JUDGMENT 1. - This appeal is directed against the judgment of learned Single Judge dated 21.11.2005 allowing the writ petition filed by the respondent company and relates to interpretation of the relevant entry made in Second Schedule annexed to Mines and Mineral (Development & Regulation) Act, 1957 (hereinafter referred to as 'the Act of 1957') providing for rates of royalty payable on Lead and Zinc as substituted vide notification dated 12.9.2000, and rules made for the purpose of determination of total royalty payable in respect of any mineral and the manner, time and place at which royalty is payable. The respondent company was originally incorporated for giving effect to aims and objects of The processing the run Metal Corporation of India (Acquisition of Undertaking) Act, 1966. One of the objects of the acquisition of Metal Corporation, which was first acquired by the Central Government in terms of Act of 1966, which in turn was repealed on enactment of The Metal Corporation (Nationalisation & Miscellaneous Provisions) Act, 1976 was to exploit to the fullest extent possible, the Zinc and Lead deposits in and around Zawar area in State of Rajasthan and to utilise those minerals in such manner as to subserve the common good, and for matters connected thereto.It is in the aforesaid background, the Hindustan Zinc Ltd. was granted mining lease for Zinc and Lead at Rajpura in District Rajsamand, Agucha Mines in District Bhilwara and Zawar Mines in District Udaipur. The lead and zinc are usually not found independently but are found in association with other minerals contained in the run of mines produced through mining operations. The Company had set up the processing plant within the mining lease area in order to obtain zinc concentrate and lead concentrate form run of mine and only after processing the run of mine, the concentrate were removed from the leased area for sale and use. Tailings left after processing the run of mine was a waste material, which was not usable in the sense that no zinc and lead was recoverable from it and was removed for dumping at a dumping place authorised for that purpose.Though under the Rajasthan Land Revenue Act, all minerals embedded in the earth vest in the State, the Parliament enacted the Mines and Mineral (Development & Regulation) Act, 1957 to provide for the development and regulation of mines and minerals under the control of Union. Entry 54 in the Union List of the Seventh Schedule legislative field for enacting laws on the subject of regulation of mines and minerals to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest is exclusive preserve of Parliament. It is with reference to aforesaid entry that Act of 1957 was enacted by Parliament, any provisions made under the Act of 1957 and Rules framed thereunder, the field was occupied by the Central Legislation and any provision made by the State with reference to Entry 23 of the State List of Seventh Schedule about regulation of mines and minerals development, to the extent it was repugnant to law, governed by law made in terms of Entry 57 of List-I became inoperative.Be that as it may, under the Act of 1957, Section 9 provides for Royalties in respect of mining leases. It inter alia provided that holder of mining lease shall pay royalty in respect of mineral removed or consumed by him or by his agent, manager, employee, contractor or sub- lessee form the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.Sub-section (3) of Section 9 enabled the Central Government to enhance or reduce the rate at which royalty shall be payable in respect of any mineral by a notification published in official gazette w.e.f. such date as may be specified in the notification subject to rider that Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of three years.Section 9A, which was inserted in the Act of 1957 by amendment in 1972 w.e.f. 12.9.1972, and which is relevant for present purposes had ordained that holder of mining lease, whether granted before or after the commencement of the Mines and Minerals (Regulation & Development) Amendment Act, 1972, shall pay to the State Government, every year, dead rent at such rate, as may be specified, for the time being, in the Third Schedule, for all the areas included in the instrument of lease provided that where the holder of such mining lease becomes liable under section 9 to pay royalty for any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area, he shall be liable to pay either royalty or the dead rent in respect of that area, whichever is greater. The provision is significant in the sense that it envisages one of the criterion about period for which royalty is to be computed. Computation of royalty is to be made on yearly basis for the purpose of determining whether the lessee is liable to pay dead rent or royalty in respect of any mineral removed or consumed form the mining lease.In tune with Section 9, Second Schedule provided rates at which royalty was payable in respect of any mineral removed or consumed from mining area. 2. 2. Before we notice in detail the Second Schedule and relevant provisions of the Rules governing the computation and determination of royalty payable on zinc and lead, the minerals in question, we may notice that First Schedule classifies the minerals in Part A, B, & C for specified purpose stated in Sections 4(3), 5(1), 7(2) & 8(2) of the Act of 1957. Part A of the First Schedule has classified Coal and lignite as Hydro Carbons/Energy Minerals. Part B deals with Atomic Minerals and Part C deals with Metallic and Non-metallic minerals, which are governed for special treatment in respect of metals mentioned in the aforesaid provision of Parent Act. Zinc and lead fall in Part C of the First Schedule. 3. It will also be relevant to mention that Section 13 of the Act of 1957 empowers the Central Government to make Rules for regulating the grant of reconnaissance permits, prospecting licences and mining leases in respect of minerals and for purposes connected therewith. Amongst other things, it enables the Central Govt. to make rules about the time within which and the manner in which dead rent or royalty shall be payable. 4. Prior to substitution of Second Schedule w.e.f. 12.9.2000, royalty payable on minerals lead and zinc was governed by notification dated 11.4.1997. In Second Schedule, Lead was entered at item No. 25 and Zinc was entered at item No. 50. The entries before the substitution of Second Schedule read as under: "Item No. 22 lead Concentrate 4% of London Metal Exchange metal Price on ad valorem basis chargeable per tonne of concentrate produced. Item No. 41 Zinc Concentrate 3.5% of London Metal Exchange metal price on ad valorem basic chargeable per tonne concentrate produced." 5. In terms of aforesaid entries, the rate of royalty was related to per tonne of concentrate produced irrespective of metal content in the processed mineral and irrespective of the fact whether the concentrate was produced in the leased area or outside the leased area. It was also immaterial whether metal concentrate was obtained within State or outside the State in which mine is situated. In other words the time and place where royalty became payable was when mineral concentrate was obtained. The percentage rate was to be applied to metal price prevailing at London Metal Exchange. It was also immaterial whether metal concentrate was obtained within State or outside the State in which mine is situated. In other words the time and place where royalty became payable was when mineral concentrate was obtained. The percentage rate was to be applied to metal price prevailing at London Metal Exchange. In other words, royalty was payable in case of Lead concentrate on the price of Lead prevailing in London Metal Exchange and fixed percentage of that price was to be applied to the quantum of concentrate per tonne after the concentrate was obtained by processing the run of mine. For example on processing the run of mine 100 tonne of concentrate is obtained containing 60% of Lead metal, the price chargeable for one tonne of metal shall be applied to the quantity of concentrate per tonne prevailing in London Metal Exchange to concentrate produced & 4% on ad valorem value of the concentrate produced was the royalty payable. Likewise, in relation to Zinc, 3.5% per tonne ad valorem at London Metal Exchange price was the royalty payable on total metal concentrate produced. In that event the metal content of mineral concentrate was irrelevant. Whether percentage content of mineral concentrate was low or higher, the royalty being measured on weight of concentrate, the amount of royalty in either case will be same. 6. Another important aspect of the matter was that time for payment of royalty on mineral was deferred until concentrate was obtained and to place where such concentrate was produced. Significantly, the consequence was that if the mineral concentrate was obtained at a place outside the State where mining lease was situated, the revenue of such mineral went to such other State where mineral concentrate was obtained. 7. By substituting the Schedule vide notification dated 12.9.2000, the entry about royalty payable on Lead and Zinc amongst other minerals, to which we shall be adverting little later, was provided as under: "Item No. 25-Lead Five per cent of London metal Exchange lead metal price chargeable on the contained lead metal in one produced. Item No. 50-Zinc Six Point six per cent of London Metal Exchange zinc Metal price on ad valorem basis chargeable on contained zinc metal is are one produced." 8. Item No. 50-Zinc Six Point six per cent of London Metal Exchange zinc Metal price on ad valorem basis chargeable on contained zinc metal is are one produced." 