Poor implementation of the dual freight policy for transportation of iron ore resulted in a financial loss of Rs. 29,237 crore to the Indian Railways during 2008-2013, the Comptroller and Auditor General (CAG) report tabled in Parliament on Friday revealed.
According to the audit, even in the case of the Steel Authority of India Limited, non or partial submission or submission of invalid mandatory documents to the authorities concerned and lapses by railway officials resulted in short charging of freight of Rs. 4,838.80 crore, besides a penalty of Rs. 5.45 crore.
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The Railway Ministry had introduced the policy in May 2008 with the primary objective of lowering iron ore transportation cost for domestic producers and to keep freight charges for its exports in sync with its rising international spot market prices. There was a freight difference of over three times between these two categories, allowing the Indian Railways to garner more revenues in the event of increase in the international price of iron ore.
The audit, for the period of May 2008 to September 2013, was conducted to verify compliance with the laid down rules and procedures for booking and delivery of iron ore at the domestic rate.
The alleged revenue loss includes an estimated freight evasion of Rs.12,722.63 crore and non-imposition of penalty of Rs.11,418.17 crore due to non-submission/partial submission or submission of invalid mandatory documents.
“The railway administration should have assessed the veracity of the information on the basis of which concessional rates were claimed and availed [of], besides satisfying themselves that the end use of transported iron ore was domestic consumption and all the required documents were submitted,” it said.
The CAG also found that manufacturing units were allowed to remove left over/residual iron ore fines for export out of the quantities transported at the domestic rate in the plant premises, and this despite the fact that the Railway Board had recognised a limit of 25 per cent for the purpose.
“As many as 23 consignees removed about 8.79 lakh tonnes of iron ore at domestic rate from their plant premises in excess of the 25 per cent. In some cases, the quantity exceeded 100 per cent. In 61 cases, the aggregated quantity of 71.22 lakh tonnes shown as received was far less than the quantity transported … This quantity was not eligible for the domestic rate and attracted a penalty of Rs. 5,095 crore,” according to the report.
“The Railways did not lay down adequate internal controls, checks and balances for effective implementation of the policy. A unique identification code for each consigner is essential for deriving correct information of bookings of iron ore made by each consignee and its comparison with actual use shown in excise returns. However, multiple names/codes of consigner/consignees are found in freight operations database for a single company,” it added.
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