2015 (11) TMI 901 - SC - Central Excise

Claim of exemption from duty on production of gold bars - whether the product produced by the assessee is the primary gold which is exempted from payment of excise duty - Denial of exemption Notification No. 6/02-CE dated 01.03.2002 - Held that - It is clear from the reading of relevant entry in the exemption Notification that it exempts primary gold when the same is converted with the aid of power from any form of gold . Explanation appended thereto defines the primary gold to mean gold in any unfinished or semi-finished form and includes among others, gold bars. From the process of manufacture that is explained above, it becomes clear that the gold bars are produced from gold mud. Gold mud would be qualified as any form of gold and the product in question viz. gold bars, therefore has to be treated as primary gold . What is relevant and important is that silver was recovered from anode slime and thereafter gold mud was recovered from silver. Insofar as the product in question viz. gold bars are concerned, these are produced from the gold mud. Thus, gold is converted in the form of bars from gold mud with the aid of power. It is undisputed that gold mud is a form of gold. What is significant to note that the primary gold is the end product which is manufactured. The entry clearly describes that when the said primary gold is converted from any form of gold with the aid of power into bars as well, the same would be treated as primary gold . - Decided against Revenue.

Summary

Issues:
Interpretation of exemption Notification No. 6/02-CE dated 01.03.2002 regarding excise duty on gold bars produced by the assessee.

Analysis:
The case involved a dispute over the applicability of an exemption notification on the production of gold bars by the assessee. The Revenue issued show cause notices demanding duty on gold manufactured without payment of duty. The central question was whether the product in question, gold bars, qualified as "primary gold" exempted from excise duty under Notification No. 6/02-CE. The Adjudicating Authority and the Commissioner initially ruled against the assessee, but the Custom, Excise & Service Tax Appellate Tribunal had a split decision. The Technical Member favored the assessee, considering the product as "primary gold," while the Judicial Member dissented. The third member concurred with the Technical Member's view, holding that the product was not liable for excise duty.

The Tribunal's decision was based on the interpretation of the exemption notification, which exempted "primary gold" converted from any form of gold with the aid of power. The Tribunal found that the gold bars produced from gold mud qualified as "primary gold" as per the explanation provided in the notification. The dissenting Judicial Member argued that the gold did not undergo conversion as it emerged for the first time during the manufacturing process, but this argument was rejected.

The Tribunal emphasized that the crucial factor was the final product, i.e., the gold bars, which were manufactured from gold mud, a form of gold. The conversion of gold into bars with the aid of power was considered sufficient to classify the product as "primary gold." The third Member's concurrence with the Technical Member's view reinforced this interpretation, leading to the dismissal of the appeal by the Supreme Court.

In conclusion, the Supreme Court upheld the Tribunal's decision, ruling in favor of the assessee and confirming that the gold bars produced were indeed "primary gold" exempted from excise duty under the relevant notification. The judgment clarified the interpretation of the exemption provision and emphasized the importance of the final product in determining its classification for duty purposes.