Efficient Mineral Administration – Board's Instructions
‘STRIKE the Iron when it is hot' is the adage we commonly follow to gain advantage of any given situation. Mining companies in Karnataka precisely followed this proverbial route to gain advantage of the rising global demand for iron ore in the last several years and made the most of it, they are still doing so. In the process, they also allegedly resorted to illegal mining and export of iron ores, throwing rules and regulations out of the window and are raking a fortune.
As per the Karnataka Chief Minister's own admission on the floor of the Legislative Assembly last week, the illegal mining and exports were to the tune of 30.49 million tonnes over a period of last several years (seven to be precise), which resulted in a significant loss to the State Exchequer by way of royalties.
While it is not known as to how the Karnataka Government was able to arrive at a definitive quantity of illegal mining to the last metric tonne, the CBEC has issued instructions to Customs Commissionerates to help the State Governments in arriving at exact details of mineral exports by sharing information available with them.
In fact, the issue of illegal mining of minerals came up for discussion during a meeting of Committee of Secretaries held on May 20, 2010 under the Chairmanship of the Cabinet Secretary. In this meeting, it was decided that Customs Commissionerates shall share the details of minerals exported through the Ports within their respective jurisdiction with the concerned State Governments on a periodical basis. The details to be shared may include the name of the ‘state of origin', name and details of the exporter, name of the minerals, quantity and value thereof etc., so that by cross-verification, any leakage of revenue by way of less payment of royalty could be detected by the State Government. The exact modalities of information/data exchange may, however, be worked out in consultation with the concerned State Government.
Board feels that sharing of information may not pose any difficulty, as in the format for the Shipping Bill there is a data field for capturing the ‘State of Origin'. Board desires that urgent ‘necessary' action may be taken to implement the above CoS decision in consultation with the State Governments concerned.
While Board's concern for loss of revenue for State Government's due to illegal mining is appreciated, the recent incident of illegal export of about six lakh tonnes of iron ore seized by the Deputy Conservator of Forests, Karwar under the directions of the Karnataka Lokayukta and the alleged role of Customs officials in allowing the export of this seized ore indicates that all is not well in the local Custom Houses. This obviously leads to serious questions about loss of revenue to the Central Exchequer as well. After all, Central Government had imposed export duty on iron ores and concentrates in the year 2007 itself and the effective rate of export duty at present is 15%.
As per the Karnataka Government's own admissions 33.96 lakh tonnes of ore were illegally mined and exported during 2008-09 and this more than doubled to 71.28 lakh tonnes during 2009-10. If the mining companies can evade royalties to the State Exchequer, then they may not hesitate to evade export duties as well – habits die hard. Will the CBEC and its super sleuths in DRI get to the bottom of these illegal exports and check if there is any leakage of revenue to the Central Exchequer?
This mining scam is all set to rock the State Governments of Karnataka and Andhra Pradesh and leaders from the two top political parties of the country are involved. When it comes to mining corruption, all parties are same – they have the party at your expense!
Customs Letter F. No., Dated: July 8, 2010