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TMI Blog2004 (5) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 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 Pradesh w.e.f. 01.11.2000. The State of Chhattisgarh has been joined as a party-respondent in these appeals. The 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 hereunder: 9. Royalties in respect of mining leases. (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, contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant as under: The 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. After 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. In 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. Also dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess 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. The 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. The 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock, 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. Upgrading 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. Concentration 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 virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (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. In 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has, in its impugned judgment, relied upon two references; Slime 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 mesh screen. They 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 boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own and clean water overflows which does not cause any pollution or detriment to environment. It was 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 added products. The 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 mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 effect to. 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 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. A bare 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial 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. It is 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. Different 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. May be 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. Mr. Mukul 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 Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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/Shri 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 operation. These 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. The case of State of Orissa Vs. Steel Authority of India Ltd. (supra), which was relied on by the High Court and by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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