8. With this change in the Schedule by shifting the basis of charging royalty from mineral concentrate produced to the metal contained in the ore produced, certain amendment in the Mineral Concessions Rules, 1960 were also introduced. Relevant for our purposes are Rules 64B, 64C and 64D which were inserted w.e.f. 25.9.2000 vide notification of the even date. 9. The arguments have centred around the interpretation of these rules vis-à-vis the entries in the Second Schedule relating to minerals in question. It will be apposite to reproduce the three newly inserted Rules in their entirety: "64B. Charging of royalty in case of minerals subjected to processing.- (1) In case processing of run-of-mine 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. 64C. Royalty on tailings or reject.--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: 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 tailing or rejects shall be liable for payment of royalty. 64D. Guidelines for computing royalty on minerals on ad valorem basis.--Every mine owner, his agent, manager, employee, contractor or sub-lessee shall follow the following Guidelines for computation of the amount or royalty on minerals where the royalty is charged on ad valorem basis, namely: The Guidelines for calculation of royalty in typical cases are as follows, namely: Case 1: All non-atomic and non-fuel minerals and minerals other than aluminium [bauxite and laterite despatched for use in alumina and aluminium metal extraction] primary gold, silver, copper, lead, zinc, nickel and tin,-- The Indian Bureau of Mines publishes 'Monthly Statistics of Mineral Production' which contains statewise total value of each mineral produced during a months in a State. The statewise average value for different individual minerals as published by Indian Bureau of Mines in the Monthly Statistics of Mineral Production shall be the benchmark for computation of royalty by the concerned State Government in respect of any mineral produced any time during a month in any mine in that State. For the purpose of computation of royalty the State Government shall add twenty percent to this benchmark value. This value shall be reckoned to be the sale price for the purpose of computation of royalty. Also the value of the minerals published in the latest published issue of the Monthly Statistics of Mineral production will be deemed to be applicable for the mineral mined in the previous month, irrespective of when the royalty actually accrues. If for a particular mineral, the information for a State is not published in a particular issue, the last information available for that mineral in the State in a previous issue shall be referred, failing which the latest published information for the mineral for all-India shall be referred. Case 2: For atomic minerals, prescribed under Atomic Energy Act, 1962 (33 of 1962)-- The minerals under this category include ilmenite, leucoxene, rutile and zircon obtained mainly from the beach sand deposits in the coastal state. The basis of collection of royalty shall be the actual mineral content in the beach sand mined. (a) In case of sale in domestic market, the per tonne sale price of the separated mineral actually realized, less the cost of transportation from the lease boundary to point of sale as shown by the mine owners in their sale vouchers or bills or in voices shall be considered for computing ad valorem royalty. To avoid payment of taxes on royalty separately in the sale vouchers or bills or invoices instead of indicating a composite price inclusive of royalty. In case the price, royalty and transportation cost are not shown separately it shall be assumed that the price indicated in the sale vouchers or bills or invoices is exclusive of royalty and transportation cost, and royalty shall be charged accordingly. In case the price, royalty and transportation cost are not shown separately it shall be assumed that the price indicated in the sale vouchers or bills or invoices is exclusive of royalty and transportation cost, and royalty shall be charged accordingly. (b) In case of direct export by mine owners the sale value for the purpose of royalty shall ordinarily be the free on board (FOB) price realised less transportation charges from the lease boundary to the port, loading and unloading charges at the port, port charges (including sampling and analysis and demurrage charges, if any), issuance charges, royalty, taxes and interest charges on loan for export. However, in case of cost insurance and freight (CIF) sales, sea freight insurance and cost of unloading at the destination port shall also be deducted from such price. For such purposes the mine owner may prepare invoices or bills indicating the free on board price or cost insurance freight price as the case may be and each of the other charges separately. Explanation.-For the purposes of calculation of royalty in case of minerals produced in captive mines (other than aluminium (bauxite and laterite dispatched for use in alumina and aluminium metal extraction), copper, lead, zinc, tin, nickel, gold and silver) and those not actually sold, Case and Case 2 shall be applicable. Case 3: For aluminium (bauxite and laterite despatched for use in alumina and aluminium metal extraction), primary gold, silver, copper, lead, zinc, nickel and tin.-- The total contained metal in the ore produced during the period for which the royalty is computed and reported in the statutory returns under Mineral Conservation and Development Rules, 1988 or recorded in the books of the mine owners shall be considered for the purposes of computing the royalty in the first place and then the royalty shall be computed as the percentage of the average metal price in the London Metal Exchange (hereinafter referred to as the LME) for copper, lead, zinc, nickel, silver and tin and Lond Bullion Market Association price (commonly known as London Price) for gold during the period of computation of royalty. The foreign exchange rate for conversion of rupees shall be the selling rate on the last date of the period of computation as published in newspaper, namely, The Economic Times. The foreign exchange rate for conversion of rupees shall be the selling rate on the last date of the period of computation as published in newspaper, namely, The Economic Times. For the LME prices as well as for London price of the commodity, either of the following three sources shall be referred to, namely: (i) Non ferrous Report: Mineral and Metals Review, 28/30, Anantwadi, P.O. Box 2749, Mumbai - 400 002. (ii) Metal Bulletin, 26, Lower Marsh, London, SE - 17 RJ (iii) World Metal Statistics: (Monthly or Quarterly Summary), by World Bureau of Metal Statistics, 27 A High Street, Ware, Herts SG12 9BA, United Kingdom. Case 4: For by-product gold and silver The guidelines for computation of ad valorem royalty shall be linked to the total quantity of metal produced and the LME price for silver and London Bullion Market Association price (commonly known as London Price) for gold as in the case 3 above. However, in this case, the actual final production of the metal shall be considered instead of the metal content in the ore produced for the purposes of computing royalty. 10. Shorn of incidental derivative arguments from analogy of different provisions, which in our opinion are not necessary to be adverted to, the stand taken by the State is that royalty is to be computed on the mineral contained in the total quantity of ore brought to surface at the pithead, by referring to the percentage of 'mineral contained in the ore produced' in terms of case 3 dealt with under Rule 64D. 11. Case of the respondent-petitioner, the holder of mining lease, is that in terms of Rule 64B the time and place for payment of royalty is removal of mineral from mining lease area and not at any other time place or stage. Since the processing of Run-of-Mine is carried but within the leased area by the mining leases holder, royalty is chargeable on mineral contained in the processed mineral removed from the mining area in terms of Rules 64B(i) and no royalty is chargeable in respect of tailings removed from the leased area for dumping and consumed outside the leased area in terms of Rule 64C. The royalty is chargeable on tailings removed from mining lease area if the same is sold or used by the holder of lease. 12. The royalty is chargeable on tailings removed from mining lease area if the same is sold or used by the holder of lease. 12. The facts about the processing of run-of-mine within the leased area and removing the tailings and waste from leased area for dumping and not for sale and consumption are the facts not in dispute. There is also no dispute that on the mineral contained in the processed mineral removed i.e. Lead concentrate and Zinc concentrate, royalty has been paid in terms of the aforesaid entry on Lead and Zinc by the respondent company. 13. However, in terms of the stand taken by the Mining Department demand was raised by the Mining Engineer by computing the royalty on the total quantity of mineral ore at pithead. It appears that demand notice had been issued by the Mining Department without affording an opportunity of hearing and without making a reasoned order. The demand notices were subjected to revision before the Central Government. The Central Government upheld the demand raised by the Mining Engineer. This has led to filing of writ petition by the respondent Corporation. 