Chief Executive Officer of Customs v West Australian Government Railways Commission

Federal Court of Australia|1999-10-27|Before: Carr J, Nicholson JJ, French J

Introduction 1 The West Australian Government Railways Commission (Westrail) transports coal, caustic soda and lime from various loading points in the south-west of Western Australia to an alumina refinery at Worsley for use in the refining of bauxite mined at Mt Saddleback, into alumina. The transportation of the raw materials which, from the points of loading, belong to the mining joint venturers as do the rail wagons provided for the purpose, is part of an integrated operation for the mining and refining of the bauxite. It is carried out under the provisions of an overarching State Agreement. The Administrative Appeals Tribunal has found, contrary to a determination of the Chief Executive Officer of Customs, that diesel fuel used in the transportation of the raw materials was purchased by Westrail for use in mining operations as defined under the Customs Act 1901 (Cth)and the Excise Act 1901 (Cth) and that Westrail is thereby entitled to a diesel fuel rebate. The decision of the Tribunal was challenged by way of appeal to a single judge of this Court, Carr J, who dismissed the appeal. The Chief Executive Officer of Customs now appeals against the decision of Carr J. 2 The case raises yet again the vexed question of the proper boundaries of judicial review and the extent to which the function of the Tribunal in making its decision was substantially a matter of evaluation and therefore a decision on a matter of fact, not reviewable in this Court, or whether it involved an error of law in the construction of the relevant statutes.

13/1/97 Lime 145,546 litres 1 September 1995 to 30 April 1996 16/1/97 Caustic Soda 125,267 litres 1 September 1995 to 30 April 1996 30/1/97 Caustic Soda 118,800 litres 1 May 1996 to 30 November 1996 30/1/97 Lime 154,502 litres 1 May 1996 to 30 November 1996 3/2/97 Coal 144,966 litres 1 May 1996 to 30 November 1996 11/3/97 Coal 16,150 litres 1 December 1996 to 31 December 1996 11/3/97 Caustic Soda 14,940 litres 1 December 1996 to 31 December 1996 11/3/97 Lime 14,848 litres 1 December 1996 to 31 December 1996

On appeal to the Administrative Appeals Tribunal, each of those decisions was set aside and in substitution therefore the Tribunal decided that a rebate of duty was payable by the Chief Executive Officer of Customs to Westrail. That decision was given on 7 November 1997. The Chief Executive Officer then appealed to the Federal Court. The appeal came on for hearing before Carr J on 5 October 1998 and on 7 January 1999 his Honour gave judgment dismissing the appeal with costs. The Chief Executive Officer of Customs now appeals to this Court against the decision of Carr J.

Statutory Framework 21 The conditions upon which rebates of customs duty and excise duty are payable in relation to the purchase of diesel fuel are set out in s 164(1) of the Customs Act 1901(Cth) and s 78A(1) of the Excise Act 1901. In each it is provided that: "A rebate is…payable to a person who purchases diesel fuel for use by him: (a) in mining operations…". Section 164(7) of the Customs Act defines "mining operations", a definition which includes the following parts relevant for present purposes: ""mining operations" means: (a) exploration, prospecting, or mining 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) the dressing or beneficiation of minerals, or ores bearing minerals, as an integral part of operations for their recovery; and includes: (c) if minerals, or ores bearing minerals, are dressed or beneficiated at a place other than the mining site as an integral part of the operations for their recovery: (i) the transporting of the minerals or ores from the mining site to that place; and (ii) the return journey from that place to the mining site of the vehicles or equipment used in transporting the minerals or ores, if that journey is for the purpose of later carrying out the mining operation 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…" 22 Prior to amendments to the Act in 1995 by the Customs and Excise Legislation Amendment Act 1995, the definition of "mining activities" covered the matters included in pars (a) and (b) and, in so called "sweeper clauses" pars (c) and (ca), operations "connected with" those activities. The sweeper clauses were deleted and a number of specific activities inserted in pars (d) to (w). They cover shipping transport used in carrying out northern mining activities and ancillary activities, natural gas liquefaction, common salt production, coal stockpiling, electricity generation, mine site rehabilitation, the search for and pumping of water for use in mining operations and other activities associated with specified elements of mining infrastructure. The stated purpose of the amendments was to tighten the eligibility criteria for rebates so that the integrity of the scheme as it was introduced in 1982 to assist those engaged in mainstream primary production and mainstream mining operations could be maintained - Parliamentary Debates Senate 8 June 1995, p 1062. 23 In the Second Reading Speech it was said that the interpretation of the sweeper clauses had been a main source of contention and had generated most of the litigation in the lifetime of the scheme. The amendments were designed to remove the subjectivity associated with the "sweeper clauses" and replace them with an objective list of activities eligible for rebate. Significantly it was said: "It should be noted that although the proposed amendments will necessarily narrow the range of activities for which rebate is payable, farmers and miners will generally be unaffected. The intention of these amendments is to put beyond doubt that the Scheme is not meant to provide rebate eligibility for activities which are not sufficiently connected with mining or agriculture; for instance, the provision of a service or utility to a farmer or miner, such as electricity through a grid, or the building of a dam which is intended to supply water to, among others, farmers, or the operation of a garbage tip on a former mine site by someone other than the miner, where the resultant filling of the mine site is said to be the rehabilitation of a mine site, and thus connected with a mining operation." - Parliamentary Debates, Senate, 8 June 1995 p 1064.

