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CASE NO.: Appeal (civil)  7880-7883 of 2001

PETITIONER: National Mineral Development Corpn. Ltd.

RESPONDENT: State of M.P. & Anr.

DATE OF JUDGMENT: 05/05/2004

BENCH: R.C. LAHOTI &  ASHOK BHAN.

JUDGMENT: J U D G M E N T

R.C. Lahoti, J.

       The 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.   All the appeals raise a common issue for decision.

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 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. \026 (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 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 mineral.

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(2A)    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.

(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 any mineral  more than once during any period of three years."

THE SECOND SCHEDULE RATES OF ROYALTY "23.    Iron Ore :

(i)

Lumps

(a) With 65 per cent Fe content  or more. : Twenty-four  rupees and  fifty paise  per tonne

(b) With 62 per cent Fe content  or more but less than 65 per  cent Fe : Fourteen  rupees and  fifty paise  per tonne.   

(c) With 60 per cent Fe content  or more but less than 62 per  cent Fe. : Ten Rupees  per tonne.

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(d) Less than 60 per cent Fe  content. :Seven rupees  per tonne.

(ii)

Fines (including inter alia natural  fines produced incidental to  mining and sizing of lumpy  ore)

(a) With 65 per cent Fe content  or more. :Seventeen  rupees per  tonne.

(b) With 62 per cent Fe content  or more but less than 65 per  cent Fe. :Ten rupees  per tonne.

(c) With less than 62 per cent  Fe content. :Seven rupees  per tonne.

(iii)

Concentrates prepared by  beneficiation and/or  concentration of low grade  ore containing 40 pr cent Fe  or less.

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:Three rupees  per tonne.   

Iron 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:  

"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 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 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.

The submission of the appellant is that in the process of mining,  the iron ore is extracted and separated into ore lumps, fines and waste

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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.   Slimes 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.   Therefore, 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.   

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 them from payment of royalty  when the Parliament itself  has chosen not to exclude slimes from charge of royalty.  

There is yet another finding recorded by the High Court for  which purpose the High Court has relied on State of Orissa Vs. Steel  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 of royalty.

A few questions arise for consideration : (i) What is ’slime’ or  ’slimes’ as understood in mining industry and trade?, (ii) 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.

       In 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 production : 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.   

Mining and preparation for processing : Common ores \026  The most common compounds from which iron is

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produced are oxides, carbonates, and sulfides.  

(See Encyclopaedia Britannica, Vol.21, 15th Edition, at  pp.360-361).   

It is further stated :

"Mining 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.

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 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.   Chamber’s 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.

’Fines’ (Powder Tech.). That portion of a powder  composed of particles under a specified size.

’Slimes’ (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.   By convention these particles are regarded as less than  1/400 in (0.0635 mm) in diameter (mesh number 200).  

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Primary 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.

’Concentrate 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.   

       A few 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:   Concentrate. a. In mining, the product of concentration.   Used 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.   The 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.  Can.  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. (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, p.122. 1)).

Slime; slimes. a. A material of extremely fine particle  size encountered in ore treatment.  ASG Gloss. b. A  mixture of metals and some insoluble compounds that  forms on the anode in electrolysis.  ASM Gloss. c. A  product of wet grinding containing valuable ore in

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particles so fine, as to be  carried in suspension by water;  chiefly used in the plural. Webster 3d. d. In 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.   Secondary slimes are very finely ground minerals from  the true ore. Pryor, 2.

Glossary of Geology edited by Robert L. Bates and Julia A.  Jackson (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.   

According 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.

       To ascertain the meaning of slime, the High Court  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)

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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.   

Reference 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): "For 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 \026 69.0% ferrous, slimes have 67.0 \026 68.8%  ferrous.

In the 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.

       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 material from slimes  is prohibitive; the cost incurred exceeds   the value of the ferrous so

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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.

       There 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.   The 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  well, as was held by this Court in State of Orissa Vs. Steel  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 charging.  

Section 9 is not the beginning and end of the levy of royalty.   The 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 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 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

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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.

       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 in ’fines’.

       Dealing 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.

       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 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 won.   Concentrates 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

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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.

       The 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.

       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 Government in exercise of the powers conferred by Section  13 of the Mines and Minerals Regulation and Development Act, 1957.     Rules 64-B and 64-C have been introduced therein by GSR 743(E)  dated 25.9.2000 which read as under :                 "64-B. 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.

               (2)     In 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 royalty:

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        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."

       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 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 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 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/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 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.   Both 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 therefrom.   The 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.  

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Entry 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 wastage.

       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  ’concentrates’ ____ the term as used in the Second  Schedule, Entry\02623 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 with Entry-23 of the Second Schedule  of the Act.                                         The judgment of the High Court cannot therefore be sustained.   The 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.