Customs, Excise and Gold Tribunal - Mumbai
Chotalal Panachand Bhimani vs Collector Of Customs on 20 July, 1989
Equivalent citations: 1989(24)ECR723(TRI.-MUMBAI), 1990(46)ELT417(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. This is an appeal directed against the Order-in-Appeal bearing No. S/49-28/84.G.C. dated 28-8-1984 passed by the Collector of Customs (Appeals), Bombay, confirming the order-in-original bearing No. 25/83 (D.C) dated 30-11-1983 confiscating 293.100 gms of primary gold found from the residential premises of the appellant with an option to redeem the same on payment of a fine of Rs. 20,000/- and imposition of penalty of Rs. 5000/- on the appellant.
2. On 22-10-1982, the residential premises of the appellant were searched, where 293.100 gms of primary gold and 1976.000 gms of gold ornaments were found. The appellant is a licensed goldsmith. The authorities found that there were no registers maintained by him and it appears that he has suspended the business since 1979. So far as the gold ornaments of 1976.000 gms were concerned, they were claimed to be the family ornaments, which on verification, was found to be correct and those ornaments were returned. As regards 293.100 gms of primary gold was concerned, no satisfactory explanation was available and hence the same was attached under the reasonable belief that the provisions of the Gold (Control) Act were contravened. The statement of the appellant was recorded on the same day. In that he submitted that the gold was lying with him for the last one month and the same belonged to the customers. His another statement was recorded on 26-10-1982. On 23-11-1982, the appellant wrote a letter to the authorities waiving the show cause notice and pleaded that the gold belonged to his customers, named in the said letter and also submitted their respective affidavits. He admitted that he has not maintained GS-13 registers and that it was merely a technical breach. The appellant was given personal hearing initially on 14-8-83 when he submitted his written arguments. The final hearing in the matter took place on 17-9-83. All the customers named by the appellant were present and they submitted that the primary gold seized from the appellant belonged to them and that they had given their old ornaments for manufacturing of new ornaments. The adjudicating authority however did not believe the defence and passed the impugned order. The Collector (Appeals) also confirmed the same.
3. Shri D.H. Shah, the learned advocate, appearing on behalf of the appellant, submitted that the charge levelled against the appellant is of contravention of Section 8(1) of the Gold (Control) Act and submitted that the appellant is a certified goldsmith. Indicating that the authorities below have observed that no instruments of goldsmithy work were found, Shri Shah submitted that vide Section 39(3) of the Gold (Control) Act, a licensed goldsmith remains a licensed goldsmith till the death or the licence is cancelled. Here the licence is not cancelled and that, therefore, the appellant continue to remain a goldsmith and under such circumstances, the charge levelled against him cannot be sustained. He, further, submitted that vide Section 42 of the Act, a goldsmith is entitled to possess primary gold upto 300 gms and in the instant case, he is found to have possessed 293.100 gms of gold which is within the prescribed limit. He, then submitted that the adjudication proceedings ought to stand vitiated on the ground that there had been no show cause notice served on the appellant. He submitted that though the appellant vide his letter dated 23-11-1982 waived a written notice, it was incumbent on the department to atleast orally making know of the charges that were levelled against the appellant. Here, there is no evidence to show that the appellant was informed of the charges levelled against him, even orally and as such the adjudication proceedings initiated stand vitiated on account of breach of statutory provision. He also submitted that those who claimed to be the owners of the gold had also lodged their claim before the adjudicating authority and by virtue of provisions contained in Section 79 read with proviso to Section 71 makes it imperative on the adjudicating authority to issue show cause notice to all of them. The authority has ordered confiscation of gold despite the claims by the customers which, in his submission, is not proper and as such the order of the authorities below is not sustainable. In support of his contention that the opportunity ought to be given to the persons who claimed the ownership. Shri Shah cited an unreported decision of the Kerala High Court in O.P. No. 2108/1971 in the matter of K. Chellappan Achari v. Assistant Collector of Central Excise, Trivandrum & Ors decided on 8-2-1972. He also relied on the decision reported in 1984 ECR 16.
4. Shri S.P. Prabhu, the learned JDR, appearing on behalf of the respondent, submitted that the whole theory of the gold belonging the customers is just an after thought as at the time of drawal of panchnama as also in the statements recorded, the appellant has admitted that he is not doing any gold-smithy business. He has not got any account to show that the business is a running business and that he has not given the names of the customers at that time. Shri Prabhu submitted that the customers have been brought up only at a subsequent stage and even they admitted that they had never seen the appellant doing any gold-smithy work. Shri Prabhu, therefore, urged that the appellant has come forward with an entirely unconvincing story, that too, at a later stage which has to be negative and submitted that the orders passed by the authorities below calls for no interference.
