TaxTMI 
TaxTMI 
2019 (1) TMI 557
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....ith penalty under Section 11AC of the Central Excise Act and Rule 25 of the Central Excise Rules, 2002 and applicable interest under Section 11AB/11AA of the Central Excise Act. The Commissioner, vide OIO No. BLR-EXCUS-003-COM-01-14-15 dated 28.05.2014, confirmed the proposed demand of duty on M/s BRPL and levied penalties on M/s BRPL and other appellants. The details of 7 appeals are as below. Appeal No/ Appellant Issue Period Duty Demand/ Penalty (Rs.) E/22501/2014 M/s BRPL Excise duty on branded gold/silver coins 01.07.2012 to 30.05.2013 20,91,82,176 E/22502/2014 M/s BRPL Excise duty on gold/silver bars manufactured out of gold dore bar 01.04.2008 to 16.01.2012 159,31,15,270 Excise duty on unbranded gold/silver coins 01.03.2011 to 16.03.2012 1,55,00,412 Excise duty on branded gold/silver coins 01.01.2012 to 16.03.2012 5,60,420 17.03.2012 to 30.06.2012 1,37,71,504 Excise duty on gold jewelry 17.03.2012 to 07.05.2012 23,24,097 Differential duty at 6% demanded on unbranded gold/silver coins and jewelry 17.03.2012 to 30.06.2012 45,93,477 Short payment of Central Excise duty on manufacture of gold/ silver bar 17.01.2012 to 30.06.2012 82,192 E/22503/2....
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....('HGML') and other traders; The 'dore bars' contain around 90% gold, 6/7% silver and other impurities; the dore bars are first melted and granulated; granules are then dissolved in aqua regia; the solution is filtered to separate the silver precipitated in silver chloride form; the solution is further treated with chemicals to precipitate gold from the solution; Gold precipitated as powder is separated by filtration process; Gold powder is washed thoroughly and dried; The powder is melted to get 999 fine (99.9% gold) purity gold which is cast into sheets which are further rolled to reduce the sheets into requisite thickness before it is subjected to punching with the molds to produce bars of various sizes and weights. 2.2. The Ld. Counsel traced the legal history of Notifications granting exemptions to 'Primary Gold' converted from 'any form of gold': (i). For the first time by way of Notification No. 157/90-CE dated 16.11.1990, the Central Government granted exemption to 'primary gold converted from any form of gold' falling within Chapter 71 from so much of duty as is in excess of the amount calculated at the rate of Rs. 175/- per kilogram; the term 'primary gold' was defined f....
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.... (SC), held that the 'gold mud', which also emerged as an intermediate product, is itself a form of gold and therefore benefit of exemption was to be extended to gold bars manufactured by the Appellant from 'gold mud'. Even though conflicting views were taken by the Ld. Members of the Hon'ble CESTAT in the year 2005/ 2006, the Central Government did not feel the need to clarify the expression 'any form of gold' even in the subsequent Notifications. (v). Notification No. 5/2006-CE dated 01.03.2006 (relevant for the present case) continued to grant exemption, at Sl. No 21, on identical lines and defined primary Gold to be gold in any unfinished or semi-finished form and includes ingots, bars, blocks, slabs, billets, shorts, pellets, rods, sheets, foils and wires. (vi). Notification No. 11/2010-CE dated 27.02.2010, was issued amending 05/2006-CE, by way insertion of Sl. No. 21A, seeking to levy concessional duty on gold bar (other than tola bars) bearing manufacturers engraved Sl. No. and weight expressed in metric units and manufactured from the stage of gold ore or concentrate. This amendment however, continued exemption for the other downstream manufacturers of gold products. (v....
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....ether the detailed process undertaken by the Appellant for the manufacture of gold bars from the stage of 'dore bar' can be equated with primary gold "converted" from any form of gold so as to fall within the scope of Sl. No. 21 of Not. No. 5/2006 and secondly whether 'dore bars' can be considered as 'any form of gold' within the scope of Sl. No. 21 of Not. No 5/2006. He submitted that the Apex Court's decision in case of Hindalco Industries, supra rendered in the context of identical exemption granted vide Notification No. 6/2000-CE dated01.03.2000 decides both the issues in favour of the appellants. 4. Ld. Counsel submitted that in the case of process of manufacture of gold bar from the stage of copper ore (as in the case of Birla Copper) was that the primary input for manufacturing gold bar was 'anode slime' and that the said anode slime or the intermediate products i.e. 'dore anode' and 'gold mud', which came into existence for the first time in the factory during the process of manufacture cannot be considered as 'any form of gold'. Further, the term "any form of gold" covers only articles/ ornaments of gold or other primary forms of gold and that the recovery of gold by the ....
