Customs, Excise and Gold Tribunal - Tamil Nadu
J.J. Jewellers vs Collector Of C. Ex. on 4 April, 1989
Equivalent citations: 1989(44)ELT241(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. The above two appeals are directed against the common order of the Collector of Central Excise, Cochin, dated 6-10-1988 imposing a fine of Rs. 2,00,000/- in lieu of confiscation of 2243.900 gms. of gold ornaments, absolutely confiscating 5.700 gms. of primary gold besides imposing a penalty of Rs. 50,000/- on appellant J.J. Jewellers, Nellore, and Rs. 5,000/- on appellant Praveen Kumar Jain under Section 74 of the Gold (Control) Act, 1968, the 'Act' for short.
2. Appellant J.J. Jewellers are licensees under the Act at Nellore and appellant Praveen Kumar Jain is their employee. On 31-8-1987, the Superintendent of Central Excise, Cochin, intercepted appellant Praveen Kumar Jain at Ernakulam and found him in possession of gold ornaments totally weighing 2249.600 gms. which included 5.700 gms. of primary gold. Since the authorities had reason to believe that the ornaments which were found new were being taken for purposes of sale in contravention of Section 27(7)(b) of the Act, they effected seizure of the same under a mahazar as per law. Appellant Praveen Kumar Jain gave a statement before the authorities on 31-8-1987 that he was an employee of appellant J.J. Jewellers and that the ornaments were being taken for purposes of sale and that all the ornaments had not been entered in the G.S.12 Register. It is in these circumstances after further investigations proceedings were instituted against the appellants resulting in the present impugned order.
3. Shri L. Suganchand Jain, the learned Counsel for the appellants at the outset submitted that the gravemen of the charge against the appellant J.J. Jewellers is that the ornaments in question had not been accounted for in terms of Section 55 of the Act. The adjudicating authority would appear to have viewed the contravention grave particularly in the context of the alleged violation under Section 27(7)(b) of the Act. It was submitted that appellant J.J. Jewellers filed a Writ Petition in the Andhra Pradesh High Court and during the pendency of the Writ Petition appellant J.J. Jewellers were permitted by order of the High Court of Andhra Pradesh to transact business in gold ornaments outside their licensed premises and it is only by reason of such an order of the High Court, appellant J.J. Jewellers after making due entries of all the ornaments in the G.S.12 Register maintained at the shop of J.J. Jewellers at Nellore, sent the ornaments under proper voucher through their travelling salesmen appellant Praveen Kumar Jain and Dudaram Jain who were employees. Shri Jain, the learned Counsel, conceded the fact that the subsidiary G.S.12 Register which appellant Praveen Kumar Jain was carrying did not contain entries of the ornaments in question. For the ornaments weighing 1133.100 gms., the same was covered by Voucher No. 158. Appellant Praveen Kumar Jain admittedly was not in possession of that voucher and after the recording of the statement by the authorities, when appellant Praveen Kumar Jain was released by the authorities he sent the voucher in regard to the same by post on the next morning i.e. 1-9-1987. The learned Counsel in this context produces the acknowledgement received by the Collector of Central Excise, Cochin, which would show that the despatch of the communication on 1-9-1987 and receipt of the same by the Collector of Central Excise, Cochin on 2-9-1987. The learned Counsel submitted that this point is admitted by the Department and is not disputed. The learned Counsel submitted that the reasoning of the adjudicating authority that the order of the Andhra Pradesh High Court would be applicable within the territory of the Andhra Pradesh is not correct and placed reliance on the ruling of the Bench of this Tribunal in the case of Lalith Kumar and Ors. v. Collector of Customs, Cochin, reported in 1988 (38) E.L.T. 636 (Tribunal). The learned Counsel urged that the charge of contravention under Section 36 also would not be applicable in the context of the admitted facts of the case inasmuch as J.J. Jewellers, Nellore, had sent ornaments for sale through their travelling salesmen after making due entries in their statutory register by issuing proper voucher viz. Voucher No. 150 & 158. The learned Counsel, therefore, contended that if appellant J.J. Jewellers are exonerated of the charge of contravention under Section 27(7)(b) and Section 36 of the Act, the only charge that would survive would be one under Section 55(2) of the Act. Even in respect of this charge of contravention, the learned Counsel submitted that on 2-9-1987, the authorities verified the G.S.12 Register of appellant J.J. Jewellers at Nellore and the same was found to contain entries relating to Voucher No. 150 & 158 and the quantity of ornaments covered by the said two vouchers would total upto the ornaments under seizure in the present case. The learned Counsel therefore, submitted that if at all there is any contravention the contravention would be only with regard to the fact that subsidiary G.S.12 Register which the travelling salesman is supposed to carry did not contain entries of the ornaments and in particular did not contain entries in regard to the totoal quantity of 1133.100 gms. covered by Voucher No. 158. The learned Counsel did not dispute that this contravention has been made out but the breach is purely technical in the facts and circumstances of the case and on that basis, the learned counsel made a fervent plea for a substantial reduction in the quantum of fine and the penalty.
