INCOME TAX MATTERS ( A monthly journal on - Income tax and wealth tax- since 1999) - ( subscription for the year 2008 (TWO VOLUMES) is only Rs. 1100/-) - For subcription and to Know more click here
NEWS ABOUT COAL
--------------------------------
Railways impose special supplementary freight charges on transportation of commodities - coke and coal 5%, others 7%
New Delhi, June 30
Railways has decided to levy special supplementary freight charges on transportation of commodities like coal, ore, petroleum products, fertilisers, machinery, machine tools and foodgrains.
The hike will be effective from July 1.
The special levy will be applicable for only three months up to September 30.
Coke and coal would attract 5 per cent levy while for other items, it would be 7 per cent.
The special supplementary charge will be applicable on base freight rate.
----------------------------------------------------------------
Pricing
Domestic Price Fixation
Government of India deregulated the prices of Non-Coking Coal of grades A, B & C, Coking coal and Semi/Weakly coking coal on 22.03.1996. Subsequently, on 12.02.1997, Government of India deregulated the prices of non-coking coal of grade D, Hard Coke and Soft Coke and also allowed Coal India Ltd. to fix coal prices for grades E, F & G till Jan'2000 once in every six months by updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices. With effect from 01.01.2000, CIL was free to fix the prices of such grades of coal in relation to the market prices.
Pursuant of the above, CIL fixed the prices of deregulated coal from time to time and last such revision has been made on 12.12.2007
Grade wise Basic Price of coal at the Pit-head excluding statutory levies for Run-of-mine (ROM) Non-Long-Flame Coal ,Long flame Coal, Coking Coal, Semi Coking Coal& Weakly Coking Coal ,direct feed Coal, Assam Coal for various subsidiaries of CIL are tabled below :
Assam Coal (Run of Mine) (Rs. /Tonne.) |
||
| Unit /Grade of Coal | UHV range ((K Cal/Kg.) | Price |
| North Eastern Coalfields "A" | Exceeding 6200 K cal/ Kg,,But not exceeding 6299 K. Cal./Kg. | 2280.00 |
| North Eastern Coalfields "B" | Exceeding 5600 K cal/ Kg,,But not exceeding 6200 K. Cal./Kg. | 1815.00 |
1.In Grade "A" for every additional UHV of 100K Cal /Kg. exceeding 6299 K Cal /Kg. ,Additional Rs.82.00 /M Te. shall be added to the price of " A "Grade.
2.For UHV exceeding 7099 k. Cal./ kg. ,the price of coal shall be 3345 for ROM Coal and the price difference among the steam ,slack and run of mine coal shall remain same.
General Remarks:-
PRICE NOTIFICATION NO CIL : S&M: GM(F) : Pricing 1124 dated 12th Dec.07
In super session of this office price notification no. CIL: S&M:GM(F): Pricing: 289 dated 15.06.04, the pit head prices of all grades of coal produced by Coal Companies of Coal India Limited are being revised with effect from mid night of 12th December,2007 i.e. Zero Hours of 13th December.,2007. The revised pithead prices of all varieties of Run of Mine Coals have been given in tables I to V.
Notes : Additional Rs.15 shall be charged on pithead price of Run of Mine coal for the supply of Slack Coal.
Additional Rs.165 shall be charged on pithead price of Run of Mine Coal for the supply of Steam Coal.
Where the top size is being limited to any maximum limit within the range of 200 mm – 250 mm through manual facilities or mechanical means, a charge at the rate of Rs.35.00 per tonne will be levied, in addition to the price applicable for Run of Mine coal.
Where the top size is being limited to 100 mm through manual facilities or mechanical means, a charge at the rate of Rs.55.00 per tonne will be levied, in addition to the price applicable for Run of Mine coal.
Where the top size is being limited to 50 mm through manual facilities or mechanical means, a charge at the rate of Rs.70.00 per tonne will be levied, in addition to the price applicable for Run of Mine coal.
