2014 (12) TMI 277

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....facture of jewellery watches, watch case and parts etc. classifiable under Chapter 91 of Central Excise Tariff Act, 1985. On 26.9.2002, the Central Excise officers, during verification of the records, at their factory premises found that the respondent cleared 2525.100 kgs. of recovered gold Sludge from their factory without payment of central excise duty to M/s.Nirvighnam Plantinum Ltd., Juhu, Mumbai vide Dispatch Voucher No.30046586 dt. 21.5.2002. A show cause notice dt. 27.11.2003 was issued proposing demand of Central Excise Duty amounting to Rs. 1,81,807/- for clearance of 2525.100 kgs. of recovered gold Sludge classifiable under sub heading 7101.80 of the CETA'85 alongwith interest and penalty. As the respondent paid the different....

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....same goods on payment of duty and, in the present case, they have cleared the goods without payment of duty with an intention to evade payment of duty and therefore, penalty under Section 11AC would be invoked. 4. On the other hand, Ld. Advocate on behalf of respondent submits that admittedly, the respondent cleared Sludge arising during the process of manufacture of gold ornaments and jewellery watches. It is different from waste and scrap of precious metal as mentioned under Heading 7101.80 of CETA'85. He submits that the word "sludge" as understood in the trade parlance is unusable product which cannot be treated as waste and scrap and therefore the Commissioner (Appeals) after detail discussion had come to the conclusion that the c....

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.... would be classified under Heading 7101 of CETA which is reproduced below :-            71.01 Natural or cultured pearls; precious or semi-precious stones; synthetic or reconstructed precious or semi-precious stones; dust and powder of natural or synthetic precious or semi- precious stones; articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed); precious metals and metals clad with precious metal; articles of jewellery (other than imitation jewellery) and parts thereof; imitation jewellery; other articles of precious metal or of metals clad with precious metal; waste and scrap of precious metal or of metals clad with precious metal; ot....

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....ntaining precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal. It includes, in particular : (A) Waste and residues derived from the mechanical working of precious metal or of metal clad with precious metal, in mints, goldsmiths', silversmiths', jewellers' workshops etc., for example sweepings, dust, lemels, shavings etc., resulting from shaping, drilling, working, etc." 6.1 Chapter 71 of CETA'85 had not defined the "waste and scrap of precious metal". Heading 71.01 covers "other waste and scrap containing precious metal or precious metal compounds of a kind used principally for recovery of precious metal; coin". 6.2 Chapter 71.12 of HSN covers "waste and scrap of any m....