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TMI Blog2024 (11) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has observed that since the percentage of gold has been specifically prescribed to understand Gold Dore Bar , then meaning of gold bar be considered as the one other than Gold Dore Bar being a distinct products in the trade parlance. Argument of the appellant that even though the final product cleared from their factory is Gold Dore Bar having purity less than 95%, which are manufactured from gold ore/concentrate be considered as Gold Bar , in absence of a definition of Gold Bar , in the exemption Notification, in our view, cannot be accepted. On the contrary, we find there is merit in the reasoning of the Ld. Commissioner that once the Gold Dore Bar is given a meaning in the Explanation to the Notification being considered as raw material/input for the manufacture of gold bar , the said meaning cannot be ignored while understanding the meaning of Gold Bar even though both the items are classifiable under Chapter 71 of the CETA, 1985. The Gold Bars which are manufactured out of Gold Dore Bars having purity less than 95% cannot be equated with Gold Dore Bars . Thus, the argument of the Appellant that Gold Bars (i.e., Gold Dore Bar) manufactured from gold ore or concentrate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned as Gold Bar claiming exemption available to them from time to time. In the said circumstances, the second show-cause notice issued to the appellant on 05.08.2017 invoking extended period, in our opinion, cannot stand the scrutiny of the law as there has been no change in the process of manufacture, marketing/sale of the final product i.e., Gold Dore Bar except availment of benefit of Notification issued from time to time. Thus, there is no mis-declaration nor suppression of facts with intent to evade payment. However, the appellants are required to discharge differential duty at the appropriate rate, if any, payable for the normal period of limitation, as benefit of Sl. No.189 of the Notification No.12/2012 dated 17.03.2012 as amended, being not admissible to the appellant. Since the issue relates to interpretation of law and there is no suppression of facts, we do not find justification in imposing penalty under Section 11AC of the Central Excise Act, 1944 on the appellant as held in the impugned order. Appeal is partially allowed upholding the demand of duty with interest for normal period and setting aside penalty imposed on the appellant. Consequently, the matter is reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 11AC of the Central Excise Act, 1944. 3. Briefly stated the facts of the case are that the appellants are a Public Sector Undertaking, wholly owned by Government of Karnataka. The Appellants are engaged in mining of gold ore in their mining lease area located at Hutti and other places. On the basis of the intelligence, DGCEI initiated investigation against the Appellant which revealed that the appellants are not discharging appropriate Central Excise duty on the clearance of Gold Dore Bars manufactured by them in their factory and wrongly declaring it as gold bars by availing the benefit of Sr. No. 189 of Notification No. 12/2012-CE dt.17.03.2012. Consequently, on completion of investigations, show-cause notice was issued to the appellant on 05.08.2017 proposing recovery of differential Central Excise duty for the period from 01.07.2012 to 30.06.2017 amounting to Rs.83,63,98,488/- along with interest and proposal for penalty under Section 11AC of Central Excise Act, 1944. On adjudication, the demand was confirmed with interest and order was passed as stated above. Hence, the present appeal. 4. At the outset, the learned Sr. Advocate for the appellant has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution will be sent to Electro Wining process in which gold is deposited on the steel wool cathodes. Then, the loaded steel wool cathodes will be removed manually from time to time and subjected to acid digestion and drying to obtain Gold Precipitate Powder . The gold powder obtained as roasted and magnetted table concentrate and gold precipitate powder is taken separately to the melting and refining section, wherein the concentrate is mixed with flux (Borax, Manganese dioxide, Nitre and Silicon) and heated up to 1200 degree by using oil fired furnace. The gold melts at 1063 and settles at the bottom of the crucible owing to its density. The impurities, which are lighter will float on the top and removed as slag after pouring into the moulds to obtain gold buttons after cooling. The purity of gold button smelted from table concentrate and buttons smelted from the gold precipitate powder vary slightly in quality or gold content. The buttons obtained from both the process are melted together to eliminate further impurities and cooled to obtain any homogenous Gold Bars having gold content of 90-92%, silver content of 6-7% and other impurities. 