employed. It is unnecessary to describe these units in any detail, beyond saying that the MODUs are rigs which need to be towed from place to place, and that the FPSOs are self-propelled sea-going vessels. As the Tribunal found, the applicant could not conduct all its relevant operations on or from the offshore locations. There are limitations to what can safely or economically be stored and held on the MODUs and FPSOs. Work boats, including supply vessels, support the operations by regularly ferrying people, materials, equipment and water to the offshore facilities (MODUs and FPSOs) from the onshore sites, and by regularly bringing from the offshore facilities people, and spent or unnecessary materials and equipment. The work boats also assist in towing MODUs from exploration point to exploration point, within a permit area, and from one permit area to another. 11 The Tribunal also found that the onshore operations were controlled by those in charge of, and situated on, the offshore facilities. The issues 12 Some of the claims for rebates made before the delegate of the respondent and the Tribunal were not pursued before us. The issues raised before us were: (a) whether any error of law was demonstrated by the Tribunal in its upholding of the delegate's view that the applicant was not entitled to a rebate in respect of fuel used: (i) by the supply boats travelling to and from the offshore and the onshore facilities (other than in respect of the supply of water and the removal of waste products under pars (n) and (s)); (ii) by work boats to assist in towing MODUs from one permit area to another (but not within permit areas - in respect of which movement the rebate was allowed); and (b) whether any error of law was demonstrated by the Tribunal in apportioning under par (z) (vide: "to the extent that") between transport activities giving rise to the rebate (see pars (n) and (s)) and transport activities not giving rise to the rebate (being those in (a) (i) and (ii) above).