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....ss and upheld the order of CESTAT by accepting the process to be in the nature 'conversion'. In the instant case as well, the entire process of refining is nothing but 'conversion' of primary gold with aid of power from another form of gold and therefore would fall within the scope of Sl. No. 21 of Not. No. 5/2006. 5. Appellants submitted that the department, vide para 4.8 of the show cause notice, has classified 'dore bar' under Chapter sub-heading 7108 13 00 of the Central Excise Tariff Act, 1985 ('CETA') as -- Other semi-manufactured forms: HSN and CETA has been totally aligned at Heading level and the HSN Explanatory notes specify that as under: "This heading covers the various unwrought, semi manufactured or powder form of gold or silver alloys (as defined in the General Explanatory Note) or of gold plated with platinum. The heading does not, however, cover gold clad with precious metal. Since gold Dore bar is an alloy of gold and silver, it would be treated as gold by virtue of Note 4 and 5 to Chapter 71 of CETA. Clearly, the expression "any form of gold" refers to gold in unwrought form, semi-manufactured form as well as powder form. Significance of the term "any" cannot b....
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....2006 vide Notification No. 25/2011-CE dated 24.03.2011 was clarificatory in nature and thus, had retrospective effect inasmuch as the purpose of the amendment was to clarify the ambiguities in the entry and bring out the intended meaning to the words 'any form of gold' and 'converted/ conversion'. Further, the Ld. Counsel for the Revenue at Para 4.5 of WS of Revenue Counsel submissions has argued that the amendment to the Sl. No. 21 had clarified that 'any form of gold' did not include gold ore, concentrate or dore bar and merely made explicit that was implicit in the expression "from any form of gold". Therefore, the same is clarificatory in nature and has retrospective effect. It is a settled law that any amendment to an exemption notification is prospective in nature and therefore, what is expressly stated in the notification cannot be said that it was existing all along nor can it be stated that the same has retrospective effect as per ratio of UOI vs. Martin Lottery Agencies Ltd 2009 (14) STR 593(SC). 7.1. Appellants further submit that the provisions of section 5A of the Central Excise Act, 1944 do not empower the Central Government to issue notifications with retrospective ....
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.... of Not No. 5/2006 in terms of which 'gold dore bar' was defined as gold bar having gold content less than 95%, where as it was defined to be having gold content less than 95% in 5/2011. (ii). Revenue: the decision of Apex Court in the case of Hindalco Industries, supra is not applicable to the present case as the decision of Hon'ble Tribunal was rendered in 2007, when the amending Notification No. 25/2011 clarifying the scope of expression 'from any form of gold' was not issued. Appellant: Apex Court has interpreted an identically worded exemption notification and concluded that 'gold mud/ dore anode' was falling within the scope of term 'any form of gold'. Therefore, is applicable to the present case; Not. 25/2011 has only prospective effect and cannot be construed to be clarifying the scope of the entry for the past. (iii). Revenue: the dispute in the present case is materially different from the case of Hindalco Industries; in the said case the fundamental issue was at what stage the input material becomes a 'form of gold' since the entire process from copper extraction from copper ore/ concentrate and to gold bar took place in same factory while in the instant case the proc....
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....he phrase 'in all forms' from 'in all kinds' has no relevance to present facts considering the very nature of product in question i.e. gold, which can only manifest in different forms i.e. in primary forms such as bars, billets, sheets or finished articles of jewelry, ornaments, coins etc. Further, CTH 7108 covers gold in different forms i.e. gold in unwrought form, semi-finished form, powder form. 'Gold dore bar' being classifiable under CTH 7108 would undoubtedly also be 'any form of gold'. (vi). Revenue: CESTAT in Stay order in case of Hutti Gold Mines Company Limited (2014 (304) ELT 105 (Tri-Bang), had taken a prima facie view that gold ore cannot be considered as 'any form of gold' on the basis that 'gold ore' was classifiable under the Chapter 26 of CETA and thus not covered under Chapter heading 7108. Appellant: the input material in the present case is gold dore bar which is undisputedly classifiable as 'unwrought form of gold' under Chapter heading 7108. Therefore, even as per the reasoning of the Tribunal, gold dore bar would be 'any form of gold'. In any case, the Hon'ble Tribunal had also held that there were two views possible during relevant period and prima facie e....
