Karnataka High Court
Rai Bahadur Seth Shreeram vs The State Of Karnataka on 19 March, 2020
Bench: Aravind Kumar, Hemant Chandangoudar
-1-
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF MARCH 2020
PRESENT
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
AND
THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR
WRIT PETITION No.56386 OF 2017 (GM -FOR)
BETWEEN :
Rai Bahadur Seth Shreeram
Narasingdas Private Limited
Formerly:R B Seth Shreeram Narsingdas
Sy.No.185, ML No.2682, Sankalapur Iron
Ore Mines, D.No.1499/1, P.O. Box No.38
Kariganur Post, Bellary District
Hospet - 583201, herein represented by
its Authorised Representative
Mr.Sudhindra V Joshi. ..Petitioner
(By Sri L M Chidanandayya, Advocate)
AND :
1. The State of Karnataka
By its Secretary, Department of
Forest, Environment & Ecology
M S Building, Bangalore-560 001.
-2-
2. Deputy Conservator of Forests
Department of Forests, Bellary
Division, Bellary.
3. Assistant Conservator of Forests
Department of Forests, Hospet
Sub-Division, Bellary.
4. The Range Forest Officer
Hospet Range, Hospet
Bellary Dist. ... Respondents
(By Sri N Balaji, AGA)
This writ petition is filed under Articles 226 & 227 of
the Constitution of India, praying to direct and hold that
beneficiated ore produced at the petitioners benefication
plant at Sankalapuram Iron Ore Mines, Sy.No.185,
Karignur, Hospet is not forest Produce and hence outside
the jurisdiction of the respondents and etc.
This writ petition having been heard and reserved on
10th March 2020 for orders and coming on for
pronouncement of orders, this day
HEMANT CHANDANGOUDAR J, passed the following:
ORDER
Taking exception to the requirement of obtaining prior permission in Form 29 of Karnataka Forest Rules, 1969 (for short `Rules') for transporting beneficiated iron ore, this writ petition is preferred.
-3-
2. Petitioner is an ISO certified ore mining and processing company and has setup beneficiation plant on a revenue land belonging to it and said plant has been operational since 2008. Process of beneficiation of iron ore is an industrial process whereby sub-grade iron ore is converted into higher grade iron ore fit for industrial application.
3. Pursuant to the bid invited by the Monitoring Committee through e-auction for purchase of 4000 metric ton of iron ore that was lying with `BKG Mines' situated in a forest area , petitioner submitted a bid with the said Committee for purchasing 4000 metric tones of iron ore. Petitioner was the successful bidder in the e-auction held on 30th October 2017. Pursuant to purchasing of the said quantity of iron ore, petitioner after obtaining bulk permit from the competent authority by paying royalty transported the iron ore to its beneficial plant. Since iron ore was extracted from the forest area, petitioner also approached -4- the second respondent and after remitting forest pass charges, petitioner was issued with the forest release order thereby permitting it to remove the iron ore (forest produce) from BKG Mines to its beneficiation plant. Petitioner was also issued with e-transit pass in Form 27 for transporting the iron ore to its beneficiation plant.
4. After transporting the iron ore to its beneficiation plant, the iron ore was converted into Higher Grade iron ore. Petitioner having entered into contract with various buyers for supply of beneficiated iron ore intended to transport the same to its respective buyers. However, to its surprise, the 2nd respondent on 9th December 2017 informed the petitioner that beneficiated iron ore can be transported from its plant only after obtaining second pass in Form 29 as required under Rule 145[A](4) of the Rules. Petitioner which is not required to obtain second pass in Form 29 since the iron ore was purchased from government and the beneficiated iron ore is not a forest produce has -5- filed this writ petition so as to restrain the respondents from insisting second pass in Form 29 being obtained for supplying/transporting beneficiated iron ore to its buyers.
5. We have heard Sri L.M. Chidanandayya, learned counsel appearing for petitioner and Sri N Balaji, learned counsel appearing for respondent.
6. Learned counsel for the petitioner Sri L. M. Chidanandayya submits that, after purchasing the iron ore extracted in a forest area, same was transported to its beneficiation plant after obtaining pass as required under Rule 145[A](2) of the Rules. The said pass was issued in Form 27 of the Rules. He further submits that after transporting iron ore to its beneficiation plant, same is converted into higher grade iron ore and as such, the iron ore purchased by petitioner ceases to be a forest produce. He further submits that since the beneficiated iron ore is not a forest produce, petitioner is not required to obtain second pass in Form 29 as required -6- under Rule 145 [A](4) of the Rules, since same is applicable for transport or removal of iron ore belonging to Government purchased from private market or from outside the State. He further submits that respondent No.2 is compelling the petitioner to obtain second pass in Form 29 which is contrary to Rule 145 of the Rules which reads as follows :
"145. Pass for transport or removal of forest produce.-[(A)](1) Pass for transport or removal of forest produce, (1) belonging to Government shall be white in colour and issued by Range Forest Officer or a subordinate officer duly authorized by him.-
(i) in Form 25 if in respect of timber;
and
(ii) in Form 26 if in respect of other forest produce.