The Tribunal's Decision 24 The facts set out above are taken from an agreed statement of facts adopted by the Tribunal. The Tribunal began by identifying as the general issue the question whether the diesel fuel purchased by Westrail for use in the transportation by rail of coal, caustic soda and lime to the Worsley Alumina refinery, was purchased for use "in mining operations" with the result that a rebate of duty was payable. This in turn raised the issue of whether the rail transport operations in which the diesel fuel used by Westrail fell within the definition of "mining operations" in s 164(7) of the Customs Act. The Chief Executive Officer conceded that the "Bayer process" carried out at the Worsley Alumina refinery constituted beneficiation of the mineral, bauxite, "as an integral part of operations for [the] recovery" of the mineral, alumina. It was also conceded that: 1. Caustic soda and lime are both necessary ingredients in the "Bayer process" carried out at the Worsley Alumina refinery. 2. The carrying out of the Bayer process at the Worsley Alumina refinery depends on the use of coal. 3. It is necessary for the required coal, caustic soda and lime to be transported by Westrail from the Collie coalfields, the Port of Bunbury and Kwinana, respectively, to the Worsley Alumina refinery by trains that are powered by diesel fuel. 25 After discussing general principles relevant to the construction and application of the statutory provisions the Tribunal identified, as the question for determination, whether Westrail's rail transport operations fell within par (a) or (b) of the definition of "mining operations". It was accepted that the requirement that diesel fuel be purchased for a "rebate attracting purpose" must be satisfied "at the point of purchase" - Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280. The Tribunal noted that in Collector of Customs v The Western Australian Government Railways Commission (Westrail) (1995) 39 ALD 21, Lee J had upheld a decision of the Tribunal that Westrail's transportation of coal from the Collie coalfields to the refinery pursuant to the State Agreement, fell within par (ca) of the definition of "mining operations". As noted earlier that paragraph was repealed in 1995. It had brought within the scope of "mining operations": "other operations connected with the dressing or beneficiation of minerals, or ores bearing minerals, where that dressing or beneficiation is an integral part of the operation for the recovery of the minerals or of the ores, being operations that are carried out in, or at a place adjacent to, the area in which the dressing or beneficiation occurs." It was observed that the Tribunal, differently constituted, had come to a contrary conclusion in a similar case in Re Queensland Railways and Regional Director of Customs (Qld) (1996) 42 ALD 577. The Tribunal which decided the Queensland Railways case declined to follow the decision of Lee J in Westrail. In the Queensland Railways case, the Tribunal had found that the purpose of Queensland Railways in purchasing diesel fuel was solely related to the transport of coal, which was one of the essential components of Queensland Alumina's beneficiation process but was not for use in the beneficiation process itself. The Tribunal under appeal in this case, however, took the view that Westrail's purpose in purchasing the relevant diesel fuel should not be so narrowly construed. It went on to say: "Accordingly, in a broader, practical commercial sense it may truly be said that Westrail purchased the diesel fuel for use by it in rail transport operations which formed an integral part of a closely integrated and co-ordinated beneficiation process whereby alumina was recovered - that is, in "mining operations" as defined in para (b) of the statutory definition. In a yet broader sense it may also be said that Westrail purchased the diesel fuel for use by it in rail transport operations which formed an integral part of an integrated and co-ordinated project for the excavation (that is, mining) and refining (that is, beneficiation) of bauxite and the recovery of alumina therefrom - that is, in "mining operations" as defined in both para (a) and para (b) of the statutory definition." 26 The Tribunal regarded as decisive of the matter in issue in this case, the State Agreement and the integration of the relevant transport operations within the overall integrated and co-ordinated Worsley project for the recovery of alumina under the provisions of the Agreement.