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....ure. In this regard reliance is placed on the decision of the Tribunal in the case of Mahaveer Tube Industries v. Commissioner of Central Excise reported at 2008 (231) ELT 499 (Tri.-Ahmd.) wherein the issue involved was whether process of drawing / re-drawing of pipes / tubes amounts to manufacture prior to introduction of Chapter Note 3 to Chapter 73. The Tribunal held that if the activity was covered by the definition of Section 2(f), there was no need to introduce Chapter Note 3 deeming the activity of drawing / re-drawing to have been the manufacturing activity. The Tribunal held that the Chapter Note makes it clear that it only extends the ordinary meaning of the manufacture as available under Section 2(f) and is to the effect that from the date of the introduction of such process shall amount to manufacture. Therefore, the scope of Chapter Note cannot be extended to the period before its birth. Accordingly, it was held that the Chapter Note was not clarificatory in nature and scope thereof could not be extended to the period prior to its introduction. 11. Ld. Counsel submitted that the additional ground on 'manufacture' can be raised at a subsequent stage. SCN (at para 2 and....
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....f excise has not been levied or paid or has been short-levied or short-paid by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made there under, with intent to evade payment of duty. In the absence of these ingredients demand can be issued only for the normal period of one year. The Appellant submits that in the instant case, none of the ingredients for invocation of extended period are present. The Appellant has claimed exemption from payment of duty on the gold bars refined from dore bar under Sl. No. 21 of Not No. 5/2006 dated 01.04.2006 under a bona fide belief that the term 'other form of gold' would cover dore gold bar having gold content of 90%. 12.1. The Appellant's bona fide belief is fortified by the manner in which the amendments have been carried out to the basic Not. No. 05/2006. As seen supra, for the first time in the year 2010, concessional duty was levied on serially numbered gold bars manufactured from stage of gold ore and concentrate (Sl. No. 21A-Refer para no. 15 supra). Further, in the year 2011 by way of Not. No. 5/2011, serially numbered gold bars manufactured....
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....Members of the Hon'ble CESTAT, the Hon'ble Supreme Court has given another interpretation to the entry. It is a settled law that longer period of limitation is not invokable in difference of opinion matters. Reliance is placed on the decision of Hon'ble CESTAT in case of British Airways vs CCE, Del 2014 (36) STR 598 (Del), wherein it was observed that the fact that there is difference of opinion between the two Members of the original Bench itself establishes the fact that the legal issue is complex issue requiring legal expertise to settle the same. In such a scenario, if an assessee entertained a bona fide belief that inasmuch as the service is not being received by him, and he is not required to pay any tax, he cannot be blamed for the same. Reliance is also placed on the decision of Hon'ble Tribunal in case of Byco International & Others vs. CCE, Delhi 1993 (49) ECR 126 (Tri), wherein the demand was set aside on the ground that the assessee was under a bona fide belief that they were eligible for benefit of exemption notification and there was scope of doubt as the legal position was not clear at the relevant time and the interpretation was crystallised only with the order of t....
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....re slit in to the width as per the required diameter of the coins. From the slits, the blanks are cut as per the required diameter of the coin, which is known as plain coins. These plain coins are polished and pressed between two dies to get required figure/logo/weight/etc. The left-over strips (after cutting the blanks) are re-melted and the above procedure is repeated to get the coins. 15. The Ld. Commissioner held that in respect of the period 01.01.2012 to 16.03.2012, that the Appellants have taken credit on the principal inputs i.e. dore Bar used in the manufacture of coins from January 2012 and that Cenvat Credit has been utilized for payment of duty on the gold/ silver coins manufactured and cleared; therefore, the Appellants are not eligible for exemption on manufacture and clearance of branded gold/ silver coins as they have contravened the conditions of Notification No. 01/2011 dated 01.03.2011. However, Commissioner allowed the benefit of exemption Notification No. 2/2011-CE, dated 01.03.2011. Commissioner held that after the issuance of Notification No. 12/2012-CE dated 17.03.2012, the Appellants had manufactured and cleared branded gold coins without payment of Centra....
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....ra 24.2.7.2) that on verification of this annexure, the Appellants purchased gold bullion under trading invoices issued from 10th May, 2012 only and thus, Appellants has no evidence of procuring gold bullion under Trading invoices prior to May, 2012 and that for the period prior to May, 2012, no evidence was placed before him to show that inputs used for manufacture of impugned gold and silver coins were sourced under non-cenvatable invoices. The Ld. Commissioner has therefore, held that the Appellants have taken Cenvat credit on the inputs used for manufacture of impugned gold and silver coins. The Ld. Commissioner has held that the Appellants have not produced any evidence of not availing credit prior to January 2012. The Appellants submit that it is an impossible condition to be fulfilled when the Appellants are stating that they have not purchased any dore bars which are duty paid from HGML. It is for the Commissioner to prove the positive evidence if any that the Appellants have procured duty paid goods and taken credit. The question of availment of credit, if any prior to this date, would have been reflected in the Cenvat Registers. 15.3. Further, the dore bars procured from....
