Customs, Excise and Gold Tribunal - Tamil Nadu
Ashok Kumar Agarwal vs Collector Of C. Ex. on 19 August, 1988
Equivalent citations: 1989(22)ECR61(TRI.-CHENNAI), 1989(41)ELT454(TRI-CHENNAI)
ORDER K.S. Venkataramani, Member (T)
1. These applications arise out of a common order dated 31-8-87, passed by the Collector of Central Excise, Bangalore, by which he had ordered absolute confiscation of 2,226 gms. of primary gold seized from the possession of Ashok Kumar Agarwal, son of Bhaiyyalal and Ashok Kumar Agarwal son of Moolchand, valued at Rs. 6,32,600 under Section 71(1) of the Gold (Control) Act, 1968 and also imposing a penalty of Rs. 25,000 on each of them under Section 74 of the Gold (Control) Act, besides imposing a penalty of Rs.50,000/- on appellants Mahendra Kumar Agarwal and Surendra Prasad Agar-wal. Since the issue involved in the appeals lies in a short compass and are to be taken up for disposal today itself waiver of pre-deposit of the penalty in all these cases prayed for is allowed and the appeals themselves are taken up for disposal today.
2. A.Nos. G/183,184,185,186/881 - The facts in brief are on 18-5-84 the Central Excise officers of Headquarters Gold Cell, Bangalore, on receipt of information that the Directorate of Revenue Intelligence officers had intercepted 4 persons carrying gold at Hotel Sharada in Bangalore, visited the Hotel and found the appellants Ashok Kumar Agarwal son of Bhaiyyalal and Ashok Kumar Agarwal son of Moolchand alongwith Mahendra Kumar Agarwal in the Hotel. On examination of the baggage of Ashok Kumar son of Bhaiyyalal it was found that there was a card board carton which was containing eatable and underneath eatables there was a packet containing three pieces of gold each weighing 298 gms., 249 gms. and 211 gms. of 24 ct. purity. On further examination of the bag, another heavy paper roll was found which was containing 40 thin roun rods of gold totally weighing 1,468 gms. of 24 ct. purity. Thereafter the person of appellant Ashok Kumar Agarwal son of Moolchand was searched and it was found that he had concealed two paper packets in his shoes containing gold pieces totally weighing 937 gms. of 24 ct. purity. The gold totally weighing 3,163 gms. valued at Rs. 632,600/- was seized for action under the Gold (Control) Act. Ashok Kumar Agarwal son of Bhaiyyalal gave a statement on 19-5-1984 stating the he was working with his brother-in-law appellant Surendra Prasad Agarwal of Allahabad for the past 8 years and that on 16-5-84 appellant Mahendra Kumar Agarwal gave him 3 pieces of gold and 40 rods telling him to hide them and carry them to Bangalore along with him. He said that he kept the three pieces of gold in a card board box along with eatables to avoid its detection and the gold rods in his rexin bag as directed by appellant Mahendra Kumar Agarwal. Ashok Kumar Agarwal son of Moolchand also gave a statement on 19-5-1984 stating that he went to Allahabad on 12-5-1984 on the promise of appellant Surendra Prasad Agarwal father of appellant Mahendra Kumar Agarwal, to secure him a job; that on 16-5-1984 he was told by Surendra Prasad Agarwal to accompany Mahendra Kumar Agarwal to Bangalore and that Mahendra Kumar Agarwal gave him 4 pieces of gold with instructions to conceal and carry the same to Bangalore along with him and also stated that after selling the same he would be given some money out of the proceeds to start some business. Appellant Mahendra Kumar said in a statement on 19-5-1984 that his father Surendra Prasad had given him the gold on 16-5-1984 in his house with instruction to deliver it to one Sesh-mul of Bangalore and to get it sold through him. He accordingly left for Bangalore along with the other appellants the two Ashok Kumar Agarwals to whom he had given the gold for carrying it to Bangalore. Appellant Surendra Prasad Agarwal in his statement on 29-5-1984 denied any knowledge of the gold seized at Bangalore and said it did not belong to him. He also said that his son appellant Mahendra Kumar Agarwal was not in the house since 15-5-84 and that he had not met him. It is in these circumstances, following further investigations proceedings were instituted against the appellants which resulted in an adjudication order of the Collector dated 31-12-85 confiscating the gold and imposing various penalties on the appellants. An appeal was filed against the Collector's order before the CEGAT which by its order No. 603 to 606/86, dated 1.8.86 remanded the case of the appellants to the Collector on the ground that the appellants should be afforded an opportunity to participate in the personal hearing which opportunity could not be afforded to them during the adjudication proceedings. Therefore, the Collector took up the case in terms of the direction of the Tribunal and passed the present impugned order against which the appeals have now been preferred.