4. Heard Shri K.K. Bhatia, the learned S.D.R.
5. We have carefully considered the submissions made before us. The fact of seizure of ornaments in question along with 5.700 gms. of primary gold from the possession of appellant Praveen Kumar Jain at Ernakulam on 31-8-1987 is not disputed and is indeed admitted. Four charges were framed against appellant J.J. Jewellers of contravention under Section 8(1), 27(7)(b), 36 & 55(2) of the Act. Appellant Praveen Kumar Jain was charged for abetment of the said offence. So far as the charge under Section 27(7)(b) of the Act is concerned, the adjudicating authority in para 12 of the impugned order has found as follows:
"Under S.O. 578(E) Notification No. 18/78 F.No. 132/1/78 GC II, dated 28-9-1978 exemption has been granted in respect of gold ornaments sent outside the premises specified in the gold dealers licence to the premises of a customer (other than a licensed dealer) for approval and selection before purchase. Strict conditions guiding such exemption have also been provided for in the Notification. Even here sale outside the declared premises has not been permitted. What has been stayed by Hon'ble High Court of Andhra Pradesh is the operation of the Trade Notice 30-11-1974 issued by the Collector of Central Excise, Hyderabad. The stay is only in respect of the Trade Notice issued by the Collector of Central Excise, Hyderabad and it is not applicable to the operation , of the provisions of Section 27(7)(b) of the Gold (Control) Act. Also the operations of the provisions is applicable to all places in India and is not hit by stay order. The stay order only restrains the Collector of Central Excise, Hyderabad from giving effect to the Trade Notice issued by him and it has no binding effect out side the jurisdiction of Andhra Pradesh."
The Bench of this Tribunal in the case of Lalith Kumar cited supra had occasion to go into this aspect of the matter and found that in a situation where a party is armed with an order of the High Court permitting him to transact business outside the licensed premises, the party cannot be penalised on a charge of contravention under Section 27(7)(b) of the Act. For purposes of convenience and to avoid repetition, we would like to extract the observations of the Bench in the said ruling which would apply on all fours to the present case. The Bench in the said Lalith Kumar case in a similar situation dealing with a charge of contravention under Section 27(7) (b) has observed as under:
"We shall now take up the fine and penalty imposed on the appellants under the provisions of Gold (Control) Act, 1968. It is not disputed by the learned D.R. that appellant Mohanlal B. Jain, a licensee, was armed with an order of the High Court of Andhra Pradesh to transact business outside the licensed premises through travelling salesmen. This fact also is clearly mentioned by the adjudicating authority himself in the impugned order. No doubt, in our view, Section 27(7)(b) of the Gold (Control) Act, 1968 clearly enjoins on a licensed dealer not to carry on business as such dealer in any premises other than the premises specified in the licence. In this context we may also refer to the ruling of the Supreme Court in the case of Manik Chand Paul & 35 Others v. Union of India & 3 Others (Writ Petition Nos. 918 to 953 of 1977, decided on 17-4-1984) wherein the Supreme Court, while upholding the constitutional validity of Section 27(7)(b) of the Gold (Control) Act, 1968, has held that Section 27(7)(b) confines "a licensed dealer to carry on business as such dealer to the premises specified in his licence". This observation of the Supreme Court came to be made in the context of the challenge to the constitutional validity of Section 27(7)(b) of the Act particularly when the writ petitioners before the Supreme Court challenged the Government of India's letter of instructions to the Collectors of Central Excise throughout the country directing them to withdraw the facility till then afforded to licensed dealers to send ornaments for sale through travelling salesmen and the Trade Notice issued by the Collectors of Central Excise pursuant thereto withdrawing the said facility with immediate effect. We also would like to note that a