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.... / records apart from the said seized register are maintained with regard to availment and utilization of credit. The separate registers maintained for recording the inventory like duty paid gold, non-duty paid gold, Cenvat register etc., evidences that the Appellant has not claimed CENVAT credit during the disputed period on any other input purchased during the month. As a result, it is abundantly clear that gold/ silver coins which were manufactured and cleared during the period 01.01.2012 to 31.04.2013 were made out of gold procured from other suppliers who had not charged excise duty. Therefore, the allegation of the ld. Commissioner and contention of the department that the Appellant had contravened the condition of Notification No. 1/2011-CE dated 01.03.2011 is liable to be set aside. It is further submitted that the department cannot just brush aside the evidences produced by the Appellants without any proper reasoning and without any contra evidences. 15.6. The Ld. Commissioner in the impugned Order has also confirmed the proposal made in the SCN that during the period January 2012 to May 2012, the Appellant had utilized CENVAT Credit taken on purchase of Dore Bar from HGM....
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....by the Appellants were subjected to Central Excise duty w.e.f 17.01.2012 at the tariff rate and as such there is no contravention of any exemption Notification. In view of the above, the Appellants submit that the branded gold/ silver coins were manufactured only out of gold procured from sources other than HGML who had not charged excise duty. 15.9. In respect of Gold coins manufactured during the period 01.05.2012 to 30.06.2012 & 01.07.2012 to 31.05.2013, the Ld. Counsel submitted that with effect from May 2012, the Appellants manufactured gold/ silver coins out of duty paid gold i.e. Dore bars procured from HGML on which duty of excise had been charged and exemption was claimed from payment of duty under Notification No. 12/2012 under Sl. No. 200 (II). Gold/ silver coins have been manufactured out of dore bar purchased on payment of duty from HGML from the month May 2012. This is evident from the stock accounts maintained by the Appellant which shows that the total quantity of gold coins sold during each month is utilized from the dore bar purchased from HGML. (Para D.34 of grounds of appeal at Page 65 of appeal). 16. With regard the allegation that gold bars emerge in the int....
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....t credit on the purchase of inputs used in the manufacture of branded gold coins, it is submitted that in any case, they are eligible for the benefit of Notification No. 2/2011-CE dated 01.03.2011 which grants exemption at reduced rate of 5% ad valorem and thus the demand of differential duty at the full tariff rate is without authority of law and liable to be set aside. 17. Regarding demand of duty of Rs. 23,24,097/- on the manufacture and clearance of gold jewellery for the period 17.03.2012 to 07.05.2012, the Ld. Counsel submitted that the SCN proposed to deny exemption, claimed under Notification No. 12/2012-CE, on the ground that the Appellants contravened the conditions contained in the Notification by availing Cenvat Credit on the principle input i.e. dore bar and utilizing it for the payment of Central Excise duty. The Ld. Commissioner has held that the demand is not sustainable in view of the retrospective amendment by virtue of Section 138 of the Finance Act 2012; However, the Commissioner, traversing beyond the SCN, sets up a new case to demand of Rs. 23, 24,097 i.e., 6% of value of exempted goods on the ground that the Appellants have not maintained separate accounts i....
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....ding invoices with none of the suppliers charging excise duty on the sale of gold prior to the period January 2012. From January 2012, HGML started charging excise duty on sale of dore bar to the Appellant. However, the said dutiable dore bar was exclusively used in the manufacture of serially numbered gold/ silver bar from January 2012 to May 2012 (evidence at D.18 at page 58 of appeal). 18.1. He submitted that during the period May 2012 to June 2012, the Appellant was utilising the duty paid dore bar for the manufacture of various goods such as serially numbered gold bars, gold jewellery, gold potassium cyanide, branded gold coin. In respect of those manufactured goods which were exempt, the Appellant reversed the CENVAT credit in terms of the provisions of Cenvat Credit Rules. This fact has not been disputed by the department. He submitted that once credit availed on inputs going into manufacture of exempted final product is reversed, it amounts to non-availment of Cenvat credit. Reliance is placed on decision of Hon'ble Supreme Court in the case of CCE vs. Bombay Dyeing & Mfg Co Ltd.- 2007 (215) ELT 3 (SC). 18.2. He submitted that the Appellant was also manufacturing and cle....