Where coal is loaded, either into Indian Railways system or into the purchasers’ own system of transport, through high capacity loading system with a nominal capacity of 3500 tonnes per hour or more, additional charge of Rs.18.00 per tonne shall be levied for such loading.
While the coal is transported beyond a distance of 3 kms to the loading point, the coal companies shall be entitled to charge additional transport costs from the purchasers at the following rates, namely:
1. For a distance of more than 3 kms but not more than 10 kms Rs.40.00 per tonne.
2. For a distance of more than 10 kms but not more than 20 kms Rs.70.00 per tonne.
In cases, where coal is transported for more than 20 kms to the loading points, transport charges will be payable on actual basis, to be borne by the purchaser.
The pit head prices fixed are exclusive of Royalty, Cess, Taxes and Levies, if any, levied by the Govt., Local Authorities or any other bodies of Excise and Sales Tax from time to time.
Grading/ classification of coal and the definitions relating to the same have been given in Annexure –X.
The prices given in this notification are either FOR or FOB, as the case may be . Surface transportation charges, where applicable, would be levied extra .
The prices do not apply to coal sold for export .For undertaking special sizing or beneficiation of coal, additional charges as
may be negotiated between the purchaser and the producer may be realised over and above the pithead prices .
A rebate of 5% for supply of wahsery grade coking coal will be given to power houses other than captive ones .
Categorisation of Coal
1 Non-coking coal
A - Useful heat value exceeding 6200 kilocalories per kilogram
B - Useful heat value exceeding 5600 kilocalories per kilogram but not exceeding 6200 kilocalories per kilogram.
C- Useful heat value exceeding 4940 kilocalories per kilogram
but not exceeding 5600 kilocalories per kilogram
D - Useful heat value exceeding 4200 kilocalories per kilogram
but not exceeding 4940 kilocalories per kilogram
E - Useful heat value exceeding 3360 kilocalories per kilogram
but not exceeding 4200 kilocalories per kilogram
F - Useful heat value exceeding 2400 kilocalories per kilogram
but not exceeding 3360 kilocalories per kilogram
G - Useful heat value exceeding 1300 kilocalories per kilogram
but not exceeding 2400 kilocalories per kilogram
2 Coking coal
Steel Grade I - Ash content not exceeding 15 percent
Steel Grade II - Ash content exceeding 15 per cent but not
exceeding 18 percent.
Washery grade I - Ash content exceeding 18 per cent but not
exceeding 21 per cent
Washery Grade II - Ash content exceeding 21 per cent but not
exceeding 24 per cent.
Washery Grade III - Ash content exceeding 24 percent but not
exceeding 28 percent.
Washery Grade IV - Ash content exceeding 28 percent but not
exceeding 35 percent.
3 Semi coking and weakly coking coals
Semi coking Gr. I - Ash plus moisture content not exceeding 19
percent
Semi coking Gr. II - Ash plus moisture content exceeding 19 percent
but not exceeding 24 percent.
Notes:
1 Coking Coals are such coals as have been classified as coking coals by the erstwhile Coal Board or such coals as have been declared or may be declared as coking coal by the Central Government.
2 ‘Semi coking coals’ and ‘weakly coking coals’ are such coals as were classified as ‘Blendable coals’ by the erstwhile Coal Board or as may be declared as ‘Semi coking’ or ‘weakly coking coals’ by the Central Government.
3 Coals other than coking, semi coking or weakly coking coals are non-coking coals.
4. ‘Useful heat value’ is defined by the following formula
HU = 8900 – 138 (A plus M)
Where HU = Useful heat value in kilo calories per kilogram
A = Ash content in percentage
M = Moisture content in percentage.
In the case of coal having moisture less than 2 per cent and volatile content less than 19 per cent the useful heat value shall be the value arrived at as above reduced by 150 kilocalories per kilogram for each one percent reduction in volatile content below 19 percent fraction pro- rata. Both moisture and ash shall be determined after equilibrating at 60 per cent relative humidity and 40 C temperature as per relevant clauses of Indian Standard Specification No.IS:1350 - 1959.
