Customs, Excise and Gold Tribunal - Calcutta
Ashok Kumar Rastogi vs Collector Of C. Ex. on 13 September, 1989
Equivalent citations: 1989(25)ECR500(TRI.-KOLKATA), 1990(45)ELT298(TRI-KOLKATA)
ORDER T.P. Nambiar, Member (J)
1. Briefly stated the facts of the case are: that on 11-10-1984 Gold Control Officer intercepted Shri Ashok Kumar Rastogi near Thana Chowk, Chhapra. On search, it was found that Shri Rastogi was carrying gold ornaments weighing 953.500 gms. valued at Rs. 1,25,800.00. In his statement dated 11-10-1984 Shri Rastogi, inter alia, stated that he is resident of Chauraha Gali, Moradabad having gold dealer licence No. 1/69. He further stated that he had brought the gold ornaments in Chhapra for the purpose of sale. When these ornaments could not be sold he was going back in the evening of 11-10-1984 but he was intercepted by the Excise Officer. Later, following ornaments were recovered from his possession:-
____________________________________________________________________________ Description of seized goods Pieces Purity Weight in Value gms.
____________________________________________________________________________ (1) (2) (3) (4) (5) ____________________________________________________________________________
1. Churi 46 22 ct. 344.000
2. Har 09 22 ct. 195.000
3. Bunda 13 22 ct. 058.000
4. Anguthi 47 22 ct. 138.000
5. Bali 30 22 ct. 48.000 Rs. 26,800.00
6. Tops 16 22 ct. 28.000
7. Pendals 03 22 ct. 09.500
8. Jhumka 06 22 ct. 20.000
9. Tika 09 22 ct. 37.000
10. Kara 01 22 ct. 76.000 ____________________________________________________________________________ Total Weight: 953.500 ____________________________________________________________________________ In respect of the aforesaid gold ornaments, Shri Ashok Kumar Rastogi stated that as there was no cash vouchers or any other documents with him, and the aforesaid gold ornaments were seized by the Gold Control Officer in presence of two independent witnesses:
2. A show cause notice dated 6-4-1985 was issued to Shri Rastogi calling upon him to show cause to the Additional Collector as to why for violation of the provisions of Sections 27(7) (b) and 55 of the Gold (Control) Act, 1968, the seized gold ornaments may not be confiscated under Section 71 and penalty imposed under Section 74 of the Gold (Control) Act, 1968.
3. In reply to the notice the appellant stated that the recovery panchnama is a fictitious one. He also stated that he is a resident of Moradabad who did intercaste marriage against the wishes of the parents. Hence the family members were not happy with the appellant. The appellant wanted to establish his own separate business and when he could know that one small Glass Ware Factory is ready for sale, he tried to make negotiation for the same. Hence the appellant was in urgent need of money. The appellant collected ornaments of the wife as well as other close relations temporarily. As the appellant wanted to keep this secret, he went to Chhapra to arrange money with these gold ornaments. The Inspector Central Excise, Chhapra, on 11-10-1984, detained the appellant and without any reasonable belief, taken into his custody, all the gold ornaments weighing 953.500 gms., without preparing any Panchnama/Recovery Memo. As the gold ornaments were taken into custody by the Inspector Central Excise, Chhapra, in an illegal manner, the appellant through his letter intimated the details of the case to the Additional Collector Central Excise, Patna and also intimated that no recovery memo or Panchnama was given to the appellant at the spot. Later on, the Inspector Central Excise, Chhapra, vide his letter C. No. Gl/l/SSW/85/82 dated 24-6-1985, supplied a copy of the alleged Panchnama, which was neither signed by the appellant nor any mention about the contravention of the provisions of any Act, were mentioned.
4. The Collector of Central Excise, Patna, vide his letter C. No. Gold/Seiz/84/2152 dated 4-4-1985, issued notice to show cause for the violation of the provisions of Section 27(7)(b) and Section 55 of the Gold (Control) Act, 1968, allegating that he is a Gold Dealer and alleging to have Gold Dealer Licence bearing No. 1/69. The appellant challenged the notice to show cause and submitted proper defence reply. The evidences were also submitted that the appellant at that time was neither gold dealer nor partner in the gold dealer firm. The affidavits of the owners of the gold ornaments were also submitted.
5. After adjudication of the case by granting personal hearing to the appellant the Ld. Collector confiscated the gold ornaments under Section 71 of the Gold Control Act, 1968 and gave an option to redeem it on payment of fine of Rs. one lakh and further imposed a penalty of Rs. thirty thousand on the appellant. It is against that order the present appeal is filed.