The Decision of the Judge at First Instance 27 On appeal to the learned primary judge the Chief Executive Officer asserted that the Tribunal had erred in law in holding that Westrail's activities of transporting coal, caustic soda and lime fell within par (b) of the definition of "mining operations". The Tribunal was also said to have erred in law for failing to have proper regard to the definition of "mining operations" and to the decision of Sackville J in Australian Native Landscapes v Chief Executive Officer of Customs (1997) 44 ALD 531. The Tribunal was said to have misdirected itself as to the relevant legal tests. Its finding that Westrail's activities constituted beneficiation of bauxite was attacked and the decision generally was stigmatised as unreasonable. 28 His Honour characterised the question which the Tribunal had to decide as whether the rail transport activities had such a nexus with the mining or beneficiation operations that it could correctly be said that the diesel fuel was used "in" those operations. That question involved an assessment of the degree of connection between the rail transport operations and the beneficiation process which took place at the Worsley site. Where a question involved such assessments of degree and where different conclusions were reasonably open, the Tribunal's decision was one of fact which could not be disturbed on appeal. His Honour, having referred to a number of authorities, said that to succeed on appeal the Chief Executive Officer must establish that the Tribunal's conclusion that the rail transport activities were "in mining operations" was not a conclusion reasonably open to it. 29 Central to the submissions of the Chief Executive Officer to his Honour was the proposition that the Tribunal had erred by asking itself the wrong question. Instead of asking whether the rail transport activities were in beneficiation of bauxite, the Tribunal had, so it was put, departed from that formulation by using phraseology such as "an integrated and co-ordinated project" and like terms. 30 His Honour's view was that on a fair reading of the Tribunal's reasons it did have proper regard to the definition of "mining operations". It posed the correct question for itself, namely, whether the respondent's transport operations whereby the materials, all of which were essential to the beneficiation process at the Worsley refinery, were transported to the refinery, fell within either of the subparagraphs of the definition. His Honour rejected the contention that the Tribunal had failed to have proper regard to the decision of Sackville J in Australian Native Landscapes. He accepted Westrail's submissions to the effect that the 1995 amendments to the definition of "mining operations" did not narrow the range of activities for which a rebate was payable under par (b) of the statutory definition. His Honour, who was a member of the majority on the Full Court in Chief Executive Officer of Customs v WMC Resources Ltd (1998) 158 ALR 241agreed with the views which had been expressed by Lee J on that aspect noting that it had not been necessary for him to deal with that issue on the appeal in that case. He disagreed with the contention that the Tribunal's decision stripped subpar (c) of the definition of "mining operations" of any significance at all. 31 He rejected a contention that the Tribunal had erred in law in having regard to the State Agreement, noting that the rights and obligations conferred on and assumed by the joint venturers provided a most appropriate factual context in which the Tribunal could assess whether the transport activity was "in" beneficiation. He noted several cases which stand as authority for the proposition that the degree of integration of the relevant activity with an integrated mining operation is a relevant consideration to be taken into account. When the Tribunal had decided that the transport activities in this case were "in" beneficiation, it did not err in law by misdirecting itself as to the legal test to be applied. It was justified in taking into account as a relevant consideration the integration of the transport operations with the overall integrated and coordinated Worsley project. 32 His Honour also rejected the contention that anything which was not a step in the Bayer process could not be "in" beneficiation. Such a submission was found to fly in the face of cases such as Federal Commissioner of Taxation v Reynolds Australia Alumina Ltd (1987) 18 FCR 29. His Honour rejected the no evidence submission. The question for the Tribunal in this matter was, in his Honour's view, one of fact not of law. It was submitted that having regard to three previous decisions of the Tribunal which were materially indistinguishable and the ratio of Lee J's decision in Westrail, the Tribunal's decision was unreasonable. This referred to the Tribunal's comment in the earlier Westrail decision that the rail operation could not properly be regarded as part of the beneficiation process. His Honour, however, pointed out that that was a differently constituted Tribunal, only considering that question as an aside. The Tribunal's decision was not unreasonable.

Grounds of Appeal 33 By the Notice of Appeal the Chief Executive Officer of Customs contended that his Honour erred in law in holding that: "(a) On the proper construction of s 164(1)(b), diesel fuel purchased for use in the transportation of coal, caustic soda and lime, ("the goods") which themselves were to be used in the beneficiation of bauxite, was purchased for use in "the dressing or beneficiation of minerals, or ores bearing minerals, as an integral part of operations for their recovery." (b) It was open to the Administrative Appeals Tribunal ("the Tribunal") to hold that the transportation of the goods for use in the beneficiation of a mineral itself constituted the beneficiation of the mineral within sub paragraph (b) of the definition of "mining operations" in Section 164(7) of the Act. (c) "…the question for the Tribunal involved an assessment of the degree of nexus between the rail transport operations and the beneficiation process which took place at the Worsley site". (d) The Tribunal was justified in considering the "integration of the relevant transport operations with the overall integrated and co-ordinated Worsley Project for the recovery of alumina" in holding that the diesel fuel purchased for use in the transportation of the goods was purchased for use "in" the beneficiation of bauxite. (e) There was evidence before the Tribunal upon which it could hold that the diesel fuel purchased for use in the transportation of the goods was purchased for use "in" the beneficiation of bauxite. (f) It was reasonably open for the Tribunal to hold that diesel fuel purchased for use in the transportation of the goods was purchased for use "in" the beneficiation of bauxite."

The Nature of the Jurisdiction 34 The proceedings before his Honour, the learned primary judge, were brought under s 44 of the Administrative Appeals Tribunal Act 1975 which provides, inter alia, that: "44(1) A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding." The Court's jurisdiction is significantly constrained by its limitation to questions of law. The appealable error of law must arise on the facts found by the Tribunal or must vitiate the findings made or must have led the Tribunal to omit to make a finding which it was legally required to make. A wrong finding of fact is not sufficient to demonstrate error of law. Where the decision of the Tribunal involves matters of fact and degree, then provided it applies correct principles of law, no appeal will lie. So if the Tribunal's conclusion as a matter of fact and degree is reasonably open, even if not the only conclusion reasonably open, it should be regarded as a conclusion of fact and the Court should not interfere with it. That is not to say that the question whether facts found fall within a particular statute is not frequently a question of law or at least involves a question of law - see generally Collector of Customs v Pozzolanic Enterprises and the authorities there reviewed. 35 The question for the learned primary judge in this case was whether there had been an error of law on the part of the Tribunal which affected its determination. Necessarily, on appeal to the Full Court in such cases, there is a tendency to focus on the existence or non-existence of an operative error of law on the part of the Tribunal rather than upon the reasoning of the trial judge. Such appeals tend to acquire the character of re-runs of the judicial review process with three judges instead of one. In this case there was a degree of concentration on the reasoning of the learned primary judge but in the end the case reduced to whether the Tribunal had erred in law.