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....nal in Nicolas Piramal cited supra which was subsequently reversed by High Court. 19. On the allegation of short payment of Central Excise duty of Rs. 82,192/- during the period 17.01.2012 to 30.06.2012, the Counsel submitted that the case of the department is that M/s. Dhruv Jewellers and Appellant are 'related parties' in terms of Section 4 (3)(b) of the Central Excise Act, 1944. Further, it is alleged that gold bars/ silver bar manufactured by the Appellant is sold to M/s Dhruv Jewellers which are further sold by M/s Dhruv Jewellers to customers with a small margin. Therefore, in terms of Rule 10 when excisable goods are sold through a related person, then value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal. Accordingly, the show cause notice proposed to adopt the average purchase and sale price of M/s Dhruv Jewellers in respect of the goods received from BRPL for computing the differential Central Excise duty for the period 17.01.2012 to 30.06.2012. 19.1. The Appellants submit that in the instant case though there are some common directors between the Appellant and M/s Dhruv Jewellers that by itself doe....
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....O has imposed a penalty under Rule 26 of the Central Excise Rules, 2002 on the following personnel of the Appellant-Company on the ground that they were concerned in the removals and sale of excisable goods without payment of duty which they knew or had reason to believe were liable to confiscation under the Central Excise Act and Rules made there under. The requirement of Rule 26 is very specific and it shows that it refers to removal of excisable goods or concerning oneself with such excisable goods physically and the same should have been done with the knowledge or reason to believe that the goods are liable to confiscation. No evidence has been led by the department as to how the Appellant has involved in clearance of goods without payment of duty. For establishing knowledge there must be some positive evidence which is missing in the present proceedings against the Appellant. Furthermore, the aforesaid personnel were and are still under the bona fide belief that the Company has rightly claimed exemption from payment of duty on the manufacture of unbranded/ branded gold/ silver coins and for the manufacture and clearance of gold bars from primary gold under Notification No. 5/2....
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....ion either under Sl. No. 200(I) or 200(II) of Notification No.12 /2012. Thus, the subject coins attracted duty at tariff rate. BRPL have not referred to the aforesaid Chapter note 14 but merely stated that the coins come into being as a result of a continuous process. From the process indicated by BRPL it is seen that gold in powder or strip form does come into being and is excisable goods in terms of the aforesaid Chapter Note. 21.1. Appeals No E/22502 to 22507 /2014 pertain to duty demand on gold bars made from dore bars, branded gold /silver coins cleared by them during 17/3/2012 to 16/7/2012 and other issues. The amount of duty involved in these 6 appeals is Rs. 163.34 crores. BRPL's contention is that primary gold bars manufactured by them from 'dore bars' procured by them were eligible for full duty exemption under S.No.21 of notification no.5/2006 CE as 'dore bars' fall within the ambit of 'any form of gold' specified in the said notification. The department is of the view that 'dore bar' is a semi pure alloy of gold, silver and other impurities. The 'dore bar' becomes a form of gold only after a complex refining process in which ....
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....from 24/3/2011, duty exemption was undoubtedly not available to primary gold manufactured from Dore bar. The amount involved is around Rs. 46.56 Crores. 21.3. BRPL has contended that as per HSN Explanatory notes, 'dore bars' are to be classified under the description of gold in unwrought or semi-finished form covering dore bars (viz. Heading 7108 ICT). This is only an inclusive clause. The above explanation emphasizes the fact that a Dore bar is an alloy of gold, silver etc. and it is not gold bars. It only states that the subject alloys are also covered under the heading 7108. Thus, this Note is no authority for taking a view that a Dore bar is a gold bar. 21.4. Relying on the Explanation against Sl. No.21A inserted vide amending notification 5/2011 dated 1/3/2011, it is contended that Dore bar with gold content exceeding 80% was covered under Sl. No 21 as any form of gold. First of all, the explanation under Sl.No.21A cannot be read into the entry in 7108.21. Secondly, if that was the case, it would not have been clarified, by notification dated 24/3/2011, that gold in any form did not include "gold ore, concentrate or dore bar". The description herein covered Dore bar ....
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.... Denial of exemption is the only just course. The contention that BRPL had maintained separate accounts is contrary to the statement of Shri Khetan Dhruv dated 2/5/2012. It is clearly an afterthought. 21.7 On this issue of demand on articles of gold jewellery cleared during 17/3/2012 to 7/5/2012, he submitted that BRPL had availed of and utilized CENVAT credit of duty paid on Dore bars used in the manufacture of articles of gold jewellery, which were fully exempted from duty. As per Rule 6(3) of CCR, 2004 they were required to pay an amount equivalent to 6% of the value of exempted clearances. Hence, recovery of the amount involved is justified. BRPL had not maintained separate accounts and had failed to prove that said gold jewellery has been manufactured from inputs in respect of which CENVAT has not been taken. Same arguments hold good for demand on articles of gold such as gold/silver bars unbranded gold/silver coins cleared during January to June 2012. 22. On this issue Demand on gold/silver bars cleared during January to June 2012 to M/s. Dhruv Jewellers, he submitted that some quantity of gold /silver bars manufactured by BRPL was sold to M/s. Dhruv Jewellers, a partnershi....