14. Learned Single Judge while allowing the writ petition, opined as under: "Sub-rule (1) and sub-rule (2) of Rule 64B are separate provisions for charging of royalty, one for only processed minerals manufactured from the leased area and another for un-processed run-of-mine minerals. Rule 64C further made it clear that 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 be liable for payment of royalty. In case the royalty will be charged immediately on the extraction of the mineral then there was no reason for framing rule 64C which provides that royalty shall not be charged on removal of tailings or rejects from the leased area unless as per the proviso to rule 64C, the tailings and rejects are used for sale or consumption. The Hon'ble Apex Court also held in the case of National Mineral Development Corporation Ltd. (Supra) that the rule also suggest the intention of the Government for the dumped tailing or rejects, or in other words "slimes", are to be treated as separate head and charge of royalty thereon is not to be made as matter of course. The Hon'ble Apex Court also held in the case of National Mineral Development Corporation Ltd. (Supra) that the rule also suggest the intention of the Government for the dumped tailing or rejects, or in other words "slimes", are to be treated as separate head and charge of royalty thereon is not to be made as matter of course. Dumped tailings or rejects may be liable to payment or royalty if only they are sold or consumed. In view of the above the respondents have no right to demand the royalty on Lead Ore or Zinc Ore and the respondents can charge the royalty on zinc metal or lead metal which is contained in ore produced by the lessee. I do not find any force in the submission of the learned Advocate General appearing on behalf of the State that removal of the word "concentrate" from the old Entry No. 22 by notification dated 12.9.2000 is sufficient for charging the royalty of lead and zinc ore. The removal of word "concentrate" cannot convert the word "lead" and "zinc" into "lead ore" and "zinc ore" or into the words lead with impurities and zinc with impurities." 15. Against the aforesaid judgment, this special appeal is before us. 16. Learned Additional Advocate General has invited our attention to the following part of the discussion made in the body of the judgment, wherein, the learned Single Judge has observed that: "The word "concentrate" after the "Lead" and "zinc" has been removed. At the same time, the heading has not been changed to "Lead Ore" or "Zinc Ore". This suggest only that royalty can be levied on Lead and Zinc and not on Lead Ore and Zinc Ore. Even as per the amended charging provision under Entry No. 25 and 50 of the Second Schedule, the chargeable commodity is "contained Lead metal" in Ore produced for Lead and Zinc as the case may be. This also suggest that the royalty can be charged on contained zinc metal or contained lead metal which may be found in the ore produced. Therefore, the definition unambiguously suggests that the royalty can be charged on the lead metal and zinc metal and not on ore produced. The words "in ore produced" separates the metal from the ore for the purpose of levy of royalty." 17. Therefore, the definition unambiguously suggests that the royalty can be charged on the lead metal and zinc metal and not on ore produced. The words "in ore produced" separates the metal from the ore for the purpose of levy of royalty." 17. On this anvil, it is urged that the above passage reflects the correct analysis of the provision and applying the same principle the demand notices ought to have been sustained. 18. On the other hand, learned counsel for the respondent petitioner invited our attention as noticed by us above and submitted that the aforesaid analysis relied on by the learned counsel for the State is not conclusive but is only to highlight that levy is neither on the ore nor on the concentrate but on the mineral. The core question is whether the mineral contained is referable to processed mineral removed from the mining lease or the total quantity of run-of-mine brought at the pithead for the purpose of computing royalty at the rate prescribed in the schedule. 19. It was reiterated by the learned counsel for the State that Rule 64D (case No. 3) is an exception to the Rule 64B and 64C and is clearly referable to the total ore produced, the time for computation of royalty has been shifted from processed mineral to the ore brought at the pithead and royalty is to be determined at the time and place where run-of-mine is brought to surface because the basis of computation of royalty is changed from concentrate to the mineral contained in ore produced as shown in the returns before it is processed. Rule 64B has no application to it, particularly in view of specific provision made in respect of nine minerals mentioned in case No. 3 of Rule 64D. The general provision contained in Rule 64B and 64C must give way to the specific provisions contained in Rule 64D. That is ultimately the question which requires answer. 20. All the learned counsel suggested that intertwining of various provisions of Act and Rules relevant for present controversy be considered through interpretorial exercise, as the same goes to root of matter for determining royalty in respect of mineral when it is linked with 'metal contained in ore produced'. 21. That is ultimately the question which requires answer. 20. All the learned counsel suggested that intertwining of various provisions of Act and Rules relevant for present controversy be considered through interpretorial exercise, as the same goes to root of matter for determining royalty in respect of mineral when it is linked with 'metal contained in ore produced'. 21. One principle, which hardly needs any elaboration is that the provision of the Act and Rules are to be so construed that none is rendered otiose or redundant and that construction should be preferred which is harmonious and gives effect to all statutory provisions. 22. In this connection, it has been contended by learned Addl. Advocate General that Heading of Rule 64D "Guidelines for computing royalty on minerals on ad valorem basis" need not control the substantive provisions made in the Rule. This contention was raised in response to the submission that Rule 64D is only a guideline and does not take away the effect of Rules 64B & 64C for the purpose of computing royalty and it does not lay down the time and place and the manner of finding out the royalty on mineral contained in the ore and is not governed by case No. 3 detailed under Rule 64D. Rule 64B being explicit that in case processing of run-of-mine is carried out within the leased area, then royalty shall be chargeable only on the processed mineral removed from the leased area and no royalty is payable in respect of mineral which is processed outside the leased area, and the tailing or waste resulting as a result of such processing is not subjected to royalty at all under Rule 64C on its removal for dumping. 23. In order to resolve this issue, we shall have to notice, in some detail, the various types of basis provided for computing royalty under the Schedule. 24. Schedule enlists as many as 51 items and has three different indicias for the purpose of providing the rates of royalty payable on mineral removed or consumed in terms of Section 9. 25. On Item Nos. 24. Schedule enlists as many as 51 items and has three different indicias for the purpose of providing the rates of royalty payable on mineral removed or consumed in terms of Section 9. 25. On Item Nos. 1, 2, 4, 5, 6, 7, 8, 10, 13, 14, 16, 17, 18, 19, 22, 24, 29, 30, 31, 35, 36, 38, 40, 41, 44, 48, 49 & 51 royalty is payable on percentage of sale price of the mineral on ad valorem basis and under these items it is not further provided as sale price per tonne, per quintal or with reference to any quantity or ore, run of mines or processed mineral. Under the items on which royalty is payable with reference to sale price of the mineral is included the mineral falling in Part B of First Schedule namely atomic minerals. 26. On items No. 5, 12, 20, 25, 33, 42, 45, & 50 royalty is payable ad valorem on value of the mineral contained in ore produced. Lead and Zinc fall in this category of minerals and are covered under item No. 25 and 50. Value of 'the mineral contained' is to be calculated at a rate prevalent at London Metal Exchange and apparently London Metal Exchange rate being not in rupees for the purpose of determination of royalty payable on the mineral produced or consumed in India, such metal price equivalent to London Metal Exchange has to be converted in rupee value. 27. Apart from the aforesaid minerals, following items No. 3, 9, 15, 21, 23, 26, 27, 28, 32, 34, 37, 43, are stated for determination of royalty at a rate on quantum basis. Apparently, value of all the minerals contained or sale price of the mineral concerned is not to be determined in respect of items falling within this criteria. 28. The remaining Item No. 39 - Sand for stowing, Item No. 46 Tungsten and Item No. 47 - Uranium have been stated for different treatment. Item No. 11 relates to Coal (including lignite) for which separate notifications have been issued from time to time. Coal (including lignite) is a mineral falling under Part A of First Schedule and is not treated for general treatment amongst other minerals for the purpose of levying royalty and separate notifications are issued by the Government of India and its Department of Coal. Coal (including lignite) is a mineral falling under Part A of First Schedule and is not treated for general treatment amongst other minerals for the purpose of levying royalty and separate notifications are issued by the Government of India and its Department of Coal. Similarly, in relation to sand for stowing (item No. 39), Tungsten (item No. 46) and Uranium (item No 47) separate notifications specifying rate of royalty have been issued. Hence provisions made for four items have no bearing on deciding the issue raised before us. 29. We have already noticed above that under Section 13(2)(i) what is required to be prescribed in relation to payment of royalty is the time within which royalty is to be paid and the manner in which dead rent and royalty is to be paid. But the period for which total royalty is to be computed or dead rent is to be computed in order to find out whether the lease holder is paying dead rent or royalty is not subject matter of rules but is provided under Section 9A itself that total royalty payable by a mining lease holder or the total dead rent payable by such mining lease holder depends upon the annual determination of dead rent or the royalty and he is liable to pay the greater of the two but not the both. But rules may provide for periodical determination of royalty. In other words where the period for which royalty is payable has not been prescribed by the rules, the period of computation shall be as under Section 9A, i.e. Annual. But where period for such computation is provided under the Rules, that may be the basis for operating the rules. For the present case parties are in agreement that royalty on Zinc and Lead is determinable quarterly as per returns to be submitted every month. 