TaxTMI 
TaxTMI 
2006 (8) TMI 593
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....onal penalty of equivalent amount under Section 11AC of the Act. . 2. 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....
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....owder is then filtered, washed and dried and is of 99.9% purity. The same is subsequently melted 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 rectifi....
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....agination can be considered as 'form' of gold. Gold is a yellow coloured precious metal and by applying the common 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. T....
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....nst them in respect of gold powder. We do not firm much force in the above argument of the Learned Advocate. The notice having 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 discussio....
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....ently concluded that the exemption was extended to first time production of gold w.e.f. 1-3-03. 14. As regards personal penalty, it is 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 ....
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....ecting it on the emergence of an excisable product 'dore anode' but has been directed at and on converted primary forms of gold which are exempt, I cannot confirm the duty demands as made or and arrived 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-P....
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....es dore as an alloy of gold and silver. The Encyclopedia by Kirk Othmer Vol. VII page 975, which is an authoritative commentary, states that "In the refining of gold, silver and the platinum group metals are difficult to remove. In the refinery of scrap gold, silver is encountered 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 elimin....
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.... to alloys of precious metal, but not to metal clad with precious metal or to base metal or non-metals plated with precious metal." 24. The focal point of Revenue's submission that dore anode is not an alloy and hence dore anode is not an alloy of gold, relying upon he definition of alloy contained in A.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. ....
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....of the apex court in Khandelwal Metal, 1985 (20) E.L.T. 222 (S.C.) is relied upon by the Revenue to support its contention that dore anode is not an alloy. In this case, the assessee imported brass scrap and wanted to pay duty by availing concessional rate of duty of 40% under Notification 97/77-Cus., dated 25-6-1977. covering articles other than waste and scrap. The Revenue wanted to tax brass scrap at 80% in terms of Notification 156/77-Cus., dated 16-7-1977 covering copper waste and 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 e....