Goliath Portland Cement Co Limited v Chief Executive Officer of Customs

The Statutory Provisions 6 With respect to all three applications, s 164(1)(a) and s 78A(1)(a) provided that a diesel fuel rebate is "payable to a person who purchases diesel for use by him … in mining operations". Section 164(7), prior to 1 July 1995, provided that: "'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; … but does not include quarrying operations carried on for the sole purpose of obtaining stone for building, road making or similar purposes;" and: " 'minerals' means minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic." These definitions apply to the third application listed above. 7 The definitions of "mining operations" and "minerals" were amended in 1995 and 1996 (Customs and Excise Legislation Amendment Act 1995 (Cth), No 87 of 1995; and Customs and Excise Legislation Amendment Act (No 1) 1996 (Cth), No 21 of 1996). In both cases the amendments took effect from 1 July 1995. The 1995 amendment inserted the following definition of "mining operations": " 'mining operations' means: (a) exploration, prospecting, the removal of overburden and other activities undertaken in the preparation of a site to enable mining to commence or mining for minerals; or (b) the dressing or beneficiation of minerals, or ores bearing minerals, as an integral part of operations for their recovery; … but does not include quarrying operations carried on solely for the purpose of obtaining stone for building, road making or similar purposes." To the definition of "minerals" the following exception was added: "except sand, sandstone, soil, slate, clay (other than bentonite or kaolin), basalt, granite, gravel, limestone or water." [Emphasis added] 8 The 1996 amendment to the definition of "minerals" in s 164(7) relevantly separated out the reference to limestone in the exception from minerals but saved from that exception "agricultural use limestone": " 'minerals' means minerals in any form, whether solid, liquid or gaseous and whether organic or inorganic, except: (a) sand, sandstone, soil, slate, clay (other than bentonite or kaolin), basalt, granite, gravel or water; or (b) limestone (other than agricultural use limestone)." "Agricultural use limestone" was in turn defined to mean "limestone for use in the de-acidification of soil in any agricultural activity other than the activity referred to in par (t) of the definition of agriculture". Paragraph (t) is not relevant for present purposes. 9 The 1996 amendments also provided for a new paragraph (a) of the definition of "mining operations": "(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."

The Tribunal's Decision 10 The Tribunal found that the purpose of Goliath's mining operations is to recover lime, the elements of which are present in the calcite as mined. The lime is recovered by separating it from the carbon dioxide in calcite and the carbon dioxide is discarded in the same way that other minerals are freed from extraneous matter. The target was "lime" and it was found by the Tribunal to be a mineral. The Tribunal noted that witnesses said "recovery" was used as a broad term in the mining industry; and the Tribunal itself suggested that it meant obtaining material; and that the addition of value to the material was also relevant. No doubt in connexion with a submission from Customs that the lime could not be said to be actually separated out in the processes undertaken, the Tribunal held that it was capable of extraction. 11 The Tribunal considered that the activities concerned with extracting the limestone and clay from the earth and crushing, blending and stockpiling the blend constituted mining for minerals; the following activities by Goliath in drying and grinding the blend and the whole of the calcining process constituted beneficiation of minerals, or ores bearing minerals, as an integral part of the operations for their recovery. It had earlier found limestone to be referred to either as an ore or a mineral. Clinkering was not however part of "mining operations". 12 The foregoing is a very brief summary of the reasons of the Tribunal and its consideration of the evidence of many witnesses. Much of this was necessitated by its view that "informed general usage" could resolve many of the issues of definition which arose. 13 The Tribunal rejected the suggestion that what was involved was quarrying and not mining operations, and held that quarrying was only excluded as an eligible activity if it was carried out exclusively for the purposes listed - which did not encompass the present circumstances. 14 For the first two applications, which require reference to the amendments taking effect in July 1995, the Tribunal also had to take account of the exclusions with respect to limestone. It had regard to some extrinsic material and to an earlier decision of the Tribunal on the same point (Re David Mitchell Ltd v Chief Executive Officer of Customs (1998) 51 ALD 389) where it had been held that it was not the Government's intention to exclude from the rebate circumstances where ores such as limestone were being extracted so as to recover a mineral within them.