4.2 Learned Sr. Advocate referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; (iii) It should bear the manufacturer s engraved serial number and weight expressed in metric units; and (iv) It has to be manufactured either from the stage of (a) gold ore or (b) concentrate or (c) from the stages of gold dore bar. 4.4 It is submitted that the appellants are manufacturing dore bars , having gold content of 87 92%, from the stage of gold ore . The Gold Dore Bars are commercially known as gold bars . Such dore bars are classifiable under Chapter Heading 7108 of Central Excise Tariff Act, 1985. Since the appellant had complied with all the conditions of the said notification, therefore, entitled to avail the benefit of concessional rate of duty under Sr.No.189 of the said Notification No. 12/2012 CE dt. 17.3.2012 as amended. Further, it is submitted that the percentage of gold content specified under the Explanation under Sl. No.189 of the said Notification is meant for dore bar used as a raw material and it has no significance to determine the content of gold in the gold bars, when such gold bars are made from gold ore and not from the gold dore bar. 4.5 The Ld. Sr. Advocate has further submitted that the amendment brought to the Central Excise exemption Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the difficulties of the trade, amendment has been brought to Notification No.21/2002-Cus dated 01.03.2002 and Notification No.5/2006-CE dated 01.03.2006, whereby concessional duty structure for manufacture of serially numbered gold bars from (a) gold ore or concentrate; and (b) gold dore bars. Gold Dore Bar was defined to mean dore bars having gold content less than 80%. Thereafter, the meaning of dore bars specified the purity level as not exceeding 95% by amending the relevant Customs Notification as well as Notification issued under Central Excise, which resulted for the trade to import dore bars for manufacture of gold bars which were more easily available with higher purity in the international market. 4.8 The concessional rate of duty at Sl. No.21A of Notification No.5/2006-CE dated 01.03.2006 as amended by Notification No.2/2012-CE dated 16.01.2012 has also been extended to the local mines, who manufactured gold dore bars from the stage of ore or concentrate. Thus, on a holistic reading of the exemption Notifications issued under Customs and Excise in the backdrop of import policy, it is understandable that amendments have been carried out in 2011 with a view to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where the gold content in the Gold Dore Bar is more than 95%, the manufacturer of gold bar from such Gold Dore Bar will not be entitled to exemption. It is their contention that the Explanation only indicates that the gold bar manufactured from Gold Dore Bar will be entitled to exemption, provided the gold content in the Gold Dore Bar is not more than 95%. The Notification does not deny the exemption to gold bar when manufactured from gold ore or concentrate. 4.11 Learned Sr. Advocate, referring to the classification of gold bar under Chapter Heading 7108 of Central Excise Tariff Act, 1985 read with Note 5(b) to Chapter 71, submitted that gold in the form of bars, whether or not dore bars, is classifiable under CTH 7108 of the Central Excise Tariff Act, 1985. It is further submitted that when exemption is extended with reference to the Chapter Number, the terms used in the Notification shall be understood as indicated in the relevant Chapter Notes and Interpretative Rules of the Central Excise Tariff Act, 1985. In support, they have referred to the judgment of the Hon ble Apex Court in the case of CC, Bangalore vs. Maestro Motors: 2004 (174) E.L.T 289 (SC). The learned Sr. Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as gold bars only and classifying the same under Chapter 7108 of CETA. Further, they submitted that the Department in the previous proceedings considered the product as Gold Dore Bar only; thus, the department cannot have contradictory stand. Further, they have submitted that the department has considered the goods manufactured by the appellant as gold bars during the period from January 2012 to June 2012 whereby the Explanation to Sl. No.21A was amended and the definition of dore bar was changed having gold content not exceeding 95%. The appellant had cleared the goods even after amendment to Sl. No.21A with effect from 16.01.2012 as gold bars and reflected in their ER-1 returns. The department has not disputed the same. It is their contention that due to increase in the percentage specifying the gold content in the dore bars by virtue of Explanation to Notification No.12/2012-CE dated 17.03.2012, the department cannot have contradictory stand. 4.13 Further, they have submitted that the demand is barred by limitation for the period prior to August 2015. It is their contention that they have been filing regularly ER-1 returns and the invoices raised by them clearly mentions the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gold as claimed earlier. 