30. Secondly, we have already noticed that while royalty is payable on removal of mineral from the mining lease or on consumption of mineral, computation is to be made in accordance with rules at rates prescribed under the Schedule. Second Schedule does not answer the question, whether royalty is payable at the time of sale of the mineral, or at the time of removal of mineral or consumption of mineral. Second Schedule does not answer the question, whether royalty is payable at the time of sale of the mineral, or at the time of removal of mineral or consumption of mineral. If we keep in mind different basis of rate of levy of royalty provided under Second Schedule, and consider the scheme of Rules 64B, 64C & 64D, the contention of learned counsel for the appellant state that Rule 64 D is a special provision over-riding the general provision contained under Rule 64B and 64C cannot be sustained. 31. Rule 64D in its fullness shows that it defines the terms with reference to which rate of royalty is to be applied keeping in view the terms used in Second Schedule. The rule opens with statement Guidelines for calculation of royalty in typical cases are as under". 32. Case 1 deals with all non-atomic and non-fuel minerals (other than 09 minerals referred to above to which royalty is payable at rate applicable is related to value of mineral contained in the ore at the price prevalent at the London Metal Exchange) where royalty is to be computed at rate applicable to sale price of mineral'. The element of sale price ordinarily comes into existence when actual sale takes place. It also does not speak of value as in the case at hand. It provides that sale price for the purpose of determination of royalty in respect of those minerals excluding atomic minerals and 09 minerals on which royalty is charged on mineral contained is not the sale price actually charged by the lease holder for sale or consumption but artificial sale price has to be taken into consideration in the manner prescribed in Case 1 for the purpose of determining royalty by applying rate thereto. That is to say it provides guidelines for determination of sale price envisaged in respect of all items of Second Schedule where rate of royalty is to be applied to the sale price of mineral. It in terms provides that the bench mark value of the mineral in question has to be determined in terms of the total value of each mineral during the month in the State which is to be determined by Indian Bureau of Mines. It in terms provides that the bench mark value of the mineral in question has to be determined in terms of the total value of each mineral during the month in the State which is to be determined by Indian Bureau of Mines. The State wise average value about each mineral is published by Indian Bureau in the monthly Statistics of Mineral Production and that is to be taken the bench mark for computing royalty by the concerned State Government and on that bench mark 20% is to be added and that total is reckoned as sale price for computing royalty. Apparently, this does not override any rule as an exception to that rule for determining manner in which royalty is to be paid, but defines what sale price means to which rate of royalty applicable in the case of concerned non-atomic mineral is to be applied. 33. Likewise, Case No. 2 deals with determination of sale price in the case of atomic minerals where also royalty is payable on the sale price of atomic mineral. It provides different manner of fixing sale price for operating the entry in the Schedule for the purpose of applying rates. This also defines 'Sale Price' in relation to atomic minerals where royalty is to be determined with reference to sale price. 34. Case No. 3 deals with all 09 minerals referred to above where royalty is on the value of metal contained in ore produced at rates as per second Schedule. It may be apposite to notice that minerals Gold and Silver have been included for alternative treatment in the matter of computation of royalty on the basis of mineral contained in the ore. In case of Gold and Silver recovered as by-product, royalty is payable on actual recovered mineral but where the Gold and Silver form part of primary mining lease, the same are to be treated in the like manner as other minerals for the purpose of royalty. If we closely read case No. 3, it lays down that it concerns with computation of royalty for a period for which it is required to be computed and nothing to do with the time and place when and where royalty is to be paid. It reads that "Total contained metal in the ore produced during the period for which the royalty is computed". It reads that "Total contained metal in the ore produced during the period for which the royalty is computed". Therefore, to say that because of change in the basis of computing royalty, lime and place at which royalty becomes payable has also been altered or is changed in terms of provisions made in case No. 3 of Rule 64D by over-riding other rule or rules that may be applicable is erroneous. Time and place at which royalty is payable and the manner in which royalty is payable remains untouched by the provisions made in Case No. 3 of Rule 64D. The provision is made keeping in view that under Section 9 royalty may be payable at different times and place when the mineral is removed from the mining lease area or is consumed, as the case may be. The contention of learned counsel for the State that royalty becomes payable as soon as mineral ore is brought to pit head is not supported by any provision. When the ore is brought at pit head it is neither removed from nor consumed within the mining leas area. Hence, the time and place for place for payment of royalty cannot be referable to point when mineral ore is brought at pit head. 35. Secondly, when royalty is to be computed in terms of rate of mineral prevalent at London Metal Exchange, whether on each removal royalty is to be computed at a price prevalent at London Metal Exchange or is to be modulated is a second question which has been addressed under case No. 3. It provides that royalty shall be computed at percentage of average metal price in the London Metal Exchange during the period of computation of royalty. That is to say, when royalty is to be computed, average metal price during the period of computation has to be taken for the purpose of applying rate prescribed in Second Schedule to such products for determining royalty for specified period. Case No. 3 also deals with conversion of London Metal Exchange price to its rupee value for determination of royalty in terms of Indian Currency. For this purpose, it provides that foreign exchange rate for conversion of land on Metal Exchange price to rupees shall be the selling rate on the last date of the period of computation as published in newspaper, namely, The Economic Times. For this purpose, it provides that foreign exchange rate for conversion of land on Metal Exchange price to rupees shall be the selling rate on the last date of the period of computation as published in newspaper, namely, The Economic Times. That is to say average metal price at London Metal Exchange has to be converted in rupee value at a rate published in Economic Times on the last date of period for which royalty is to be computed. Apparently, this provision is not applicable to day to day payment of royalty and its computation, when the mineral is removed from mining lease. 36. Likewise, Case No. 4 deals with computation of royalty payable in respect of Gold and Silver recovered as by-product in terms of items No. 20 and 42. Same principle has been applied as in case No. 3 except that royalty shall be computed on actual metal produced as bi-product instead of metal content in the ore. 37. Case Nos. 3 and 4 deal with the mineral which are subject to levy of royalty on metal contained and not on actual metal recovered at the price prevalent at London Metal Exchange, therefore, it provides for taking the returns as basis for metal contained in the ore on which royalty is determined for the prescribed period and computation of total royalty for the period with reference to an average of London Metal Price of Metal during the period and also provides for rate at which London value of metal is to be converted into Indian currency. Therefore, in view thereof, the contention of Learned Addl. Advocate General that Rule 64D, case No. 3, is a special provision and overrides Rule 64B and 64C cannot be sustained. 