3. Shri G. Chander Kumar, the learned Counsel for the Appellants, submitted that the order passed in de novo proceedings by the Collector is ab initio void and is in violation of the provision of the Explanation to Section 79 of the Gold (Control) Act. The Counsel contended that this Explanation lays down that where any fresh adjudication is ordered under the Act the period of six months specified in the Section for issue of Notice shall be computed from the date on which the order for fresh adjudication is made. In this case the Counsel pointed out that the order of the Tribunal remanding the case for de novo adjudication is dated 1.8.86 whereas the Notice to the appellants to file their replies was given only on 25.2.87 which is beyond six months from the date of order of the Tribunal and therefore, in terms of the Explanation to Section 79 of the Gold (Control) Act the adjudication order itself is vitiated and is void ab initio. In this connection the learned Counsel cited case law reported in 1983 ELT 2301 in support of his contention. It was further argued that appellants Surendra Prasad and Mahendra Kumar Agar-wal had not at all been found in possession of any gold and no gold had been seized from them. In this case of appellant Surendra Prasad Agarwal excepting the statement of Mahendra Kumar Agarwal, there is no other evidence against him connecting him with the gold. In his statement before the officers also this appellant had denied any knowledge about the gold and had denied any connection with it. His statement itsel further reveals that this appellant was not doing any work, although formerly he used to carry on business in silver. Therefore, there was no ground for charging this appellant under Section 8(1) of the Gold (Control) Act in the absence of any evidence that he owned or had in possession of any primary gold.
4. As regards appellant Mahendra Kumar Agarwal, the learned Counsel contended that this appellant was not present in the Hotel Sharada where the gold was recovered from the other two appellants Ashok Kumars Agarwal. No gold had been recovered from him. The statement obtained from this appellant was also not voluntary statement but one extracted under duress from which he also retracted and that, therefore, no reliance can be placed on such a statement to penalise him.
5. As regards the Appellants Ashok Kumar son of Bhaiyyalal and Ashok Kumar son of Moolchand, the learned Counsel pleaded that purity of the gold has been taken as 24 ct. on the basis of goldsmith testing of the gold and that the appellants were not supplied with copies of certificate from the Govt. of India Mint regarding the purity and the Counsel understood that in some cases it was less that 24 ct. according to the Mint Certificate. In the circumstances, the learned Counsel pleaded that the gold should be allowed to be redeemed on payment of suitable fine in lieu of confiscation. As regards personal penalty the quantum of penalty on the two Ashok Kumars from whom gold was recovered is high and excessive and the penalty on the other two appellants Mahendra Kumar Agarwal and Surendra Prasad is totally unwarranted and should be set aside.