The Issue for Determination 36 The issue for determination in this appeal can be expressed as a single question. On the facts found by the Tribunal was it open to the Tribunal to conclude that Westrail's purchase of diesel fuel was a purchase of such fuel for use by it in mining operations? By substituting the relevant part of the definition of "mining operations" in s 164(7) of the Customs Act, the question is reframed. On the facts found by the Tribunal, was it open to the Tribunal to conclude that Westrail's purchase of diesel fuel was a purchase of such fuel for use by it in the beneficiation of mineral or ore bearing minerals, as an integral part of operations for their recovery? 37 It was not disputed that the Bayer process itself is a process of beneficiation within the meaning of the Act. But the Chief Executive Officer submitted that that process defines the totality of beneficiation relevant for present purposes and was limited to the steps taken in the refinery. The transportation of coal, caustic soda and lime to the refinery was not "in beneficiation" but antecedent to it. 38 A site based limitation of the beneficiation process risks distorting the concept in the direction of a geographical rather than process based definition of its limits. If within the refinery there had been stockpiles or storage silos of coal, caustic soda and lime transported by some diesel powered means to the boilers, the digesters and the separators, as the case may be, there would be little doubt that such diesel would have been purchased for use in the beneficiation of the bauxite into alumina. The geographical dispersion of the points at which the joint venturers acquired ownership of the raw materials is a relevant factor in asserting whether transport from those points to the point of application in the refinery is in beneficiation or not. But it is not determinative of that question. It may be that, for reasons to do with access to raw materials or other reasons, certain elements of a beneficiation process are geographically dispersed. The Chief Executive Officer contends, in effect, that it is not possible to draw an evaluative boundary around the beneficiation process so as to incorporate in it the transportation of raw materials from the points at which the joint venturers have acquired ownership in them. There was, he argued, expert evidence as to the technical meaning of the term "beneficiation" and it was the fact that beneficiation was constituted solely by the "Bayer process' which took place entirely at the refinery site. His Honour's conclusion that the term "beneficiation" was not a technical term was said to be an error of law. In failing to have regard to its technical meaning, his Honour was said to have: (a) failed to consider or apply the expert evidence as to the processes which constituted "beneficiation". (b) had regard to two irrelevant considerations, namely the State Agreement, and the alleged integration of the project, in determining whether the transportation of the material was in beneficiation. (c) failed to have proper regard to the true meaning of the term "recovery" in the context in which it appears. (d) consequently failed to have proper regard to the meaning of the phrase "as an integral part of operations for their recovery". His Honour's approach to the relevance and significance of the State Agreement and to the "integration" of the project was also said to overlook the technical nature of the term "beneficiation" and the need for expert evidence in relation to it. His Honour was said to have allowed evidence to overtake what was an issue of construction. 39 The Tribunal had found, on the basis of the expert evidence of Mr Blunt, that the Worsley Alumina project is an integrated and coordinated project for the mining and refining of bauxite and the recovery of alumina therefrom. It also found on the basis of his evidence and having regard to the terms of the State Agreement, that the rail transportation by Westrail of the coal, caustic soda and lime to the Worsley Alumina refinery from the Collie coalfields, the Port of Bunbury and Kwinana respectively, which are essential to the carrying out of the Bayer process of beneficiation at the refinery, are some of a number of integrated steps between excavating the bauxite at Boddington and recovering the alumina at Worsley. 40 The words "beneficiate" and "beneficiation" are ordinary English words in the Oxford English Dictionary and the Macquarie Dictionary. In the Oxford English Dictionary "beneficiate" is defined: "beneficiate v. Mining [f. Sp. Beneficiar to benefit, to derive profit from a mine, + - ATE3] trans. To reduce (ores). Hence beneficiating ppl a., beneficiation, the reduction of ores." In the Macquarie Dictionary "beneficiation" appears thus: "beneficiation 1. the dressing or processing of ores to regulate the size of the product, remove unwanted constituents and improve the quality, purity or assay grade. 2. concentration or other preparation of ore for smelting by drying, flotation, or magnetic separation." 41 In cross examination of WAPL's production superintendent, Mr Blunt, senior counsel for the Chief Executive Officer before the Tribunal, put to him that the process which is described as the "Bayer process" is known as the beneficiation of bauxite. Mr Blunt agreed. The question is whether that uncontroverted evidence defined the limits of the beneficiation process so as to limit the Tribunal in deciding what was or was not "in beneficiation" for the purposes of s 164. If it were reasonably open to the Tribunal to characterise as "in beneficiation" the steps taken to bring the coal, caustic soda and lime to the refinery, then that characterisation was not open to challenge before his Honour and is not open to challenge on this appeal. 42 There is support for the proposition that beneficiation is a non-legal, technical term. It was so described in the joint judgment of Cooper and Ryan JJ in Abbott Point Bulk Coal Pty Ltd v Collector of Customs (1992) 35 FCR 371 at 374. The joint judgment however, decided that case on the basis that the process there in question, the placing of coal from different stock piles in the hold of a ship in layers, was not an integral part of an operation for the recovery of the coal. It was therefore unnecessary, and their Honours so stated, to determine whether the process was one of beneficiation. In Collector of Customs v BHP Australia Coal Ltd (1994) 53 FCR 499, it was not in contest before the Court that both the words "beneficiation" and "recovery" were non-legal, technical terms (at 501). The joint judgment in Abbott Point was cited. 