2006 (8) TMI 593 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 6/2000-CE and its successor Notification No. 3/2001-CE.
2. Classification and definition of "dore anode" and its status as a form of gold.
3. Determination of the stage at which duty should be levied.
4. Applicability of personal penalty under Section 11AC of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 6/2000-CE and its Successor Notification No. 3/2001-CE:
The primary issue was whether the appellant's gold bars qualified for exemption under the cited notifications. The notifications granted exemption to "primary gold converted with the aid of power from any form of gold." The appellant argued that "dore anode" is a form of gold, and its conversion into gold bars should qualify for exemption. The revenue contested this, stating that "dore anode" is not a form of gold but a source of gold, and thus the exemption did not apply. The tribunal concluded that the process of obtaining gold bars from anode slime and dore anode did not constitute "conversion" as envisaged by the notification, and thus, the exemption was not applicable.

2. Classification and Definition of "Dore Anode" and its Status as a Form of Gold:
The appellant contended that "dore anode," which contains gold and silver, is a form of gold and should be classified under heading 71.08 of the Harmonized System of Nomenclature (HSN). The revenue argued that "dore anode" is not a form of gold but a source of gold. The tribunal examined technical literature and HSN explanatory notes, which describe "dore anode" as an alloy of gold and silver. The third member, Vice-President, concurred with the Member (Technical) that "dore anode" is indeed a form of gold, aligning with HSN and Central Excise Tariff Act definitions.

3. Determination of the Stage at Which Duty Should Be Levied:
There was a difference of opinion between the members on whether duty should be levied on gold bars or at the stage of "dore anode." The Member (Judicial) opined that duty should be levied on gold bars, while the Member (Technical) argued that duty should be levied at the stage of "dore anode." The third member agreed with the Member (Technical), stating that "dore anode" is a form of gold and duty should be determined at its emergence. The final majority order confirmed that duty should be levied on the value and at the stage of "dore anode."

4. Applicability of Personal Penalty under Section 11AC of the Central Excise Act:
The Commissioner had initially imposed a personal penalty equivalent to the duty amount under Section 11AC. However, it was observed that there was no deliberate suppression or intent to evade duty by the appellant. The tribunal noted that the entire facts were known to the revenue, and there was a bona fide dispute regarding the interpretation of the exemption notification. Consequently, the tribunal set aside the personal penalty imposed on the appellant.

Conclusion:
The tribunal, by majority, held that duty should be confirmed on the value and at the stage of emergence of "dore anode." The personal penalty imposed on the appellant was set aside. The appeal was disposed of in these terms.