Mineral Development Corpn. Ltd. Vs. State of M.P. & Anr  Insc 378 (5 May 2004)
Lahoti & Ashok Bhan. R.C. Lahoti, J.
High Court of Madhya Pradesh has by its impugned judgment held 'slimes' exigible
to charge of royalty, as forming part and parcel of iron ore. Feeling aggrieved,
the mining lessee i.e. the appellant herein has come up in appeals by special
leave to this Court.
the appeals raise a common issue for decision.
Mineral Development Corpn. Ltd. ('NMDC', for short) is a public sector company
engaged in exploring and development of iron ore deposits in India. It holds mining leases over land
admeasuring more than 600 hectares from the State of Madhya Pradesh for extracting iron ore. In the
present case we are concerned with the iron ore project of NMDC situated in Bailadila,
District Bastar of Madhya Pradesh, which now stands allocated to the State of Chhattisgarh consequent upon reorganization of
the State of Madhya
01.11.2000. The State of Chhattisgarh has been joined as a
party-respondent in these appeals.
mining leases held by the appellant are governed by the provisions of the Mines
and Minerals (Regulation and Development) Act, 1957 hereinafter 'the Act', for
short. Section 9 of the Act which makes provision for levy of royalty and Entry
23, in the Second Schedule of the Act which makes provision for the rates and
quantification of royalty, are relevant and hence extracted and reproduced
Royalties in respect of mining leases.
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.
The holder of a mining lease granted on or after the commencement of this Act
shall 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 at
the rate for the time being specified in the Second Schedule in respect of that
The holder of a mining lease, whether granted before or after the commencement
of the Mines and Minerals (Regulation and Development) Amendment Act, 1972,
shall not be liable to pay any royalty in respect of 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.
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:
that the Central Government shall not enhance the rate of royalty in respect of
any mineral more than once during any period of three years."
SECOND SCHEDULE RATES OF ROYALTY "23. Iron
With 65 per cent Fe content or more. : Twenty-four rupees and fifty paise per tonne
With 62 per cent Fe content or more but less than 65 per cent Fe: Fourteen
rupees and fifty paise per tonne.
With 60 per cent Fe content or more but less than 62 per cent Fe: Ten Rupees
Less than 60 per cent Fe content. :Seven rupees per tonne.
Fines (including inter alia natural fines produced incidental to mining and
sizing of lumpy ore)
With 65 per cent Fe content or more. :Seventeen rupees per tonne.
With 62 per cent Fe content or more but less than 65 per cent Fe: Ten rupees
With less than 62 per cent Fe content: Seven rupees per tonne.
Concentrates prepared by beneficiation and/or concentration of low grade ore containing
40 pr cent Fe or less.: Three rupees per tonne.
ore deposits occur mostly in the hill ranges and iron ore is found on the top
of the hill i.e. on the surface. The process by which the mineral is won, has
been described by the appellant as under:
ore is extracted by open cast method of mining for which mining benches are
prepared. Firstly, holes are drilled on the benches covering entire height of
the bench at regular distance depending on ore types.
charging of the holes with explosives this portion of the bench is blasted. The
blasted material known as ROM (Run of Mines) consists of large boulders,
fragments and fines along with other contaminants ROM is transported to
Crushing plant by dumpers and crushed to below 150mm sizes. This crushed ROM
contains Lump, Fines and also contaminants such as Alumina and Silica. The
crushed ore is transported to Screening Plant through conveyer belts and is
washed with water and screened in vibrating screens. Vibrating screens
segregates ore into different sizes such as Lump, Calibrated Ore and Fines. Some times, the ore need not be washed as the percentage of
contamination is within the acceptable limits.
such cases, Run of Mine ore screened by dry screening i.e. without resorting to
washing by water. It is not possible to continuously resort to dry, screening
because quality of ore which does not need washing occur mostly in patches.
during monsoon, the ore becomes moist due to which dry screening is not
possible and washing by water is necessary in screening. During the processing
of screening the ore is sorted into various sizes i.e. Lump;
Lump Ore and Fines and the washed water, which contains mostly the contaminants
and also a part of the ROM, is diverted to and impounded in a Tailing Pond. The
ore particles are mostly less than 100 mesh (0.15 mm)" "Iron ore is
blasted from the hillocks and the blasted material is brought in as boulder,
fragment, fines and other extraneous materials in small pieces and transported
by dumpers to the crushing plants. The big boulders are crushed into 150 mm
size and transferred to the screening plant, where water is pumped for pollution
control, beneficiation and segregation of different fragments i.e. lump and
fine. In the said process, lump and fines are segregated and through conveyor
system transported to loading yard. Waste materials and extraneous materials
like mud and shale which form the slurry is transported through pipeline to
tailing dam where the whole material gets deposited and extra water flown
out." The above process is such as has been described by the appellant.