(2) purchased from Government forest or depots shall be blue in colour and issued by a Forest Officer duly authorized in this behalf by the [Deputy Conservator of Forests] in Form 27.
(3)from inam lands or private lands including coffee lands shall be yellow in colour in Form 28 and issued by.-
-7-
(i) Range Forest Officer or such Foresters as may be authorized by him if the forest produce to be moved is not more than 5 cubic metres of timber or 30 cart-loads of firewood, or 100 bags of charcoal or 1,000 bamboos;
(ii) [Deputy Conservator of Forests] if the quantity exceeds the limit prescribed in (i) above.
(4) from private market or from outside the State shall be green in colour in Form 29 issued by a Forest Officer not below the rank of a Forester.
[(B) Application for a pass referred to in sub-rule (A) shall be accompanied by a fee of [rupees fifteen].
(C) No goods vehicle as defined in clause (8) of Section 2 of the Motor Vehicles Act, 1939 (Central Act 4 of 1939) shall enter a reserved forest without a pass given by a Forest Officer duly authorized in this behalf and an application for such a pass shall be accompanied by a fee of rupees twenty-five].
[(D) Application for issue of pass shall be accompanied by transportation fee on forest produce at the rate of Rs.50/- per Cum.
For Timber, Rs.10/- per Cum. For Firewood/Pulpwood, Re.1/- per pole, 0.20 paise per Bamboo/Cane in Forms 28 and 29.
The rates mentioned in the Notification No.FEE 14 FDP 2004, dated 19-5-2004 in -8- respect of sandalwood in Forms 39 and 40 shall continue.]"
7. Learned counsel for the petitioner further places reliance on the decision of the learned Single Judge of this Court in the case of Bhadravathi Division Saw Mills Owners & Timber Merchants Association -vs- State of Karnataka reported in ILR 1986 Kar. 2298. He submits that in view of the aforesaid decision supra, it is not necessary to obtain Form 29 when the petitioner has purchased iron ore (forest produce) from the government and transported the same to its plant for beneficiation after obtaining pass under Form 27.
8. He further submits that beneficiated iron ore is dutiable as "concentrates" and as such securing of pass in terms of Rule 145[(A)](4) of the said Rules is not required. In support of his submission, he has relied upon Circular dated 17th February 2012 issued by the Government of India, Ministry of Finance, at Annexure-H whereunder it is -9- clarified that levy of excise duty is attracted where part or all of the foreign materials is removed from the iron ore by special treatment.
9. Learned counsel for the petitioner by relying upon circular supra, submits that, since beneficiated iron ore is amenable to excise duty, the same cannot be termed as a forest produce. Accordingly. he seeks for allowing the writ petition.
10. Per contra, Sri N Balaji, learned Additional Government Advocate appearing for respondents submits that forest produce has been defined under sub-Section (7) of Section 2 (b)(iv) of the Karnataka Forest Act, 1963 and as per the said definition it includes all products of mines or quarry, which includes iron ore after beneficiation also as it does not change in character and continues to be iron ore and thereby it continues to remain a forest produce. He submits that it is mandatory for the petitioner to obtain Form 29 before transporting the beneficiated iron ore. In
- 10 -
support of his submission, he has placed a decision of the Hon'ble Apex Court in the case of State of Uttarkhand -vs- Kumaon Stone Crusher in Civil Appeal No.14874/2017 wherein it is held that stone boulders continues to be forest produce and do not transform into any new commodity after crushing of the said stone boulders into stone bricks, chips and dust. Hence, he submits that petitioner cannot claim exemption from production of Form 29 on the ground that beneficiated iron ore ceased to be a forest produce. He further submits that petitioner cannot claim exemption from production of Form 29 since beneficiation plant belonging to petitioner is a private market and as such, petitioner is required to obtain Form 29 as contemplated under Rule 145[(A)](4) of the Rules 1969. Accordingly, he seeks for dismissal of the writ petition.
11. We have examined the submissions made by the learned counsel appearing for the parties and also the material on record.