6. The Ld. Advocate, for the appellant, Shri A.K. Rastogi contended that possession of gold or gold ornaments does not prove that appellant is doing business in gold. Secondly, he contended that he is not a dealer in gold and it is his father who is a dealer in gold with licence Number 1/69 and that he is not a partner in the firm. He further contended that since he is not a dealer in gold the question of his contravening Section 27(7) (b) does not arise. He further contended that the appellant could not be said to have contravened Section 27(1) of the Gold Control Act as there was no such allegation against him in the show cause notice and alternatively he contended that the act does not require obtaining a licence for effecting a single transaction of sale or purchase of gold whatsoever the magnitude of the transaction. He further contended that the first statement given by the appellant before the Customs Officer was retracted by him and that sole statement cannot form the basis to confiscate gold in the absence of corroboration. He also contended that when the ornaments were seized there was no reasonable belief on the officers to come to the conclusion that he has contravened any of the provisions of the Gold Control Act and that the burden is on the Department, to prove the same which is not discharged in this case. He also contended that the Panchnama is the sheet anchor of the prosecution and that the same was not drawn at the time of seizure of gold ornaments and the Panch witnesses who have connection with the Department is not reliable and their presence is liable to be rejected. He also stated that denial of the right to cross-examine Panch witnesses and the Seizing Officer violates the principles of natural justice.
7. The Ld. J.D.R., Shri P.C. Jain contended that the appellant had stated on 11-10-1984 before the Seizing Officer that he is a Gold Licensed Dealer with licence No. 1/69 and that he had gone to Chhapra with the gold ornaments for their sale and therefore, this statement being a voluntary one the contravention of Section 27(7) (b) is established. He stated that the retraction of this statement having been made at a later stage cannot be taken into consideration. It was alternatively contended that the appellant admittedly had gone to Chhapra for sale of the articles of gold and if he has no licence then he has contravened Section 27(1) of the Act. He stated that the attempt to sell the ornaments by the appellant is conclusively established. He also stated that the gold is liable for confiscation under Section 71 of the Gold Control Act and the imposition of penalty under Section 74 is justified.
8. We have heard both the sides in great detail. The points that arise for our determination are:
(i) whether the appellant is a dealer in gold and whether he has contravened the provisions of Section 27(7) (b) of the Gold Control Act and Section 55 of the Gold Control Act;
(ii) whether alternatively, the appellant had contravened Section 27(1) of the Gold Control Act by dealing in business of Gold ornaments without licence;
(iii) whether there is violation of principles of natural justice in not allowing the appellant to cross-examine the witnesses and whether the proceedings are vitiated;
(iv) whether imposition of penalty to the extent of Rs. 30,000.00 and confiscation of gold are in accordance with law;
Point No. (i): We are unable to accept the contention of the Ld. D.R., Shri P.C. Jain that it is established that the appellant is a dealer in gold and has contravened Section 27(7) (b) and Section 55 of the Gold Control Act. The reason is that the appellant had stated in his reply to Show Cause Notice that it is his father who has got the licence bearing No. 1/69 and he is not a partner in his father's firm along with his reply he had furnished an affidavit sworn by his father, Sri Ramnath Rastogi testifying the above fact of licence standing in his name and also by stating that gold ornaments seized in this case do not belong to him. He has also furnished the affidavits of his wife; and three other relations who had sworn that the gold ornaments belong to them and they have given it to appellant to mortgage them for obtaining funds to raise a new business.
In fact, the Ld. Collector himself has accepted this case of the appellant in para 14 of his order which reads as follows:
"Para-14: It is established that Sri A.K. Rastogi is not a licensed gold dealer. However, the facts and circumstantial evidences of the case convince me that Sri Rastogi had induldged in illicit sale transactions of gold ornaments, and it is only for this purpose that he had brought these ornaments. As such, he has violated the provisions of Section 27 of the Gold (Control) Act. It is true that in the notice it had not been alleged that he indulged in sale transactions of ornaments but these facts have come out after he has submitted his reply. It has already been held in many court cases that mere non-mention of relevant rules/section will not initiate the proceedings if the offence is otherwise established."
