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Tata Steel Ltd. And Tata Iron & Steel Co. Ltd. Versus Union of India & Ors and State of Jharkhand & Ors. And State of Bihar (Now Jharkhand) & Ors. Versus Tata Iron & Steel Co. Ltd.

2015 (10) TMI 2386 - SUPREME COURT

Payment of royalty - whether royalty is payable at the rate mentioned in the Second Schedule to the MMDR Act on processed coal, that is, coal consumed or removed from the boundaries of the leased area in a beneficiated form or on the raw or unprocessed or ROM coal at the pit-head - Held that:- beneficiation process, as far as coal is concerned, has two significant consequences – the grade of coal improves (from Washery Grade IV it could improve to Steel Grade I) and the weight of the coal increa .....

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limestone has a consequence different from that of copper ore, namely, mere removal of waste and foreign matter. It appears that this process does not improve the quality of the dolomite or the limestone, though with the removal of waste and foreign matter, the weight would decrease somewhat. It may be mentioned that royalty is charged on dolomite and limestone on a tonnage basis. - nature of the mineral and the stage at which royalty is to be computed become important. The basis of levy would .....

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ut by the holder of the mining lease. In that context it was held in SAIL that since the process of removal of waste and foreign matter amounts to consumption, the entire extracted mineral is exigible to royalty. - SAIL did not consider (and then reject) the reasoning given by the Orissa High Court that royalty is not payable on wastage that remains within the boundaries of the leased area. This was critically adverted to in an order M/s Central Coalfields Ltd. v. State of Jharkhand decided by t .....

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the extraction of which royalty has to be paid. - Iron ore (with which NMDC is concerned) falls in the same generic category for levy of royalty as dolomite, limestone and coal namely on a tonnage basis but there is a crucial difference between iron ore and coal (as also between dolomite, limestone and iron ore). In the case of iron ore, beneficiation is necessary before it can be utilized. It has been observed in NMDC that "in iron ore production the run-of-mine (ROM) is in a very crude form. A .....

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royalty on iron ore is postponed, as held in NMDC, to a post-beneficiation stage.

Under the circumstances, removal of beneficiated coal as against ROM coal might work to the disadvantage of the lease holder. For this reason, no similarity can be found between coal and iron ore or between coal and dolomite and limestone (apart from the fact that SAIL did not deal with removal from the leased area but consumption within the leased area). - issue of computation of royalty on minerals is .....

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on tailings or rejects. As far as Tata Steel is concerned, its computation given in the Convenience Volume indicates that royalty is paid and payable on middlings and tailings. Rule 64C of the MCR makes it clear that royalty is payable on rejects when they are sold or consumed after being dumped. This will take care of situations such as that pertaining to silver, as mentioned in the affidavit of the Union of India.

There is nothing to indicate in Rule 64B and Rule 64C of the MCR tha .....

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cluding only coal. On the contrary, in NMDC this court has observed that these rules are general in nature, applicable to all types of minerals, which includes coal. The expression of opinion by the Union of India is contrary to the observations of this court.

With effect from 25th September, 2000 when these rules were inserted in the MCR, royalty is payable on all minerals including coal at the stage mentioned in these rules, that is, on removal of the mineral from the boundaries of .....

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25th September, 2000. However, this amount need not be physically refunded but should be adjusted pro rata against future payments of royalty by TISCO over the next one year. TISCO is not entitled to refund of royalty paid after 25th September, 2000. The royalty paid by TISCO after 25th September, 2000 was correctly paid and in accordance with Rule 64B and Rule 64C of the MCR, which have not been challenged by TISCO. - Appeal disposed of. - CA NOS. 2938-2939 OF 2015 (Arising out of S.L.P. (C) N .....

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aining to TISCO, the first appeal is Civil Appeal No. 303/2004 filed by TISCO against the judgment and order dated 23rd July, 2002 passed by the Jharkhand High Court. MANU/JH/0590/2002 The grievance in this appeal is that though the application of the law laid down by this court in State of Orissa v. Steel Authority of India Ltd. (1998) 6 SCC 476 (hereafter SAIL) has been accepted by the High Court, namely, that royalty is chargeable [in accordance with Section 9 of the Mines and Minerals (Devel .....