- 11 -
12. Chapter XVI deals with the Transit of Forest Produce and Control of Private Saw Pits, Saw Mill etc. Rule 143 of the Rules provides that expression "Forest produce in transit" includes forest produce found in or on the margin of any public road , whether loaded in any conveyance or not , forest produce found or being conveyed in any river , tank, lake , pond, reservoir or sea and forest produce lying in any railway yards, ports or airports whether loaded or otherwise. Rule 144 of the Rules indicates that no person shall transport or move or attempt or abate the transport or movement of any forest produce [into, within or outside State of Karnataka] except under and in accordance with a pass issued by a Forest Officer duly authorized in this behalf by or under these rules to issue such pass save as provided in Rule 154 and 155. Thus, without a pass no person shall pass or move or attempt or abate the transport or movement of any forest produce. A plain reading of Rule 145 of the Rules would
- 12 -
indicate that sub-Rule (2) of Rule 145 of the Rules provides for transport of forest produce purchased from Government Forest or Depots shall be in blue colour and issued by a Forest Officer duly authorized in this behalf (Deputy Conservator of Forest) in Form 27.
13. Petitioner has purchased the iron ore in an e- auction conducted by the Monitoring Committee and the said iron ore belonged to BKG Mines situated in a forest area. Petitioner has transported the iron ore purchased by it after obtaining a pass as required under Rule 145[(A)](2) of the Rules in Form 27. After purchasing, it has converted the iron ore into higher grade ore fit for industrial application.
14. It is not in dispute that the iron ore extracted in a forest area was purchased by the petitioner from the Government in an e-auction and the iron ore purchased by the petitioner was transported to its beneficiation plant after taking permission under Rule 145[(A)](2) of the Rules
- 13 -
in Form 27. Petitioner who intends to supply/ transport the beneficiated iron ore to its buyers has been compelled by respondent No.2 to obtain second pass in Form 29 as required under Rule 145[(A)](4) of the Rules on the ground that beneficiated iron ore does not change in character and continues to be iron ore and thereby it continues to remain forest produce and also that the beneficiation plant belonging to petitioner is a private market.
15. Petitioner has purchased iron ore from the Government and not from a private market. After beneficiation it intends to transport the beneficiated iron ore to its prospective buyers . In fact, Form 29 is a pass required to be obtained for transport or removal of forest produce from a private market or purchased from outside the State, and column No.10 of Form 29 requires that number and date of pass in Forms 25, 26 or import pass disposed of is to be stated. A plain reading of Rule 145[(A)](1) of the Rules would indicate that for transport or
- 14 -
removal of forest produce belonging to Government should be in Form 25 if it is timber and Form 26 in respect of other forest produce is required to be obtained. For transport or removal of forest produce purchased from Government Forest or Depots it should be in Form 27 as indicated in sub-Section (2) of Section 145.
16. In the instant case, petitioner has purchased iron ore extracted in a forest area from the Government and transported the iron ore so purchased to its beneficiation plant after obtaining pass in Form 27 as required under Rule 145[(A)](2) of the Rules. Beneficiation Plant belonging to the petitioner is not a private market since the iron ore purchased by the petitioner from the Government and stacked in its beneficiation plant no longer belongs to the Government. Learned Single Judge of this Court in the case of Bhadravathi Division Saw Mills Owners & Timber Merchants Association -vs- State of Karnataka after considering Chapter XVI which deals with the transit of
- 15 -
forest produce and control of private saw pits, saw mill etc has held that it is not necessary to obtain Form 29 when forest produce is purchased from the government and transported the same after obtaining pass under Form 27. It has been held as under:
"6.6 In fact, Form No.29 states that it is a pass for the removal of timber and other forest produce from private markets or private timber depots or imported from outside the State. One of the columns in Form No.29 namely Column No.10 requires the information as to number and date of pass in Form 25, 26 or import pass disposed of, to be stated. Form Nos.25 and 26 are the passes for transporting Government timber and forest produce other than timber belonging to the Government from Government forest to the Government timber yard or depot. The passes issued inform No.25 and 26 are intended to be used for transporting the Government timber and other forest produce from the forest belonging to the Government. Saw Mill owners, private depot owners or other persons, who purchase in the Government forest or Government depots the timber or other forest produce belonging to the government in order to transport such timber or forest produce to their depots or to the private market or to their places, have to obtain passes in Form Nos.27 and 28. As it is noticed earlier sub-rule (4) of Rule 145 of the Rules provides that pass for transport or removal of forest produce from private market or from
- 16 -
outside the State shall have to be in green colour in Form No.29 issued by a Forest Officer not below the rank of a Forester. No doubt, From No.29 apart from describing the pass for removal of timber or other forest produce from private markets or imported from outside the State it also mentions private depots. Rule 152 of the Rules which provides for transport of imported forest produce after entry into the State directs that the forest produce which is imported by sea, rail, road or water shall have to be conveyed after entry into the State within the limits of the State by road or water, rail or with a pass issued in Form No.29. It follows from sub-rule (4) of Rule 145 and sub-rules (1) and (3) of Rule152 of the Rules read with Form No.29, that Form No.29 is issued by the Forest Officer not below the rank of a Forester for removing timber and other forest produce from private markets or private depots and also for conveying the timber or other forest produce imported from outside the State. It is also possible to obtain Form No.29 by those private depot owners who have not obtained authorisation in Form No.30 and are not authorized to issue way-permits in Form No.31. Thus, Form No.29 is not applicable to those saw-mill owners and private depot owners who are authorized to issue way permits. Further, the way-permits issued in Form No.31 are intended to be used for transporting the timber or other forest produce sold by the saw-mill owners or private depot owners which they had bought from the Government yard or the Government depot or from private holdings including coffee lands and transport the same into their sawmills or private depots under
- 17 -
Form Nos.27 and 28. As such, they cannot be compelled to use Form No.29. Consequently, Annexure-E also liable to be quashed."