43 In my respectful opinion the word "beneficiation" can be treated as an ordinary English word. The dictionary definition does not require expert assistance for its understanding. Expert evidence may be required to explain the steps in processing mineral ores following their extraction and the purpose and outcomes of such processing. On the basis of such evidence it may be decided whether or not all or any of those steps constitute "beneficiation" according to its ordinary meaning. The application of the term to the process described in the evidence is not, however, a matter exhaustively determined by expert testimony. More particularly, the question about what is "in beneficiation" and what is not, is not a purely technical exercise. It may be that, as in this case, an expert witness will say that some process or other is beneficiation. There may be a number of sub-processes, each of which constitute beneficiation. Each of the steps of digestion, separation, precipitation and calcination in this case could be regarded as a beneficiation of the mineral ores. And taken together, they also constitute beneficiation as Mr Blunt said in his evidence. This does not mean that the line which defines the outer limits of beneficiation has to be drawn around those steps. 44 Reference was made in the Tribunal's decision and that of the learned primary judge, to the decision of Lee J in Collector of Customs v The Western Australian Government Railways Commission (Westrail). That was an appeal from a Tribunal decision allowing diesel fuel rebate in respect of the same process as that under consideration in this case, albeit for an earlier period than that under consideration in this case. The decision relied upon the now deleted par (ca) in the definition of "mining operations". That paragraph picked up "other operations connected with the dressing or beneficiation of minerals" and included operations carried out in or at a place adjacent to the area in which the dressing or beneficiation occurs. His Honour's dismissal of the appeal against the Tribunal decision was ultimately based upon the proposition that when the conclusions of the Tribunal are findings on questions of degree, those conclusions are findings of fact and no question of law arises. That was expressed to be subject to the case in which it can be said that the application of the proper construction of the relevant provisions to the given facts would permit only one conclusion to be drawn - (at 27-28). That qualification could perhaps be expressed more widely to cover the case in which the application of the proper construction of the relevant provisions would not allow the conclusions to be drawn which were drawn. 45 The case went off on his Honour's acceptance that the findings of the Tribunal were open to it having regard to the language of par (ca). His Honour went further in the event that the repeal of that paragraph was applicable to the case to express the view that in any event the transportation of the raw materials was within par (b) of the definition of "mining operations". That conclusion was obiter and arguably represented an evaluative application of the provisions of the kind carried out by the Tribunal rather than by the Court. 46 In Re Queensland Railways and Regional Director of Customs (Qld), the Tribunal considered a factual situation indistinguishable from that considered by Lee J in the 1995 Westrail case. It did not agree with his Honour's obiter view about the application of par (b) of the definition of "mining operations" to the facts in that case. To say that, however, was to say little of significance for this case. To the extent that the application of par (b) to a set of facts is evaluative in character, it is entirely a matter for the Tribunal. In the present case the Tribunal, differently constituted from that which decided Queensland Railways, came to a different conclusion. 47 The recent case of Chief Executive Officer of Customs v WMC Resources was concerned with diesel fuel used by ships transporting materials to an island for construction of a facility to be used in receiving natural gas from an offshore wellhead. The rebate was disallowed by the Chief Executive Officer of Customs, whose decision was affirmed by the Administrative Appeals Tribunal. On appeal to the Federal Court, the primary judge allowed the appeal and remitted the matter to the Tribunal. The Full Court by majority (Carr and R.D. Nicholson JJ, (French J dissenting)) allowed the appeal and restored the decision of the Tribunal. That case is distinguishable from the present case in that the transportation of materials was a preparatory step in the establishment of the mining operation whereas the transportation of raw materials in this case is a continuing part of an integrated process of extraction and refining. Nevertheless, even in the WMC Resources case, Carr J was of the view that it would have been open to the Tribunal to find that the relevant transport services were activities undertaken in the preparation of a site. It was also open to the Tribunal to find they were not, and the Tribunal had so found. On that basis the Tribunal had made a finding of fact which did not involve any error of law. R.D. Nicholson J took a narrower view of the application of the relevant provision to the facts of the case saying that the act of transportation was not itself an act in preparation of the relevant site. It was an act preparatory thereto. There was therefore no clear ratio in the case, the majority judges allowing the appeal for somewhat different reasons. 48 While accepting that the word "in" is a word of restriction, it does not operate to restrict the evaluation of what constitutes "beneficiation" for the purposes of the definition of "mining operations". That term describes a process, the outer limits of which are subject to evaluation by the Tribunal. That evaluation is a matter of fact. It was made explicit in this case at par 23 of the Tribunal's reasons: "Accordingly, in a broader, practical commercial sense it may truly be said that Westrail purchased the diesel fuel for use by it in rail transport operations which formed an integral part of a closely integrated and co-ordinated beneficiation process where alumina was recovered - that is, in "mining operations" as defined in para (b) of the statutory definition. In a yet broader sense it may also be said that Westrail purchased the diesel fuel for use by it in rail transport operations which formed an integral part of an integrated and co-ordinated project for the excavation (that is, mining) and refining (that is, beneficiation) of bauxite and the recovery of alumina therefrom - that is, in "mining operations" as defined in both para (a) and para (b) of the statutory definition." 49 The Tribunal was dealing in this case with a fully integrated process for the extraction and refining of bauxite. It was open to it to characterise as "in beneficiation" the steps, including transportation of raw materials to the refinery which were involved in the processing of the ores post extraction. That evaluation of what was and was not "in beneficiation" was reasonably open to the Tribunal in accordance with the ordinary meaning of the word "beneficiation" and the ordinary meaning of the collocation "in beneficiation". Once it is accepted that it was open to the Tribunal to adopt that evaluation, that is a matter of fact which cannot be challenged in this Court. 50 In my opinion, for these reasons, the appeal should be dismissed with costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