The correctness of the description has not been disputed by the respondents.
The High Court has also upheld the process to be such as described by the
appellant and proceeded to construct its judgment based thereon. The
correctness of the above description is not disputed before us too.
submission of the appellant is that in the process of mining, the iron ore is
extracted and separated into ore lumps, fines and waste material which is
generally referred to and known as "slime". "Slime" is not
iron ore within the meaning of the provisions of the Act and the Second
Schedule. It has no utility, much less as a mineral. It is only dumped. The
slime is the resultant waste material from the wet screening process undertaken
for segregation of lumps and fines.
consist of impurities and minute particles with ferrous content but the ferrous
part can neither be retrieved nor utilized for production of iron/steel as no
technology for the said purpose is yet developed.
till today, it is submitted on behalf of the appellant, no other State in the
country is collecting royalty on slimes. It is only the State of Madhya Pradesh which has initiated the process of
seeking to levy royalty on slimes. Such action of the State is arbitrary and
unreasonable as slimes are nothing but impurities left available to be discarded
at the end of the process of production of iron ore lumps and iron ore fines.
In view of the provisions contained in Section 9 and Entry 23 of the Second
Schedule, both read together, the State cannot claim to levy royalty on slimes
and hence the action of the State is liable to be struck down.
plea of the respondents which has found favour with the High Court is that the
royalty is payable on the mineral as extracted and removed or consumed from the
leased area by the mining lessee.
slimes are produced from the iron ore as extracted and removed from the leased
area. Inasmuch as the slimes do contain ferrous material, nearly in the same
proportion as the lumps or the fines contain, on a reasonable interpretation of
Entry 23, the "slimes" should be treated as included in the
"fines". Merely because the slimes cannot be usefully utilized for
the purpose of extracting out the ferrous contents thereof and have no
commercial value and have, therefore, to be dumped as waste, it cannot be a
ground for exempting them from payment of royalty when the Parliament itself
has chosen not to exclude slimes from charge of royalty.
is yet another finding recorded by the High Court for Authority of India Ltd.,
(1998) 6 SCC 476 wherein this Court has observed that processing of any mineral
extract and subjecting it to a certain process to remove waste and foreign
materials amounts to consumption and therefore the lessee becomes liable to pay
royalty on the entire mineral extracted by him and not merely on the net
quantity of mineral obtained after processing. The High Court has held that the
entire quantity of ROM, as extracted from the earth shall be liable to payment
questions arise for consideration :
What is 'slime' or 'slimes' as understood in mining industry and trade?,
Whether 'slimes' is included in 'fines' or 'concentrates', within the meaning
of Entry 23 of the Second Schedule, for the purpose of charging royalty? We
proceed to answer the questions.
order to understand and appreciate the legislative scheme behind enactment of
Section 9 and Entry 23 of the Second Schedule dealing with iron ore, it is
necessary to understand a few relevant facts relating to iron production and
that we propose to do by borrowing from Encyclopaedia Britannica.
: Iron is the most useful of the metallic elements and the second most abundant
in the Earth's crust, after aluminum. In its elemental form or as steel, iron
has supplied civilization with most of its tools and machinery, many of its
products, and the bulk of its structural elements in large-scale construction.
and preparation for processing : Common ores The most common compounds from
which iron is produced are oxides, carbonates, and sulfides. (See Encyclopaedia
Britannica, Vol.21, 15th Edition, at pp.360-361).
further stated :
techniques. A substantial amount of iron ore is recovered by surface methods,
usually known in metal mining as open-pit or opencut. For deeper lying deposits
in which the ore and wall rocks are firm, open stopes ___ a series of
descending steps ___ are cut; in cases of small deposits, the entire ore body
may be removed from wall to wall without leaving any pillars. Where the ore
body lies buried in rock, deep underground, shaft mining is employed; the
vertical shaft may go down several thousand feet. Horizontal tunnels from the
shaft follow the ore deposits as they are mined, with locomotives and cars on
tracks used to move the ore to the shaft elevators.
