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TMI Blog2024 (3) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ., dore bar manufactured by the appellant satisfy the meaning of primary gold provided in the said Notification. The entry 21 of the said Notification No.05/2006-CE dt. 01.03.2006 has been amended by Notification No.25/201-CE dated 01.04.2011 and the Appellant discharged duty from 01.04.2011 to 31.12.2011, which has been appropriated in the impugned order. The dispute centres around the interpretation of the expression conversion from any form of gold to primary gold i.e., dore bars as was in the said entry at Sl. No.21 till 31.03.2011. In the impugned order, it is observed that any form of gold would mean gold in its original form, that is, it should be in existence before its conversion into another form of gold i.e. dore bars . Applying the common parlance test, the Revenue has argued that the old ornaments of gold, articles of gold, other primary form of gold like ornaments, pellets, etc., is gold in any form . It is an age-old practice to make new ornaments from old/broken ornaments; and for making new ornaments, old articles are melted to obtain specific form of gold or that the same could be used again in making new articles. In the said process, existing gold is transformed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 01.03.2006 (Sl.No.21) in respect of gold bars manufactured in their factory at Hutti; 2) It is ordered to classify the gold bar manufactured in their factory under tariff heading 71081200 of the First Schedule to the Central Excise tariff Act, 1985. Accordingly, the duty is levied and payable on gold bar manufactured and cleared; 3) I demand and order for recovery of duty of excise of Rs.141,37,26,577/-(Rupees One Hundred and Forty one Crores Thirty Seven Lakhs Twenty Six Thousand Five Hundred and Seventy Seven only)(including education cess and Secondary and Higher Education cess) in respect of gold bar manufactured and removed by M / s Hutti Gold Mine Company Limited, Hutti during the period from 01.01.2007 to 31.12.2011 under proviso to section 11A of the Central Excise Act 1944 with interest thereon under Section 11AB of the said act; 4) I order appropriation of duty of Rs.3,54,61,240/- stated to have been paid against the above demanded amount; 5) I impose penalty of Rs.141,37,26,577/- (Rupees One Hundred and Forty One Crores Thirty Seven Lakhs Twenty Six Thousand Five Hundred and Seventy Seven only) under Section 11AC of the Central Excise Act, 1944 on M/s Hutti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Carbon in pulp process Section and Smelting Section. The crushing operation is carried out in three stages viz., Primary Crushers, Secondary Crushers and Tertiary Crushers, where gold ore is crushed to reduce its size to 10 mm. The crushed ores are carried out in the primary mills and secondary mills. The discharge of mills is passed through woollen blankets and free gold is recovered through gravity process. The gold recovered is passed through cyclone classifiers and the coarse gold is again subjected to grinding in the secondary mill. The process is repeated till the ore is reduced to 75 micron size. The woollen blankets are washed every 3 hours and the washings (rough concentrates) collected are stored in concentrate tanks for 24 hours. These rough concentrates are fed to vibrating tables, treated and cleaned to remove impurities. The free gold recovered from this process is called 'Table Concentrate', which is taken for further processing of roasting and magnetting to obtain gold powder. 4.1 Further it is submitted that the fine gold which could not be recovered through gravity process is recovered by chemical process called Carbon-in-Pulp process. The slurry containing ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold falling under Chapter 71 from duty as is in excess of the amount calculated at the rate of Rs.175/- per kg. The term 'primary gold' was defined for the purpose of this Notification to mean gold in unfinished/semifinished form and includes ingots, bars, blocks, slabs, billets, shorts, pellets, rods, sheets, foils and wires. In the said Notification the meaning of expression "in any form of gold' was not prescribed. Thereafter, this Notification was rescinded and fresh Notifications were issued from time to time allowing exemptions at different rate. 4.4 It is his contention that in all these Notifications issued from time to time, the Central Government has consistently defined the term 'primary gold' by way of an Explanation. The said entry has not undergone any change and the Central Government also did not find reason to define the phrase "any form of gold". Thus, the understanding of all concerned was that the expression of 'any form of gold' means dore bars, powder, mud or ore / concentrate. 