2015 (1) TMI 28 - AT - Central Excise

Notification No. 84/2003-C.E. (N.T.), dated 31-12-2003 - Duty demand on Gold Potassium Cyanide (GPC) - intermediate product for the manufacture of exempted jewellery - whether benefit of Notification No. 84/2003-C.E. (N.T.) is available to GPC - Held that - final product manufactured by the respondent is imitation jewellery. The respondents are procuring inputs for the manufacture of GPC which was manufactured in the factory and is further in the manufacture of final product i.e. imitation jewellery. In these circumstances, we find no infirmity in the impugned order whereby the adjudicating authority held that GPC is emerging in the course of manufacture of imitation jewellery. - Decided against Revenue.

Summary

Issues:
- Interpretation of Notification No. 84/2003-C.E. (N.T.) regarding the exemption of goods.
- Determination of whether Gold Potassium Cyanide (GPC) is an intermediate product for the manufacture of exempted jewellery.
- Assessment of whether GPC is emerging during the course of manufacture of imitation jewellery.
- Analysis of the contention that GPC is a separate and independent excisable good.
- Evaluation of the grounds for appeal in relation to the Show Cause Notice issued.
- Consideration of the process of GPC manufacture and its usage in the production of imitation jewellery.

Analysis:
The appellate tribunal heard an appeal filed by the Revenue against an Order-in-Appeal passed by the Commissioner, where a demand for the period April 1999 to February 2001 was dropped due to Notification No. 84/2003-C.E. (N.T.). The case involved the manufacturing of gold electroplated/electroformed jewellery and Gold Potassium Cyanide (GPC) by the respondents. The Revenue contended that GPC is a separate excisable good and not arising during the manufacture of imitation jewellery, thus not eligible for the exemption under the mentioned notification.

The Revenue argued that GPC is independently manufactured by the respondents and used in making imitation jewellery, challenging the adjudicating authority's finding that GPC emerges during the course of manufacturing imitation jewellery. The respondents, however, maintained that GPC is part of the manufacturing process for imitation jewellery and relied on the statement of the Production Manager explaining the GPC manufacturing process.

The tribunal examined the process of GPC manufacturing, where gold is dissolved in aqua regia solution to obtain liquid gold potassium cyanide used in making imitation jewellery. Considering that GPC is part of the manufacturing process for imitation jewellery, the tribunal found no issue with the adjudicating authority's decision that GPC emerges during the manufacture of imitation jewellery, thereby upholding the dropped demand up to February 2001 based on the notification's exemption provision.

In conclusion, the tribunal dismissed the appeal, affirming that GPC is indeed emerging during the manufacture of imitation jewellery, as per the provisions of Notification No. 84/2003-C.E. (N.T.). The judgment highlights the importance of analyzing the manufacturing process and the interconnectedness of products to determine eligibility for duty exemptions under relevant notifications.