Ore with a low sulfur content are more
suitable for smelting. Formerly, only ores containing more than 30 percent iron
could be smelted profitably, but because of various upgrading processes lower
grade ores can now be used. The value of an ore deposit depends on geographic
location and accessibility.
ores (beneficiation). As the high-grade deposits became more inaccessible or
exhausted and as shipping costs increased, it became necessary to separate and
discard unusable materials from the iron ores at, or near, the mines. Processes
broadly termed beneficiation were developed to upgrade the ore before shipment.
or other preparation of ores is accomplished by leaching and drying, flotation,
agglomeration, or magnetic separation. Flotation is an ore-dressing process by
which finely pulverized ore is agitated in a mixture of oil and water.
Constituent minerals are separated from one another by virtue of their
respective abilities to be wetted by water and by their specific
gravities." It will also be apposite to precisely understand a few
scientific and technical terms which are of relevance for the issue at hand.
Science and Technology Dictionary defines the following terms as under:
'Iron Ores' (Geol.). Rocks or deposits containing iron-rich compounds in
workable amounts; they may be primary or secondary; they may occur as irregular
masses, as lodes or veins, or interbedded with sedimentary strata.
(Powder Tech.). That portion of a powder composed of particles under a specified
(Min.Ext.). Particles of crushed ore which are of such a size that they settle
very slowly in water and through a bed which water does not readily percolate.
Such particles must be leached by agitation.
convention these particles are regarded as less than 1/400 in (0.0635 mm) in
diameter (mesh number 200).
slimes are naturally weathered ore, or associated clays. Secondary slimes are
produced during comminution." 'Concentrate' (Min.Ext.). The products of
concentration operations in which a relatively high content of mineral has been
obtained and which are ready for treatment by chemical methods.
plant' (Min.Ext). Concentrator mill, reduction works, washing, cleaning plant. Buildings
and installations in which ore is processed by physical, chemical and/or
electrical methods to retain its valuable constituents and discard as tailings
those of no commercial interest.
definitions from Dictionaries Of Mining Terms by Paul W. Thrush and the Staff
of the Bureau of Mines (1968, reprint 1990) deserve to be quoted:
a. In mining, the product of concentration.
in plural form as "arrangements for treating the concentrates were
complete." Concentrates are called ore at Joplin, Mo.; mineral at Michigan
copper mines; and tailings in Black Hawk, Colo. Fay. b. In mining, to separate
ore or metal from its containing rock or earth.
concentration of ores always proceeds by steps or stages. Thus the ore must be
crushed before the mineral can be separated, and certain preliminary steps,
such as sizing and classifying, must precede the final operations, which
produce the finished concentrates. Ricketts, I. c.
Enriched ore after removal of waste in beneficiation mill. Hoffman. d. The
clean product recovered in froth flotation. B.S. 3552, 1962. e. To intensify in
strength or to purify by the removal of valueless or unneeded constituents;
condense; intensify. Standard, 1964.
(tailings is defined inter alia as) Those portions of washed ore that are
regarded as too poor to be treated further; used especially of the debris from
stamp mills or other ore-dressing machinery, as distinguished from material
(concentrates) that is to be smelted. Standard, 1964.d. The inferior leavings
or residue of any product; foots, bottoms.
mining the residuum after most of the valuable ore ahs been extracted. Fay.e. The
term tailings has been construed as including slag. Fay. f. The term tailings
as used in the mineral industry is used in the plural form. Fay. g. Also
applied to sectional residue, for example, table tailings, which is the residue
from shaking screens and tables. This materials may be recrushed or retreated. Nelson.
h. The waste rock after the asbestos fiber has been removed. Mersereau, 4th,
p.210. Tailings dam. One to which slurry is transported, the solids settling
while the liquid may be withdrawn. Pryor, 3, p.122. 1)).
material of extremely fine particle size encountered in ore treatment. ASG
mixture of metals and some insoluble compounds that forms on the anode in
electrolysis. ASM Gloss.
product of wet grinding containing valuable ore in particles so fine, as to be
carried in suspension by water; chiefly used in the plural. Webster 3d.
metallurgy, ore reduced to a very fine powder and held in suspension in water
so as to form a kind of thin ore mud; generally used in the plural. Fay. e. A mudlike
substance formed of ore in an almost impalpable powder, mixed with water;
usually plural. Standard, 1964. f. Primary slimes are extremely fine particles
derived from ore, associated rock, clay, or altered rock. They are usually
found in old dumps and in ore deposits which have been exposed to climatic
action; they include clay, alumina, hydrated iron, near colloidal common earths
and weathered feldspars.
slimes are very finely ground minerals from the true ore. Pryor, 2.
of Geology edited by Robert L. Bates and Julia A.