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July, 2002. The submission is that after the decision in SAIL the Government of India issued a notification dated 25th September, 2000 inserting Rule 64B and Rule 64C in the Mineral Concession Rules, 1960 (hereafter MCR) and as a result of this, Run-of-Mine (ROM) minerals, after being processed in the leased area are exigible to royalty on the processed mineral. It is contended that these rules were, unfortunately, not brought to the notice of the High Court and that the decision rendered by th .....

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er TISCO is entitled to refund of royalty from 25th September, 2000 till June 2002 and if so, whether the High Court was right in denying that refund. 6. The other set of appeals pertaining to Tata Steel consists of four appeals. These appeals filed by Tata Steel arise out of S.L.P. (C) Nos.8972-73/2014 and S.L.P. (C) Nos.9016-17/2014 and are directed against a common judgment and order dated 12th March, 2014 passed by the Jharkhand High Court in W.P. (C) Nos.1504/2009 & 1505/2009 and W.P. ( .....

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icularly applicable on coal minerals. Tata Steel is also aggrieved by the conclusion of the Jharkhand High Court that Rule 64B and Rule 64C of the MCR are constitutionally valid. Appeals filed by Tata Steel 7. The question for our consideration in the set of appeals filed by Tata Steel is whether royalty is chargeable under Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 and the Second Schedule thereto on raw or unprocessed or Run-of-Mine (ROM) coal at the pit-head or .....

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tracted at the pit-head only for the period from 10th August, 1998 to 25th September, 2000. Background facts 8. Tata Steel holds several mining leases for coal in the State of Jharkhand, in the district of Ramgarh (formerly Hazaribagh) known as the West Bokaro Colliery and in the district of Dhanbad known as the Jamadoba and Belatand group of collieries. The coal mines are captive coal mines. Tata Steel has an adequate number of washeries in the leased area where the raw coal extracted from the .....

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ses.-(1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral. (2) The holder of a mining lease granted .....

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any coal consumed by a workman engaged in a colliery provided that such consumption by the workman does not exceed one-third of a tonne per month. (3) The Central Government may, by notification in the Official Gazette, amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification: Provided that the Central Government shall not enhance the rate of royalty in respect of .....

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ble at the rate mentioned in the Second Schedule to the MMDR Act on the tonnage of the extracted coal at the pit-head and not on the tonnage of the washed or beneficiated coal. By its judgment and order dated 7th August, 1990 the Patna High Court held that TISCO was liable to pay royalty on the tonnage of the washed or beneficiated coal. It was held: From the plain reading of section 9(2) of the Act, it is clear that royalty is payable on the coal removed from the leased area and so long it is n .....

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Second Schedule to the MMDR Act on the quantity of mineral (limestone and dolomite) extracted as it is or on the quantity arrived at after these minerals have undergone a process of removal of waste and foreign matter. According to the State of Orissa royalty was chargeable on the extracted minerals at the rate mentioned in the Second Schedule to the MMDR Act while according to SAIL royalty was chargeable at the rate mentioned in the Second Schedule to the MMDR Act on the quantity of minerals ob .....

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a High Court was appealed against but the appeal was dismissed by this court. {National Coal Development Corporation Ltd. v. State of Orissa, (1998) 6 SCC 480} Relying upon this decision, it was concluded in SAIL that the process of removal of waste and foreign matter amounts to consumption and, therefore, the entire mineral extracted is exigible to a levy of royalty. By necessary implication the decision of the Patna High Court in CWJC No.1 of 1984 (R) filed by TISCO stood reversed. 13. Perhaps .....

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R Act on the tonnage of unprocessed or ROM coal at the pit-head and not on processed or beneficiated coal. 15. With regard to the claim of Tata Steel that it was liable to pay royalty only on the tonnage of unprocessed or ROM coal at the pit-head in terms of the decision in SAIL, the response the State of Jharkhand was that in view of Rule 64B and Rule 64C of the MCR, royalty was liable to be paid at the rate mentioned in the Second Schedule to the MMDR Act on the tonnage of beneficiated coal an .....

