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2015 (11) TMI 901 - SUPREME COURT

2015 (11) TMI 901 - SUPREME COURT - 2015 (325) E.L.T. 427 (SC) - Claim of exemption from duty on production of gold bars - whether the product produced by the assessee is the “primary gold” which is exempted from payment of excise duty - Denial of exemption Notification No. 6/02-CE dated 01.03.2002 - Held that:- It is clear from the reading of relevant entry in the exemption Notification that it exempts “primary gold” when the same is converted with the aid of power from ‘any form of gold’. Expl .....

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ereafter 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.

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 pow .....

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, Mr. Anandh K., Adv. And Mr. Aditya Bhattacharya, Adv. ORDER Various show cause notices were issued by the appellant/Revenue demanding duty in respect of gold manufactured and cleared allegedly without payment of duty started from the show cause notice dated 1st June, 2001. In this show cause notice, it was inter alia stated that the respondent had Precious Metal Recovery Plant (PMR Plant) for the recovery of precious metal starting from anode slime. That the process of manufacturing of gold wa .....

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de slime. The flow chart, which shows the stage at which anode slime forms was explained by submitting that from anode slime, silver is recovered, thereafter gold mud and from gold mud, gold bars are produced which are sold in the market. It is on this gold bar, which is the final product, the Revenue wanted to levy excise duty which is @ 16%. The assessee, on the other hand, submitted that the product in question was covered by exemption Notification No. 6/02-CE dated 01.03.2002 attracting nil .....

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s, rods, sheets, foils and wires Nil The question, therefore, that falls for consideration is, as to whether the aforesaid product produced by the assessee is the primary gold which is exempted from payment of excise duty. We may mention here that insofar as Adjudicating Authority is concerned, it passed the Order-in-Original dated 02.06.2003 confirming the demand made in the show cause notice and held that the aforesaid exemption Notification does not apply to the product in question as the pro .....

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evy of excise duty. Because of this difference of opinion, the matter was placed before the third member who has concurred with the opinion of the technical member holding that the assessee shall be entitled to the benefit of the aforesaid Notification and, therefore, product in question is not liable for any excise duty. We have already re-produced the process of manufacturing of the product viz. gold in question and have also taken note of the exemption Notification. It is clear from the readi .....

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gold bars, therefore has to be treated as primary gold . 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 p .....

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scussed are technical necessities of the process of manufacture and to go through stages of increased concentration of gold before arriving at the stage of primary gold. 13. As we have already held that primary gold comes into existence for the first time in the appellant's factory, there can be no question of 'Conversion' of the same from one form to another. As is seen the expression used in the notification for grant of exemption is 'conversion' from one form to another fo .....

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e meaning of the term is extended to the 'extraction' of the gold and emergence of the gold in primary form for the first time for the entire notification in our view would becomes absurd. Our above view is also fortified by the issuance of subsequence notification no. 6/2003, which amended notification no. 6/2002 CE Sr. No. 259 of the amended notification granted exemption to gold arising in the course of manufacture of copper or zinc by smelting. As such the first time production of go .....

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