Regional Training Institute, Ranchi

1. Regional Training Institute, Ranchi Structured Training Courseware on State Receipts Audit Audit of Mining Receipts

2. Session Objectives At the end of these sessions, the participants will be able to • Define the type of minerals and the nature of mining receipts • Licensing mechanism • Understand the procedures for assessment and collection of mining receipts and • List audit checks relating to mining receipts RTI, Ranchi

3. Major and Minor Minerals • Governing Statutes • Mines and Minerals (Development and Regulation) Act, 1957 • Mineral Concession Rules, 1960 • Major Minerals • Central Govt. Legislative Control • Coal, Iron Ore, Copper, Bauxite etc. RTI, Ranchi

4. Major and Minor Minerals (Contd.) • Minor Minerals • State Government Legislative Control • Building Stones, Gravel, Ordinary Clay etc. • Specified Major Minerals • Hydrocarbon/ energy • Atomic • Metallic and Non-metallic • Revenues from both Major and Minor Minerals to State Government RTI, Ranchi

5. Licensing – Major Minerals • Types • Reconnaissance Permit • Prospecting License • To ascertain quantity and quality of ores • Not for commercial removal • Preference for Mining Lease • Mining Lease • Commercial Mining Activities • 20-30 years; renewal for not more than 20 years RTI, Ranchi

6. Licensing – Major Minerals (Contd.) • Application • Indian national • Area to be specified • Central Government role for specified major minerals • Prior approval of permit/license/lease • Power to revise any State Government order RTI, Ranchi

7. Licensing – Minor Minerals • Mining Lease • Granted by DC for up to 10 years • Sand auctioned on annual basis • Quarrying permits • District/ Asst. Mining Officer • Specified quantities on royalty pre-payment • Control on works contractors purchasing minor minerals only from lessees etc. • To prevent illegal mining RTI, Ranchi

8. Mining Receipts • Royalty • Flat or ad valorem rates • Different rates for different grades/ qualities • Dead rent (if higher than royalty) • Surface rent • Local cess • Application fees • Fines, penalties and interest • Compensation for loss of forest area RTI, Ranchi

9. Organisational Setup RTI, Ranchi

10. Responsibilities • Director of Mines • Recommendations on grant/ renewal of licenses • Write-off proposals • Revision of assessments • Dy. Director of Mines (DDMs) • Appellate authority for assessments • Certificate Officer for arrears RTI, Ranchi

11. Responsibilities (Contd.) • Distt. Mining Officer (DMO) / Asst. Mining Officer (AMO) • Assessment, levy and collection of royalty etc. • Receipt and processing of applications • Receipt and processing of Grant Orders • Monitoring compliance with license/ lease conditions RTI, Ranchi

12. Responsibilities (Contd.) • Inspector of Mines • Verify/ Survey/ Demarcate areas • Applied • Notified for lease • Lease area • Inspection of leasehold and mines bearing areas • Verification of stock of minerals RTI, Ranchi

13. Important Registers and Records • Licenses and Leases • Register of applications for Reconnaissance Permits • Register of Reconnaissance Permits • Register of applications for Prospecting Licenses • Register of Prospecting Licenses • Register of applications for Mining Leases • Register of Mining Leases RTI, Ranchi

14. Important Registers (Contd.) • Financial Registers • Register of Demand and Collection • Daily Receipt Register • Register of Raising and Despatch • Surface Rent Register • Bank Draft Register / Challan Register • Register of Refunds RTI, Ranchi

15. Important Registers (Contd.) • Other Registers • Register of Analysis • Register of Transit Passes • Half-Yearly Verification/ Inspection Reports • Register of Illegal Mining • Registers relating to Certificate cases RTI, Ranchi

16. Assessment • Important factors are Quantity, Grade, Rate Payable • Stacking of minerals • Mineral content analysis by State Geological Laboratory • Verification of stocks by Inspector • Permits for removal + lorry transit passes RTI, Ranchi

17. Assessment (Contd.) • Monthly return of mineral raised and royalty due • Monthly return of cess due • Assessment of monthly returns by DMO • Dead-rent on half-yearly basis for non-working leases • Surface rent at rates specified by DC RTI, Ranchi

18. Collection • Bank Drafts entered into Register of Bank Drafts • Deposited into Treasury • Challans entered into Register of Daily Receipts • Demand and Collection Register also • Verify total receipts with AG figures RTI, Ranchi

19. Audit Checks • Certificate of Approval • Applications supported by specified fees for correct period • Renewal application prior to expiry • Grant of License/ Permit/ Lease • Applications containing relevant information • Area specified • Indian national • Certificate of Approval + Income Tax Clearance Certificate • Grant/ renewal in accordance with statute RTI, Ranchi

20. Audit Checks (Contd.) • Delay, and financial implications thereof • Lease deeds executed in prescribed period, correct format, detailed map • Security deposit + Compensation for loss of forest area • For lease transfer • Approval of Central Government • Addl. Benefits beyond main lease • Premium for transferer RTI, Ranchi

21. Audit Checks (Contd.) • Prospecting License • Monthly Returns & Periodic Verification • Weighment of Minerals • Free Allowance • Royalty for Addl. Clearance/ Commercial Use RTI, Ranchi

22. Audit Checks (Contd.) • Operations • Surface/dead rent at correct rate from correct date • Water used exclusively for mining operations • Cost recovery for soil and other minerals • Demand for dead rents RTI, Ranchi

23. Audit Checks (Contd.) • Royalty • Monthly Returns, checked with original lessee records • Quarterly by Inspector • Half-yearly by DMO/ AMO • Weighbridges and weighments • Tare weights of wagons, lorries • Cross-check ore consumption with lessee records RTI, Ranchi

24. Audit Checks (Contd.) • Dispatches with DMO permission, transit passes • Cross-verification of dispatch with other data • RR weight, returns to IBM, receipts by purchasing organisation, toll gate records etc. • Procedures for sampling and grading • Joint sampling for ore of marginal grades RTI, Ranchi

25. Audit Checks (Contd.) • Correct royalty rate from correct date • Local cess properly assessed • Cess returns compared with royalty returns • Beneficiated minerals – royalty on input • Interest payable RTI, Ranchi

26. Audit Checks (Contd.) • Expired / Terminated Leases • Detailed survey after 6 months • Compensation for damage • Notice for removal of left-over property • Lease of buildings on land • Auction of left-over machinery, equipment and scrap • Disposal of left-over mineral RTI, Ranchi

27. Audit Checks (Contd.) • Unauthorized Mining • Cases of prior removal or after lease expiry • Reports of clandestine removal, and prompt action thereon • Penal action or compounding of offence by authorized officer RTI, Ranchi

28. Audit Checks (Contd.) • Refunds • Actual payment or excess payment • For refund of application fee, refusal by Government and sanction of refund • Correct calculation • Verify refund payments at Treasury for selected month with authorizations by DMO/AMO RTI, Ranchi

29. Audit Checks (Contd.) • Minor Minerals • Valid Quarrying Permits/ Mining Leases • Correct Assessment, Timely Demand • Monthly Returns • Cross-verification of amount of minerals raised • Penal action for illegal removal • Certificate Proceedings for arrears RTI, Ranchi