38. Rule 64B clearly makes a provision about the manner in which royalty becomes payable and which is in the domain of the Central Government to provide by Rules. It unequivocally provides that where Run-of-Mine is processed within the mining area, royalty is firstly payable on processed mineral removed under Rule 64B. Rule 64C provides that no royalty is payable in respect of tailings and waste, which have been removed for dumping and not for sale or use. It also provides that if tailings or waste is sold or consumed, the same becomes subject to royalty on the same principles. Thus, the ore own from the mine is split into two categories. Rule 64C provides that no royalty is payable in respect of tailings and waste, which have been removed for dumping and not for sale or use. It also provides that if tailings or waste is sold or consumed, the same becomes subject to royalty on the same principles. Thus, the ore own from the mine is split into two categories. The ore that becomes part of processed mineral, the royalty becomes payable on its removal from leased area. The remainder viz. Tailings or waste ore is subject to royalty when it is removed on sale or for use. In case it is removed only for dumping, no royalty becomes payable in terms of rule 64C(1), in our opinion, Rules 64B and 64C are not overridden by Rule 64D and must be given effect to in case of minerals, where run-of-mines is processed within mining lease area. 39. The last issue in this regard pertains to ambit and scope of expression 'total ore produced'. While it is contended by learned Addl. Advocate General that the total ore produced is the total Run-of-Mines at the pithead, learned counsel for the respondent-petitioner contended that concentrate which is derived as a process of run of mines within the mining lease area is not the actual mineral produced or recovered, as that is also embedded with impurities and has to be further processed for recovery of actual mineral later on. Therefore, what remains after the processing of Run of Mines within the mining lease area is also the ore. It was also contended that since royalty is payable on removal of mineral, in terms of Rule 64B when processed mineral or processed ore is removed, mineral as part of processed ore becomes subject matter of payment of royalty. When the remainder viz. the tailings are removed it becomes subject to royalty as per Rule 64C. But since on removal of tailings there is specific restriction on charging of royalty unless it is by way of sale or for use, the respondent is not liable for royalty in respect of removal of tailings for dumping in terms of rule because both the conditions are not applicable to it. The tailings are removed for dumping as waste. Hence, royalty is not payable thereon. The tailings are removed for dumping as waste. Hence, royalty is not payable thereon. It was claimed that he has paid royalty in terms of rules as per the return or books of accounts of the respondent-petitioner maintained by him in this regard for the purpose of determination of Royalty on the metal content of processed mineral removed from mines. 40. In case mineral is processed within the mining lease area. Tailing and waste remaining after processing have been subject to royalty on its removal by sale or for use. But in case it is dumped as waste, royalty is expressly excluded only if the tailing and waste are not used in any manner and dumped as waste material. It cannot be indirectly brought into by any stretched interpretation. The provisions of Rule 64B and 64C read together are clear in their import that where any mineral is processed within the mining lease area, the royalty is payable on removal of processed mineral and on removal of tailings and waste on sale or for use. However, no royalty is payable where tailings and waste are removed for dumping. 41. We have given our careful consideration to the submissions. 42. At the outset we may notice the basic norms underlying mining activities and royalty policy. According to our opinion, the mineral resources are the most precious natural resources of the mankind and ores, as main source of metals, are part of it. The information available from Wikipedia reveals that mineral resource classification is systematic organisation of information on ores and other minerals deposits which contain economic value. The process guides governmental and industrial planning on how to manage the resources. 43. Not all mineralisation needs those criteria. The specific categories of mineralisation in an economic sense are:-- (i) Mineral occurrences of prospects which are of geological interest but may not be of economic interest. (ii) Mineral resources, includes those which are potentially economically and technically feasible, and those which are not (iii) Ore reserves, must be economically and technically feasible to extract. 44. Yet another source defines ore as a volume of rock containing components or mineral in a mode of occurrence that renders it valuable for mining. An ore must contain materials that are; (1) Valuable (2) In concentrations that can be profitably mined, transported, milled and processed. (3) Able to be extracted from waste rock by mineral processing techniques. 44. Yet another source defines ore as a volume of rock containing components or mineral in a mode of occurrence that renders it valuable for mining. An ore must contain materials that are; (1) Valuable (2) In concentrations that can be profitably mined, transported, milled and processed. (3) Able to be extracted from waste rock by mineral processing techniques. 45. It is also said that Ore deposits are mineral deposits defined as being economically recoverable. Mineral deposits may include those bodies of mineralisation which are uneconomic resources, of too low a grade or tonnage or technically impossible for extraction of the contained metal. 46. What is valuable to mine is generally considered in terms of purely economic considerations. However, cultural, strategic or social goals of nations, tribes and individuals may render economically unfeasible bodies of rock valuable for extraction, for instance ochre, some clays, and ornamental stones that are of religious, cultural or sentimental value to a population. Here, value is placed on the rock in non-economic terms. 47. Yet another view points on economics of mining as basis for mining activity determining mineral and waste opines that the grade or contained concentration of an ore mineral, or metal, as well as its form of occurrence, will directly affect the costs associated with mining the ore. The cost of extraction must thus be weighed against the contained metal value of the rock and a 'cut-off grade' used to define what is ore and what is waste. 48. The processing of ore is an essential element of securing mineral from the crest of earth is reflected in the statement that ore minerals are generally oxides, sulfides, silicates, or "native" metals (such a copper) that are commonly concentrated in the Earth's crust or "'noble" metals (not usually forming compounds) such as gold. The ores must be processed to extract the metals of interest from the waste rock and from the ore minerals. 49. All these statements from different points of views reflect a consensus that ore is an economic entity, Fluctuations in commodity prices will determine what rock is considered valuable and hence ore, and what rock is not valuable and is considered waste. 50. In other words, mining of ores is basically economic activity and its economic value determine the Governmental and industrial planning on how to manage resources. 50. In other words, mining of ores is basically economic activity and its economic value determine the Governmental and industrial planning on how to manage resources. The policy behind regulating and developing mineral resources and raising royalty on mineral resources, if viewed in that light, is aimed at optimum economic exploitation of mineral resources. The structure of royalty from time to time framed by the Government also reveals that it is primarily founded on economic value of the mineral resources, and is directly related to economic value of the mineral resources. 51. The levy of royalty as revealed in the report of study group on revision and rates of royalty of major minerals dated March 1, 2000 on which reliance has been placed by both sides is also founded on same principle of economic viability of mining operation and gives some useful information. 52. It reveals that the practise of levying royalty in some form or other had been prevalent in India right from ancient times and had been continued till modern times. It was for the first time in 1957 that the Mines and Minerals (Regulation and Development) Act (MMMRD Act) was enacted and the system of collection of royalty by the States was redefined and regularised under this Act. 53. Till 1968, the royalty rates used to be notified as and when necessary for different minerals at different rates. The rates of royalty for 21 minerals were on the basis of unit of production and those for other minerals were on the basis of pit's mouth value. Thus, the royalty rates prevalent prior to 1968 were directly or indirectly linked to pit's mouth value. 54. For the first time in the year 1961, the Central Government set up a Study Group to carry out a general comprehensive review of the royalty rates on all minerals with regard to impact on production, mineral based industries, export and the State revenues. The Study Group recommended delinking of royalty rates from the pit's mouth value for most of the minerals and suggested unit of production as the basis, because of the difficulties experienced by the State in administration of charging royalty as per value of minerals at the pit's mouth upto 1992, which led to litigations and disputes. The Study Group recommended delinking of royalty rates from the pit's mouth value for most of the minerals and suggested unit of production as the basis, because of the difficulties experienced by the State in administration of charging royalty as per value of minerals at the pit's mouth upto 1992, which led to litigations and disputes. It was for the first time in 1992, the royalty rates were notified in most of the cases (except diamond and other precious and semi-precious stones excluding agate) at flat rates which were arrived at by the Study Group by giving due weightage to the unit value of the minerals at the pit's mouth. 55. Under Section 9(3) of MMRD Act, the rates of royalty on major minerals can be revised not more than once in a period of 3 years. After revision of rates of royalty of major minerals last notified by the Ministry of mines w.e.f. 11.4.1997 the study group was constituted in October 1998 to go in the royalty regime which would be applicable in future. Said study group submitted its report dt: 1.3.2000 referred to above. 