But in para-12 of the order the Ld. Collector stated as follows :
"Para-12: Shri Ashok Kumar Rastogi has argued that he was not gold dealer licensee at the time when seizure was made. As such, he had not committed any violation of Sections 27(7)(b) and 55 of the Gold (Control) Act. Affidavits of Sri Nand Kishore, S/o Sri Ram Kishan, Smt. Veena, wife of Sri Ashok Kumar Rastogi and Sri Pradeep Kumar, S/o Pratap Singh, Molibazar, Dehradoon, Sri R.K. Agarwal, S/o Sri Lala Ram Prakash have also been received in this office. In these affidavits, they have stated that they had given their ornaments to Sri Ashok Rastogi for hypothecating the same so that Sri Rastogi may collect some money for the purpose of some business he was proposing to embark upon. All these affidavits are dated 14-10-1984. It would be pertinent to refer the statement given voluntarily by Sri Rastogi at the time of seizure. He had categorically mentioned that he had revealed himself as gold dealer licensee. In the situation the officers could not but accept the truthfulness of the statement. As per provisions of Section 27(7) (b) the licensed dealer is prohibited from carrying on business of dealer in any premises other than the premises specified in his licence. Sri Rastogi who proved to be holder of gold dealer licence had apparently violated the aforesaid provisions. Moreover, the nature of ornaments i.e. commercial quantity of in-dividual items of ornaments could have given reasonable belief to any prudent man that they were meant for trade. As such the officers had correctly seized gold ornaments. In the statement it has nowhere been stated that Sri Rastogi was an ordinary person (other than gold dealer) and had come to Chhapra just to hypothecate the gold ornaments of his relations and friends."
It is thus clear that though in para-12 the Ld. Collector held that appellant is a licensed dealer in para-14 he came to a contrary finding. In fact, there is no evidence to show that appellant is a licensed deabr dealing in gold. On the contrary, the affidavit filed by his father establishes that the licence 1/69 stands in his name and not in appellant's name. In such circumstances, the initial statement given by appellant that he is a licensed dealer with licence No. 1/69 which is retracted later cannot form the basis to come to this conclusion and hence we hold as per Point No.l that it is not established that appellant is a gold dealer and that he has contravened Section 27(7) (b) and Section 55 of Gold Control Act.
Point No. (ii) : As far as the second point is concerned in the first instance we observe that there is no allegation in the whole of the show cause notice alleging that appellant is dealing in gold ornaments without a valid licence and requiring him to show cause against the violation of Section 27(1) of Gold Control Act. The relevant portion of show cause notice reads as follows :
"Where as it appears that Sri Ashok Kumar Rastogi, S/o Sri Ram Nath Ras-logi was found in rickshaw on 11-10-1984 near Thana Chowk Chhapra carrying Gold and Gold ornaments weighing 953.500 grm. of value Rs. 1,26,800.00. He had no cash memo and valid vouchers for dealing with such ornaments. Thus he violated the provisions of Sections 27(7)(b) and 55 of Gold Control Act, 1968.
The aforesaid Sri Ashok Kumar Rastogi, S/o Sri Ram Nath Rastogi of Chowranghigali, Muradabad, U.P. Gold dealer licence No. 1/69 is required to show cause to the Collector Central Excise Patna as to why these seized gold and gold ornaments so detected from his possession on 11-10-1984 should not be confiscated under Section 71 of Gold Control Act and why penal action should not be taken for violation of the aforesaid Sections as per Section 74 of the Gold Control Act,'68.
The said Sri Ashok Kumar Rastogi, S/o Sri Ram Nath Rastogi is further directed to produce at the time of showing cause all the evidence upon which he intends to rely in support of his defence."
Therefore, we hold that the appellant cannot be said to have contravened Section 27(1) of the Act when no such allegation was made in the show cause notice as the evidence and material which was made the basis of impugned order was not disclosed to the appellant in the show cause notice and he was not given an opportunity to explain the same [vide 1983 (12) E.L.T. 216 (Bom.) in the case of Collector of Central Excise v. Krishna Silicate and Glass Work and Anr. and also 1983 (12) E.L.T. 425 in the case of Bombay Industrial Plastic Corporation Pvt. Ltd. v. Union of India and Anr. ], Even otherwise, a single transaction is not sufficient to prove that appellant is doing business in gold. In this connection, the Ld. Advocate for the appellant brought to our notice the following decisions - (i) 1989 (39) E.L.T. 410 in the case of Damodeu Kanji Soni v. Collector of Customs; (ii) 1989 (21) ECR p. 87 in the case of Rajkumar v. Collector of Central Excise; (iii) 1989 (39) E.L.T. 67 in the case of Prabhakar Balkankur v. Collector of Customs (P), Bombay and Ors. decisions - to the effect that business contemplates a series of transaction and a stray transaction is not sufficient to prove that appellant is doing business. In 1989 (39) E.L.T. 67 at paras 13,14 and 15, it is held by the West Regional Bench of the Tribunal as follows :
"13 : As stated by me earlier, the licence is required for carrying on business as a dealer in gold. The Act does not require of obtaining a licence for effecting a single transaction of sale or purchase of gold whatsoever be the magnitude of the single transaction. In the instant case, even if the entire material relied upon by the department is accepted. It only establishes that the appellant had come to sell certain ornaments. He had not sold any ornament. This evidence would not be sufficient to hold that the appellant had carried on business as a dealer in gold. Therefore, the charge under Section 27(1) necessarily fails.