(Second Edition) defines 'tailings' as those portions of washed or milled ore
that are regarded as too poor to be treated further, as distinguished from the
concentrates, or material of value.
to Handbook of Mineral Dressing by Arthern & Taggart (at p.15.04),
"Slime" is the term used in milling practice to describe a
suspension, in water of the fully divided fraction of pulverized ore; also the
solid, whether suspended or after settling out to drying. The terminology is
not precise e.g. the overflow of a mechanical classifier or guarding the
discharge of a grinding mill may be called SLIME as distinguished from the
coarser sand, even though the separation be made at upward of 0.5 mm size; the
over of a hydraulic classifier is called slime, more or less irrespective of
the size of grains. Some writers (41 A S 98, 42 A 752) define slime as crushed
rock in water when rock is of such fineness that it will pass a 150-or 200 m.
(0.1- to 0.075-mm) screen. The solid particles in mill slimes are rock or
mineral fragments formed by operations, and secondary minerals such as
steatite, talc, and clayey substances that have been disintegrated and
dispersed by wetting. These latter substances are often called as SLIMES.
ascertain the meaning of slime, the High Court has, in its impugned judgment,
relied upon two references;
is the term used in milling practice to describe a suspension in water of the
far divided fraction of pulverized ore; also the solid, whether suspended or
after settling and drying. The terminology is not precise, e.g., the overflow
of a mechanical classifier or for guarding the discharge of a grinding mill may
be called SLIME as distinguished from the coarser sand, even though the
separation be made at upward of 0.5 mm size, the ore of a hydraulic classifier
is called slime, more or less irrespective of the size of the coarse
grains." (Hand Book of Mineral Dressing by Arthen F. Taggart) "Slimes
refer strictly to the colloidal and semi- colloidal portion of the pulp; but in
practice they are usually considered as being they are usually considered as
being the portion that is composed largely of particles that will pas a 200
can be treated by cyanide solution in agitation tanks, followed by separation
of the metal-bearing solutions from the solids by settling and
filtration." (Mining Engineers' Hand Book by Roberl Peeli, Vol.II) From
the abovesaid definitions as available in two reference books, the High Court
has concluded that "slime is nothing but powdery form of iron ore and it
contains small grains of ferrous." A little after we will test the impact
of the inference so drawn.
may also be made to Monograph on Iron Ore (Revised Edition, 1997) brought out
by Indian Bureau of Mines, Ministry of Mines, Nagpur. Dealing with Bailadila
Iron Ore Mines it is stated (at p.163):
disposal of waste dump, sites are selected considering topography of the area
in order to restrict the flow of materials into natural water course, and for
this purpose, areas where closed valleys and/or blind angles exist, have been
proposed with the provisions of rock toes. Flat tops and inward slope area,
construction of small terraces with peripherial bands for dumps and their
stabilization by planting agave, shrubs, grasses and fast growing trees on
terraces are the important measures to be taken up for environment-friendly
disposal of waste." The Monograph deals with the processes adopted in
India by reference to different mining areas in gaining iron from ROM (Run of
Mine) also known as feed. The flow-sheet of Bailadila iron ore project of NMDC
in Dist. Bastar (M.P.) (now Chhattisgarh) reveals that the feed (ROM) has 67.5
to 68.7% ferrous, lumps have 67.5 - 68.9% ferrous, fines have 65.2 69.0%
ferrous, slimes have 67.0 68.8% ferrous.