6. Shri K.K. Bhatia, the learned S.D.R. appearing for the Department, submitted that the legal argument that notice in the de novo proceedings was given belatedly and thereby the order was vitiated is without substance. He pointed out that the communication dated 25.2.87 to the appellants from the Collector calls for their replies to the notice dated 5.11.84 already issued and he further pointed out that the date of communication of the Tribunal order is crucial and relevant, as otherwise it would mean that any delay in the despatch of the Tribunal's order directing de novo proceedings" may prove fatal to the Notice to be issued in such proceedings by the lower authorities. From the facts in evidence it is clear, according to the learned S.D.R., that appellant Surendra Prasad and Mahendra Kumar are the central figures in the despatch of the gold from Allahabad and the records also show there had been previous movement of such gold. The other two appellants viz. Ashok Kumar Agarwal son of Bhaiyyalal had been an employee of Surendra Prasad Agarwal for more than 8 years and Ashok Kumar Agarwal son of Mool-chand had financially contributed in the deal according to his own statement. Appellant Mahendra Kumar Agarwal was the person who had distributed the gold to be carried between the two Ashok Kumars and had given them money also for expenses as well as given them instructions for the concealment of the gold. Therefore, the charges against the appellants have clearly been established and the confiscation of the gold which is of 24 ct. purity and the imposition of penalty on the appellants is maintainable. Further, the Certificate from the Mint has been communicated to the appellants and in this Certificate it has been clearly mentioned that some of the gold was of foreign origin and that gold of such purity is not refined in India.
7. We have given careful consideration to the submissions made by the learned Counsel as well as the learned S.D.R. The recovery of a quantity of 3163 gms. of primary gold from the appellants Ashok Kumar Agarwal son of Bhaiyyalal and Ashok Kumar Agarwal, son of Moolchand is not denied. The legal argument has been vehemently put forth that in terms of Section 79 of the Gold (Control) Act a Notice in de novo proceedings has not been issued in this case within six months of the order directing such de novo proceedings issued by the Tribunal, and that, therefore, the adjudication proceedings is ab initio void. We are, however, unable to agree with this argument. The issue has been gone into great detail by the various High Courts and by the Supreme Court of India with reference to analogous Sections 110(2) and 124 of the Customs Act, 1962.
8. In the Supreme Court decision in the case of Assistant Collector of Customs v. Outran Das Malhotra (AIR 1972 SC 689) the Supreme Court held that Section 124 of the Customs Act which provides for the issue of Show Cause Notice before confiscation, does not lay down any period within which the notice required by it has to be given. The Supreme Court observed, "The period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice."
9. The Madras High Court, in its judgment in the case of Collector of Customs & Central Excise v.Amruthalakshmi (AIR 1975 Madras 43), observed, We are of the view that Section 110 can only be restricted to the seizure and detention of the goods for the period specified and has nothing to do with the other powers conferred on the authority under Section 124 or other provisions of the Act.
10. The Punjab & Haryana High Court in the case of Munilal v. Collector of Central Excise, Chandigarh (AIR 1975 Punjab & Haryana 130) also referred to the Supreme Court decision in Charan Das Malhotra case and observed "When the provisions contained in the proviso to Sub-section (1) of Section 110, Clause (a) of Section 124, and Sub-section (2) of Section 126 of the Act are looked at, it cannot be gainsaid that adjudication of confiscation of goods can be recorded even without seizure of the goods."
11. Similarly, a Division Bench of the Bombay High Court observed in the case of Mohan Lal Devdan Bhai v. H.P. Mondkar (AIR 1977 Bombay 320) "On a plain reading of Section 124 it will be open even to the Competent Officer to pass an order of confiscation of goods or imposing any penalty without seizing any goods or after returning the goods under the proviso to Sub-section (2) of Section 110 for failure to initiate proceedings within the prescribed time."
12. The Karnataka High Court also had occasion to consider the above decisions in the case jevvaraj v. Collector of Customs -1985 (22) ELT 44 (Karnataka). Dealing with the contention that when the goods are liable to be returned under Section 110(2) of the Customs Act on failure to issue notice under that Section within 6 months from the date of seizure, the goods became free of any liability or subsequent confiscation also, the High Court observed "With great respect to his Lordship these principles do not form the provisions of the Act and cannot also be upheld on any legal or jurisdic principles."