The David Mitchell Case (Administrative Appeals Tribunal) 15 At various points in the Tribunal's decision in this case reliance was placed on the prior decision in David Mitchell. In that case an issue arose as to whether the processes were manufacturing, as distinct from mining. The applicants for rebate extracted limestone at two sites and subjected it to calcination and refined it into lime - which was then sold in that form or further processed to produce hydrated lime. The Tribunal held that when the material was extracted for the purpose of obtaining its mineral content, it was mined. "Minerals" had to be given a broad meaning and by reference to "informed general usage". Lime, the material sought, is found in nature where it is produced by a process similar to that applied by the applicants, and therefore it should be regarded as a mineral. The preparation for calcination constituted "dressing" and the calcining process was beneficiation - a term which encompasses physical changes. The allegation of manufacturing applied equally to a naturally occurring process and did not disqualify lime from being regarded as a mineral. 16 The Tribunal concluded: "The finding of the tribunal is that the total integrated process, from after extracting the limestone to the completion of the calcination process, constitutes dressing and beneficiation and recovery. The purpose of the mining operations is to recover lime, the elements of which are present in the calcite as mined. The lime is recovered by separating it from the elements of carbon dioxide with which it is associated in calcite and which, as a waste product, is discarded, in the same way that other minerals are freed from extraneous materials." It may be observed that the Tribunal in the present case has adopted this conclusion. There are, however, some differences in the facts.

The Decision of the Primary Judge 17 In his Honour's view the Tribunal fell into error in its approach with respect to the statutory exclusion of limestone: "If 'limestone' has been expressly excluded from the statutory definition of 'minerals' it seems to me to follow inexorably that the essential and defining component of limestone, namely calcite, must also be excluded. One cannot mine for calcite without mining for limestone, and vice versa. Goliath's argument requires treating the exclusion as if it read '(other than agricultural use limestone or limestone where what is sought is not the limestone as such, but a mineral that is found in the limestone)'. To quote the well known passage from the speech of Lord Mersey in Thompson v Goold & Co [1910] AC 409 at 420: 'It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do.' This conclusion is confirmed by the restoration of the rebate for limestone, but limited to agricultural use limestone. Likewise, by expressly excluding bentonite and kaolin from the exclusion of clay, Parliament has indicated that there is no room for any further exception for clay by reference to its components." 18 It was, his Honour held, not open to the Tribunal to use the extrinsic materials to explain Parliament's intention concerning the exclusion, since there was no relevant ambiguity. None arose in the circumstances: "… Cement manufacture is a well known use of limestone. It would be an odd reading of the statute to treat limestone as excluded from the exclusion not only where it is sought for the use explicitly mentioned (agriculture) but also for other, and necessarily unspecified, uses. Such other uses would include not only cement manufacture but glass manufacture and medicinal purposes, amongst others." The provisions of the statute did not indicate any policy, except one that limestone was only to be treated as a mineral when it was for agricultural use. His Honour did not uphold the attacks upon the Tribunal's findings as to whether mining, and not quarrying, was undertaken; nor to lime being a mineral; and that beneficiation was an integral part of the recovery of that mineral from limestone. 19 Two other matters, which are the subject of Custom's cross-appeal were also rejected by his Honour. They concern the topics of procedural fairness and informed general usage.

David Mitchell - the Appeal 20 Since the publication of his Honour's reasons in this case the appeal in David Mitchell was determined by Ryan J (Chief Executive Officer of Customs v David Mitchell Ltd (1999) 43 ATR 191). His Honour approved the conclusion reached by his Honour the primary Judge - that the express exclusion of limestone necessarily meant that its defining component, calcite, must also be excluded. His Honour then turned to consider whether the exception could be avoided by "characterising an operation as the extraction of calcite". In his Honour's view the Tribunal's focus upon whether the activities were quarrying operations had the result that the Tribunal "lost sight of the critical question of whether the object of the extractive process was a 'mineral'" [26]. The activities were properly characterised as the recovery of limestone. Whilst it was true that calcite is a constituent of limestone that did not mean that limestone is an ore of calcite. Indeed in that case his Honour held that it was not an ore of either calcite or lime. Further, nothing was done to separate calcite from the limestone before it is fed into the kilns to produce lime. His Honour went on [37]: "…Counsel for David Mitchell and Loongana emphasised that, before calcining, the limestone is subjected to screening, crushing and 'picking' to ensure that it has an acceptably high calcite content. That feature would tend to support the characterisation of the process as the dressing or beneficiation of limestone, but not as part of operations for the recovery of calcite. Accordingly, I have concluded that the tribunal erred in holding the total integrated process to the completion of calcination included dressing and beneficiation for the recovery of a mineral other than limestone." 21 His Honour did not accept that lime was a mineral; and did so as a matter of the construction of the subsection rather than by reference to the evidence of witnesses. The essential quality of "minerals", as used in the definition of "mining operations" in s 164(7), is that they are mined for. Lime, or calcium oxide, as produced at the site does not naturally occur and could not be won by mining. Whilst one might talk of limestone being extracted for its "mineral" content, it did not follow that its constituent, calcite, or the lime that was produced from driving off the carbon dioxide, is a "mineral". Whilst the Customs Act did not expressly state that a mineral had to be naturally occurring, it did specify for something that was to be mined for.