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....esses undertaken amount to conversion and two, whether such convers is from a form of gold. Revenue is of the view that 'Dore bars' are semi-refined alloys produced at the mine site from ore/ concentrate. They are generally not usable/ not used without further refining. These refining processes are different from the processes of conversion of gold from one form to another. Accordingly, in BRPL's case itself, while production of coins from strips is conversion resulting in primary gold, obtaining gold powder/ bars by refining dore bars does not amount to conversion as generally understood. 24.2. Heavy reliance was placed on the decision of the Hon'ble Tribunal and the Hon'ble Supreme Court in the case Hindalco i.e. Birla Copper Ltd vs. CCE, Vadodara. The fundamental issue in that case was at what stage the input material became a 'form of gold' since the entire process from copper extraction from copper ore/concentrate and to gold bars took place in the same factory. In BRPL's case, the process of manufacture with Dore bars, which is in the nature of an intermediate product, procured primarily from HGML and some traders as well. The dispute in BRPL&....
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....tual difference between the words "all kinds' and 'in all forms', is that the former multiplies items of the same kind while the latter multiplies the same commodity in different forms. The use of the word 'in all forms' widens the scope of the Entry." 24.4. Reference is invited to the appeals filed by Hutti Gold Mines Co. Ltd. [HGML] [2014(304) ELT 105 (Tri.-Bang)], which are pending before this Hon'ble Bench. This case has considerable relevance to the present Appeals. Revenue would like to submit that the same relate to Dore bars supplied by them to refineries including BRPL. The issue raised therein is availability of duty exemption under Notification no.5/2006 for Dore bars produced by them from gold ore/concentrate. The duty demand is Rs. 141.37 Crores and the period relates to 1/2007 to 3/2011. HGML has claimed the benefit of aforesaid Notification taking the input i.e. gold ore/concentrate, as any form of gold and the Dore bars as primary gold obtained by conversion. Revenue has contested this stand since ore/ concentrate cannot be regarded as 'any form of gold' and the processes adopted are one of refining the ore/concentrate and cannot be....
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....to Notification No.5/2006 - CE dated 1.3.2006 vide No.5/2011 dated 1.3.2011 whereby Sl. No.21A was inserted, granting exemption at a reduced rate of duty in respect of gold bars manufactured in a factory starting from the stage of gold dore bars, clearly emphasizes that gold bars manufactured out of dore bars attract Central Excise duty; Notification No.25/2011-CE dated 24.3.2011 which substituted the words "from any form of gold" with the words "from any form of gold other than gold ore, concentrate or dore bar" is retrospective in nature and the benefit of Sl. No.21A is not applicable to the appellant as gold dore bar has been defined as dore bar having gold content and not exceeding 80%; that since dore bars procured by the applicant are having gold content exceeding 80%, they are not entitled for the benefit of reduced rate of duty under Notification No.5/2006-CE amended by Notification No.5/2011. 27.1. The appellants mainly relied on the decision of Hon'ble Supreme Court in the case of CCE, Vadodara vs. Hindalco Industries Ltd.: 2015 (325) ELT 427 (SC) and submit that the process of refining dore bars amounts to "conversion to primary gold from any form of gold and that the e....
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....emergence of "dore anode" as held by learned Member (Technical), and hence concur with his view." 9. We agree with the aforesaid view and as a result thereof the appeal is liable to be dismissed. The appeal is, accordingly, dismissed. From the above, it is clear that the Hon'ble Supreme Court has laid down two conditions for the availability of the exemption Notification. Number (1) is to see whether the end product manufactured is primary gold and Number (2) is to see whether it is converted into any form of gold. When the Supreme Court has held "gold mud" having very low percentage of gold "as any form of gold" and the manufacture of the gold bars from the same to be conversion, there is no scope of any doubt to consider the dore bar, having high percentage of gold from 80-95%, procured by the appellants over the years from M/s. HGML as any form of gold and the process of manufacture of gold bars from "dore bars" is to be construed as conversion. Therefore, we have no doubt in holding that the appellants are eligible for the exemption contained in the Notification No.5/2006-CE dated 1.3.2006 prior to 1.3.2011. We find that the issues raised by the department such as whether t....