5. Ash percentage of coking coals shall be determined after air-drying as per IS: 1350-1959. If the moisture so determined is more than 2 percent, the determination shall be after equilibrating at 60 per cent relative humidity at 40 C temperature as per IS:1350-1959.
6. Run of Mine coal is coal comprising of all sizes comes out of the mine without any crushing or screening.
7. The fraction of the Run of Mine coal as is retained on a screen when subjected to screening or is picked out by a fork shovel during loading is called steam coal.
8. The fraction that remains after steam coal has been removed from the Run of Mine Coal is called slack coal.
9. If Run of Mine Coal is subjected to successive screening by two different screens of different apertures resulting in segregation into three different sizes, the fraction that is retained on the screen with the largest aperture, shall be termed Steam coal, the fraction passing through the screen but retained on the screen with the smaller aperture, shall be termed Rubble coal and the fraction passing through both the screens shall be termed Slack Coal.
10. Coking coal, weakly coking coal, semi coking coal which fall outside the
categorisation shown above shall be treated as non coking coal for the purpose of pricing and classified accordingly.
11. ‘ Long Flame Coals ’ are defined by the parameters laid down in ‘ General classification of coals (Revised)’ of Indian Standard Specification No. IS: 770 – 1964.
Coal Marketing Policy
- Presently following categories are classified as Core Sector Consumers
- Power( Utilities including IPPs)
- Power (Captive)
- Defence
- Railways
- Fertilizer
- Steel including Sponge Iron & Pig Iron and other metallurgical Industries, who use Coal /Coke for their end use.
- Cement
- Aluminum Industries
- Paper Industry
- Central PSU for consumption and use (as distinguished from Trading)
- Export of Coal to neighboring countries as part of bilateral negotiation held under auspices of Ministry of External Affairs.
Distribution of Coal under Core Sector :
Distribution of Coal under Core Sector is as under :-
For Power ,CMT and CPPs:
Coal linkages are decided by Standing Linkage Committee (Long term as well as Short Term) ,an inter-ministerial body with Addl. Secretary as Chairman and having members from Ministry of Railways ,Power and Coal Companies. The terms of reference of the Committee is to review time to time the coal requirements of the units and establish rational linkages for supply of coal , considering availability of coal ,Quantity /Quality of required by Units ,Transport logistics available with Railways and other agencies.
- Steel Plants
Coking Coal requirement of Steel plants and metallurgical consumers is decided by Ministry of coal. Based on such long term allocations monthly allocations of coal is made at CIL through deliberations amongst Steel Sector ,Railways and Coal Companies representatives.
Sponge Iron
SLC under the aegis of Ministry of Coal decide long term linkages to Sponge Iron Plants and individual linkages are issued by MOC .Based on such linkages, source-wise, quarterly allocations are made by CIL.
- Fertilizer
Annual recommendation /Sponsorships are issued by Fertilizer Industries Coordination Committee under Ministry of Chemical & Fertilizers in favour of various Fertilizer Units and Coal supplies are effected by Coal Cpmpanies on the basis of recommendation/Sponsorship.
- Defence
Demand for this sector is decided by defence Coal Cell at Kolkata under the aegis of Ministry Of Defence in consultation of CIL and railways .Supplies is as per monthly allocation issued by Coal Cell Wing (Ministry of Defence).
Railways
Demand of Coal for Loco has decreased to negligible level over the years.
Export:
Quantity of export to neighbouring countries is decided as per the bilateral negotiations held under the auspices of Ministry of External Affairs and ministry of Coal.
Paper ,Aluminum and central PSU :
They were in Non Core Sector prior to 01/01/2004. Distribution of Coal has been so far guided by MPQ ( Maximum Permissible Quantity ) ,which was determined by on the basis of highest order booking in the preceding three years .Application of MPQ hereinafter stands lifted and MPQ of 2004 is considered to be their entitlement..