13. Observing so, the views of the High Court of Madras, Punjab & Haryana, Bombay were followed. Therefore, in the light of the judicial pronouncement as discussed above, the contention of the learned Counsel that the failure to issue notice for the fresh proceedings within 6 months is fatal to the adjudication proceedings itself cannot be accepted and further we are in agreement with the submission of the learned S.D.R. that the computation of the time limit for the issue of the notice cannot be divorced from the date of communication of the order.
14. As regards the case against the appellant Surendra Prasad Agarwal, his involvement is clearly borne out by the evidence of the statement not only of appellant Mahendra Kumar Agarwal, who is his own son, but also those of the 2 Ashok Kumars from whom gold had been recovered. Ashok Kumar Agarwal son of Moolchand had said that he had given Rs. 1,00,000/- to appellant Surendra Prasad Agarwal as part of his share for the deal, and Ashok Kumar Agarwal son of Bhaiyyalal had said that he was an employee with Surendra Prasad for the past 8 years and he had carried out the instructions of appellant Mahendra Kumar for bringing the gold from Allahabad under concealment as per his direction. Ashok Kumar Agarwal son of Moolchand had clearly said that he had been directed by Surendra Prasad Agarwal to wait for his son Mahendra Kumar's arrival, and thereafter he was told by Surendra Prasad to accompany his son to Bangalore. It was at this stage that appellant Mahendra Kumar gave the gold to Ashok Kumar Agarwal son of Bhaiyyalal for carrying it to Bangalore. The statements of the two Ashok Kumars are corroborative of each other. They have clearly admitted the carriage of the gold concealed in various ways from Allahabad to Bangalore. Their version of having travelled along with appellant Mahendra Kumar is further supported by the recovery of the bus tickets of all the four of them with appellant Mahendra Kumar Agarwal for their journey between Jabalpur and Nagpur on 16.5.84. Their statements further contain details of their journey with the gold, and a perusal thereof shows that these statements are voluntary and reliable. In these circumstances, the original statement of appellant Mahendra Kumar Agarwal has also to be accepted as valid in evidence wherein he has clearly admitted that the gold was given to him by his father for which he had made arrangement to be carried down to Bangalore with the other two Ashok Kumars to whom it had been given by him because of the fact that they were elders, and, in the circumstances, the retraction therefrom has to be discarded.
15. The further plea raised by the appellants that the Certificate from the Mint ' was not given to them will not be of much avail to them considering the fact that in the communication from the Mint which has been conveyed to them it has been given clear-ly that no bullion dealer in India is known to manufacture gold of this purity on commre-cial scale, and that a part of the gold under confiscation is clearly of foreign oigin. In the circumstances, on a total consideration of the evidence on record, it has' to be held that the order of confiscation of the gold is correct in law, and, having regard to its very high purity, this is also not a fit case for allowing the gold to be redeemed on payascrit of a fine in lieu of confiscation.
16. As regards the charges against the appellants Ashok Kumar Agarwal son of Bhaiyyalal and Ashok Kumar Agarwal son of Moolchand, they are not denying the charges but the plea is only for reduction in the quantum of penalty. The evidence on record clearly shows that primary gold of very high purity was recovered from their possession and the charges against them are clearly established.
17. As regards the quantum of penalty, considering the significance of the role in the offence of these appellants, and also since the gold involved is already under absolute confiscation, the personal penalty on appellants Ashok Kumar Agarwal son of Bhaiyyalal and Ashok Kumar Agarwal son of Moolchand is reduced to Rs. 10,000/- (Rupees Ten Thousand) each, and the personal penalty on the other appellants Mahendra Kumar Agarwal and Surendra Prasad Agarwal is also reduced to 30,000/- (Rupees Thirty Thousand) each. The Collector's order is modified only to the above extent, it is otherwise upheld.