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ated 5th May, 1987 the rate of royalty on coking coal Steel Grade I was fixed at ₹ 7/- per ton and of Washery Grade IV at ₹ 5.50 per ton; by a notification dated 1st August, 1991 the rate of royalty on coking coal Steel Grade I was increased to ₹ 150/- per ton and of coking coal Washery Grade IV to ₹ 75/- per ton; by a notification dated 14th October, 1994 the rate of royalty on coking coal Steel Grade I was further increased to ₹ 195/- per ton and of coking coal Wa .....

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unprocessed coal or Run-of-Mine (ROM) coal can be used as it is. 18. As far as Tata Steel is concerned, it is stated on page 164 of the Convenience Volume handed over to us by learned counsel for Tata Steel that Most of our raw coal falls in the (on average) Washery Grade IV. It may be mentioned that coal of Washery Grade IV has ash content between 28% and 35%. In the synopsis and lists of dates filed by Tata Steel in the appeals arising out of S.L.P. (C) Nos. 8972-73 of 2014 it is stated as fol .....

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entire ROM can be generally made usable, the Respondents No. 1 & 2 are of the opinion that rule 64B and the rule 64C [of the Mineral Concession Rules, 1960] may not be particularly applicable on coal minerals. 20. Similarly, the State of Jharkhand in its affidavit filed in the same case has stated in paragraph 79 as follows: That with regard to the averments made by the petitioner in Paragraphs 84 and 85 of the instant writ application it is stated and submitted that it is not necessary that .....

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n its washeries in the leased areas. 22. The controversy in the present appeals is, therefore, limited to the question whether royalty is payable at the rate mentioned in the Second Schedule to the MMDR Act on processed coal, that is, coal consumed or removed from the boundaries of the leased area in a beneficiated form or on the raw or unprocessed or ROM coal at the pit-head. 23. That the controversy is limited to the stage at which royalty is chargeable on coal is also clear from paragraph 17 .....

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d. 24. Similarly, in paragraph 31 of the counter affidavit filed by the Union of India in W.P.(C) No.1504 of 2009 in the High Court it is stated as follows:- 31. That in reply to the statements made in para No.84 of the Writ Petition the Answering Respondent most humbly and respectfully state that the applicability of Rule 64B and Rule 64C [of the Mineral Concession Rules, 1960] is necessary for minerals that need processing or beneficiation before being used, especially metallic minerals. Howev .....

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ts needs to be beneficiated to make it usable in the steel industry and the controversy is limited to the issue of payment of royalty - whether it is payable on raw or unprocessed or ROM coal at the pit-head or it is payable on processed Steel Grade coal. Coal beneficiation 26. The question that, therefore, arises is what is the consequence of beneficiation? Very briefly, the consequence of beneficiation of coal is upgrading or improving its quality from the ROM coal. In the Convenience Volume h .....

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the Coal washery (Beneficiation plant) for beneficiation so that the final clean coal product has ash of below 15% (Steel Grade coal). For coal beneficiation, gravity separation methods for coarser (size 13 mm to 0.5 mm) material and froth floatation method for finer material (size < 0.5 mm) are done. So, before beneficiation, the raw coal is crushed in to size below 13 mm at Coal Handling Plant (Crushing Plant). The coarse material i.e. size from 13 mm to 0.5 mm is treated in dense media cyc .....

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the output, shown by an example below - Production (Extraction): The basis figure of production of 100 tonnes of ROM coal has been taken. Therefore, Quantity produced (extracted): = 100 tonnes Beneficiation: The products are dewatered but still the surface moisture gets adhered to the product generated. The beneficiation is a wet process i.e. raw coal mass flows through different process in slurry form. Output is measured on wet process because it is transported on wet basis (with moisture). Hen .....

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higher ash coal and lower ash coal, so no chemical changes are there in the coal mineral, as there are no chemical reactions involved during this beneficiation process. Referring below a flow chart [not relevant]…….. From the quantity related table, it is also quite evident that due to addition of water during wet beneficiation, the summation of beneficiated coal product quantity is higher than fed ROM coal quantity. 27. From this, it is quite clear that the beneficiation process, .....