Monograph there are eight flow sheets given showing how in different iron ore
projects Run of Mine (ROM) is processed and undergoes the process of crushing,
screening, classification and what is left to be consigned to the tail pond
which becomes 'slimes'. In Bailadila Iron Ore Project, with which we are
concerned, ROM is fed into gyratory crusher and then having passed through
several stages the lumps are formed. Then there is spiral classifier and
dewatering screening. Fine ore is segregated. The slimes are then consigned to
the tail pond. Similar, processes are to be found, with suitable and required
technical modifications, in Bailadila (Karnataka), Keonjar (Orissa) and several
other projects. One common feature in all the projects is that after the fines
have been recovered and washed the slimes are consigned to tailing ponds. The
tail end products do have certain percentage of ferrous contents but then such
contents are part of slag or slurry. In the tailing pond all the impurities
settle down and clean water overflows which does not cause any pollution or
detriment to environment.
submitted on behalf of the appellant that the slimes generated due to washing
operations done in screening plants are conveyed to the tailing dam for
quiescent settling. Only clear water is allowed to pass though the wiremesh at
the tailing dams. Thus the only water pollutant i.e. suspended solids in the
form of lateritic soil and some iron ore micro-fines are retained at the
upstream whereby avoiding water pollution in the natural water course. In the
submission of the appellant, the iron ore slimes have been treated as waste
product though it contains iron content in the range of 45-50% because it is
not usable by any of the existing technologies. Suitable technologies are still
being explored and examined for converting these iron ore slimes into value
submission is not refuted by the respondents that although efforts are being
made to win ferrous material from the slimes by innovating scientific and
technological methods, the achievements made till this date do not make the
process commercially viable inasmuch as the cost incurred in winning ferrous
material from slimes is prohibitive; the cost incurred exceeds the value of the
ferrous so won, out of all proportion. Thus whatever may be the future, as on
the day, the slime, including its ferrous contents, is just a waste with no
commercial value as it can neither be used nor consumed and there are no takers
of the same in business, commerce and industry.
can be no manner of doubt that the entire material extracted from the earth, so
far as iron ore mines are concerned, has to be subjected to a process for the
purpose of wining iron therefrom.
process results into (i) lumps, (ii) fines and (iii) slimes. Section 9 of the
Act obliges the holder of a mining lease to pay royalty in respect of any
mineral removed or consumed from the leased area. If only it would have been
the question of considering Section 9 and determining the impact thereof, may
be it is the total quantity of mineral removed from the leased area or consumed
in the beneficiation process which would have been liable for payment of
royalty and that quantity may have included the quantity of slimes as Authority
of India Ltd. (supra). But in case of iron ore the process of beneficiation
involves introduction of catalytic agents leading to separation and generation
of waste consisting of impurities which the scheme of the Act has left out from
9 is not the beginning and end of the levy of royalty.
royalty has to be quantified for purpose of levy and that cannot be done unless
the provisions of the Second Schedule are taken into consideration. For the
purpose of levying any charge, not only the charge has to be authorized by law,
it has also to be computed. The charging provision and the computation
provision may be found at one place or at two different 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 provision
shall be so interpreted as to act in aid of charging provision. If the two can
be read together homogenously then both shall be given effect to, more so, when
it is clear from the computation provision that it is meant to supplement the
charging provision and is, on its own, a substantive provision in the sense
that but for the computation provision the charging provision alone would not
work. The computing provision cannot be treated as mere surplusage or of no
significance; what necessarily flows therefrom shall also have to be given
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 authorizes charging of
royalty cannot be complete unless what is specified in the Second Schedule is
also read as part and parcel of Section 9.
reading of Entry 23 reveals that the Parliament has not chosen to compute
royalty on iron ore by itself and quantifiable as run of mine (ROM). The
Parliament is conscious of the fact that iron ore shall have to be subjected to
processing whereafter it would yield (i) lumps, (ii) fines, (iii) concentrates,
and (iv) slimes ___ the last one to be found deposited in the tailing pond. The
Parliament has to be attributed with the knowledge that keeping in view the
advancements in the field of science and technology as on the day, the slimes
do not have any commercial value. While carrying out prospecting operations it
is known what will be the strength of the iron ore (i.e. the percentage of
ferrous content) available in a particular area. By reference to such strength
or quality of iron ore, the rate of royalty could have been made available for
calculation based on the quantity of the iron ore as run of mine and
quantifiable on per tonne of iron ore, that is, tonnage of iron ore as such.
Parliament has chosen not to do so. Entry 23, the manner in which it has been
drafted, mandates the quantification of royalty to await or be postponed until
the processing has been carried out and the lumps, fines and concentrates are
prepared. Once the result of processing is available, the lumps, fines and the
concentrates are subjected to levy of royalty at different rates applied by
reference to the quantity of each of the three items earned as a result of
processing. The slimes have been left out of consideration by Entry 23 for the
purpose of quantification and levy.
