Hindustan Copper Limited vs Union Of India And Ors.
1989 Latest Caselaw 607 Del

JUDGMENT

S.B. Wad, J.

(1) This writ petition is directed against the order of the Central Government in revision, passed on 20.5.71, holding the Rotary Disc Screen equipment not as mining machinery under item 72(18) ICT. This equipment is used in the Copper mine in Khetri Copper Project under the control of National Mineral Development Corporation (NMDC). The Nmdc executed a contract with M/s Venopic Elsa of France to fabricate and supply the said equipment through a contract dated 9.3.67. The equipment arrived in two consignments. The petitioners contended that they were liable to pay duty under item 72(18) as mining machinery. The same was not accepted by the authorities and they charged a much higher rate as "Machinery" general. The petitioners paid the customs duty on that basis. Thereafter the petitioner applied for the refund of the amount charged in excess by the Department.

(2) The Assistant Collector of Customs, New Delhi, by his orders dated 6.7.70 held that the machinery in question does not fall under item 72(18) Ict as mining machinery. The orders were confirmed in appeal by the Collector of Customs, vide orders dated 22.1.71. The Government of India by its orders dated 18.10.73 dismissed the revision application filed by the petitioner against the Appellate orders of the Collector of Customs. The principal challenge in this writ petition is that the revisional authority has not properly appreciated as to what is mining operation and, therefore, has excluded screening operations done by the equipment in question.

(3) The Mining Advisor in the Department of Mines (Ministry of Steel & Mines) has certified as to what was the nature of the Rotary Disc Screen equipment. A copy of the certificate is annexed as Annexure ''M" to the writ petition. The Certificate reads : "THIS is to certify that the "Rotary Disc Screen EQUIPMENT" imported by Hindustan Copper Limited for underground installation in its Khetri Copper Mines at Khetri Nagar, is a piece of mining machinery, tailor made, designed and fabricated exclusively for Khetri Copper Project for handling Copper Ore in the underground chamber in the Production Shaft."

1. Prospecting; 2. Surface drilling; 3. Techno-economic feasibility study; 4. Detailed project report; 5. Shaft sinking/other opening approach to ore body; 6. Level preparation; 7. Detailed underground drilling; 8. Stop preparation; 9. Mine-dewatering; 10. Mine ventilation; 11. Stopping (ore breaking); 12. Underground transportation of ore to the bunker; 13. Underground screening of ore; 14. Primary crushing; & 15. Hoisting up to the surface;

(5) The revisional authority has accepted the description of the equipment and also the work/ service it performs. It has accepted as a finding of fact -'as explained by the importers' technical representative in the particular type of mining operation which they are carrying, out the ore which has compressive strength comes out as big boulders after they are blasted Big boulders of about Ii meter cube weighing approximately 3 tonnes must be crushed to smaller sizes before they can be economically lifted. Unless the bie boulders are crushed to smaller sizes, they cannot be conveniently loaded in the skip, nor the full space in the skip can be utilised. Before the boulders as cursed underground, they are to be separated from the smaller ones and for that purpose, the Rotary Disc. Screen is used."

(6) The Central Government found that mining machinery "has not been defined in the tariff". It is better to quote the words used in the revisional order to understand the view of the Government in regard to the process of mining and its finding that screening of ore per se is not a mining operation : "MINING is a process of breaking minerals from their solid position and loading and transporting them to the surface. It includes use of explosives and detonators, distribution of explosive through rock by means of a pattern of shot holes, explosive and mechanical fragmentation loading and transportation to the surface. Machines within the meaning of the Tariff Item 72 Ict which are specially designed for use directly in this process of mining and is not suitable for use for any other purpose elsewhere may get the benefit of assessment as mining machienry. Screening of ore preset is not a mining operation. The particular disc Screen may be specially designed for use underground for screening the ore before they are lifted. But even than such a rotary disc screen is only indirectly connected to the process of breaking minerals - from their solid position and loading and transporting them to the surface. It cannot also be said that installation of such a rotary disc screen is always essential for lifting copper ore from underground mines. This rotary disc screen is only an auxilliary machine installed underground for the benefit of the importers' special requirement. Such screens admittedly are not used in other copper mines. The rotary disc screen is not machine used directly for breaking minerals from their solid position and loading and transporting them to the surface and therefore cannot get the benefit of assessment under item 72(18) Ict as a mining machine."

(7) The entire reasoning in the revisional order is based on the understanding of the revisional authority as to what is meant and is involved in a mining operation. The expert in the field has filed his affidavit and he has described in detail as to what arc the various stages of the mining operation. The mining operation is not restricted to only breaking minerals from their solid position and loading and transporting them to the surface. Every activity which enables or facilitates the mining of minerals from prospecting to bringing them to surface arc all mining operations. It is more safe to rely on the expert evidence in this regard rather the general assessment of the revisional authority. As to what is meant by mining has been described in the Mines Act 1952 and Metal lifer us Mines Regulations 1961. They were referred to for a limited purpose to know as to what is mining operation. The revisional authority took it otherwise and did not attach any importance to it. Since the words 'Mining Machinery arc an integral part of the mining operation, in the absence of a definition of mining machinery in the tariff it was natural to look to the other enactments and regulations. There is no concept of an indirect connection of screening through the equipment in question. It has been admitted by the revisional authority that for economic lifting of the it is necessary that big boulders are crushed to smaller sizes, otherwise it cannot be conveniently loaded in the ships nor the full space in the ships can be utilised. Separating the smaller boulders through rotary disc screening is, thus, a vital part of economically lifting the ore to the surface. Every machinery or equipment employed for economic, efficient and optimum utilisation of the installed machinery is an inseparable part of that machinery in this case the mining machinery. Considering the fact that the petitioners are running a copper mine in the Public Sector the considerations of economic use of the machinery and efficient and optimum utilisation of the machinery have a special relevance. It is irrelevant to consider whether screening of ore parse is or is not a mining operation because in the present case we are concerned with screening as a part of the total mining operation. So also the finding of the revisional authority that Rotary Disc Screening is not always essential for lifting the copper ore or that the said machinery is not universally utilised in all the copper mines have no direct bearing on the question involved in this case. The revisional authority has already erred in treating separately the Rotary Disc Screen from the electrical equipment required for running the same and to hold that the electrical equipment cannot be described as mining machinery. In these days of large-scale mining through the use of electricity in a public sector, it is idle to talk of electrical equipment as not being part and parcel of the principal mechanical counter-part of the machinery. The respondents have not filed any counter-affidavit contesting the various assertions made in the writ petition, or to justify as to how the revisional order is correct.

(8) In regard to the other equipment in mining, viz drifter drills and kopek winder, this Court has already quashed the revisional orders and held that the equipment in question falls under item 72(18) Ict (AIR Delhi 1986 Pg. 54, CWP. 313/72 decided on 10.4. 1985.

(9) For the reasons stated above the impugned revisional order is set aside. The petitioners are entitled to the refund of the excise amount paid by them on the basis of the respondent's order that the machinery in question is not covered by the tariff item No. 72(18) ICT. This amount was deposited by the petitioners before 1970 and the respondents have utilised the said amount for the last over 18 years. The petitioners are entitled to 12% simple interest on the said amount till actual payment. I, therefore, direct that the exact amount in question should be worked out immediately and be refunded to the petitioners within three months from today. The writ petition allowed, Rule is made absolute.