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rt, the beneficiation of copper has different consequences. It is stated, in this regard as follows: It is stated that the mineral extracted during mining in its primary state is called run of mine (ROM), which may or may not be useable in its primary state depending on the minerals and its grade. In such a case where the entire ROM cannot be used generally, there is a level of processing required to beneficiate the ROM to enhance the grade ore and also take out waste material occurring with the .....

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eing taken out of the lease area, in terms of the royalty rate prescribed in Second Schedule to the MMDR Act. Rule 64B of MCR does not specify the royalty rates and its applicability is only to the extent of facilitating levy or royalty on the processed ore removed from the lease area, and not the mineral consumed in the lease area. Further royalty is required to be paid as per the rates notified by the Central Government in Second Schedule to the MMDR Act. Rule 64B of MCR is therefore applicabl .....

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r is extracted from the tailings and sold or consumed. Rule 64C is therefore applicable on such cases of minerals, where tailings or rejects generated during mining or processing are likely to be dumped due to its limited use. 29. In other words, the ROM copper ore contains hardly 1% or 2% of copper but after the beneficiation process the copper extract from the ore increases to about 25%. It is thereafter sent for refining and smelting. In other words, copper ore cannot be utilized as it is or .....

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on dolomite and limestone on a tonnage basis. 31. It is in this context that the nature of the mineral and the stage at which royalty is to be computed become important. The basis of levy would have to be rational and it might have different consequences at different stages. Computation of royalty 32. As far as the computation of royalty on coal is concerned, Tata Steel has given details of the methodology of computation in the Convenience Volume handed over to us. {This has not been disputed by .....

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d 14th October, 1994 amending the Second Schedule to the MMDR Act. For coking coal Steel Grade I, coking coal Steel Grade II and coking coal Washery Grade II the rate of royalty is ₹ 195/- per ton. For coking coal Washery Grade IV the rate of royalty is ₹ 95/- per ton. 35. Therefore, for every 100 tons of coking coal Washery Grade IV extracted by Tata Steel, the royalty payable on ROM coal was ₹ 9500/- with effect from 14th October, 1994. However, if the royalty were to be comp .....

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M coal (as claimed by Tata Steel) is ₹ 2850/- per 100 tons of coal extracted (12350 minus 9500 = 2850). 37. This position continued till August 2002 when the Second Schedule to the MMDR Act was amended by a notification dated 16th August, 2002. 38. In terms of the notification dated 16th August, 2002 the rate of royalty for coking coal Steel Grade I, coking coal Steel Grade II and coking coal Washery Grade II was raised to ₹ 250/- per ton. For coking coal Washery Grade IV the rate of .....

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5 85 2125 Royalty payable 105 15525 Rejects have not been included in this calculation. 40. Based on the above computation, the difference in royalty on post-beneficiation coal (as claimed by the State of Jharkhand) and on ROM coal (as claimed by Tata Steel) is ₹ 4025/- per 100 tons of coal extracted (15525 minus 11500 = 4025). 41. This position continued till August 2007 when the Second Schedule to the MMDR Act was amended by a notification dated 1st August, 2007. Through this notificatio .....

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lty (R) on Washery Grade IV coal, a = ₹ 90; b = 5% of P ; P = basic pit-head price of ROM coal as reflected in the invoice. 43. Tata Steel gives the computation arrived at on the basis of the above notification in the Convenience Volume as follows: As Tata Steel is not selling ROM, hence we take the prices notified by CIL [Coal India Limited] for its various collieries. For example, we apply the prices notified by Coal India Ltd for Central Coalfields Ltd. In the Price Notification No.181 .....

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ber, 2009 the pit-head/basic price of Run of Mine (ROM) coal for Washery Grade IV stood revised from 1020 (in Rupees per tonne) to 1120. This is the figure taken by Tata Steel in its computations given in the Convenience Volume} Product Grade Quantity ( in tons) Royalty rate (a+ bP Royalty (Rs per ton) Amount (in Rs) Clean coal Steel Grade I 40 180+5% of 1120 236 9440 Middlings Grade E 40 70+5% of 790 116 4400 Tailings Grade D 25 70+5% of 1000 120 3000 Royalty payable 105 16840 Rejects have not .....