5.1 It is contended that the department on the other hand took the view that dore bars are neither primary gold converted from any form of gold nor gold bars as defined in the relevant Notification. Consequently, tariff rate/effective rate has been adopted as the applicable rate in demanding duty on Gold Dore Bar. Also, extended period of limitation has been invoked in both the cases. It is relevant to note that the exemption claimed under Notification No.5/2006-CE dated 01.03.2006 as primary gold converted from any form of gold continued in the same form till 23.3.2011. With effect from 24.3.2011, the expression from any form of gold was substituted by the expression from any form of gold other than gold ore, concentrate or dore bar . Thereafter, the same entry continued vide Sl. No.188 of Notification No.12/2012-CE dated 17.03.2012 for the whole period by the present appeal. 5.2 It is further submitted that in the appeal No. E/26922/2013, the appellant had argued that dore bars are different from gold bars and are not commercially understood as gold in pure form. In this context, the letter addressed to DGCEI dated 06.10.2010 by appellant annexed at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period up to 23.3.2011, the demand may be required to be confirmed at the stage of and value of gold buttons, a product which can be regarded as any form of gold and which gets converted to gold dore bars . For the period 24.3.2011 to 30.6.2017, the gold dore bars cleared by the appellant could be regarded as neither as primary gold as understood in Notification No. 05/2006-CE dated 01.03.2006 as amended nor as gold bars as defined in Notification No.12/2012-CE dated 17.03.2012 and its successor Notification. 5.5 The learned Sr. Special counsel for the respondent has submitted that the appellant has not acted in a bona fide manner which is evident from significance of events after visit of the appellant s factory on 30.09.2010, which needs consideration. On 14.09.2010, appellant furnished details of clearances of gold bars for the period from 01.03.2010 to 31.08.2010. By their letter dated 06.10.2010, they contended that they were availing exemption under Notification No.5/2006 and that they were not required to obtain registration and comply with the direction to pay duty. Thereafter, statements of key personnel were recorded between 10.03.2011 and 12.08.2011. The statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of the Hon ble Supreme Court in the case of Hindalco Industries Ltd. case (supra), this Tribunal vide Final Order No. 20168-20170/2024 dt. 19.03.2024 decided the issue in favour of the Appellant observing that gold ore/concentrate is a form of gold; thus, conversion of gold ore/concentrate to primary gold i.e., Gold Dore Bar attracts NIL rate of duty under Sl. No.21 of Exemption Notification No.05/2006-CE dated 01.03.2006 for the period from 01.01.2007 to 24.3.2011. It is also not in dispute that after amendment to the Notification No.05/2006-CE dated 01.03.2006 with effect from 24.03.2011 vide Notification No.25/2011-CE dated 24.03.2011, the appellant discharged duty for the period March 2011 to December 2011 after taking registration in the year 2012 availing benefit of Sl. No 21A of Notification No.05/2006-CE dt 01.3.2006. Also, they have continued payment of duty at the applicable rate from January 2012 under Sl. No.21A of the Notification No.2/2012-CE dated 16.01.2012. Thereafter, they discharged concessional rate of duty under Sl. No.189 of the Notification No.12/2012-CE dated 17.03.2012 as amended from time to time till 30.6.2017. The present dispute centres aroun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to gold bars manufactured from gold ore or concentrate, and same is not permissible. 11. The Revenue s condition on the other hand is that the appellant during the previous proceedings pleaded that what is manufactured in their factory by subjecting the gold ore extracted from mines to physical and chemical processes is Gold Dore Bar in primary form which is in unfinished/semifinished condition and the purity content is much less than in comparison to gold bar manufactured by refineries from Gold Dore Bar available in the market. The exemption claimed by the appellant in the previous proceedings was under Sl. No.21 of the Notification No.05/2006-CE dated 01.03.2006 is not by claiming the Gold Dore Bar as Gold Bars , therefore, appellant cannot be allowed to change its stand on the same set of facts, when the benefit of Notification No.12/2012-CE dated 17.03.2012 has been extended to gold bars manufactured out of Gold Dore Bar. 12. We find that the learned Commissioner after analysing the submissions advanced by the appellant held that appellants are not entitled to avail the benefit of Sr. No. 189 of the Notification No.12/2012-CE dt. 17.03.2012 on Gold Bars as claimed by them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gold and silver. Further, said bars are subject to refining by M/s. Bangalore Refinery Pvt. Ltd., Bangalore (buyer) to obtain gold bars. Considering the definition of gold dore bars as defined in Notification and the process of manufacture/composition of impugned goods, it is clear that the goods manufactured by the assessee fall under the definition of gold dore bars inasmuch as the gold content in the goods manufactured by them is in the range of 87 % to 92% and does not exceed 95%. As per Notification No. l2/2012-CE, the impugned goods to merit classification as gold bars', the gold content should be more than 95%. 