5. I have considered the submissions made on both the sides and perused the available records. Examining the question regarding the issue of show cause notice, the same has to be examined on two counts:
(i) Whether the appellant has been served with a valid show cause notice as contended by the appellant.
(ii) Whether the persons claiming ownership have to be served with show cause notices, and If, yes, what is the effect on the adjudication proceedings.
6. So far as the appellant is concerned, he has already submitted vide his letter dated 23-11-1982 that he was waiving the show cause notice. The arguments advanced by the learned advocate, Shri D.H. Shah is that despite this waiver, an oral show cause notice explaining the charges levelled ought to have been served. The appellant has on 14-8-1983 submitted a detailed arguments in the matter. This indicate that the appellant was well aware of precisely the charges levelled against him. From this it can be reasonably presumed that the appellant was made aware of the charges levelled against him and which were the matter of decision in the adjudication proceedings. In that case the arguments that the appellant ought to have been served with an oral show cause notice does not appear convincing. On the contrary, it appears that the appellant was made aware of the charges levelled against him and that can be treated as due compliance of the statutory requirements.
7. So far as the other claimants are concerned, it is not possible to believe that the story of the gold seized belonging to the customers has been advanced for the first time and at a very belated stage. In his statement recorded on 23-10-1982 that is, on the date of the seizure, the appellant has categorically stated in the last portion of his statement that "the primary gold is lying in my house for the last one month which I received from my customers". It is true that he disclosed the names of the customers only in his letter dated 23-11-1982 i.e. after one month from the date of seizure. But then, we have also on record, the letters written by those customers addressed to the Deputy Collector, Gold Control, where they have lodged their claim over the ownership of the gold seized. The letters have been received by the authority on 23-11-1982 alongwith the letter from the appellant. These letters, which are supported by the affidavits had clearly indicate that these claimants categorically claimed ownership over the seized gold. Proviso to Section 71 read with Section 79 indicates that when such a claim has been raised by the parties, other than the one from whom the ornaments were found, they also be given opportunity to be heard before ordering confiscation of the ornaments. This admittedly has not been done here, as no show cause notice has been issued to any one of them and none of them have waived the issue of show cause notice. On the contrary, in their letters they specifically demanded to be heard before any order was passed. When a show cause notice has to be given under law, mere granting of personal hearing cannot be taken as a substitute for show cause notice and such hearing cannot fill up the lacunae arising out of the non issue of the show cause notice.
8. The order of confiscation passed without issue of show cause notice is therefore bad in law. I would have thought of remanding the matter for fresh adjudication after issue of show cause notice to the persons claiming the ownership but proviso to Section 79 provides that action is to be taken within a period of six months. The period is admittedly lapsed and any proceedings that are initiated would be barred by time. Besides confiscation, there is an order imposing personal penalty of Rs. 5000/- on the appellant. Admittedly, the appellant who is a licensed gold-smith has received the ornaments without issuing any receipt to the party or without making any entry thereof in GS-13 register. Actually he is not maintaining any account. The appellant as a licensed gold-smith was required to comply with the statutory provision and maintain proper account and his failure to do so, makes him liable for contravention of the provisions contained in Section 55 of the Act. Considering the fact that the appellant has not remained in the active business and be doing some job for the purpose of earning some livelihood and considering the fact that the quantity of the gold found from him being very small, I hold that the personal penalty of Rs. 5000/- imposed on him is little excessive. I, therefore, hold that the personal penalty to be reduced to Rs. 1000/- (Rupees one thousand only).
10. In view of what is discussed above, it does not appear necessary to consider the other points raised. However, I would like to observe that the learned advocate for the appellant has also raised a contention that the appellant is a licensed gold-smith and vide Section 42 of the Act, he is entitled to retain with him primary gold upto 300 gms. Section 42 does permit retention of primary gold upto 300 gms but such retention is subject to observance of other provisions of the said Act. Thus if the appellant acquired or retained the gold in contravention of the other provisions of the Act, merely because the gold found from him is less than 300 gms cannot exonerate him from the liability arising out of the breach of other provisions of the act.
11. From, what is discussed above, the appeal is partly allowed. The order of confiscation is set aside and the personal penalty imposed on the appellant is reduced to Rs. 1000/- (Rs. One thousand only).