KIOCL LIMITED Vs. RAILWAY BOARD, NEW DELHI

JUDGEMENT

(1.) In this case, the petitioner has called in question the legality and validity of para 5 of the circular at Annexure 'B' bearing No. TCR/1078/2007/3 dated 1.6.2009 issued by the Railway Board, under the Ministry of Railways, Government of India and for certain other reliefs. The petitioner is a Government of India Enterprise. It is a company incorporated under the provisions of the Companies Act, 1956. It has a pelletization plant, which is 100% export oriented unit and blast furnace unit in Mangalore. The petitioner procures its raw materials in the form of iron ore fines from M/s. NMDC Limited, a Central Government undertaking from its mines at Donimalai in Bellary District as well as its mines at Bailadilla Sector in Chattisgarh. The petitioner is having its own private railway siding at Panambur, Mangalore for unloading raw materials transported through railways. It has long term contracts for supply of raw material with M/s. NMDC. Iron ore fines procured by petitioner will be converted into iron oxide pellets which are considered as value addition and same is exported and also marginally sold at domestic market.

(2.) Under the Railways Act, 1989 ('Act' for short), various duties have been classified for the purpose of determining rates to be charged for carriage of such goods and commodities. The rates are fixed based on classification of commodities. Goods Tariff No. 45, Part I (Volume II) contains the classification of Commodities. Iron and steel is classified as Class 180. There was no distinction on the transportation of iron ore through railways for making pellets or steel which are sold either locally in domestic market or exported. The Railway Board issued Rate Circular after obtaining sanction from Central Government from time to time towards freight charges for transportation of iron ore. One such circular issued by the Railway Board is at Annexure 'A' dated 1.7.2008. It is blear from the said circular that pelletization units receiving iron ore in their private or assisted sidings for conversion into iron ore pellets for consumption of iron and steel manufacturing plants will be treated on par with steel manufacturing units. The Railway Board issued yet another rate circular at Annexure 'B' dated 1.6.2009 which makes a distinction in pelletization units receiving iron ore for conversion to pellets for domestic consumption and for export of pellets. In other words, any movement or traffic of iron ore meant for domestic consumption for manufacture of iron and steel as well as cement will be charged at Class 180 without levy of distance based charges prescribed at para 1 of circular whereas same pellets if exported will attract additional levy of distance based charge. Thus, the distinction was made in so far as movement of iron ore for pelletization plants for purposes of export, which will be charged in addition to Class 180 the levy of distance based charges. The relevant portion of the said circular is as under:

(3.) The Divisional Commercial Manager, South Western Railways, Hubli, issued a letter dated 21.10.2011 calling upon the petitioner to furnish the details of iron ore pellets manufactured and exported from out of iron ore sourced from Hubli division by rail to take further necessary action in the matter. This notice was issued in pursuance of the rate circular at Annexure 'B' dated 1.6.2009. The petitioner has sent a reply to the said notice at Annexure 'G'.