High Court is, therefore, not right in forming an opinion that the slimes are
part of fines and hence liable to be included in Clause (ii) of Entry 23 for
the purpose of charging the royalty. In the mining circles, fines and slimes
both have different meanings. Both the terms are well understood as two
different objects. Slimes cannot be included in 'fines'.
with the topic of technical words in technical sense, Justice G.P. Singh states
in Principles of Statutory Interpretation (Ninth Edition, 2004 at pp.97-99) ___
"in determining the meaning or connotation of words and expressions
describing an article in a tariff Schedule, one principle which is fairly well
settled is that those words and expressions should be construed in the sense in
which they are understood in the trade by the dealer and the consumer. The
reason is that it is they who are concerned with it, and, it is the sense in
which they understand it which constitutes the definitive index of legislative
intention". "The true test for classification was the test of
commercial identity and not the functional test". The learned author
states that the question to be asked in such cases is "how is the product
identified by the class or section of people dealing with or using the
product?" If the word has acquired a particular meaning in the trade or
commercial circles that meaning becomes the popular meaning in the context and
should normally be accepted. The words having a special meaning in the context
of a particular field of art or science ought to be understood in that sense.
Such a special meaning, i.e. the technical meaning, shall be assigned as
distinguished from the more common meaning that the word may have.
clear that in iron ore production the run of mine (ROM) is in a very crude
form. A lot of waste material called 'impurities' accompanies the iron ore. The
ore has to be upgraded. Upgrading the ores is called "beneficiation".
That saves the cost of transportation.
processes have been developed by science and technology and accepted and
adopted in different iron ore projects for the purpose of beneficiation. In the
processes, a stage is reached which yields concentrates. They are treated in
the concentrate plant by resort to physical, chemical and/or electrical
methods. The valuable constituents are retained and what is discarded as
'tailings' or 'slimes' is something of no commercial value, being just
impurities consisting of unusable materials. Concentrates is not necessarily a
stage reached in all the processes. Concentrates consist of enriched ore
segregated from waste in concentration plant. It is a substance of intensified
strength having been purified by removal of valueless mud, slurry, impurities
and waste. Wet processing (at a stage after fines have already been won)
separates extremely fine particles, grains or fragments of ore which are too
poor to be treated any further and have to be flown for being consigned to tail
ponds as waste separated from concentrates. From concentrates iron can yet be
differ from slimes which are to be found as such not in concentration plant but
only in tail pond. What reaches tailings dam or pond is slurry. Solid particles
are deposited and clean water overflows. This processing is done to prevent
pollution and to protect environment. There are ferrous contents in the slurry
but that is a total waste. Inasmuch as, and undisputedly, by any process or
technique known to science and technology till this date, winning of ferrous
contents from out of the slurry is commercially unviable. The slimes are
accepted by the mother Earth once again to be dissolved in its womb.
Parliament knowing it full well that the iron ore shall have to undergo a
process leading to emergence of lumps, fines, concentrates and slimes chose to
make provision for quantification of royalty only by reference to the quantity
of lumps, fines and concentrates. It left slimes out of consideration. Nothing
prevented the Parliament from either providing for the quantity of iron ore as
such as the basis for quantification of royalty. It chose to make provision for
the quantification being awaited until the emergence of lumps, fines and
concentrates. Having done so the Parliament has not said ___ "fines
including slimes". Though 'slimes' are not 'fines' the Parliament could
have assigned an artificial or extended meaning to 'fines' for the purpose of
levy of Royalty which it has chosen not to do. It is clearly suggestive of its
intention not to take into consideration 'slimes' for quantifying the amount of
royalty. This deliberate omission of Parliament cannot be made good by
interpretative process so as to charge royalty on 'slimes' by reading Section 9
of the Act divorced from the provisions of the Second Schedule. Even if slimes
were to be held liable to charge of royalty, the question would still have
remained at what rate and on what quantity ___ which questions cannot be
answered by Section 9.
at some point of time in future when the science and technology have succeeded
in evolving a process rendering the slimes a useful and valuable goods on
account of availability of any process making it commercially viable to
retrieve iron therefrom, the Parliament may make appropriate amendment in Entry
23 by including therein 'slimes' and prescribing the rate at which royalty
shall be charged thereon.
Rohatgi, the learned Additional Solicitor General assisted by Mr. P.S. Narasimha,
learned counsel for the appellant, has brought to our notice a very significant
amendment made in the Mineral Concession Rules, 1960. The Mineral Concession
Rules, 1960 (hereinafter referred to as the Rules, for short) have been framed
by the Central Government in exercise of the powers conferred by Section 13 of
the Mines and Minerals Regulation and Development Act, 1957.