Distribution of Coal to Non Core Sector Consumers:
Non core sector, includes consumers drawing coal against linkage, Central/State Govt. Undertakings and Consumers/Customers drawing Coal Under E-Auction.
Arising out of introduction of sale of Coal under E-Marketing ,the following system of sale are now prevalent for release of Coal a/c Non Core Sector.
Through linkage System.
Through Central/State Agencies.
Through E-Booking
Details of each system are as under:-
1) Through Linkage System:-
Releases of Coal to linked consumers of Non Core Sector are made to the extent of MPQ derived on the basis of best of booking during immediate previous 3 years. Such releases ,however ,are made at 130% of notified price.
With view to ensure proper usage of Coal by the linked consumers, series of verification drive have been undertaken .Based on the findings of such verifications, decisions with respect to continuance of Coal Supplies or otherwise is taken by the linked Coal Companies.
2) Through Central /State Agencies:-
GOI has earmarked 2Mill tonne per annum to be offered a/c NCCF, functioning under the administrative control of Union Ministry of Consumer Affairs, Food & Public Distribution (being treated as linked consumer) with a view to enable them to distribute the same to small & tiny consumers of various states .A Watch dog mechanism of CIL /Coal Companies monitors actual coal supplies by NCCF to small and tiny consumers on random basis .
Apart from above ,Govt of India has also allocated 3 million tonnes of Coal for the year 2006-07 to the nominated state agencies for distribution to small & tiny consumers.
Coal is released to both Central/State Agencies on basis of floor price(20% above the notified price). Coal released from the Coal Companies is to be supplied to small & tiny consumers of various states, whose annual requirement is not exceeding 500 tonnes. Besides, Coal is to be delivered at a price not exceeding 105% of the base price at which same is purchased from Coal Companies .The statutory levies and other charges would ,however, be in addition to base price mentioned above.
3) Sale of Coal through Live Auctions under E-Booking
E-Marketing of Coal for which36 million tonnes was earmarked by the Government during 206-07 continued 08th December,2006.This scheme ,however ,was thoroughly deliberated before the Hon'ble Apex Court, wherein it was found by the Hon'ble Court through its order dated 01/12/2006 that the system of E-Marketing in its present form was ultra-vires to the Article 14 of the Constitution of India .As a result of this directive from the Hon'ble Apex Court, holding furthur Auctions under e-marketing was stopped with effect from 09th December'2006 i.e the date on which a certified copy of the order was made available .
As further directed by the Hon'ble Court, A Committee headed by the Secretary (Coal), Government of India was constituted for formulating new Sales Policy in line with the directives of Apex Court .
Pending formulation of Policy ,It was thought prudent to evolve an alternative arrangement under which Coal Supply arrangement under which Coal Supplies to various segments could be continued. Accordingly, as an interim measure, a system of "E-Booking " was put in place under which any buyer including the Linked consumers are free to participate for their coal requirement/additional requirement requirement at a fixed price, which is currently at a level of 130% of the notified prices on first come -first serve' basis by taking the help of modern technology. Under the system of "E-Booking" ,bids are are accepted at fixed prices, only in respect of quantity against the offer submitted by the Coal Companies. Attempt is made to satisfy most of the buyers ,whoose bids is accepted within 15 minutes of the commencement of the "E-Booking". In case of quantities are not fully booked ,the "E-Booking" remains open during the entire time slot of two hours or till the offer is fully exhausted ,whichever is earlier .The minimum quantity to be bid under "E-Booking" is kept at the level of 50 Tonnes in case of Road and One Rake Load in case of Rail. For the purpose of allotment, the minimum quantity has been kept at Five Truck Loads in case of Road and One Rake Load in case of Rail. None of the buyers under these scheme would be allowed to bid for quantities more than 1/3 rd of the offered quantities on each source.