AND: THE WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION (WESTRAIL)

KIEFEL J: 51 The Chief Executive Officer of Customs appeals from a decision of a Judge of this Court. His Honour dismissed an appeal from the decision of the Administrative Appeals Tribunal concerning the availability of a diesel fuel rebate to the respondent. 52 The facts before the Tribunal were not in dispute. Those necessary for the purposes of this appeal may be stated shortly. The Worsley alumina project in Western Australia is conducted as a joint venture, and is facilitated by two agreements with the State of Western Australia. Pursuant to those agreements, the Joint Venturers established a bauxite refinery at Worsley for the purpose of extracting alumina from bauxite mined near the town Boddington. The process used is called the "Bayer process", which operates continuously, twenty-four hours per day, 365 days per year. It is not necessary to further describe it. The bauxite mined was transported to the Worsley site by a conveyor system. The materials used in the process, coal for heat and power, and the ingredients caustic soda and lime, were transported from the coalfield and ports by rail. It is that means of transport which involved the respondent to the appeal, Westrail, in the purchase of diesel. Pursuant to the agreements, the joint venturers paid for an upgrading of an existing railway system and the construction of a railway line to the refinery. They were also obliged to provide their own rail wagons, but not locomotives, for the transportation of the material and to pay freight to the respondents. Westrail provided the locomotives and the diesel fuel which powers them. 53 Section 164(1) of the Customs Act 1901 (Cth) and s 78A (1) of the Excise Act 1901(Cth) each provide that: "A rebate is … payable to a person who purchases diesel fuel for use by him: (a) in mining operations …". 54 The phrase "mining operations" is defined in s 164(7) Customs Act, for the purpose of both Acts. The subsection is, in relevant parts, as follows: "'Mining operations' means: (a) exploration, prospecting, or mining 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) the dressing or beneficiation of minerals, or ores bearing minerals, as an integral part of operations for their recovery; and includes: (c) if minerals, or ores bearing minerals, are dressed or beneficiated at a place other than the mining site as an integral part of the operations for their recovery: (i) the transporting of the minerals or ores from the mining site to that place; and (ii) the return journey from that place to the mining site of the vehicles or equipment used in transporting the minerals or ores, if that journey is for the purpose of later carrying out the mining operation 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 …". 55 It is that definition, and in particular paragraph (b), that is in issue here. The Bayer process was accepted to be one of "beneficiation". It was generally referred to as a type of refining process.