56. We have already noticed that under the existing structure, the basis of royalty payable as on lead and zinc amongst other associated minerals noticed above was ad valorem as 'mineral concentrate' of these minerals. The unit to which rate was to be applied was value of one ton mineral concentrate. We have also noticed that mineral concentrate is not pure mineral but requires further processing to secure pure mineral therefrom. In other words, irrespective of mineral content in the concentrate, the royalty was paid in respect of non-mineral content of concentrate on its gross weight. Moreover, the concentrates may or may not be produced within the State where the mineral was excavated, which affected the revenue of the State having mines. 57. On the recommendation of the said study group, the rate of royalty for the lead and zinc were provided by changing the basis of royalty. Instead of value of mineral concentrate, value of 'contained metal in ore produced' was recommended for charging royalty. The rate recommended was ad valorem on price of mineral prevailing on London Metal Exchange, both for lead and zinc. Para 6.19 of the report which reads as under: "6.19. Instead of value of mineral concentrate, value of 'contained metal in ore produced' was recommended for charging royalty. The rate recommended was ad valorem on price of mineral prevailing on London Metal Exchange, both for lead and zinc. Para 6.19 of the report which reads as under: "6.19. However, the present basis of charging royalty linked to the total quantity of concentrate regardless of the variations in metal content therein has given rise to an anomalous situation wherein producers of high grade and low grade concentrates are charged the same royalty. To correct this anomalous situation, the Study Group recommends that the royalty should now be charged on the contained metal in the ore produced, irrespective of recovery during concentration. This will also imply that the producers of low grade are will pay low rate of royalty and those of high grade will pay higher royalty which should be fair to all concerned. Further, this will not create any problem if, in future, some concentrate plant is set up in a State other than the one where the mine is situated. 58. Considering the changed basis in computation of royalty and ensuring that royalty is payable only on the removal of the ore from the mining lease area in term of Section 9(2) apart from one consumed by the lessee, his agent, contractor or other persons named in the statute there does not appear to be real dichotomy between the rival stands taken by the parties before us in the scheme of the Rules. 59. The expression "the contained metal (lead or zinc in present case) in ore produced finds its meaning in guideline for computing the royalty for specified period in terms of Rule 64D- case 3. It provides the total content mineral in ore produced during the period for which the royalty is computed and reported in the statutory return under the Mineral Conservation and Development Rules, 1988 or recorded in the books of mine owners, shall be considered for the purpose of computing the royalty in the first place. 60. This takes us to the rules of 1988. 60. This takes us to the rules of 1988. The Rules of 1988, to which reference has been made in Rule 64D: Case 3, which is verbatim adoption of recommendation of the study group, provides that Rule 45 requires the owner to submit to the controller of mines and regional controller returns in respect of each mine a monthly return for copper, lead, zinc and some other minerals in form F-5 in terms of Sub-rule 1(a)(v). It requires the information in respect of 'Run of Mine' production as well as metal content both in Run of Mine at pit mouth as well as its content in concentrate and tailings after processing of Run of Mine and the total weight of Run of Mine as well as total weight of mineral concentrate and tailings or waste separately. It will be clear from the following tabular content required to be filled in form F.5: 1. Production and Stocks of R.O.M. ore Opening Stock Production Closing Stocks Quantity Metal content/Grade Quantity Metal Content/Grade Quantity Metal Content/Grade Total : Opening Socks of ore at the Concentrator/Plant Ore received from the mine Ore teated Quantity Metal content/Grade Quantity Metal Content/Grade Quantity Metal Content/Grade Concentrates obtained Tailings Closing stocks of Concentrates at the Concentrator/Plaint Quantity value Metal content/Grade Quantity Metal Content/Grade Quantity Metal Content/Grade 61. The information required to be furnished in above Form No. F-5, consists of total quantity of ore in Run-of-Mine produced. It consist of opening stocks of Run-of-Mine, Run-of-Mine produced during the specific period and closing stock. The Run-of-Mine or ore produced is definitely not the same as metal concentrate or tailings but refers to rock or bulk excavated and brought to pit mouth. It is also required to be disclosed, where Run-of-Mine is processed, the quantity of concentrate obtained of Run-of-Mine processed and the tailings or waste remaining behind. It is further required to reveal the metal content in Run-of-Mine, concentrate and tailings separately. 62. However, one has to remember that through the historical development of royalty regime, the payment of royalty at the pit head value is not the basis of royalty computation. But basis of royalty in terms of Section 9 is mineral removed from mining leased area. So long as mineral in whatever form remains within the leased area, no royalty is computable, chargeable and payable thereon. But basis of royalty in terms of Section 9 is mineral removed from mining leased area. So long as mineral in whatever form remains within the leased area, no royalty is computable, chargeable and payable thereon. Hence, the computation of royalty is still not on mineral removed at pit head but on mineral removed from leased area. 63. The provision of Section 9 read with Schedule II in question does not militate against above conclusion. Nor there is contention to contrary. In fact, this was specified in the study report also in its chapter VIII, para 8.5 of which clearly indicates that the time and place of payment of royalty is to be determined when the mineral leaves the leased area in whatever form whether it may be processed or beneficiated or un-processed. In other words, if some processing of the run-of-mine mineral is done within the leased area, then royalty should be chargeable on the processed mineral that is despatched; on the other hand, if run-of-mine or mineral is despatched to a processing plant situated outside the leased area, then royalty will be chargeable in respect of mineral removed in the form of un-processed run-of-mine or ore and not on the processed product which may in given case be an excisable commodity under the Central Excise Act. These principles have been kept in mind while formulating the guidelines. 64. It is this part of the recommendation that has found place in insertion of Rules 64 B and 64C which ensures that every part of the ore leaving the mining lease area is subject to payment of royalty at that time whether in the form of 'Run of Mine' or in the form of processed or beneficiated mineral, that is on the removal of "mineral' from the leased area and that is time when royalty became payable in respect of mineral removed. 65. If processed mineral is removed from the leased area, it is the mineral contained in processed mineral which becomes subject to royalty at that time. When the remainder viz. the tailings or wastes are removed, it would become subject to payment of royalty in terms of Section 9(2) in respect of metal contained therein. 65. If processed mineral is removed from the leased area, it is the mineral contained in processed mineral which becomes subject to royalty at that time. When the remainder viz. the tailings or wastes are removed, it would become subject to payment of royalty in terms of Section 9(2) in respect of metal contained therein. The form submitted by the respondent-petitioner under Rule 45 of Rules of 1988, which is to be taken as basis for computation of royalty on the mineral content in ore produced, reveals that ore produced in first part of the column by taking into consideration the closing and opening stock equal and weight of processed mineral and tailings taken together, which is also required to be disclosed in other part of the same return. In other words, the total "run of mine' which comes at the pit head becomes split into processed mineral and tailing, on its processing into mineral concentrate. 66. Since the mode and method of payment of royalty is to be prescribed on the removal of mineral from mining lease area, if 'run of mine' is removed from the mining lease area without processing within the leased area, the mineral contained in the 'Run of Mine' so removed from leased area, as disclosed in the return becomes immediately, subject to payment of royalty at ad valorem rate on the basis of mineral price at London Metal Exchange. If on the other hand, the processing plant is set up in the mining leased area itself and ROM is split into the processed mineral and the tailing. Then as and when the processed mineral is removed it becomes subject to royalty and when tailings are removed, it becomes subject of the royalty on 'Metal contained' in each of two split portions of the ore produced as per the return filed under rule 45 of the rules of 1988. 67. Rule 64B and Rule 64C together with Rule 64D bring out this result. There is no disharmony in the Rule 64B and 64C on one hand and Rule 64D on the other. 68. 67. Rule 64B and Rule 64C together with Rule 64D bring out this result. There is no disharmony in the Rule 64B and 64C on one hand and Rule 64D on the other. 