Mean while after detailed study, The Committee submitted their recommendations and based on the same ,Govt. issued a new Coal Distribution Policy on 22.10.2007 ,the broad framework of which is as under:-
a) The existing classification of consumers into Core & Non Core to be dispensed with, instead ,each sector/Consumers be treated on merit keeping in view , interalia, the regulatory provisions applicable to thereto and relevant factors.
b) Requirements of Defence and Railways to be met in full at a notified price ,as at present
c) In Case of Power Utilities including Independent Power producer (IPP) /Captive Power Plants (CPP) and Fertilizer Sector,100% of the quantity as per the normative requirements of the consumers to be considered for supply of Coal through Fuel Supply Agreement (FSA) at fixed prices to be declared /notified by the CIL .
d) In case of other Consumers ,75% of the quantity as per normative requirement of the Consumers/Actual Users to be considered for supply of Coal through by FSA by CIL at the notified price to be fixed and declared by CIL .The balance 25% of COAL requirement of the Units are to be sourced by them E-Auction/Import of Coal etc. as per their preference.
e) All the existing linkage holders of erstwhileCore and Non Core Sector and Not having FSA 's would be required to enter into FSA with Coal Companies.
f) At present small and tiny Consumers in Non Core Sectors, whose annual consumption is less than 500 metric Tonnes are eligible to get Coal through State nominated Agencies /NCCF etc. Cap of 500 to be increased to 4200 Tonne per Annum. Units ,whose requirement is more than 4200 tonnes per annum would be required to take Coal directly from Coal India Limited /Subsidiaries Companies through FSAs. Linked Consumer of erstwhile Non Core Sector, whose annual requirement is less than 4200 Tonne to be given two options either to enter into FSA with the Coal Company as per terms and conditions ,including satisfaction levels applicable to other consumers or opting out of FSA regime and access their coal requirement through agencies nominated by the Sate Governments.
g) In order to meet the enhanced cap fixed for small and tiny consumers ,the quantity earmarked for distribution to State Agencies /NCCF to be increased from 5 Million to 8 Million tonnes annually ,to start with .The earmarked quantity will be distributed through Agencies notified by the State Govt.'s. These Agencies could be State Govt. Agency /Central Govt. or Industries Associations , as the State Govt. may deem appropriate. The Agency /Association so notified by the State Govt. would be required to enter into FSA with Coal Company to be designated by the Coal India Limited .The FSA will continue remain in force till either State Govt. denotifies the Agency/Associations or CIL shifts the obligations to some other Coal Company due to Production, Transportation Logistics etc. In the latter case, a fresh FSA will be signed with new COAL Company .The FSA would be based on firm commitment and compensation for default in performance on either side .The price charged to such Agencies would be same notified price as applicable to other Consumers entering into FSA. The Agency is entitled to charge actual freight and upto 5% margin as service charge ,over and above the basic price charged by the Coal Company ,from their consumers.
h) In order to meet Domestic requirement of Coal ,CIL may have to import Coal as may be required from time to time ,if feasible, CIL may adjust its overall price accordingly .Thus ,it will be responsibility of CoaL India Limited / Coal Companies to meet full requirement of Coal under under FSA s even by resorting imports, if necessary.
i) New Consumers from State/Central Power Utilities ,CPPs, Independent Power Producers (IPPs),Fertilizer, Cement and Sponge Iron Units to be issued LOA ,based on prevailing norms and recommendation of administrative Ministry, which may inter alia have regard to LOA ?Linkage already granted to the Consumer of Specific sector, existing capacity ,requirement for capacity addition during a plan period etc. All other Consumer may be issued LOA by CIL ,based on prevailing norms and recommendation by the Administrative Ministry. CIL may also engage an independent Govt. or recognized Agency/ Institution ,if required ,for the purpose of processing/certifying of coal requirement of Individual Consumers ,if there is no prevailing norm for such category of Consumers /Sector .
j) LOA will be issued by the CIL to the applicant Consumer consequent upon payment of EMD to the Coal Coal Company.
