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TMI Blog2006 (8) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant, herein, Birla Copper are primarily engaged in the manufacture of Copper Cathodes classifiable under chapter 74. For the said purposes, they are importing copper ore in the form of concentrate. Though there is no dispute in respect of Copper Cathodes being manufactured by the appellant and cleared on payment of duty, for the sake of, clarity, we would refer to the manufacturing process of the same, in brief. Copper concentrate, as obtained by the appellant, is reacted in the smelting furnace at a high temperature in the presence of air and oxygen with an aim to increase the metal content and to obtain high purity of copper. Sulphide in the concentrate becomes sulphur dioxide and is removed as such, iron combines with silica and is removed with other impurities in the resulting slag. Copper sulphide and iron sulphide form matte copper , which is then fed into a converter. In the converter, air is blown through the matte copper resulting in emergence of impure copper, sulphur dioxide gas and slag. The impure copper at this stage is called blister copper which is transferred to anode furnace where it is fire-refined. Molten copper so obtained is casted into shape of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and casted into gold bars. The residue of dore anode after extraction of gold and silver consist of palladium group metals concentrate and is called PGM concentrate. The gold bars so manufactured by the appellant are cleared without payment of duty in terms of the notfn. No. 6/2000-C.Ex. and the subsequent notfn. No. 3/2001-C.Ex. 6. Having detailed the process of manufacture of gold bars, now we proceed to decide whether the appellant s claim of exemption under notfn. No. 6/2000-CE dated 1-3-2000 is admissible or not. For better appreciation Sr. No. 184 of the said notfn. which grants exemption from Central Excise duty, is reproduced below- Primary Gold converted with the aid of power from any form of gold Explanation for the purposes of the exemption, primary gold means gold in any unfinished or semi-finished form and includes ingots, bars, blocks, slabs, billets, shots, pellets, rods, sheets, foils and wires . 7. Shri V. Sreedharan, ld. Advocate appearing for the appellant advanced number of pleas and arguments in support of the appellants stand that the rectifications in question extend the exemption to their product gold bar. On the other hand, Shri Sethna, ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n parlance test, none of the stage of anode slime (Black coloured coarse mind). Dore Anode (Silver coloured metallic substance) would be recognised as gold. Neither of the material would attract the market price as applicable to gold in the bullion market. Such an extended meaning to the term any form of gold cannot be given to any of the stages. The other unit similarly situate M/s. Hindustan Copper have been clearing the gold arising during the smelling of copper on payment of duty only. 10. It is to be seen as to what is the point from where onwards the process of extraction of gold starts. Gold is evidently present in the original ore also. Can it be then said that the ore is also form of gold if the presence of gold in that ore is more than 2%. In our view, the answer to the above question would be, without any arguments, No . The ore is primarily obtained by the appellant for the purpose of extraction of copper. It is only the remnant product i.e. anode slime, which contains various metals of precious nature which becomes the starting raw material. The said product is transferred to a separate plant called PMR Plant. As such it can be safely concluded that the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing proposed duty on the final product being cleared from the appellants factory i.e. bars, could not have proposed duty simultaneously on the powder also. Its is only in consideration of the appellants plea during the course of adjudication that the commissioner has observed that even, if it is accepted that the gold bar being produced out of the gold powder is exempted, then duty need to be paid on the gold powder captively consumed for the production of the bar as the same would not be entitled to the benefit of exemption on the same analogy as is applied to the bars. We do not find any fallacy in the above reasoning of the adjudicating authority. Similarly, we find that the Commissioner has rightly rejected the appellant s contention of clearance of gold on payment of 8% of the value of the gold bar in terms of Rule 57CC, after having availed credit of duty paid on the powder, in as much as, said rule is applicable only when dutiable inputs are used in manufacture of dutiable as well as non dutiable products. 12. In view of the forgoing discussion, we held that the emergence of gold either at the gold powder stage or at the gold bar stage was not from any other form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that the Commissioner in paragraph 65 of the impugned order has observed as under:- in such a situation I do not find any reason to hold that M/s. Birla Copper have deliberately suppressed or misstated any facts or that they have knowingly involved themselves in the clearance of gold without payment of duty with the wilful intention to evade duty. Therefore, there is no case to invoke the provisions of Section 11AC of the Central Excise Act, 1944, as proposed in Show cause notice dated 1-6-2001 . 