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em. 46. To summarize the computations, the royalty as computed by the State and as computed by Tata Steel is as follows: Royalty payable in Rs. Period (from date) On beneficiated coal (per 100 tons) On ROM coal (per 100 tons) Difference (per 100 tons) Royalty payable 14.10.1994 12350 9500 2850 Royalty payable 16.8.2002 15525 11500 4025 Royalty payable 1.8.2007 16840 14600 2240 47. As is quite obvious, the difference in royalty payable would run into huge figures particularly since coal is mined .....

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asis, it was concluded that since beneficiated coal is removed from the leased area, Tata Steel is liable to pay royalty on the weight of the beneficiated coal. 50. The second interpretation is a somewhat restrictive interpretation given by the Orissa High Court in National Coal Development Corporation Limited. In that case, it was held that: "The incidence of royalty under the general tenor of the scheme [of Section 9 of the MMDR Act] arises when coal is severed from the seam in its natura .....

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n to removal from the leased area as extraction of the coal from the seam in the mine which is in the leased area, that is, extraction from the pit-head. This restricted interpretation was accepted by this court in the appeal filed by National Coal Development Corporation and on that basis this court also upheld the payment of royalty by the lease holder on coal consumed by the workmen of the Corporation prior to the amendment of Section 9 of the MMDR Act in 1972. {National Coal Development Corp .....

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ing to Section 9(1) of the MMDR Act and the lease deed of SAIL, the Orissa High Court held as follows:- "A distinction has to be made between removal from the mine and removal from the leased area. If after the mineral is extracted from the mine, it undergoes some processing and during processing, a part of the mineral is wasted and the wastage remains on the leased area and is not removed therefrom, the lessee cannot be asked to pay royalty on that portion of the wastage."{The decisio .....

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noted that the extracted mineral undergoes a process of removal of waste and foreign matter before it is removed from the boundaries of the leased area. The decision of this court on the levy of royalty turned on the consumption of the mineral through that process carried out by the holder of the mining lease. In that context it was held in SAIL that since the process of removal of waste and foreign matter amounts to consumption, the entire extracted mineral is exigible to royalty. It was held:- .....

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undaries of the leased area. This was critically adverted to in an order dated 25th July, 2006 in C.A. No.5651 of 2005{M/s Central Coalfields Ltd. v. State of Jharkhand decided by this court } on the ground, inter alia, that the distinction made by the Orissa High Court between removal of a mineral from a mine and removal from a leased area has been rejected without any reason. This is what this court had to say: "A bare reading of this Court's judgment in Steel Authority of India's .....

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quot; 57. We may also mention at this stage that SAIL has been politely distinguished in National Mineral Development Corporation Ltd. v. State of M.P. (or NMDC). (2004) 6 SCC 281] 58. In sum and substance this is the issue before us, namely, whether for the purposes of payment of royalty, removal of a mineral as mentioned in Section 9 of the MMDR Act must be restrictively interpreted as removal or extraction of the mineral from the mine or the pit-head or a literal interpretation as removal of .....

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the resultant waste material from the wet screening process undertaken for segregation of lumps and fines. When the issue of exigibility of "slimes" was raised in the High Court,[The decision of the High Court is reported as AIR 1999 MP 112] it was held that royalty is payable on the mineral as extracted and removed or consumed from the leased area. The High Court also relied upon SAIL to hold that the entire quantity of ROM iron ore as extracted from the earth shall be liable to paym .....

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and the Second Schedule to the MMDR Act must be read as a part and parcel of Section 9 of the said Act. It was also held that though the Parliament was fully aware that iron ore would have to undergo a process which would lead to the emergence of lumps, fines, concentrates and slimes yet it chose to leave slimes out of consideration for the payment of royalty. For this reason, it was held that royalty was not payable on slimes. 62. This court also proceeded to consider Rule 64B and Rule 64C of t .....