h) LOA will be valid for a period of 12/24 months as applicable ,during which Applicant Consumer will be required to achieve the milestones pertaining to his Projects /Plants as stipulated in the LOA ,failing which LOA will stand terminated automatically and the EMD would be forfeited.
k) On successfully achieving the milestones stipulated in LOA, Coal Company would execute FSA with the Applicant Consumer covering commercial arrangement for supply of Coal.
l) As and when Fuel Supply Agreements come into existence, both parties ,viz, Coal Companies and Consumers would endeavour to enter into Fuel Supply and Transport Agreement (FSTA), which would be Tripartite Agreement involving the Coal Supplier, the Coal Consumer and the Logistics Provider ,i.e, Railways. The FSTA may firstly be made applicable to major Consumers like Power, Cement, and Steel Sector and could be extended to other Consumers in phased manner.
m) A fresh Scheme of E-Auction to be introduced subject to inter-alia, following conditions:-
Any Buyer will be entitle to Coal under E-Auction.
There shall not any floor price in "E-Auction"
In order to address the concerns of of such Industrial Consumers, who wished to have assured supply over long period, say ,one year, under "E-Auction" so as to plan their annual production plan etc. ,CIL earmark a fixed quantity, which will be provided to highest Bidder/Bidders as per Bidder's requirement over the period of Bid
around 10% of estimated production of CIL would initially be offered under E-Auction and the quantity to be offered under "E-Auction " would be reviewed time to time Ministry of Coal .
As new distribution policy envisages implementation od revised distribution policy ,in which there will be the departure from the existing policy of distribution, MOC has given an implementation schedule within which modalities have to be worked out. Till such time ,our earlier policy in vogue will continue.
The gradation of non-coking coal is based on Useful Heat Value (UHV), the gradation of coking coal is based on ash content and for semi coking / weakly coking coal it is based on ash plus moisture content , as in vogue as per notification.
Grades of Coking Coal
Grade
Ash Content
Steel Grade –I
Not exceeding 15%
Steel Grade -II
Exceeding 15% but not exceeding 18%
Washery Grade -I
Exceeding 18% but not exceeding 21%
Washery Grade -II
Exceeding 21% but not exceeding 24%
Washery Grade -III
Exceeding 24% but not exceeding 28%
Washery Grade -IV
Exceeding 28% but not exceeding 35%
Grades of Non-coking Coal
Grade
Useful Heat Value (UHV)
(Kcal/Kg)
UHV= 8900-138(A+M)
Corresponding
Ash% + Moisture %
at (60% RH & 40O C)
Gross Calorific Value GCV (Kcal/ Kg)
(at 5% moisture level)
A
Exceeding 6200
Not exceeding 19.5
Exceeding 6454
B
Exceeding 5600 but not exceeding 6200
19.6 to 23.8
Exceeding 6049 but not exceeding 6454
C
Exceeding 4940 but not exceeding 5600
23.9 to 28.6
Exceeding 5597 but not exceeding. 6049
D
Exceeding 4200 but not exceeding 4940
28.7 to 34.0
Exceeding 5089 but not Exceeding 5597
E
Exceeding 3360 but not exceeding 4200
34.1 to 40.0
Exceeding 4324 but not exceeding 5089
F
Exceeding 2400 but not exceeding 3360
40.1 to 47.0
Exceeding 3865 but not exceeding. 4324
G
Exceeding 1300 but not exceeding 2400
47.1 to 55.0
Exceeding 3113 but not exceeding 3865
Grades of Semi-coking and Weakly Coking Coal
Grade
Ash + Moisture Content
Semi coking grade –I
Not exceeding 19%
Semi coking grade –II
Exceeding 19% but not exceeding 24%
Grades of NEC Coal :
Grades
UHV (Kcal/Kg)
Corresponding
Ash% + Moisture %age
A
6200-6299
18.85 – 19.57
B
5600 – 6199
19.58 – 23.91
