Case: National Mineral Dev.Corpn.Ltd Vs. State Of M.P.

2. National 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 Bailadial, District Bastar of Madhya Pradesh, which now stands allocated to the State of Chhattisgarh consequent upon reorganization of the State of Madhya Pradesh Pradesh w.e.f. 1.11.2000. The State of Chhattisgarh has been joined as ain these appeals.3. 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 ofIron 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 own, has been described by the appellant asore 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 150 mm sizes. The crushed ROM contains lump, Fines and also contaminants such as Alumina and Silica. The crushed ore in 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 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; Calibrated 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 places 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.

Court's reasoning:
17. 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 ofA little after we will test the impact of the inference sothe submission of the appellant, the iron ore slimes have been treated as waste product though it contains iron content in the range ofbecause 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 valuable added products.22. 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 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 or consumed and there are not takers of the same in business, commerce andcharging 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 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.25. 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 9.26. 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 yield (i) lumps, (ii) fines, (iii) concentrates and (iv) slimesthe 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.27. The 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 inreason 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 in 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.29. It is clear that in iron or 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 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 bonds as waste separated from concentrates. From concentrates iron can yet be won. Concentrates differ from slimes are to be found as such not in concentration plant but only in tail pond. What reaches tailing 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 commercial unviable. The slimes are accepted by the mother Earth once again to be dissolved in itsdone so the Parliament has not saidfines 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.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 prompted by the pronouncement of this Court in State of Orissa vs. 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 separated 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. Rulesare general in nature, applicable to all types of minerals. There are several other entries in the Second Schedule where a mineral is liable to royalty on tonnage basis no sooner extracted and as(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 homogeneously 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 asand 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.34. S/Shri S.K. Agnihotri and Prakash Shrivastava, the learned counsel for the States of Madhya Pradesh and Chhatisgarh submitted that the Ruleshave 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.Entry 15 levies royalty on tonnage basis on the dolomite itself so also Entry 26 levies royalty on limestone itself asthough 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 or iron ore asroyalty cannot be charged on the wastage.37. Our answers to the questions framed in the earlier part of this judgment are:(i) Slime or slimes is a term well understood in mining industry and trade. It is different from fines and concentratesthe term as used in the Second Schedule,of this Act;(ii) Slime or slimes cannot be included in fines or concentrates for the purpose of charging royalty under Section 9(1) read withof the Second Schedule of the Act.