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d in the processing in the leased area, thereby making a distinction between removal from the leased area and consumption within the leased area. 64. NMDC has analyzed the scope of Section 9 of the MMDR Act in conjunction with the Second Schedule to the MMDR Act. It was held that there is no conflict between the two and that Section 9 of the MMDR Act cannot be read in isolation but that the Second Schedule to the MMDR Act must be read as a part and parcel of Section 9 of the MMDR Act. Paragraphs .....

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ferent places depending on the draftsman's art of drafting and methodology employed. In the latter case, the charging provision and the computation provision, though placed in two parts of the enactment, shall have to be read together as constituting one integrated provision. The charging provision and the computation provision do differ qualitatively. In case of conflict, the computation provision shall give way to the charging provision. In case of doubt or ambiguity the computing provisio .....

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flows therefrom shall also have to be given effect to. 24. Applying the abovestated principle, it is clear that Section 9 neither prescribes the rate of royalty nor does it lay down how the royalty shall be computed. The rate of royalty and its computation methodology are to be found in the Second Schedule and therefore the reading of Section 9 which authorises charging of royalty cannot be complete unless what is specified in the Second Schedule is also read as part and parcel of Section 9.&qu .....

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ndustry"; "in case of coal ... the entire ROM can be generally made usable" and "it is not necessary that coal produced from a mine should always be subjected to processing. There are various coal mines in the country producing raw coal without any processing......." This is to say that ROM coal can generally be used in the raw form without processing and beneficiation is not at all necessary. However, if the raw coal is to be utilized for some specialized purposes it wo .....

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e critical reference. As mentioned above, the decision in SAIL was based not on removal but on consumption of the mineral.{ In National Mineral Development Corpn. Ltd. v. State of M.P. this court observed in paragraph 34 of the Report as follows: Both these minerals [dolomite and limestone] were utilised as raw material by the mining lessees on the leased area itself. The mining lessee claimed that dolomite and limestone having been extracted from the mine underwent processing wherein a part of .....

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moved from the leased area but that would not make any difference as the run-of-mine was itself consumed in the processing on the leased}. On the basis of the mineral extracted and the decision rendered by this court, therefore, no similarity can be found between SAIL (case of consumption) and National Coal Development Corporation Limited (case of removal) although royalty is charged on dolomite and limestone, as in coal, on a per ton basis. 68. Iron ore (with which NMDC is concerned) falls in t .....

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e upgraded. Upgrading the ores is called "beneficiation". That saves the cost of transportation. Different processes have been developed by science and technology and accepted and adopted in different iron ore projects for the purpose of beneficiation."{ National Mineral Development Corporation Ltd v. State of M.P. paragraph 28.} It is for this reason, inter alia, that the levy of royalty on iron ore is postponed, as held in NMDC, to a post-beneficiation stage. 69. In the case of .....

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lease holder does in fact beneficiate the coal, the weight of the beneficiated coal is more than the ROM coal as has been noted above. This would, therefore, increase the cost of transportation which is based on the weight of the coal. Under the circumstances, removal of beneficiated coal as against ROM coal might work to the disadvantage of the lease holder. For this reason, no similarity can be found between coal and iron ore or between coal and dolomite and limestone (apart from the fact that .....

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per, gold, lead, zinc and several others where the rate and computation of royalty payable are arrived on a completely different basis. The table below of some sample minerals taken from the Second Schedule to the MMDR Act illustrates this position {This has undergone further changes. These figures have been taken since they pertain to the period when the dispute arose in the cases referred to} and it also illustrates that waste or foreign matter in respect of these minerals is much more than so .....

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copper metal contained per ton of ore and on pro rata basis 21 Gold Two rupees per one gram of contained gold per ton of ore and on pro rata basis (a) Eleven rupees per one gram of contained gold per ton of ore and on pro rata basis (b) by product gold ten rupees per gram 27 Lead ore Three rupees per unit percent of contained lead metal per ton of ore and on pro rata basis Eight rupees per unit percent of contained lead metal per ton of ore and on pro rata basis 28 Zinc ore Six rupees per unit .....