15. In view of the foregoing finding of the Commissioner to the effect that there was no deliberate suppression on the part of the appellants and, hence, no intention to evade duty, we are of the view that there was bona fide dispute as regards the interpretation of provisions of law and exemption notification. Though, it is seen that the appellants competitor company viz.; Hindustan Zinc was paying the duty on the goods, but in view of the fact that the entire facts were in the knowledge of the revenue, who, even after issuing the first show cause notice in the year 2001, never insisted the appellant either for clearance of the goods on payment of duty or to opt for provisiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at. Sd/- (S.S. Sekhon) Member (Technical) Dated 15-6-2005 DIFFERENCE OF OPINION 19. Since there is disagreement between the two members, the matter is required to be referred to a third Member to resolve the following question. The question proposed to be put for third member s consideration would be : (i) Whether in the facts and circumstances of this case, duty should be determined on the value and at the stage of the gold bar/slab; as held by M (J) or whether in the facts and circumstances of this case, duty could be determined on the value of and at the stage of emergence of dore anode as held by Member (Technical). The matter is directed to be placed before the Hon ble President for placing before a third Member for resolving the issue. Sd/- (Archana Wadhwa) Member (Judicial) Dated 16-6-2005 Sd/- (S.S. Sekhon) Member (Technical) Dated 16-6-2005 20. [Order per : Jyoti Balasundaram, Vice-President]. - I have heard both sides on the difference referred to me. The facts have already been set out in the order and are not being repeated here. 21. Dore anode is composed of 13 to 22% by weight gold and 77 to 86% by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untered since gold-silver alloys, named dore metal (emphasis supplied) are used frequently. Encyclopedia of Chemical Technology by Kirk Othmer Vol. XVI page 337, while dealing with slag refining, states that In the recovery of precious metals from anode slimes, one of the steps is a fusion, usually in a small reverberatory furnace where impurities are removed by oxidation with air and dissolution into successive slags. The product of this operation is a silver-gold alloy, ca 90% Ag and 9% Au, called dore metal, which is further refined by electrolysis. The above extract relates to purification of copper and hence directly relates to the product in dispute. The Revenue relied upon the following passage in Kirk Othmer Encyclopedia of Chemical Technology under the heading Copper : ..The roaster product is then charged to the Dore furnace where it is melted and the resulting metal is fire-refined to eliminate the arsenates, selenates, antimonates, tellurates, and residual copper. When the copper content in the Dore metal has been reduced to less than 1% by fire refining, the metal is cast into anodes got electrolytic separation of silver.... , to contend that since dore met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Merrimen s Dictionary on Metallurgy that an alloy is something which is produced by intentional addition of alloying elements and since dore anode is not manufactured by addition of alloy element but manufactured by refining anode slime, is not tenable. Firstly, Merrimen s dictionary states that the term alloy is used usually for cases where there is an intentional addition of metal for the purpose of improving certain properties. Intentional addition of metal is emphasized in contradiction with mere presence of some other metal/element as an impurity. Further, other technical dictionaries do not refer to intentional addition as a necessary requisite for qualifying as an alloy. As seen from Hawley s Condensed Chemical Dictionary an alloy is a solid or liquid mixture of two or more metals, or of one or more metals with certain non-metallic elements, as in carbon steels. The properties of alloys are often greatly different from those of its components. The purpose of an alloy is to improve the specific usefulness of the primary component . As per Grant Hackh s Chemical Dictionary, an alloy is a mixture of two or more metal elements of non-metals which has a metallic appearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap. According to the importer, brass scrap was an alloy of copper and zinc and hence not copper scrap. The Supreme Court applied Rules of Interpretation and Note 3 to Section XV to hold that the brass scrap has to be treated as copper scrap and rejected the contention of the importer. In the present case, in view of Note 5 read with Note 4 to Chapter 71 of the schedule to the CETA 1985, dore anode has to be treated as gold for all purposes including for the purpose of serial No. 184 of the Table to Notification 6/2000, in the light of the Khandelwal Metal decision wherein the apex court applied the definition of alloy in Note 3 of Section XV for the purpose of understanding the meaning of the expression copper waste and scrap contained in notification 156/77-Cus. 27. The contention of the Revenue that gold bar enjoys the benefit of exemption only w.e.f. 1-3-2003 as per serial No. 259 of the Table to Notification 6/2003-C.E., dated 1-3-2003 covering Gold arising in the course of manufacture of copper or zinc by smelting cannot be considered for the reason that the finding in the impugned order is not based upon the amendment to Notification 6/2000 by issue of Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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