The issues on the Appeal and Cross-Appeal 22 The appellants submit that his Honour the primary Judge was in error in construing the statutory exclusion of limestone from the definition of a "mineral" to extend to lime. It was submitted that the initial object of the operations was the recovery of calcite from limestone; and the overall purpose was to recover lime. His Honour treated limestone and calcite as synonymous; and failed to have regard to lime being the product sought. Such an approach assumes that lime, in the context of these processes, is to be taken to be a mineral. 23 The latter point is taken up by Customs on the cross-appeal. It contends that his Honour ought to have held that the Tribunal misconstrued the definition of "mining operations" in finding that the process of calcining limestone answers that definition; and failed to apply the requirement of the recovery of minerals so as to refer to recovery of those minerals which are present in the material as extracted from the ground. In this case what was involved was the manufacture of a substance. In focussing on calcination as a process of beneficiation, it failed to have regard to the qualification that it must be an integral part of an operation for the recovery of a mineral. Customs submits that the decision of Ryan J in David Mitchell ought to be followed.

The Appeals 24 Central to the phrase "mining operations" is the notion of the recovery of minerals: see Collector of Customs v BHP Australia Coal Limited (1994) 53 FCR 499; Federal Commissioner of Taxation v Broken Hill Proprietary Co Ltd (1969) 120 CLR 240; 120 CLR 267; The Commissioner of Taxation v ICI Australia Ltd (1972) 127 CLR 529. The phrase "as an integral part of the operations for their recovery", which qualifies the extended meaning given to "mining operations" in par (b) in that definition, underlines this. What one has regard to is the object of the operations undertaken: the end product: Broken Hill Co Ltd, 273, 274. Put another way, that is when the mining operation ends. So, in cases concerning the recovery of the mineral salt from brine pumped to the surface and subjected to evaporation, it has been held that mining operations were engaged in: ICI Australia, 557; Regional Director of Customs (WA) v Dampier Salt (Operations) Pty Ltd (1996) 67 FCR 108. The completion of recovery may be said to occur, and the mining operations conclude, when no further process is undertaken by the miner to separate the mineral from any material adhering to it or intermixed with it prior to sale: Abbott Point Bulk Coal Pty Ltd v Collector of Customs (1992) 35 FCR 371, 380; Collector of Customs v BHP, 508; FCT v Broken Hill Co, 245. On the appeal from Kitto J in the last mentioned case, the Court expressed a reservation concerning work done subsequent to the winning of the mineral and as to whether it would come within the conception of "mining operations". The Court agreed with the broad view taken by his Honour of the words "mining operations" and that they referred to the separation of minerals from dirt and other material, but did not consider that they extended to the treatment of the mineral itself for the better utilisation of that mineral, for example, crushing bluestone for road making or turning brown coal into briquettes (272-274). That view has been subsequently reiterated. 25 The process of separation may however be a lengthy one and involve the application of forces or chemicals to recover the mineral, as the case referred to by Ryan J in David Mitchell illustrates (Chief Executive Officer of Customs v Tasmanian Electro Metallurgical Co Pty Ltd (1997) 76 FCR 476 (the 'Temco' case)). There Merkel J held that the recovery of a mineral can encompass not only the removal of impurities but also a chemical change and the introduction of additives: there sintering and smelting processes directed to the recovery of manganese, a mineral, within ore. In Dampier Salt, 116-7, it was held that the process of recovery continues until at least a saleable product emerges, but not necessarily upon the first production of a saleable product. That is to say, the focus is upon the desired end product. 26 Spender J in North Australian Cement Ltd v Federal Commissioner of Taxation (1989) 89 ATC 4765, held that the extraction of limestone for the purpose of the manufacture of cement was properly characterised as mining operations, limestone being a mineral. That might also be accepted for the purposes of the present case, although it does not assist the appellants, because of the exclusion of limestone from the definition of minerals. They go further, and point to calcite and lime occurring in the processes. In North Australian Cement, by comparison, the activity relied upon as mining operations involved the exploration for the deposit, determining its composition, planning its mining and carrying out what was for the most part extraction. 