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9 of that Act. If the general conclusion of SAIL is to be applied across the board without reference to the Second Schedule to the MMDR Act, calculation of royalty on copper, gold, lead, zinc and some other minerals would become impossible. 73. It is quite clear that the issue of computation of royalty on minerals is rather complex and it is best left to the experts in the field and it cannot be painted with a broad brush as has been done in SAIL. That decision must be confined to its own facts .....

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on pertains to the removal of coal in relation to Section 9 of the MMDR Act. Interestingly, though a reference was made to SAIL this court adopted the view expressed by the Orissa High Court in National Coal Development Corporation Limited which was endorsed by this court in appeal. The 'reasons' given in SAIL were not even adverted to. This unreported decision reads as follows: "The contention put forth in this case is that for the purpose of Section 9 of the Mines & Mineral (R .....

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ision Bench of the Orissa High Court in National Coal Development Corpn. case while considering the question whether the coal extracted by the workmen for their own domestic consumption is exigible to levy of royalty, accepting the contention of the Revenue held "that removal from the seam in the mine and extracting the same through the pit's mouth to the surface satisfy the requirement of Section 9 in order to give rise to liability for royalty." This view of the High Court found .....

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in the mine and extracting the same through the pit's mouth to the surface [satisfies] the requirement of Section 9 in order to give rise to liability for royalty." Rule 64B and Rule 64C of the Mineral Concession Rules 76. The complexities of chargeability, computation and levy of royalty on different minerals have now been simplified, clarified and standardized with the insertion of Rule 64B and Rule 64C of the MCR with effect from 25th September, 2000. {64B. Charging of Royalty in ca .....

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f tailings or rejects from the leased area for dumping and not for sale or consumption, outside leased area such tailings or rejects shall not be liable for payment of royalty: Provided that in case so dumped tailings or rejects are used for sale or consumption on any later date after the date of such dumping, then, such tailings or rejects shall be liable for payment of royalty}. 77. A plain reading of Rule 64B of the MCR, with which we are presently concerned, clearly suggests that the leased .....

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of the MCR is silent about removal of a mineral from the mine/pit-head but which is not removed from the boundaries of the leased area. This is a clear pointer that royalty is to be paid by the lease holder only on removal of the mineral from the boundaries of the leased area. This simplification and clarification takes care of some of the different and difficult situations that we have referred to above, namely, the stage of charging royalty on coal at the pit-head or post- beneficiation, the .....

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aid and payable on middlings and tailings. Rule 64C of the MCR makes it clear that royalty is payable on rejects when they are sold or consumed after being dumped. This will take care of situations such as that pertaining to silver, as mentioned in the affidavit of the Union of India. 79. There is nothing to indicate in Rule 64B and Rule 64C of the MCR that coal has been put on a different pedestal from other minerals mentioned in the MMDR Act read with the Second Schedule thereto. It is, theref .....

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all types of minerals, which includes coal. The expression of opinion by the Union of India is contrary to the observations of this court. 80. Therefore, on a plain reading of Rule 64B and Rule 64C of the MCR, we are of the opinion that with effect from 25th September, 2000 when these rules were inserted in the MCR, royalty is payable on all minerals including coal at the stage mentioned in these rules, that is, on removal of the mineral from the boundaries of the leased area. For the period pri .....

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pretation post the insertion of Rule 64B and Rule 64C in the MCR, we leave it open to Tata Steel to challenge the constitutionality of these rules either by reviving these appeals to this limited extent or by initiating fresh proceedings. Appeals filed by TISCO 82. The issue about refund of excess royalty paid by TISCO arises only for the period from 10th August, 1998 when this Court delivered its judgment and order in SAIL. 83. The claim for refund has been rejected by the High Court in its jud .....

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reasons given in respect of Tata Steel keeping in view the decision rendered in Central Coalfields Ltd., we hold that TISCO is entitled to refund of royalty paid from 10th August, 1998 to 25th September, 2000. However, this amount need not be physically refunded but should be adjusted pro rata against future payments of royalty by TISCO over the next one year. TISCO is not entitled to refund of royalty paid after 25th September, 2000. The royalty paid by TISCO after 25th September, 2000 was cor .....

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