14: On the admission of the appellant and from the material collected the department could have charged the appellant for contravention of Section 55 of the Act. But then no such allegation was made in the show cause notice.
15 : The admission of the appellant, his presence in the gold dealers premises are taken as sufficient to infer that the appellant had come to that premises to dispose of the gold ornaments, even then, the charge under Section 27(1) cannot be brought home against him because his act does not amount to carrying on business as a dealer in gold. It only amounts to a single act of sale. The expression 'business' contemplates series of transactions and not a single or stray transaction. I, therefore, allow this appeal, set aside the order of confiscation consequently the fine levied in lieu of confiscation as well as the penalty on the appellant. The appellant be granted consequential relief."
Applying the principles mentioned in the above decisions to the facts of this case we hold that a mere statement of appellant that he had gone to Chhapra for sale of the ornaments in question and that he could not sell it is not sufficient to hold that he is dealing in that business without any further evidence to show that he had done such business previously also and accordingly, the contravention of Section 27(1) and Section 55 is also not established and on that count the gold cannot be confiscated.
Point No. (iii): As far as the third point is concerned we have to find out whether there is a violation of principles of natural justice in not allowing the appellant the cross-examination to the witnesses and whether the proceedings are vitiated. It is now clear from the reply submitted by the appellant that he had stated that the panchnama was not written in the presence of the appellant and none of the witnesses to the panchnama was also present and it is a fictitious one. On a reading of the panchnama it would show that the witnesses to the panchnama merely stated that they attended the search and in their presence the gold ornaments were recovered. But nowhere in the panchnama the name of the appellant is written. The panchnama was prepared in the office and not at the spot where the appellant was apprehended. In these circumstances, the appellant wanted that these witnesses and the seizing officer should be cross-examined by him and this opportunity was not given to the appellant. This violates the principles of natural justice. In this connection, the Ld. Advocate for the appellant relied on a decision reported in 1988 (36) E.L.T. p. 304 B.B. Jewellers v. Collector of Customs and Anr. two decisions - B.M. Auto India v. Collector of C. Ex. - 1989 (41) E.L.T. 69 and 1989 (41) E.L.T. 292. In the above-said cited decisions it was held that the denial of cross-examination of panchas and seizing officers violate the principles of natural justice and does not satisfy the requirement of reasonable opportunity of being heard as contemplated by law.
Further in the show cause notice it was not mentioned that the appellant had contravened the provisions of Section 27(1) of the Gold Control Act for selling gold ornaments without a valid licence for their purpose and on that point the gold was confiscated and the penalty was imposed on the appellant. But he was not asked to explain how he was found to have contravened Section 27(1). This also violates the principles of natural justice since he was not given the opportunity to be heard in person on this aspect. The appellant had given affidavits of his wife and three relations, from whom he had acquired the gold ornaments for the purpose of mortgage and for raising a loan for his business purpose. But none of those parties is given any show cause notice in this case. In this connection, the Ld. Advocate for the appellant relied on a decision reported in 1988 (37) E.L.T. 240 (Trib.) in the case of Prasant Kumar Das v. Collector of C.E. and also on the decisions reported in Dadodeu Kanji Soni v. Collector of Customs -1989 (39) E.L.T. 410; Pravin Kumar M. Jain v. Collector of Customs (Prev.) - 1989 (39) E.L.T. 489, wherein it was held that gold belonging to third parties cannot be confiscated unless there was knowledge or connivance on their part about commission of any offence in order to attract at the contravention of the provisions of the Gold Control Act and for this purpose, they should have been issued with show cause notice and there is nothing on record to show that they had the knowledge of connivance on their part for the contravention of the prpvisions of the Act. In such circumstances, on that ground also, the confiscation of the gold is bad in law. The third point is answered accordingly.
Point No. (iv): As far as the Point No. (iv) is concerned we hold that in view of the findings which we have arrived at in Point Nos. (i), (ii) and (iii), the impugned order is liable to be set aside. In the result, the appeal is allowed. The confiscation of the gold imposing a Redemption Fine of Rupees one lakh on the appellant and imposing a penalty of Rs. 30,000/- on the appellant under Section 74 of the Gold Control Act, 1968 is hereby set aside. The gold in question be released in favour of the appellant.