4.5 It is submitted that a dispute of similar nature about the admissibility of exemption Notification No.6/2000 dated 01.03.2000 was raised for the first time in the case of Birla C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2006 from time to time, the learned Sr. Advocate has submitted that: (i) by virtue of 2010 amendment for the first time, concessional rate of duty was sought to be introduced in respect of gold bars manufactured from the stage of gold ore or concentrate but the levy was restricted to gold bars bearing manufacturer's or refiner's engraved serial number and weight expressed in metric grams, units and gold coins. (ii) the levy in terms of Entry Sl. No. 21A was sought to be extended to gold bars which were manufactured from the stage of 'gold dore bar' by the virtue of amendment in March 2011. (iii) Simultaneously by amending Sl. No.21 and excluding from the words 'any form of gold' other than gold ore concentrate or dore bar. 4.9 Assailing the finding of the learned Commissioner that; (i) the gold ore or concentrate is a mineral and not metallic gold and cannot be considered as form of gold so as to extend the benefit of exemption of Notification No.5/2006-CE dated 01.03.2006; secondly, extraction of gold from Ore cannot be equated to conversion of one form of gold into other primary form metallic gold, the learned Sr. Advocate submitted that the Hon'ble Supreme Court's decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as conversion. The learned Sr. Advocate has vehemently argued that the decisions of the Apex Court/CESTAT are squarely applicable to the facts of the present case. He has pleaded that in the present case, immediately preceding material for manufacture of 'gold dore bar' is 'gold buttons' containing gold content of 85-92%. Gold button is in turn obtained from gold precipitate powder/table concentrate in powder form, therefore, by applying the reasoning of the Hon'ble Supreme Court, wherein gold mud which might have presence of gold at the most 30% was held to be a form of gold. Thus, gold precipitate/table concentrate which has gold content of more than 60%, would definitely fall under the expression 'any form of gold'. In support, they have also referred to the reasoning of the Tribunal in the case of CCE. Vs. Vijaya Packaging: 2000 (118) ELT 160 (Tri.) and also the following decisions: • Dhruvco Printers vs. CCE: 1996 (85) ELT 62 (T) • CCE vs. Jayna Packaging Pvt. Ltd.: 2000 (122) ELT 140 (T) • Palas Associates Pvt. Ltd. vs. CCE: 1999 (105) ELT 166 (T) It is submitted that the demand of duty on the manufacture of 'gold dore bars' deserves to be set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured forms' being not subjected to any kind of process after its emergence from its refinery, he has submitted that the demand of duty proposed in the show-cause notice dated 07.02.2012 is on gold bars manufactured by the appellant; but no proposition for determination of the correct classification of the said goods. Referring to the website meaning of unwrought bars, the learned Sr. Advocate has further submitted that gold ores are subjected to the process of crushing, concentration, leaching, precipitation, electrolytic refining, etc., and therefore, the resultant dore bars are rightly classifiable under Chapter Heading 7108 1300 as 'semi- manufactured forms' and not as 'unwrought forms of gold'. It is his contention that, in any case, the classification of the product cleared by the appellant under Chapter heading 7108 1200 or 7108 1300 is not material in deciding the benefit of exemption under Sl. No.21 of the Notification No.5/2006-CE dated 01.03.2006. 4.17 Further, assailing the finding of the learned Commissioner on the issue of limitation, the learned Sr. Advocate has submitted that show-cause notice issued on 07.02.2012 proposing recovery of duty for the period 01.01.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracting gold from gold ore through various stages of manufacture like crushing, grinding, melting, etc. They obtained gold bars, which are known as 'dore bars' in the market and the percentage of gold is around 80-90% in these bars. These bars so produced are purchased by refineries, wherein serial numbers are given and manufacturer's name and particulars are embossed and ultimately sold. He has submitted that the core issue in the present case is whether the phrase 'any form of gold' would include "gold ore or concentrates" with which the process of manufacture commences at appellant's factory are referred to any form of gold like powder, wire, sheets, pellets, etc., or gold in the form of ornaments, broken ornaments or articles. The Revenue has contended that all along exemption under Sl. No.21 under Notification No.05/2006-CE dated 01.03.2006 is available only when primary gold is obtained by conversion in any form of gold like powder, sheets, pellets, etc. The expression 'conversion' according to the department implies that the metal to be converted must already exist and the process employed by the appellant to obtain primary gold by extracting gold from gold ore through va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has not demonstrated that it is marketable. If they do so, then duty would be attracted at the stage of concentrate in the light of the view taken in the case of Birla Copper (supra). In fact, if the said line of argument is accepted, only the emergence of gold button after the said concentrate is processed further can be regarded as first stage of obtaining any form of gold. In such a case, duty would be attracted at that stage and on the value of gold button, thereafter conversion of button could be eligible for exemption under Notification No.5/2006-CE dated 01.03.2006 as amended in terms of ratio of the Birla Copper's case. 5.3 Rebutting the argument that amending Notification No.25/2011 dated 24.3.2011 has settled the issue, the learned Special Counsel argued that subsequent amendment to the Notification cannot be called in an aid of the interpretation of an earlier legal decision. No doubt, retrospective effect cannot be given to the amendment but at the same time, no adverse inference can also be drawn from the amendment. This view is supported by the judgment of the Tribunal in Bangalore Refinery Pvt. Ltd.'s case. 5.4 For invoking extended period of limitation, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty from 8% ad valorem to Rs.280/- per gm. In support, he has referred to the Finance Minister's Budget Speech 2010-11. 