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2019 (1) TMI 557 - AT - Central ExciseManufacture - Gold bars manufactured from the stage of dore bar - benefit of exemption under Sl. No. 21 of Not. No. 05/2006 - process amounting to manufacture or not - manufacture of gold bars from the stage of dore bar - primary gold converted from any form of gold so as to fall within the scope of Sl. No. 21 of Not. No. 5/2006 - whether dore bars can be considered as any form of gold within the scope of Sl. No. 21 of Not. No 5/2006? Whether the appellants are liable to pay Central Excise duty on gold/silver bars manufactured out of dore bars during the period 1.4.2008 to 16.1.2012? - Held that - The Hon ble Supreme Court in CCE, Vadodara vs. Hindalco Industries Ltd. 2015 (11) TMI 901 - SUPREME COURT has laid down two conditions for the availability of the exemption Notification. Number (1) is to see whether the end product manufactured is primary gold and Number (2) is to see whether it is converted into any form of gold. When the Supreme Court has held gold mud having very low percentage of gold as any form of gold and the manufacture of the gold bars from the same to be conversion, there is no scope of any doubt to consider the dore bar, having high percentage of gold from 80-95%, procured by the appellants over the years from M/s. HGML as any form of gold and the process of manufacture of gold bars from dore bars is to be construed as conversion - the appellants are eligible for the exemption contained in the Notification No.5/2006-CE dated 1.3.2006 prior to 1.3.2011. The amendment brought by Notification No.25/2011 dated 24.3.2011 substitutes the words from any form of gold with the words from any form of gold other than gold ore, concentrate or dore bar . From this, it is clear that dore bar has been specifically excluded from the category of any form of gold with effect from 24.3.2011. The department sought to read this amendment to be retrospective. However, in view of the clear terms and words of the Notification, there is no mention of retrospective applicability. As far as there is no ambiguity in the wordings of the Notification, it requires to be construed very strictly and therefore, is to be held to be retrospective only - the appellants are liable to pay duty for the period 24.3.2011 to 16.1.2012. Extended period of limitation - penalty - Held that - Even ignorance of law, which otherwise also is no excuse, cannot be considered. Therefore, it is to be inferred that non-payment of duty and non-disclosure is a positive act of suppression with intent to evade. Hence, we find that invoking of the extended period of limitation is fully justified. On the same grounds, recovery of interest and imposition of penalties is justified. Whether the appellants are liable to pay duty on unbranded gold/silver coins for the period 1.3.2011 to 16.3.2012? - Held that - The Finance Act, 2014 vide clause 102, exempted the goods under Chapter 71, retrospectively for the period from 01.03.2011 to 16.03.2012. Therefore, we accept the contentions of the appellants in this regard and find that the demand of duty on this count is liable to be set aside - demand set aside. Whether the appellants are liable to pay Central Excise duty on the branded gold or silver coins during the period 1.1.2012 to 30.5.2013? - Held that - For a certain period, there was no scope for the appellants to procure duty paid bars. In view of the difference of opinion on the basis of records maintained, we find that the issue needs to go back to the original authority to verify the records of the appellants vis a vis their claims for the period 1/1/2012 to 16/3/2012. Therefore, it will be in the interest of justice that the matter be remanded back to the adjudicating authority - Matter on remand. Whether the appellants are liable to pay Central Excise duty on gold jewelry during the period 17.3.2012 to 7.5.2012? - Held that - The appellants submission that wherever they have availed Cenvat Credit, the same has been reversed in view of the clear findings of the commissioner. We also find that Ld. Commissioner has rightly not extended the benefit under Notification No.2/2011 dt.1.3.2011 as amended by Notification No.20/2012 as in terms of Sl. No.49 of Notification No.2/2011-CE as amended as the articles of goldsmiths and silversmiths classifiable under Chapter Heading 7114 of CETA, 1985 are excluded the gold coins of purity 99.5% above and silver coins of purity 99.9% above - the demand of ₹ 20,91,82,176 for the period 1.7.2012 to 30.05.2013 along with interest upheld - Penalty set aside. Whether the appellants are liable to pay duty at the rate of 6% on unbranded gold/silver coins and jewelry for the period 17.3.2012 to 30.6.2012? - Held that - The demand hinges on the claims of the either parties which are subject matter of verification. It was not denied by the Revenue that the appellants were not submitting ER-1 returns. However, the claim was that it was not possible to decipher from the ER-1 records to verify the CENVAT credit taken by the appellants. There are counter claims regarding the availment of CENVAT and reversal thereof. Therefore, we find that it will be in the interest of justice to remand the matter back to the authority for verify the claim of the appellant including that of limitation - matter on remand. Whether there is short payment of duty on the manufacture and clearance of gold and silver bar during the period 17.1.2012 to 30.6.2012? - Held that - Mutuality of interest is not proved and it is not alleged that all the clearance of the appellants are through M/s. Dhruv Jewellers only. In such a situation, we find that the demand does not sustain and is liable to be set aside along with penalty on M/s. Dhruv Jewellers. Penalties - Held that - Sufficient cause has not been shown to levy penalty on each of the Directors, more so, when the individual role and liability has not been shown. We find that wherever the demands are sustained, penalty on the firm would suffice. There is no need to levy penalties additionally. Therefore, the penalties imposed on the Directors are set aside. Appeal disposed off.
