Fuel levy refund claim

In Commissioner for the South African Revenue Service v Glencore Operations SA (Pty) Ltd [2021] 4 All SA 14 (SCA) the mining company claimed a refund of fuel levy, appeal hinged on interpretation of ‘own primary production activities in mining’.

By Merilyn Rowena Kader LLB (Unisa), Legal Editor at LexisNexis South Africa.

Trade (customs and excise) - Claim for refund of fuel levy by mining company: In the course of its coal mining operations, Glencore, the appellant in Commissioner for the South African Revenue Service v Glencore Operations SA (Pty) Ltd [2021] 4 All SA 14 (SCA) used vehicles and equipment requiring diesel fuel. In terms of the Customs and Excise Act 91 of 1964, diesel attracted a fuel levy. Glencore’s claims for a refund of the fuel levy were disallowed by the appellant (the Commissioner) on the ground that Glencore did not use the diesel in primary production activities in mining as contemplated in Note 6(f)(ii) and (iii) of Part 3 of sch 6 to the Act. The High Court upheld Glencore’s appeal, leading to the Commissioner appealing to the present court.

The court, as per Petse DP, held that the primary issue for decision on appeal was whether the mining operations in relation to which diesel refunds were claimed by Glencore had been carried on for own primary production in mining as contemplated in Note 6(f)(ii) and (iii) of Part 3 of sch 6 to the Act and, therefore, qualified for a refund of levies as asserted by Glencore. A related, but subsidiary issue, was whether the list of activities set out in Note 6(f)(iii) of Part 3 of sch 6 to the Act, which qualify as own primary production activities in mining was exhaustive. The answer to that question turned solely on the interpretation of the word ‘include’ in Note 6(f)(iii) in light of the underlying purpose to which the fuel rebates were directed.

The appeal hinged on the proper interpretation of the expression located in Note 6(f)(ii)(aa) of Part 3 to sch 6, namely ‘own primary production activities in mining’. The court set out the principles of statutory interpretation, and applying such rules, concluded that Glencore’s activities underlying the fuel levy rebate claims did not constitute primary production activities in mining.

On the related question, it was held that the long list of inclusions in Note 6(f)(iii) of Part 3 of sch 6 served to carefully circumscribe the ambit of the activities in respect of which rebate refunds could be claimed under the relevant item, thereby dispelling any notion that the list of inclusions was open-ended.

The High Court’s order was set aside and the appeal upheld.

Merilyn Rowena Kader
Legal Editor at LexisNexis