Tribunal's Reasoning and the Primary Judge's Decision 56 The Tribunal found that the Worsley alumina project to be "an integrated and co-ordinated project for the mining and refining of bauxite and the recovery of alumina therefrom" (45); and that the rail transportation by Westrail of the coal, caustic soda and lime to the refinery, which are essential to the process of beneficiation, are some "of a number of integrated steps between excavating the bauxite at Boddington and recovering alumina at Worsley" (46). In that approach, the Tribunal was guided by the decision in Collector of Customs v The Western Australian Government Railways Commission (Westrail) (1995) 39 ALD 21, as it acknowledged. It accordingly concluded that, in a broad, practical commercial sense, the transport operations formed "an integral part of a closely integrated and co-ordinated beneficiation process whereby alumina was recovered - that is, in "mining operations" as defined in para (b) of the statutory definition" (46). It went on to add that, in an even broader sense, it may also be said that the diesel fuel was purchased by the respondent for use by it in rail transport operations which formed "an integral part of an integrated and co-ordinated project for the excavation (that is, mining) and refining (that is, beneficiation) of bauxite and the recovery of alumina therefrom - that is, in "mining operations" as defined in both par (a) and par (b) of the statutory definition" (46). 57 His Honour the primary Judge considered that the question which par (b) posed in this case was the "degree of nexus" between the transportation and the refining process and that was one of fact. His Honour held that the Tribunal was entitled to take into account that it was, overall, an integrated project; the degree of integration; and the requirements of the State Agreement in that connexion. His Honour concluded that it had not been shown that the conclusion reached was not one reasonably open to it. The degree of integration provided the answer to the question whether the fuel for transport was used "in beneficiation". In his Honour's view, something was "integral", if it formed part of a whole. That was the case here. His Honour rejected other arguments put by the Chief Executive Officer, which included the principal submission that anything which was not a step in the Bayer process could not be "in beneficiation". The Bayer process, it had been argued, "defined and limited what amounted to beneficiation". The Appeal 58 As noted above, the Tribunal's decision was based largely upon the decision of Lee J in Westrail (1995). His Honour was there concerned with the definition of "mining operations" prior to its amendment in 1995. It is the amended definition with which this Court is concerned. Paragraph (a) was then in different terms. The new definition refers to activities which might be considered preparatory to mining, but which are said to "enable mining". Paragraph (b) earlier referred to the refining process as one taking place at the mining site or elsewhere, but this assumes no relevance on the appeal. It was otherwise in the same terms as it now appears. The earlier definition went on to list, as pars (c) and (ca) "other operations" which were "connected with" mining or refining (also as "mining operations"). (I shall use those two terms to describe all the activities in (a) and (b) respectively). The definition then read, in relevant parts: (7) In this section: … "mining operations" means: (a) exploration, prospecting or mining for minerals; or (b) the dressing or beneficiation (at the mining site or elsewhere) of minerals, or ores bearing minerals, as an integral part of operations for their recovery; and includes: (c) other operations connected with exploration, prospecting or mining for minerals that are carried out in, or at a place adjacent to, the area in which the exploration, prospecting or mining occurs; (ca) other operations connected with the dressing or beneficiation of minerals, or ores bearing minerals, where that dressing or beneficiation is an integral part of the operation for the recovery of the minerals or of the ores, being operations that are carried out in, or at a place adjacent to, the area in which the dressing or beneficiation occurs; …". 59 It will be observed that to qualify, operations other than mining and refining were required to be "connected with" mining or refining activities, and in the latter respect the refining was itself required to be an integral part of the operation for the recovery of minerals. The "other operation" and the refining process were also required to be conducted adjacent to one another. The two principal questions in Westrail (1995)were the degree of connection between delivery of coal and the process at the refinery, and whether the two activities were adjacent. The last question was answered in the affirmative, and his Honour held that the delivery of coal to the refinery and the use of the coal in the refining process were each an integral part of the operation for the recovery of alumina. In arriving at that view, his Honour regarded it as important that the recovery process was the key element in the definition and that the State Agreement required the whole operation to comprise steps which included the transport of the coal. Lee J also went on to observe that the amended definition of "mining operations", with which this Court is presently concerned, would not have altered the conclusion that the conveyance to the Worsley alumina refinery of the coal owned by the mining operator was within par (b). 60 A contrary conclusion was reached in another decision of the Tribunal: in Re Queensland Railways and Regional Director of Customs (Qld) (1996) 42 ALD 577. The Tribunal there reasoned from the purpose of each of the refiner and the transporter. In the case of the latter, its purpose in purchasing the diesel fuel was solely related to the transport of coal and was not, in its view, for use in the beneficiation process itself. The Tribunal here declined to follow that decision. The Appeal 61 The appellant's primary submissions were that the Tribunal, and his Honour the primary Judge, failed to take into account the restricted meaning of "in" in the context of the amendment; and misconceived the test to be applied which was not, post-amendment, one of sufficient connexion. The use of "in" with regard to par (b), it was argued, makes clear that it was only fuel used in the refining process itself which qualified. Transport to that point was not part of the process, it was an activity preparatory to it. 62 I agree that the question whether the process is an integrated and continuous one is a question of fact. Such a conclusion was one clearly open to the Tribunal on the evidence. I am unable however, with respect to his Honour the primary Judge, to accept that that is determinative of the matter in the case. In my respectful view it is not relevant to the enquiry which the section now poses. 63 Mining and refining to recover minerals are now nominated as the two primary activities for which diesel fuel might be purchased and a rebate received. Save for what is included in the list of additional activities which appear in paras (c) to (w) which follow and in particular (c) to which I refer below, there is no suggestion that activities other than the primary activities, but which had a connection to them, were to qualify as "mining operations". The previous definition was much wider and extended to "other activities" ancillary to mining and refining, so long as they could be seen to have an appropriate level of connection with it. In some mining operations, that question might have been properly resolved by reference to how aspects of the operation linked with, or depended upon, others. That is to say no line was then drawn around the primary activities. I am, with respect, unable to agree with Lee J in Westrail (1995). The issues which arise under pars (a) and (b) of the definition are not the same as they were prior to the amendments (and see Chief Executive Officer of Customs v Dyno Wesfarmers Limited (1997) 73 FCR 1, 5). 64 The removal of the extensions to other activities has the effect that the purchase of fuel for use "in mining operations" must be taken to refer to its use as part of the activity which satisfies the definition of a mining operation, here a refining or beneficiation process. Its operation, in such a context, is restrictive: see Robe River Mining Co Pty Ltd v Federal Commissioner of Taxation (1989) 21 FCR 1, 12; State Rail Authority (NSW) v Collector of Customs (1991) 33 FCR 211, 214. The fuel purchased here must be for use in the Bayer Process. "In" restricts the use of fuel to the process itself. Fuel used in transporting fuel and ingredients to be used in the process is fuel used in a step preparatory to the process being undertaken, but is not an activity within the refining process. It may be contrasted with the fuel used to power the process itself. The transportation of these materials may be essential to the refining process, but not part of it, as the definition would now seem to require. Further, in my respectful view, the transportation does not become part of the process by reference to the "recovery" of minerals being the overall purpose in refining. The reference to the refining process being "an integral part of operations for their recovery" in par (b) does not extend the ambit of the paragraph to activities beyond refining, such that an activity being seen to be part of that overall objective would qualify. The phrase operates to limit the processes of "dressing and beneficiation" which might qualify under (b), to those which are essential to the recovery of the minerals from the ore. I take it there may be more than one purpose to some processes which might otherwise satisfy one of the two descriptions. 65 In my view a consideration of pars (a) and (b) is sufficient to answer the questions raised on the appeal. Paragraph (c) in the amended definition further confirms that transport connected with, but not part of, the refining process itself was not intended to be the subject of a rebate. Paragraph (c) and following add to the two primary qualifying activities (mining and refining) other activities. They were no doubt chosen because they represented activities likely to closely occur with mining or refining, such that the legislature considered that they too should attract benefits. So far as the activity of refining is concerned, it may be seen that at the same time as the legislature has withdrawn the wider reference to any operations having the requisite connexion, it has turned its mind to transportation associated with it. It has identified only the transportation of minerals or ores from the mining site to the refining site as qualifying. This is a strong, though not conclusive, indication that transportation of other materials relevant to the refining process were not considered to qualify. Conclusion 66 In my view the appellant was correct in its submission that the test which was applied by the Tribunal, one of the nexus between the activity of transportation and the refining process and in the context of the operation viewed as a whole, was one no longer applicable. So far as a beneficiation process was now concerned, the fuel subject to a rebate must be purchased for use in the process itself. 67 There remains the question of the appropriate order to be made. Whilst the question whether a use is within the scope of an activity is a question of fact, there is, no dispute here that the transportation was not part of the refining process. I would therefore order that the appeal be allowed and that the decision of his Honour the primary Judge that the Tribunal did not err in law be set aside. Westrail should pay the costs on the appeal and the proceedings below. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