Division Bench of the Punjab and Haryana High Court in the case of Gian Chand Kapur v. Assistant Collector of Central Excise, Amritsar and Ors., has held that in view of the provisions of Sub-section (7) of Section 27 of the Gold . (Control) Act, 1968 and the Rules, inter-State movement of gold ornaments and sale thereof outside the licensed premises is not permitted and 'an endorsement on a licence granted by the Administrator would certainly be beyond the provisions of the Act and the Rules and the said endorsement has to be treated to be without jurisdiction ab initio and nullity in the eyes of law'. The Division Bench of the Punjab and Haryana High Court was considering the validity of the order of the Gold Control Administrator permitting licensees to transact business outside the licensed premises through travelling salesmen. The Division Bench further held that the Administrator is a creature of the Act and he has no jurisdiction to travel beyond the authority conferred upon him by the provisions of the Act and the Rules made thereunder. The endorsement of the Gold Control Administrator on the licence permitting inter-State trade of gold and selling thereof was held to be without jurisdiction, void ab initio and a nullity in the eyes of law. Presumably, the ruling of the Supreme Court and the ruling of the Division Bench of the Punjab and Haryana High Court were not brought to the notice of the High Court of Andhra Pradesh when the interim order permitting appellant Mohanlal B. Jain to transact business outside the licensed premises through travelling salesmen was made during the pendency of his Writ Petition before the Andhra Pradesh High Court. Be that as it may, we are afraid that when the High Court has passed an order according permission to appellant Mohanlal B. Jain to transact business outside his licensed premises, it would not be proper to get over the same on the ground that the order of the Andhra Pradesh High Court would not be valid beyond the territorial jurisdiction of the High Court. It should be noted that the Department was a party to the writ proceedings as one of the Respondents. Therefore, when by virtue of an order of the High Court appellant Mohanlal B. Jain was transacting business of sale of gold ornaments with another licensee viz. Fashion Jewellery at Kerala, neither of them can be said to be guilty of contravention of the provisions of the Act in the peculiar circumstances. We also find from the impugned order that the interim order of the Andhra Pradesh High Court was valid till 24-6-1987 and the sale was on 27/29th March, 1987 and the seizure was on 30th March, 1987, when the interim order of the High Court was in force. We, therefore, hold that appellants cannot be said to be guilty of contravention of the provisions of the Act by reason of the interim order of the Andhra Pradesh High Court referred to above. In this view of the matter we set aside the fine and penalty imposed on the appellants under the provisions of the Gold (Control) Act, 1968. The appeals have been disposed of accordingly."
We, therefore, exonerate appellant J.J. Jewellers of the charge under Section 27 (7) (b) of the Act.
10. The seizure of the ornaments took place in the present case on 31-8-1987 at Ernakulam and the account book of appellant J.J. Jewellers were examined by the authorities on 2-9-1987 at Nellore. We would like to note that on 31-8-1987, after effecting seizure at Ernakulam, the authorities summoned appellant Praveen Kumar Jain to appear before the Superintendent of Central Excise at 5 p.m. on that day to give statement. The authorities effected seizure of the G.S. 12 Register of appellant J.J. Jewellers at Nellore on 2-9-1987. In G.S. 12 Register, we find that Voucher No. 150 & 158 respectively relating to 17-8-1987 and 26-8-1987 have been noted and the total weight in Column 14 of the Register relating to the said entries would tally with the total quantity of ornaments seized herein. The adjudicating authority in the impugned order has not found anywhere that this G.S. 12 Register maintained by appellant J.J. Jewellers at their Nellore shop was either incorrect or not acceptable. Therefore, charge of contravention under Section 36 of the Act, fails.
