The Ministry of Coal (MoC) has recommended changes to the Mineral Concession Rules (MCR), 1960 in a bid to enhance ease of doing business.
The term ‘Mineral Concession’ refers to a license, permit, or other contract that gives companies the rights to extract minerals from public lands.
Under this exercise, the ministry has reviewed penal provisions underlined in the MCR to identify violations which could be decriminalised and those for which the penalty can be reduced. In addition, a few alterations have been made to the prevailing rules to impart clarity regarding royalty payments.
The proposals seeking to amend the existing MCR have been drafted under Mineral Concession (Amendment) Rules, 2022 and put forward for consultation to the public and stakeholders, including state governments.
Reduction in interest for late payment
Under Rule 64(A), MoC has suggested to reduce the rate of interest, charged on account of late payment of rent, royalty and other related amount, to half from 24% to 12%. The interest would be charged from the date of expiry of the time period allowed by the state government.
Earlier, the interest was payable from the sixtieth day from the date fixed by the state government.
Provision for penalty
The MoC has rationalised penalty imposed against violation of rules depicted in the MCR.
In case of any wrongdoing against the modalities of prospecting licence and reconnaissance permit, the rule defines an imprisonment for a term up to two years along with a fine, which may extend to INR 5,00,000. Plus, an additional fine of INR 50,000 on a daily basis would be levied in case the matter is not resolved.
Adjustment for excess royalty
Provision has been added for royalty payment under Rule 64(B) which shall be subjected to:
(a) final declaration of the grade of coal or lignite after sampling
(b) final declaration of the National Coal Index of the relevant basket of coal grade or National Lignite Index, as applicable, on the date of dispatch or consumption
Accordingly, the payment for balance royalty would be adjusted between the leaseholder and state government.
Further, since the royalty is charged on run-of-mine coal, an amendment has been carried out in the second schedule of Mines and Mineral (Development and Regulation), Act 1957 so as to bring it in alignment with Rule 64(B).
In this line, MoC has informed that the royalty would be paid on the basic pit-head price of ROM coal, as notified by Coal India Limited or its subsidiaries or by Singareni Collieries Company Limited.
Previously, the rate of royalty was affixed on the price of coal, as reflected in the invoice, excluding taxes, levies and other charges.
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