AND: WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION (WESTRAIL)

R D NICHOLSON J 68 I have had the opportunity of examining in draft the reasons of French J and Kiefel J. 69 I agree with the reasons of French J. 70 I do so because I consider that the question raised on the appeal is whether the Tribunal was entitled to its conclusion that as a matter of fact the uses of diesel fuel in issue were "in" beneficiation. The extensive description of the facts given by French J makes apparent, in my opinion, why it was open to the Tribunal to so conclude. 71 It is apparent from the reasons of the Tribunal that it clearly understood paragraph (ca) had been repealed. The Tribunal followed Lee J's view in Collector of Customs -v- The Western Australian Government Railways Commission (Westrail) (1995) 39 ALD 21only because it considered that the State Agreement and the integration of the relevant transport operations within the overall integrated and coordinated Worsley Project for the recovery of alumina under the provisions of that Agreement were present in the evidence. 72 In Chief Executive Officer of Customs -v- WMC Resources (1998) 158 ALR 241, I examined the relevant statutory provisions in s164(1) of the Customs Act 1901 (Cth) and s78A of the Excise Act 1901 (Cth) since their amendment in 1995. That was for the purpose of the application of those provisions to the facts of that case which involved an act of transportation which was not itself an act in preparation of the relevant site but rather an act preparatory thereto. 73 In my view the evidence which was before the Tribunal in the present matter entitled it to conclude that the transportation of materials was not a preparatory step but rather integrated into the beneficiation process. It is not for this Court to make a fresh finding of fact if that finding of fact was reasonably open to the Tribunal making it. 74 One limb of the appellant's contentions is that "the decision of the primary judge must be in error when the interpretation which he has accepted takes no account of the inclusion of subpar (c)(1) in the definition of mining operations". That paragraph includes the transporting of minerals but not other materials to a place of beneficiation. It is said this specific inclusion in subpar (c)(1) implies the exclusion from pars (a) and (b) of the transportation of materials of whatever character other than minerals. I do not agree. Sub- par (c)(1) addresses the transporting of "minerals or ores". As I stated in WMC Resources Limited, where transport is a relevant factor some paragraphs expressly address it. However paragraphs (a) and (b) of the definition of "mining operations" are widely encompassing provisions. Nothing which I said in WMC Resources Limited led me then or leads me now to the view that a specific inclusion in paragraphs (c) - (w) necessarily precludes an activity of a similar character falling within paragraphs (a) or (b) even if not themselves forming part of those inclusionary paragraphs. 75 I accept the submission for the respondents that the question of what constitutes "beneficiation" and whether there is a technical meaning to be given to the term is not the issue on this appeal. It was conceded that what was happening at the refinery was "beneficiation". The only question for the Tribunal was whether the rail transport activities were relevantly in that process, having regard to the evidence that established the degree of integration of those activities with that process. It was not a case which was run on lengthy cross‑examination concerning the commencement and completion of the process of beneficiation. 76 I also accept the submission made for the respondent there was not evidence that beneficiation was constituted solely by the Bayer process, that is, the chemical process taking place at the Worsley refinery site. There was evidence that the processes carried out at the Worsley refinery site were beneficiation, but there was nothing in the evidence or in the Tribunal's findings to suggest that the beneficiation operations of the Worsley Joint Venturers were limited to the processes carried out at the Worsley refinery site. On the contrary there was extensive and comprehensive evidence before the Tribunal regarding all the operations. In my view the Tribunal was entitled to conclude that the rail transport activities were "in" beneficiation. 77 In WMC Resources at 259 I drew attention to the dictionary definition of the word "in" as it appears in par (a) of the definition of "mining operations" stating that it is to be understood in this context as "inclusion within, or occurrence during the course of ….": Macquarie Dictionary, p887. I also referred to what was said by the Full Court (Davies Wilcox and Tamberlin JJ) in Chief Executive Officer of Customs -v- Dyno Wesfarmers Ltd (1997) 73 FCR 1 at 5 to the effect that the expression "in the process or act of" expresses the meaning of the word "in" in the context of section 164 (1)(a) of the Customs Act. Here it is appropriate to note that the word "in", by including the meaning "occurrence during the course of", leaves entirely open as a matter of statutory construction the findings of fact which the Tribunal made in this present case. 78 For these reasons I consider that the primary Judge was not in error of law and I agree with French J that the appeal should be dismissed. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice R.D. Nicholson

Associate: Dated: 27 October 1999 Counsel for the Appellant: Mr G.J. Gibson QC and Mr R.G. Maguire

Solicitor for the Appellant: Australian Government Solicitor

Counsel for the Respondent: Mr W.S. Martin QC and Mr G.J. Cotterill

Solicitor for the Respondent: Mallesons Stephen Jaques

Customs Act 1901(Cth)s 164(1), s

Excise Act 1901(Cth)s 78A(1)

(Cth)and the Excise Act 1901(Cth)

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