11. Though entries in respect of the ornaments have been made in the GS 12 Register of appellant J.J. Jewellers at Nellore, it is not disputed before us that the subsidiary G.S. 12 Register did not contain entries in respect of the quantum of ornaments weighing 1133.100 gms. Apart from it appellant Praveen Kumar Jain also was not in possession of the voucher with him when the ornaments were seized by the authorities. Rule 13 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968, lays down that every licensed dealer selling, delivering or disposing of gold ornaments, shall at the time of each such transaction, issue a voucher in relation to such gold and in a case where the transaction relates to sale, delivery etc. such voucher shall accompany the gold. Under Clause (2) of Rule 13, it is clearly specified that each voucher shall contain particulars such as Serial Number, date of issue of voucher, name and address of the dealer, name and address of the person to whom it is issued, description, purity of gold content, weight of ornaments, signatures of the dealer and the person to whom the voucher is issued etc. The voucher should be in duplicate and serially numbered and one copy to be retained by the dealer and the other by the person who receives or accepts ornaments. In the present case, we have taken pains to scrutinise the voucher and we would like to observe that the vouchers are not in conformity with the statutory formalities and the columns have not been properly filled up. As a matter of fact, on going through the voucher, we entertained an initial doubt as to whether the vouchers themselves are genuine or not and it is only subsequently when the learned Counsel for the appellants drew our attention to the seal of the Central Excise authorities affixed on the vouchers earlier before the issue of the same, we felt convinced about the genuineness of the vouchers. So far as Voucher No. 150 is concerned. We find from the records that the same was sent by Registered Post Acknowledgement. Due to the Collector of Central Excise, Cochin, on the next morning viz. 1-9-1987 as contended by the learned Counsel for the appellants and as evidenced by the postal Acknowledgement Due Card. It is not disputed before us that appellant Praveen Kumar Jain was summoned to appear before the Superintendent of Central Excise only at 5 p.m. on 31-8-1987 and therefore, after the examination, the next morning he had sent it by post from Cochin itself. We are mentioning this aspect of the case only to hold there was no time interrugnum for appellant Praveen Kumar Jain to get the voucher from Nellore which is in Andhra Pradesh. In this context, we would like to refer to the Trade Notice Gold Control Instruction No. 35/1978 dated 15-12-1978 of Cochin Collectorate in respect of non-accountal under Section 55 (2) of the Act when entries have been made in the voucher, and the Trade Notice reads as under:
"It is felt that it may not always be practicable to make an entry straightaway. The Gold Control Officers while checking the accounts should take a pragmatic view of any such lapses. A voucher has to be issued for each transaction of sale or purchase of gold/ornaments. In all such cases, where vouchers have been issued, if simultaneous entries are not made in the accounts, no mala fide can be attributed to the dealer/goldsmiths. No action need, therefore, be taken against a dealer/goldsmith for not making simultaneous entries in the accounts where the Assistant Collector is satisfied about the bona fides, and there are extenuating circumstances for condoning such an omission. We should, however, ensure as a rule that the dealers invariably make the entries in the accounts at the end of the day and before the commencement of the business on the next day."
Keeping all these factors in mind, we hold that though there is a breach in respect of Section 55(2) of the Act, the breach is technical in nature and venial in character in the facts and circumstances of the case.
12. So far as two pieces of primary gold are concerned, the charge of contravention under Section 8 (1) is not contested and it is admitted that the purity of the primary gold on the basis of test by the certified goldsmith has been ascertained by the Adjudicating Authority to be of 24 carat. Though the learned Counsel claims to have contested the purity and requested the Adjudicating Authority to have the purity tested through Mint, inasmuch as this was not effectively pursued, we would like to take the purity as 24 ct. as held by the learned Collector in the impugned order. We, therefore, uphold the order of absolute confiscation of the primary gold totally weighing 5.700 gms. in terms of the impugned order. We also find the appellants guilty of the charge of contravention under Section 8 (1) of the Act.
13. We shall now take up the quantum of fine in lieu of confiscation. For the reason given above, the contravention in respect of non-accountal would be only with reference to the ornaments weighing 1133.100 gms. The total value of the gold ornaments has been put at Rs. 6.25 lakhs including the primary gold. A quantum of Rs. 2,00,000/- has been levied as fine on grounds of non-accountal of 2243.900 gins. Since the non-accountal is restricted now for the reasons given above to 1143.100 gms. and taking the value for the primary gold and keeping the value in regard to non-accountal of 1133.100 gms. in mind and also having regard to the fact that the purity of the said ornaments range from 20 to 22 ct., as stated in the mahazar, and keeping in mind that this quantum had also been accounted for in the original G.S. 12 Register maintained by appellant J.J. Jewellers at Nellore, which was duly verified by the authorities on 2-9-1987 itself, we reduce the quantum of fine to Rs. 35,000/- (Rs. Thirty-five Thousand). In fixing this quantum, we also have regard to the fact that there was due account of the ornaments in the original G.S. 12 Register maintained by appellant J.J. Jewellers at Nellore and the non-accountal was only in the subsidiary G.S. 12 Register which the travelling salesman was carrying. We also bear in mind that the original quantum of fine by the adjudicating authority was fixed for charges of contravention under Section 27(7)(b), 36 and 55 of the Act and that we have exonerated the appellant of two charges viz. under Section 27 (7)(b) and Section 36 of the Act and held that breach of Section 55 is technical in nature. In the above circumstances, we reduce the penalty of appellant. J.J. Jewellers to Rs. 7,000/- (Rs. Seven Thousand), and the penalty on appellant Praveen Kumar Jain to Rs. 4,000/- (Rs. Four Thousand) Except for the above modification, the appeals are otherwise dismissed.