27 In the present case the end product sought is cement. The facts in David Mitchell are closer to those upon which the appellants would seek to rely, since the activities there concluded with lime as a product. The focus of that decision was upon whether lime could fall within the definition of "mineral", although Ryan J also expressed a view as to the question whether it could be said that recovery had taken place. It seems to us that the two questions overlap. 28 In our view it could not be said that in this case that lime was a "mineral" which was "recovered". Limestone is certainly recovered and the process which follows may be described as one of beneficiation of the limestone, but only as a part of a continuous process in the manufacture of cement. At the point of stockpiling of the blend prior to use, it was not suggested that a relevant mineral could be regarded as recovered and in a form to be saleable. The whole process undertaken is one which goes well beyond the removal of impurities to recover any mineral. Whilst the nature of the process applied in recovery will not always be conclusive of the question whether a mineral has been recovered, what is required is that the mineral be present when the material in which it is contained was taken from the earth, as Ryan J points out in David Mitchell. It is in that sense that one views a process or processes of recovery and what is said to be a "mineral": that which may be won by mining, albeit that other steps are necessary to render it useful or saleable. The fact that his Honour held limestone not to be an ore, which differs from the finding made here by the Tribunal, does not affect the approach otherwise taken. It is, in our view, highly artificial to speak of lime being "recovered" in a process such as this because it was possible to physically remove it. That is not and could not be undertaken in this process, the manufacture of cement. 29 On the view we have taken of the matter it is unnecessary to deal with the question whether the exclusion of "limestone" from the definition of "minerals" carries with it the exclusion of its constituents. Calcite is not the mineral mined or recovered. If that were the case we are however respectfully unable to agree with his Honour the primary Judge (with whom Ryan J agreed in David Mitchell) that any more was intended by the exclusion than a reference to limestone as such. An exclusion from beneficial legislation should not, in our view, be read widely unless it is clear that it was intended to incorporate more than is conveyed, namely the stated material. Calcite cannot, as a matter of language, be regarded as a derivative of the word limestone (as to which see Pearce, D. C., Statutory Interpretation in Australia, 4th ed. Sydney: Butterworths, 1996. [6.41]). The reference in the exclusion allowing for two constituents of clay should not be regarded as concluding the question whether the constituents of each of the materials there referred to were also to be taken as excluded, unless they were in turn excepted from it. At the most it creates an uncertainty. The extrinsic materials to which regard might then be had to resolve the question show that it was not intended to refuse rebate where a mineral within the stated minerals was sought to be recovered.

Conclusion 30 The appeal should be dismissed and the cross-appeal allowed. His Honour's order must then be set aside. In David Mitchell [48] Ryan J considered it was appropriate for the Court to frame orders finally disposing of the matter rather than to remit it for further consideration by the Tribunal, since it turned upon a question of construction. That seems, in our view, to be the proper course to take here. However, some party may wish to contend that there is some utility in remitting the matter to the Tribunal for further consideration in accordance with these reasons. If that is so then written submissions to that end should be filed within seven (7) days and, if such submissions are filed, the order reinstating the decision to refuse the rebate will not take effect until further order of the Court. The appellants should pay Customs' costs of the appeal and cross-appeal. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Lee, Cooper and Kiefel.

Associate: Dated: 22 August 2000 Counsel for the First and Second Appellants: Dr G A Flick SC and Mr J de Wijn QC

Solicitor for the First and Second Appellants: Freehill Hollingdale and Page

Counsel for the Respondent: Mr A Robertson SC and Dr A Gelbart

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 29 and 30 November 1999

Date of Judgment: 22 August 2000