5.7 Further, it is argued that the provisional figures relating to clearances of 'dore bars' were furnished only on 16.01.2012 i.e., 16 months after the visit in September 2010 and the show-cause notice was issued immediately on 07.02.2012 without delay. The appellant failed to produced any evidence to show that they were under a bona fide belief for non payment of duty. Further, he has submitted that the concept of knowledge of the facts cannot be read into the provisions of invoking extended period has been held by the Gujarat High Court in the case of Commissioner of Central Excise, Surat Vs. Neminath Fabrics Pvt. Ltd.: 2010 (256) ELT 369 (Guj.). Thus, there has been wilful default on the part of the appellants and invoking extended period in confirming the demand is justifiable. Consequently, imposition of penalties are also justified on the appellants and the Directors. 6. Heard both sides and perused the records. The issues for consideration are whether: (i) The appellants are entitled to the benefit of Sl. No.21 of exemption Notification No.5/2006-CE d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the aid of power from any form of gold, be eligible to 'Nil' rate of duty of goods falling under Chapter 71 of Central Excise Tariff Act, 1985. There is no dispute about the end product i.e., 'dore bar' manufactured by the appellant satisfy the meaning of 'primary gold' provided in the said Notification. The entry 21 of the said Notification No.05/2006-CE dt. 01.03.2006 has been amended by Notification No.25/201-CE dated 01.04.2011 and the Appellant discharged duty from 01.04.2011 to 31.12.2011, which has been appropriated in the impugned order. 10. However, the dispute centres around the interpretation of the expression conversion 'from any form of gold' to primary gold i.e., 'dore bars' as was in the said entry at Sl. No.21 till 31.03.2011. In the impugned order, it is observed that 'any form of gold' would mean gold in its original form, that is, it should be in existence before its conversion into another form of gold i.e. 'dore bars'. Applying the common parlance test, the Revenue has argued that the old ornaments of gold, articles of gold, other primary form of gold like ornaments, pellets, etc., is 'gold in any form'. It is an age-old practice to make new ornaments fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is removed in an autoclave using sulphuric acid and oxygen and sent back to smelter. The remanent is decopperised anode slime and is in the form of black moist powder. This anode slime is thereafter transferred to another section called Precious Metal Recovery (PMR). From there starts the process of recovery of gold from the said anode slime and subsequent manufacture of gold bars. The anode slime consists of selenium, silver, gold and palladium etc. Selenium is removed by oxidising the same by the process of roasting in the presence of sulphuric acid, thus leaving behind silver, gold and palladium metals. The desalinised anode slime is charged to a furnace called trof furnace, where it is melted with soda and boran which removes impurities as slag. The molten metal is cast into desired shape. The casted product is described as "Dore anode" which approximately weighs 25 Kg. The dore anode mainly consists of gold and silver along with the presence of platinum and palladium group of metals in small traces. For the purpose of separation of silver from the above dore anode, the same is subjected to electrolysis in a silver nitrate solution. The electrolysis takes place in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provisions of the relevant Notification. He observed that the duty demanded on the gold bars cannot be sustained. The third Member concurred with the Member (T) and the majority opinion of the Tribunal was that since 'dore anode' is an alloy of gold and therefore a form of gold, hence duty could be determined on the value at the stage of emergence of dore anode. 12.3 The matter reached before the Hon'ble Supreme Court. After analysing the process of manufacture, their Lordships proceeded to examine the issue whether the product manufactured by the appellant is the primary gold which is exempted from payment of duty. There Lordships observed as: "6. Mr. Adhyaru, learned senior counsel for the appellant relied upon the discussion in the show cause notice and also upon opinion of the dissenting opinion of Judicial Member of the Tribunal and argued that the gold in question cannot be treated as "gold in primary form" as the original product was anode slime which underwent various processes from which product in question came into existence. In other words, he submitted that gold bars are produced from anode slime and anode slime can be treated as "any form of gold". Mr. Adhyar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was extended to first time production of gold w.e.f. 1.3.2003." 7. It is difficult to accept the aforesaid contention having regard to the description of goods that is exempted by the aforesaid Notification and narrated by us above. The fallacy in the aforesaid argument is to proceed on the basis as if the "primary gold" is converted from anode slime. We don't have to go back and see the original material from which final product came into existence. 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. (emphasis supplied) 8. 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". This is explained by the third Member while concurring with the opinion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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