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....e insertion of Sl. No. 21 A in Notification No. 5/2006 is concerned. It has to be read that the definition of Dore bar given under Sl. No. 21A is applicable to the exemption under that particular Sl. No. and will not be applicable to Sl. No. 21. 27.5. We find that the amendment brought by Notification No.25/2011 dated 24.3.2011 substitutes the words "from any form of gold" with the words "from any form of gold other than gold ore, concentrate or dore bar". From this, it is clear that "dore bar" has been specifically excluded from the category of "any form of gold" with effect from 24.3.2011. The department sought to read this amendment to be retrospective. However, in view of the clear terms and words of the Notification, there is no mention of retrospective applicability. As far as there is no ambiguity in the wordings of the Notification, it requires to be construed very strictly and therefore, is to be held to be retrospective only. 27.6. In the result, we hold that the appellants are liable to pay duty for the period 24.3.2011 to 16.1.2012. The show-cause notice has been issued on 3.5.2013. The department contended that no declaration was filed by them disclosing the above fa....
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.... part of the appellants inasmuch as they have not reflected the details of manufacture and clearances of gold bars in their monthly statutory returns filed with the Department; no declaration was filed by them disclosing the facts; they voluntarily started paying duty on gold bars (made out of Dore bars w.e.f 17/1/2012; this act itself demonstrates that they were fully aware of the duty liability on the gold bars manufactured by them; even after accepting the duty liability from 17/1/2012, they did not come forward to disclose the fact of manufacture of the said gold bars prior to 17/1/2012; in case, their intentions were clean and bona fide they ought to have volunteered to bear the duty for the past period as well. Therefore, we find that there has been a clear intention to evade duty as they willfully failed to disclose the facts to the Department. The appellants are a large unit and have been operating for so many years in this particular field. Therefore, even ignorance of law, which otherwise also is no excuse, cannot be considered. Therefore, it is to be inferred that non-payment of duty and non-disclosure is a positive act of suppression with intent to evade. Hence, we find....
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....iming CENVAT credit on the Excise Duty paid on purchase of Dore Bar from HGML with effect from January 2012 only. The only source of duty paid Dore bars were from HGML and HGML started paying duty only from January 2012. The Ld. Commissioner has held that the Appellants have not produced any evidence of not availing credit prior to January 2012. The Appellants submit that it is an impossible condition to be fulfilled when the Appellants are stating that they have not purchased any dore bars which are duty paid from HGML. It is for the Commissioner to prove the positive evidence if any that the Appellants have procured duty paid goods and taken credit. The question of availment of credit, if any, prior to this date would have been reflected in the Cenvat Registers. Further, the dore bars procured from HGML was only used for manufacturing serially numbered gold/ silver bar. It is submitted that the said serially numbered gold/ silver bars manufactured and cleared by the Appellant was subjected to Central Excise duty w.e.f 17.01.2012 at the tariff rate and as such there is no contravention of any exemption Notification. It is submitted that other products manufactured by the Appellant....
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....oner and contention of the department that the Appellant had contravened the condition of Notification No. 1/2011-CE dated 01.03.2011 is liable to be set aside. It is further submitted that the department cannot just brush aside the evidences produced by the Appellants without any proper reasoning and without any contra evidences. 29.3. It appears from the above that for a certain period, there was no scope for the appellants to procure duty paid bars. In view of the difference of opinion on the basis of records maintained, we find that the issue needs to go back to the original authority to verify the records of the appellants vis a vis their claims for the period 1/1/2012 to 16/3/2012. Therefore, it will be in the interest of justice that the matter be remanded back to the adjudicating authority. 29.4. Coming to the demand of duty for the period 17-3-2012 to 30-6-2012 and 01.07.2012 to 31.05.2013, we find that the Appellants had manufactured and cleared branded gold coins without payment of Central Excise duty presumably claiming exemption under Sl. No. 200 (II) of 12/2012-CE dated 17.03.2012, which provided for full exemption when the gold / silver coins were manufactured out ....
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.... contention that gold bar does not come into existence during the intermediate stage of manufacturing process for gold coins, it is submitted that any goods which emerge during the intermediate stage of manufacture and which are captively consumed for the manufacture of final product are not marketable and do not attract levy of Excise duty. It is undisputed that gold dore bars are duty paid. The dore bars which get rolled into gold sheets are further punched into gold coins directly. As long as the dore bars are duty paid, the question of denying the benefit of exemption to gold coins is not legally sustainable and the same is liable to be set aside. Reliance is placed on decision of Grasim Industries vs. Collector of Central Excise, Indore - 2000 (121) E.L.T. 734 (Tribunal) wherein the demand was made on the ground that benefit of Notification Nos.53/88-CE and 14/92-CE orders denying exemption on the ground that the punched plastic dobby cards were manufactured out of films falling under Heading 39.20 of the Schedule to the CETA, 1985 and not from inputs falling under Headings 39.01 to 39.15 ibid as required under the relevant Sl. Nos. of the said Notifications were set aside. Th....