64-B and 64-C have been introduced therein by GSR 743(E) dated 25.9.2000 which
read as under :
Charging of Royalty in case of minerals subjected to processing:
(1) In case processing of run-of-mine mineral is carried out within the leased
area, then, royalty shall be chargeable on the processed mineral removed from
the leased area.
case run-of-mine mineral is removed from the leased area to a processing plant
which is located outside the leased area, then, royalty shall be chargeable on
the unprocessed run-of-mine mineral and not on the processed product."
"64-C. Royalty on tailings or rejects: ___ On removal of 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
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." Though the objects and reasons which
prompted the abovesaid amendment are not known to us (none placed for
consideration by any of the parties) in all probability the same seems to have
been Steel Authority of India Ltd. (supra). Be that as it may, the abovesaid
Rules also suggest the intention of the Government that dumped tailings or
rejects (or in other words 'slimes') are to be treated as a separate head and
charge of royalty therein is not to be made as a matter of course. Dumped
tailings or rejects may be liable to payment of royalty if only they are sold
or consumed. Rules 64-B and 64-C are general in nature, applicable to all types
are several other entries in the Second Schedule where a mineral is liable to
royalty on tonnage basis no sooner extracted and as run-of-mine (ROM). Such
entries do not further classify the mineral by reference to its constituents.
The case of iron ore is different. So far as the iron ore is concerned, the
provisions of the Section 9 of the Act read with Entry 23 of the Second
Schedule and the abovesaid Rules homogenously construed do not subject the
run-of-mine (ROM) to payment of royalty. The Second Schedule does not prescribe
any rate of royalty on the iron ore as run-of-mine and the levy of royalty has
to be postponed until the processing has been done and the quantity of lumps,
fines and concentrates (none of which will include slimes) has been found out
on the availability of which data alone the royalty is capable of being
quantified. Under the Second Schedule, the slimes which have come into
existence shall have to be excluded from the charge of royalty.
S.K. Agnihotri and Prakash Shrivastava, the learned counsel for the States of
Madhya Pradesh and Chhatisgarh submitted that the Rules 64-B and 64-C have come
to be framed on 25.9.2000 and cannot be applied retrospectively. We agree.
There is no question of giving the abovesaid amendment in Rules a retrospective
Rules only clarify the position as it already existed and are intended to
remove the doubts. We have pressed the said two Rules into service only for the
purpose of reinforcing the conclusion which we have already arrived at de hors
the said amendment in Rules.
(supra), which was relied on by the High Court and by the learned counsel for
the respondents before us is distinguishable. There the question arose as to
the charge of royalty on dolomite and limestone dealt with by Entries 15 and 26
respectively of the Second Schedule.
these minerals were utilized 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 the
mineral was wasted and the wastage remained on the leased area and not removed
contention of the lessee was that royalty could not be demanded on that portion
of the wastage which was not removed from the mining area. This contention was
repelled by this Court by reference to Section 9(1) of the Act which speaks of
payment of royalty in respect of any mineral removed or consumed by the lessee.
The Court held that though the impurities part of dolomite and limestone was
not removed 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 area.
15 levies royalty on tonnage basis on the dolomite itself so also Entry 26
levies royalty on limestone itself as run-of-mine though two different rates
are prescribed depending on the grade or percentage of silica content in the
limestone. The scheme of those two entries is different from the scheme of
Entry 23 dealing with iron ore. As no rate of royalty has been prescribed in
the Second Schedule to be charged on slimes and also no rate of royalty has
been prescribed on iron ore as run-of-mine, royalty cannot be charged on the
answers to the questions framed in the earlier part of this judgment are:
'Slime' or 'slimes' is a term well understood in mining industry and trade. It
is different from 'fines' and 'concentrates' ____ the term as used in the
Second Schedule, Entry23 of this Act;
'Slime' or 'slimes' cannot be included in 'fines' or 'concentrates' for the
purpose of charging royalty under Section 9(1) read with Entry-23 of the Second
Schedule of the Act.
judgment of the High Court cannot therefore be sustained.
appeals are allowed. The impugned judgment of the High Court is set aside. A
writ shall issue in favour of the appellant in all the four writ petitions
filed by it commanding the respondents to not to charge royalty on the quantity
of slimes. No order as to the costs.