68. It is only by dint of rule 64C that in case the tailings are not put to any further economic use or in other words, that is to say it has no economic value in terms of the mineral economy, the rule making authority has thought it fit not to charge any royalty thereon, as a waste material having no value. But if the tailings or wastes are sold in open market at whatever rate to the third party or is being used by the owner of mine, the same become subject to the levy of royalty at the rate prescribed under schedule II like the processed mineral when it become subject of levy of royalty. 69. Reason for not levying royalty on tailings, notwithstanding it may have metal contents remaining therein after processing of ore is not far to seek. We have noticed above that economic value of mineral is the basic idea of mining activities and law relating to mining regulation & development. 70. In this regard, it is profitable to notice that tailings consist of ground rock and processed effluents that are generated in a mine processing plant. This process of product extraction is never 100% efficient, nor is it possible to reclaim all reusable and expended processing reagents and chemical. The unrecoverable and uneconomic metals, minerals are discharged to a final storage area commonly known as a Tailings Management Facility (TMF) of Tailings Storage Facility (TSF). 71. Tailing are generally stored on the surface in retaining structures and are also stored underground in mined out voids by a process commonly referred to as backfill. The tailings are waste product that has no financial gain to a mining operator at that particular point in time and usually stored in the most cost effective way possible to meet regulations and site specific factors more particularly keeping in view the environmental requirement. The disposal of tailings is commonly identified as the single most important source of environmental impact for many mining operations. In ultimate analysis, concentration is the process of extracting the economic product from the crushed and ground ore, the waste from this process is the tailings. 72. The disposal of tailings is commonly identified as the single most important source of environmental impact for many mining operations. In ultimate analysis, concentration is the process of extracting the economic product from the crushed and ground ore, the waste from this process is the tailings. 72. Without going into the details of various methods of disposing the tailings, which is receiving attention world over in search for the advanced technique of tailing disposal with least adverse effect on environment, one thing that emerges is that the mineral content in the tailings ultimately returns to the earth, if it is not otherwise exploitable, whether by way of backfill of the mines' void created by operating mines or by disposing them in dams, embankments and other types of surface impoundments or by using subaqueous (below water) or subaerial techniques (above the water line, on the ground or on the tailings beach) and the mineral content in them does not reach mankind from the run-of-mine or ore at the pithead but returns to womb of mother earth. If that be so, Rule 64C is manifestation of the fact that mineral contained in tailings which returns to the ground is not considered for the purpose of royalty determination as a part of mineral contained in the ore in ultimate sense, because it never leaves the ground for its economic use. Apparently, when Section 9 refers to mineral removed from the mining leased area, it refers to mineral removed for some use which has economic value in material sense or money value for satisfying aesthetic sense for which mineral is won. 73. In the light of these principles, wholesome reading of rules leaves no doubt in our mind that the statutory provisions have been so framed that royalty becomes payable on mineral removed from mining lease area for uses an economic commodity. It is further clear from the fact that where tailings are removed from the leased area as an economic commodity by way of sale or for use, the royalty becomes payable thereon in respect of mineral contained therein. Tailings are not separately subjected to royalty in addition to mineral contained therein. 74. The principle of no royalty for a product which has no commercial value was applied by the Supreme Court in National Mineral Development Corporation Ltd. v. State of M.P. & another reported in [ (2004) 6 SCC 281 ]. Tailings are not separately subjected to royalty in addition to mineral contained therein. 74. The principle of no royalty for a product which has no commercial value was applied by the Supreme Court in National Mineral Development Corporation Ltd. v. State of M.P. & another reported in [ (2004) 6 SCC 281 ]. The court was considering demand of royalty made by the State of Madhya Pradesh on the slime of iron ore as part and parcel of iron ore. The court differentiated between the cases where mineral is liable to royalty on tonnage basis on sooner extracted as Run-of-Mine but such entries do not further classify the mineral by reference to its constituents on the one side, and on the other side where the owner is liable to royalty on the mineral constituent of the ore. The Court considered different aspects of the constituents of the ore processing, which may result in slime, tailings, fines, concentrates and the expression 'Run-of-Mine'. The Court opined that: "The submission of the appellant that slimes, including its ferrous contents, is a waste with no commercial value is not refuted by the respondent. 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 son, 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 or industry." 75. By referring to the process of concentrate for procuring the concentrate of metal content out of Run-of-Mine, the Court observed: "In the processes, a stage is reached which yields concentrate. They are treated in the concentrate plant by report to physical, chemical and/or electrical methods. The valuable constituents are retained and what is discarded as "tailings" or "slimes" 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. The valuable constituents are retained and what is discarded as "tailings" or "slimes" 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." 76. The Court went on to observe: "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 commercially unviable. The slimes are accepted by the mother earth once again to be dissolved in its womb." 77. This analysis of the process of concentrate for the purpose of determining the economic value of the ore and the waste remaining thereafter having no commercial value and returns to earth fortifies us in our above conclusion. 78. It is true that iron ore is different from lead and zinc and associated mineral ores and the basis of computing royalty in both the cases is different under the Schedule, but one thing common in either case is that royalty is not leviable on waste material which has been made further clear by Rule 64C. The fact that in the entry related to iron ore, separate rates of royalty come into existence of different grades of iron ore as a result of processing but no such separate rate of royalty has been provided in respect of computing royalty on lead and zinc and other such material to which we have alluded to above, does not alter the basic feature. In either case, levy of royalty is not on the ore extracted but is on the mineral contained therein. The rate is on the mineral contained in the ore and same is to be applied to the mineral removed from the mining lease area or mineral consumed. If from the mining area the mineral is not at all removed notwithstanding the ore has been won, no royalty becomes determinable. The rate is on the mineral contained in the ore and same is to be applied to the mineral removed from the mining lease area or mineral consumed. If from the mining area the mineral is not at all removed notwithstanding the ore has been won, no royalty becomes determinable. The London Metal Exchange rate of the metal is applied to the mineral removed, which clearly indicates that what is removed from the leased area must have some market value in economic sense to which London Metal Exchange rate would be applied. If nothing is removed from the leased area and something returns to the womb of mother earth as described by the Supreme Court, the royally does not become payable in respect thereon. For all purposes, that part of the mineral is not removed from the earth at all. 79. It may be viewed from yet another angle. If instead of dumping the tailing, the mine owner removes the processed mineral, and also sells tailing or uses it for own purposes, he would be paying royalty on both items on the basis of information contained in return submitted by him in form F-5 under the Rules of 1988. If he were to pay royalty in the first instance on the entire run of mine produced or processed within leased area, he would be charged royalty a second time on mineral content shown in the tailings when the same is removed on sale or for further use. The charging subject under the Act of 1957 is not sale or user but is mineral removed. No double royalty is envisaged on same mineral. 80. Therefore, on the material placed before us, it is apparent that Rule 64B, 64C and 64D in cohesion gives full effect to royalty leviable under schedule II on lead and zinc on metal content in entire ore produced, but at the time when such ore is removed either as a run of mine or in split parts as a result of processing of run of mine within the mining lease area on removal of the processed mineral and the removal of the tailing. If the operation of the Rule excepts non-economic part of the ore from being subjected to payment of royalty, which according to both sides is within the domain of appropriate Government, and the validity of rule not being in challenge before us, it must be held that there is no dichotomy in the operation of rules and the parent provision and they do not cut across each other but really operate in giving full effect to computation and recovery of royalty at the rate provided in schedule II on removal of mineral from the mine. If run of mine itself is removed form the leased area without processing, the computation of royalty is made on mineral contained in quantity of such unprocessed ore removed. In case the run of mine is removed in two parts namely the processed mineral and the tailings, the mineral content is also split in two and royalty becomes payable separately as provided under Section 64B and 64C respectively and computed in terms of rule 64D case 3. 