Historically, the processing of ore was a contentious issue from a diesel refund perspective, due to the various interpretations held by SARS and industry participants in the diesel refund scheme.
Accordingly, there was a constant debate as to whether various
processing activities constitute qualifying mining activities or
On 13 December 2013, Note 6(f)(iii)(cc) to Part 3 of Schedule No 6 to the Customs and Excise Act, No 91 of 1964 ("the Act") was amended (with retrospective effect from 1 January 2011) to read as follows:
"Operations for the recovery of minerals being mining for those minerals including the recovery of salts but not including any post-recovery or post-mining processing of those minerals."
In essence the amendment now legitimises the view held by SARS over the last couple of years that diesel refunds may only be claimed in respect of mining activities up to the point before the ore is processed, which includes activities like screening, crushing, washing, etc.
Whilst the purpose of the amendment was, no doubt, also to simplify/clarify the interpretation of the Notes to the refund item, the amendment raises the following, as yet unanswered, questions:
- What is the impact of the retrospective amendment on users and how will SARS give effect to the amendment?
- Is the retrospective amendment of Note 6(f)(iii)cc) "expedient in the public interest", as envisaged in section 75(15) of the Act?
- Is the amendment not contradicting some of the other qualifying activities, such as the transporting of ore on the mining site for processing (Note 6(f)(iii)(pp))?
- What is the impact of this amendment on qualifying activities listed in Note 6(f)(iii) that take place after processing of ore, e.g. the transport of ores/minerals to the nearest railway siding (Note 6(f)(iii)(tt)), stockpiling of coal (Note 6(f)(iii)(mm)), etc?
Until the above questions are answered, it is unclear what actions users will have to take in response to the amendment of Note 6(f)(iii)(cc).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.