hand to hand. (1)

He—peace and blessings be upon him—also said, “Whoever gives more or asks for more has fallen into riba.” (2)

On another occasion he was brought some high-quality dates and asked about them. The people replied, “We used to take one measure for two, and two measures for three.” The Prophet ordered that the transaction be reversed and declared, “That is pure riba.” He then directed them to sell the inferior dates for money and, with that money, purchase the good dates. (3)

From these hadiths we understand that the practice mentioned by the questioner—exchanging gold for gold while adding the cost of manufacturing to only one side—is prohibited. It clearly constitutes the riba the Prophet, peace and blessings be upon him, forbade. The correct procedure is to sell the scrap gold for cash without any prior agreement or collusion; once the owner has taken possession of the money, he may then buy the newly fashioned piece. It is even better to look for the new item in another place