81. If as a result of the specified relaxation is granted in case of dumping of tailing then not because of any dichotomy in the Rules, but because of the basic policy behind the economic exploitation of mineral resources and economic value of mineral which determines the policy of the State in determining the royalty. If the Central Government has considered it fit not to levy any royalty on irrecoverable mineral, waste material, having no economic value, the rule cannot be said to be at cross purpose with each other. In fact by providing that royalty is payable on tailing on its removal for sale and use, the intention of the legislature is very clear that where the mineral is processed within the mine area, mode and method of recovery of royalty would be on mineral split between the concentrate and tailings as the metal contained therein when removed from the mining area separately. However, when the tailings are removed for dumping or destroying, there being no economic value left in such tailings or waste no royalty becomes payable as there is no ad valorem value of the tailings to which rate could be applied. In fact in such event the metal contained in tailing returns to womb of mother earth. 82. However, when the tailings are removed for dumping or destroying, there being no economic value left in such tailings or waste no royalty becomes payable as there is no ad valorem value of the tailings to which rate could be applied. In fact in such event the metal contained in tailing returns to womb of mother earth. 82. Thus, viewed from any angle, in the totality of the scheme of MMRD Act and Mineral Concession Rule, particularly Rules 64B, 64C and 64D coupled with the Rules of 1988, to which we have referred to above, leaves no room of doubt in our mind that royalty is not payable in respect of tailings which has not been sold or removed for use out of the mining area but has been returned to dust by appropriately disposing of in accordance with the system governing disposal of tailings and waste having no economic value. 83. However, one aspect need be considered in determining the computation of royalty in terms of Rules 64B, 64C & 64D read in the light of Section 9. Section 9(2) makes the royalty chargeable not only on mineral removed from the mining lease area but also on mineral consumed by the mining lease holder, his agent, manager, employee, contractor or sub-lessee. Rule 64B deals with royalty payable on removal of mineral, whether as contained in run-of-mine as excavated or metal contained in processed mineral/ore, where so processed within lease area, removed from lease area. Rule 64C deals with metal contained in tailings or waste remaining after processing of run-of-mine within leased area. 84. The rules referred to above do not provide for levy of royalty on consumption of mineral, if any, which may have taken place in the processing. The material which is submitted in the form of information under form F-5 or for that matter other forms in terms of Rules of 1988 do provide such information. In the prescribed form, It is required to be stated therein total run of mine/ore produced as a mining activity, and the metal contained therein. It also requires in the case of processing of mineral within the mining area, the quantity of mineral concentrate obtained as a result of processing of run-of-mine and the mineral contained therein as well as the quantum that remains as tailings and mineral contained therein are disclosed separately. It also requires in the case of processing of mineral within the mining area, the quantity of mineral concentrate obtained as a result of processing of run-of-mine and the mineral contained therein as well as the quantum that remains as tailings and mineral contained therein are disclosed separately. Apparently, if there is any difference in the total metal contained in the run-of-mine which has been subjected to processing and the aggregate of the metal content in concentrate and in the tailings, such shortfall is obviously result of consumption of metal during processing, be it by the mining lease holder or his agent or sub-lessee or employee, as the case may be. If any mineral has been consumed before removal from the leased area due to the processing of run-of-mine, it must be amenable to royalty in terms of Section 9(2). 85. Ad valorem rate of royalty on metal contained in ore has been prescribed under Schedule II and mode and manner of computation has been provided under Rules. Taken together full effect is to be given to compute royalty on mineral removed or mineral consumed in terms of Section 9(2) of the MMRD Act. 86. In view of the aforesaid compendious reading of the Rules in light of the parent statute, there is no hesitation in coming to the conclusion that where run-of-mine is processed within the mining area, the royalty has to be paid on the basis of its removal from the leased area in terms of Rule 64B and 64C. However, if as per information submitted by the mining lease holder in terms of Rules of 1988, there is shortfall in the total mineral contained in run-of-mine when compared with the aggregate of the total mineral content in the processed mineral & the tailings, commensurating with the total run-of-mine which has been processed, such shortfall must be considered as consumption of mineral as result of processing of run-of-mine and royalty must be computed thereon. 87. This may be clear from the following illustration. Assuming that one ton of run-of-mine contains 2.2% of lead. That means there is 22 kg of lead contained in one ton of run-of-mine or ore produced. When such one ton run-of-mine undergoes processing, it results in metal concentrate containing 20 kg of metal lead and tailings remain with 01 kg of metal lead. Assuming that one ton of run-of-mine contains 2.2% of lead. That means there is 22 kg of lead contained in one ton of run-of-mine or ore produced. When such one ton run-of-mine undergoes processing, it results in metal concentrate containing 20 kg of metal lead and tailings remain with 01 kg of metal lead. Thus, when one ton of run-of-mine (unprocessed contains 22 kg of lead, but when it is processed there remain 20+1=21 kg of lead metal only in processed mineral and tailings taken together. It shows that unprocessed run-of-mine had 22 kg of lead metal contained therein. After processing said run-of-mine the total lead contained by taking aggregate of mineral contained in lead concentrate (20 kg) and tailings (1 kg) remained 21 kg only. Where did 01 kg of lead metal go? Obviously, it was consumed in processing. On such mineral consumed also royalty becomes payable at rates prescribed in Schedule. 88. In case of metal contained in processed ore and tailings together remain 22 kg, no consumption of mineral takes place during processing and no royalty becomes payable on consumption. Again if out of total metal contained in processed ore or tailings, in Run of Mine within leased area otherwise than by processing, the same may become liable to royalty on consumption within leased area. 89. Once we reach this conclusion, operation of Rules 64B, 64C and 64D becomes very clear. 90. Applying the test to the illustration, if run-of-mine is not processed within mining lease area, on its removal royalty is payable on 22 kg of lead metal contained in ore produced, on such removal. Rate to be applied is metal price as modulated in terms of Rule 64D: Case 3 and the price in London Metal Exchange is to be converted in its rupee value as per Rule 64D: Case 3. 91. On the other hand, if said run-of-mine is processed in leased area, on removal of processed mineral, which contains 20 kg of lead metal, royalty is to be computed on 20 kg in terms of Rule 64B(a), at the ad valorem rate prescribed in Schedule II. The quantification in terms of its value at London Metal Exchange and its rupee conversion is to be made as per rule 64D (Case 3). Likewise, when tailings are removed from leased area, royalty on its removal is to be determined as per Rule 64C. The quantification in terms of its value at London Metal Exchange and its rupee conversion is to be made as per rule 64D (Case 3). Likewise, when tailings are removed from leased area, royalty on its removal is to be determined as per Rule 64C. If it is removed to dumping place, no royalty becomes payable. If it is sold or removed for use, royalty becomes payable on 1 kg of lead metal contained in tailings to be computed as aforesaid in case discussed above. These removal account only for 21 kg of total metal contained in one ton ore produced. Remainder 1 kg of metal contained in run-of-mine or ore produced having been consumed during processing of run-of-mine has to be subjected to royalty payment under Section 9(2). The computation of value of metal contained for such 1 kg of consumed metal shall also have to be in the manner stated in Rule 64D (Case 3). 92. The conclusion to which we have reached is result of harmonious construction of Section 9, Schedule II read with Rules 64B, 64C and 64D for giving effect to the computation of royalty on total metal contained in ore produced. 93. The computation of royalty in such cases has to be considered and determined in above terms. 94. Accordingly, the appeal is disposed of with direction that the matter is remitted back to the Mining Engineer for recomputing the royalty payable on 'metal lead/zinc contained in ore produced' in case of each period in light of the aforesaid principles. There shall be no order as to costs.Appeal Disposed of as per Direction. *******