2020 (3) TMI 276 - HC - Customs

Import of Ilmenite from other countries by the petitioner in any manner including discharge, transportation, storage and usage thereof - whether the MMDR Act applies to imports? HELD THAT - The MMDR Act itself is a legislation made for the purpose of granting prospecting or mining leases within the territory of India. When the ilmenite is imported, which is mined outside the territory of India, the said Act cannot be applicable. The Mineral Conservation and Development Rules 2017 traced their origins to the Sections 15, 18 and 23C of MMDR Act, 1957. When the Act itself does not apply to the imports, by no stretch of imagination it could be stated that the said rules applies to the imports. As the ilmenite is freely importable, the first respondent has no authority to interfere with the imports nor exercise the powers of Central Government and thus, exceeded its jurisdiction. As the prima facie case is made out by the petitioner, which is supported by Bill of Lading, Bill of Entry, customs assessments and consequential payment of custom duty, the petitioner is the owner of the minerals and it is entitled to use it in its factory. There is no prejudice caused to the respondents in allowing the writ petition forbearing the 1st respondent from interfering with the import of the ilmenite by the petitioner from other countries in any manner including discharge, transportation, storage and usage thereof. Petition dismissed.

Summary

Issues Involved:
1. Applicability of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) to the import of minerals.
2. Requirement of a dealer license under the Tamil Nadu Prevention of Illegal Mining, Transportation, and Storage of Minerals and Mineral Dealers Rules, 2011 for imported minerals.
3. Jurisdiction of the State authorities over imported minerals.
4. Compliance with local laws for imported minerals despite being freely importable under the Foreign Trade Policy.

Detailed Analysis:

1. Applicability of the MMDR Act to the Import of Minerals:
The primary issue was whether the MMDR Act applies to the import of minerals. The court noted that the MMDR Act governs the development and regulation of mines and minerals within India, focusing on activities such as reconnaissance, prospecting, and mining operations within the country. Section 4 of the MMDR Act, which prohibits transportation or storage of minerals without compliance with the Act, pertains to minerals mined within India. The court concluded that the MMDR Act does not extend to imported minerals, which are regulated by customs authorities under the Foreign Trade (Development and Regulation) Act, 1992.

2. Requirement of a Dealer License:
The first respondent argued that the petitioner had not obtained a dealer license under the Tamil Nadu Prevention of Illegal Mining, Transportation, and Storage of Minerals and Mineral Dealers Rules, 2011. However, the court found that these Rules, framed under Section 23C of the MMDR Act, are intended to prevent illegal mining, transportation, and storage of minerals within India and do not apply to legally imported minerals. This interpretation was supported by the Supreme Court's decision in the case of State Of Gujarat vs. Jayeshbhai Kanjibhai Kalathiya, which clarified that Section 23C applies only to minerals illegally mined within India.

3. Jurisdiction of State Authorities:
The court determined that the State authorities, including the District Collector, do not have jurisdiction over minerals imported from other countries. The MMDR Act and its associated Rules are confined to the regulation of domestic mining activities. Consequently, the Tamil Nadu Rules cannot be applied to imported minerals, and any attempt by State authorities to regulate such imports exceeds their jurisdiction.

4. Compliance with Local Laws:
The respondents contended that, despite the Foreign Trade Policy allowing the import of ilmenite, the petitioner must comply with local laws. The court acknowledged that while local laws may apply to domestically produced goods, they do not extend to imported minerals, which are governed by the Foreign Trade Policy and customs regulations. The court highlighted that the petitioner had complied with all necessary customs procedures, including the submission of relevant documents and payment of customs duty.

Conclusion:
The court ruled in favor of the petitioner, stating that the MMDR Act and the Tamil Nadu Prevention of Illegal Mining, Transportation, and Storage of Minerals and Mineral Dealers Rules, 2011, do not apply to imported minerals. The petitioner was entitled to import, transport, store, and use the ilmenite without interference from the first respondent. The writ petition was ordered as prayed for, and the connected miscellaneous petitions were closed. The court dismissed the related writ petition as infructuous due to compliance with interim orders.