17. We concur with the well considered view taken by the learned Single Judge in the aforesaid decision and hold that petitioner is not required to obtain permission under Rule 145[(A)](4) of the Rules in Form 29 .
18. In the decision of the Hon'ble Apex Court relied upon by the learned Additional Government Advocate in the case of State of Uttarakhand (supra) it is held that stone boulders continues to be forest produce and do not transform into any new commodity after crushing of the said stone boulders into stone bricks, chips and dust. In the instant case the beneficiated iron ore is treated as concentrates attracting excise duty by the Central Government . Further, after considering Rule 144 of the Rules, we have already held that iron purchased from Government and transported to the petitioner's beneficiation plant after obtaining pass in Form 27 is not
- 18 -
required to obtain second pass in Form 29, the decision of the Apex Court supra is not applicable to the facts and circumstances of the case since the provisions contained in Indian Forest Act, 1927 and The Mines and Minerals (Development & Regulation) Act, 1957 were under consideration before the Apex Court and not the provisions contained in Karnataka Forest Act & Rules.
19. The Central Government by Circular at Annexure-H has clarified that iron ore is dutiable as concentrates when part or all of the foreign matter removed by special treatment either because such foreign matter may hamper subsequent metallurgical operation or with a view to economical transport when subjected to crushing, cleaning, sizing or washing etc. For immediate reference, Circular dated 17th February 2012.
"Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi
- 19 -
Sub: Dutiability of "iron ore" and "iron ore concentrates" - Clarification regarding.
A reference has been received from Bhuwaneswar Zone seeking clarification on the issue of whether "iron ore lumps and fines" are dutiable as "concentrates" when subjected to crushing, screening, sizing of washing etc.
2. In Budget 2011, a Note was inserted in Chapter 26 of the First Schedule to the Central Excise Tariff to deem the process of converting "Ores" into "Concentrates" as a process amounting to manufacture. Both ores and concentrates are classifiable under Chapter 26 and while the term "Ore" is defined in Note 2 of the said chapter, the terms 'concentrate' is not. HSN Explanatory Note spell out the scope of the term "Concentrate" as under:
"For the purposes of Headings 2601-2617, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport."
From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have clarified that no special treatment is involved in the crushing and screening of ore and the end-
- 20 -
product can be termed as a concentrate only when the grade of ore is sufficiently proved through beneficiation Federation of Indian Mineral industries have also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation & Concentrate thickening have to be undertaken for ores to be converted into concentrate.
3. Hence, it is clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN Notes, that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'.
4. The above position may be brought to the notice of Commissioners under your charge so that pending disputes, if any, may be decided accordingly."
20. Petitioner after purchasing the iron ore from the Government which was extracted in a forest area has transported the iron ore to its beneficial plant which is situated on a revenue land after obtaining a permission in Form 27. Thereafter, petitioner through industrial process has converted the iron ore into higher grade ore fit for
- 21 -
industrial application. Hence, we are of the view that since beneficiated iron ore which is amenable to excise duty has ceased to be a forest produce.
21. For the aforesaid reasons, we accept the submissions of the learned counsel appearing for the petitioner that respondents cannot compel the petitioner to obtain Form 29 for lifting or removal of beneficiated iron ore from its plant for supplying it to its prospective buyers and we reject the submission of the learned Additional Government Advocate that petitioner cannot claim exemption from production of Form 29 since the beneficiation plant belonging to the Petitioner is a private market and beneficiated iron ore does not cease to be a forest produce. Hence, we are of the view that requirement of obtaining second permit in Form 29 under Rule 145 [(A)](4) is without authority of law and arbitrary. Accordingly, we pass the following:
- 22 -
ORDER
i) Writ Petition is allowed.
ii) Respondents are hereby restrained from
compelling the Petitioner from obtaining second pass in Form 29 for lifting or removal of beneficiated iron ore from its plant for supplying to its prospective buyers so far it relates to iron ore purchased from State Government and pass has been obtained in Form 27 in terms of Rule 145[(A)](2) of the Karnataka Forest Rules, 1969.
iii) No order as to costs.
Sd/-
JUDGE Sd/-
JUDGE Bkm