24. In view of above discussion, I held that Notification No. 12/2012-CE granting concessional rate of duty to Gold Bars cannot be made applicable to the Gold Dore bars manufactured by the assessee and the assessee is not eligible for the benefit of exemption Notification No. 12/2012-CE. 13. We find that the Learned Commissioner, while analysing the dictionary/popular meaning of Gold Bar and applying common parlance test to it, has categorically made an observation that the claim of the appellant that Gold Bar includes Gold Dore Bar cannot be accepted since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the requirement contained in the Notification that weight in metric units should be available on the gold bar cannot be met in these cases. This clearly shows the intention of the Government to levy duty on only on gold bars traded by weight and not on impure gold bars traded by percentage of gold content. 21. It is in keeping with the above intention of the Government that Sl. No.21A of the Notification contemplates existence of both serial number and weight. The said entry by implication clearly excludes the manufacturers engaged in clearing Primary Gold obtained after processing the ore, includes those whose final product is impure gold bar or dore bar. In the instant case, the final product of M/s. HGML is Primary Gold which continues to be covered under entry 21 of the Notification attracting NIL rate of duty. 15. Therefore, the argument of the appellant that even though the final product cleared from their factory is Gold Dore Bar having purity less than 95%, which are manufactured from gold ore/concentrate be considered as Gold Bar , in absence of a definition of Gold Bar , in the exemption Notification, in our view, cannot be accepted. On the contrary, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in Sun Export Case (supra) stands overruled. 17. Thus, an exemption Notification has to be construed strictly and in context to charging section, the burden is placed on the assessee to show that their case falls within the parameters of the exemption Notification. The appellant s argument of the meaning of Gold Bar , now referring to common parlance understanding that purity is not the criteria to differentiate Gold Dore Bar and Gold Bar , is contrary to their own stand in their earlier proceedings, where they had categorically claimed that because of the content of Gold Dore Bar, which is ultimately cleared to the refineries and to convert into gold bar of purity of 999.99%, therefore, Gold Dore Bar be considered as primary gold and eligible to benefit of exemption on conversion from any form of gold. Now, merely saying that Gold Dore Bar is nothing but Gold Bar as the later is manufactured from gold ore/concentrate , in our opinion, the Appellant has failed to discharge the burden in establishing their claim that they satisfy all the parameters of the said exemption Notification No.12/2012-CE dt. 17.03.2012. Besides, what is commonly understood is always not necessarily mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressed the opinion with regard to the rate of tax on the de-oiled cake while scrutinizing C Forms which is an expression of opinion on the available materials brought on record and, therefore, the first appellate authority as well as the tribunal was justified in concurring with the said order. It is worthy to note that the revenue had not challenged the order passed by the Joint Commissioner. The High Court has not expressed any opinion on this score. Considering the cumulative effect of the facts and law we have stated, we have not an iota of doubt in our mind that there should not have been reopening of assessment. However, the finding recorded by the High Court overturning the view of the tribunal that oil-cake and de-oiled cake are the same product and, therefore, both are liable to reduced rate of tax despite the notification only mentions oil-cake, is not defensible. 19. Applying the aforesaid ratio to the present case, it can safely be concluded that even if in common parlance purity may not be the criterion to use the expression Gold Bar , however, for the purpose of Notification No.12/2012-CE dated 17.03.2012, Gold Bar and Gold Dore Bar are two different commodities. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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