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....mined by the adjudicating authority and found to be unsubstantiated. Particularly, for the period from January, 2013 to May 2013 no credit reversals were found. Accordingly, it has been held in the OIO that BRPL is not entitled to claim the benefit of full exemption under aforesaid S.no. 200(II). In the result, gold/silver coins cleared by BRPL were not eligible to claim duty exemption either under Sl. No. 200(I) or 200(II) of Notification No.12 /2012. Thus, the subject coins attracted duty at tariff rate. 29.7. We find that revenue has a point in this case. We find that the majority view in the case of Hindalco Industries (Supra) was that duty cannot be demanded on bars, but demand of duty can be determined on the value of and at the stage of emergence of 'Dore Anode'. This view was not overturned by the Supreme Court. Just as 'Dore Anode' was emerging in the course of manufacture of Gold from Copper Ore, in the instant case, 'Gold Powder' or 'Gold Strip' emerge in the manufacture of gold/silver coins. Therefore, the contention of department is correct. The appellant's reliance on Grasim Industries is not applicable as the facts are different. Moreover, there is a specific chapte....
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....tification No.12/2012 for the reason that the appellants have availed CENVAT credit on the principle input i.e., dore bars for payment of Central Excise duty. Though the learned Commissioner has accepted that the demand is covered by retrospective amendment given vide Section 138 of Finance Act, 2012 has proceeded to set up a new case by demanding 6% value of exempted goods on the ground that the appellants have not maintained separate accounts in terms of Rule 6 of CENVAT Credit Rules, 2004. The appellants contended that the Commissioner has traversed beyond the show-cause notice by setting up a new case at the time of adjudication and they have relied upon the following cases: * CCE, Nagpur vs. Ballarpur Industries Ltd.: 2017 (215) ELT 489 (SC) * CCE, Bhubaneswar-I vs. Champdany Industries Ltd.: 2009 (241) ELT 481 (SC) * CCE vs. Gas Authority of India Ltd.: 2008 (232) ELT 7 (SC) We agree with the contentions of the appellants that the adjudication order cannot traverse beyond the terms of show-cause notice. Therefore, we have no hesitation in setting aside the duty demand of Rs. 23,24,097/- on the articles of gold jewelry cleared by the appellants during the period 17.0....
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....bars procured from M/s. HGML were used for manufacture of gold bars cleared by them. However, it does not give the entire quantity of dore bars purchased by them and that the argument of the appellants that they have used gold bullion purchased by them under trading invoices in the manufacture of impugned goods is not acceptable. Commissioner also found that there were working shown as to how the amount of Rs. 21,32,773/- was arrived as the credit attributable to the inputs used in the manufacture of exempted goods and such payment too was after being pointed out by DGCEI. The appellants contended that part of the demand i.e., Rs. 21,60,254/- is barred by limitation. However, the learned Commissioner held that it was not possible to verify the veracity of the CENVAT credit taken by the appellants on the basis of ER-1 returns as all the supporting documents and records are available with the appellants. 30.3 We find that in respect of this issue, the demand hinges on the claims of the either parties which are subject matter of verification. It was not denied by the Revenue that the appellants were not submitting ER-1 returns. However, the claim was that it was not possible to decip....
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....ach of the Directors, more so, when the individual role and liability has not been shown. We find that wherever the demands are sustained, penalty on the firm would suffice. There is no need to levy penalties additionally. Therefore, the penalties imposed on the Directors are set aside. 33. In view of the discussion above, the appeals are disposed of as below: (i). We confirm the demand of duty on gold bars manufactured and cleared by them during the period 24.3.2011 to 16.1.2012 and hold that extended period is squarely applicable. Penalty imposed under Section 11AC will be restricted to the duty confirmed. For quantification of the duty payable for the above period, the matter is remanded to the adjudicating authority. (ii). We set aside the duty demand of Rs. 1,55,00,412/- on unbranded gold/silver coins for the period 1.3.2011 to 16.3.2012. The penalty under Section 11AC is also set aside. (iii). With regard to the demand of duty of Rs. 5,60,240/- on branded gold/silver coins for the period 1/1/2012 to 16/3/2012, we set aside the demand & penalty and remand the issue back to the adjudicating authority to evaluate the evidence produced by the appellants vis a vis their claims....