Issues Involved:
1. Liability to pay Central Excise duty on gold/silver bars manufactured out of dore bars. 2. Liability to pay duty on unbranded gold/silver coins. 3. Liability to pay Central Excise duty on branded gold or silver coins. 4. Liability to pay Central Excise duty on gold jewelry. 5. Liability to pay duty at the rate of 6% on unbranded gold/silver coins and jewelry. 6. Alleged short payment of duty on the manufacture and clearance of gold and silver bars. 7. Penalties imposed on various partners of the firm. Detailed Analysis: 1. Liability to Pay Central Excise Duty on Gold/Silver Bars Manufactured Out of Dore Bars: The appellants claimed exemption under Notification No. 5/2006, arguing that dore bars should be considered "any form of gold" and the process of refining them into gold bars constitutes "conversion." The department contended that dore bars are semi-pure alloys and refining them amounts to manufacture, not conversion. The Tribunal found that the Supreme Court's decision in Hindalco Industries Ltd. supports the appellants' view that dore bars with high gold content (80-95%) fall under "any form of gold" and that refining constitutes conversion. However, the Tribunal held that the amendment in Notification No. 25/2011, which excluded dore bars from "any form of gold," is prospective, not retrospective. Thus, the appellants are liable for duty for the period 24.03.2011 to 16.01.2012, and the extended period of limitation is applicable due to willful default. 2. Liability to Pay Duty on Unbranded Gold/Silver Coins: The Finance Act, 2014, retrospectively exempted goods under Chapter 71 for the period from 01.03.2011 to 16.03.2012. The Tribunal accepted the appellants' contention and set aside the demand for this period. 3. Liability to Pay Central Excise Duty on Branded Gold or Silver Coins: For the period 01.01.2012 to 16.03.2012, the Tribunal remanded the issue back to the adjudicating authority to verify the appellants' records and claims. For the periods 17.03.2012 to 30.06.2012 and 01.07.2012 to 31.05.2013, the Tribunal upheld the demand and interest, finding that the appellants failed to show non-availment of Cenvat credit and that intermediate products (gold powder or strip) are marketable and excisable. However, the penalty under Section 11AC was set aside. 4. Liability to Pay Central Excise Duty on Gold Jewelry: The show-cause notice alleged that the appellants availed Cenvat credit on dore bars for payment of duty on gold jewelry. The Commissioner set up a new case demanding 6% value of exempted goods, which the Tribunal found to be beyond the show-cause notice. The demand, interest, and penalties were set aside. 5. Liability to Pay Duty at the Rate of 6% on Unbranded Gold/Silver Coins and Jewelry: The Tribunal remanded the matter back to the adjudicating authority for verification of the appellants' claims, including the issue of limitation. The appellants contended that they reversed credit on inputs used in exempted goods, which amounts to non-availment as per the Supreme Court's decision in Bombay Dyeing. 6. Alleged Short Payment of Duty on the Manufacture and Clearance of Gold and Silver Bars: The show-cause notice alleged undervaluation due to related party transactions with M/s. Dhruv Jewellers. The Tribunal found that mutuality of interest was not established, and Rule 10 of the Valuation Rules was not applicable. The demand and penalty on M/s. Dhruv Jewellers were set aside. 7. Penalties Imposed on Various Partners of the Firm: The Tribunal found that the individual roles of the partners in the alleged lapses were not established. Penalties on the partners were set aside, and penalties on the firm were deemed sufficient. Conclusion: The appeals were disposed of with specific directions for each issue. The Tribunal confirmed some demands, set aside others, and remanded certain issues back to the adjudicating authority for further verification. Penalties on the partners were set aside, while penalties on the firm were upheld where applicable.
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