Customs, Excise and Gold Tribunal - Delhi
Brijendra Kumar Gupta vs Collector Of Central Excise on 4 February, 1988
Equivalent citations: 1988(19)ECR247(TRI.-DELHI), 1990(46)ELT278(TRI-DEL)
ORDER S. Kalyanam, Member (J)
1. The prayer in Miscellaneous Petition No. 454/87 is for summoning certain records from the Collector of Central Excise, Meerut. Since we feel that the appeal could be disposed of on the materials available on record without summoning any further records, we dismiss the petition.
2. The prayer in Miscellaneous Petition No. 470/87 is for fixing an early date of hearing of the appeal. Since we propose to dispose of the appeal itself today, as the issue and scope of the same lies on a short compass, the petition is dismissed as infructuous.
3. This appeal is directed against the order of the Collector of Central Excise, Meerut, dated 28-8-1987 confiscating gold and ornaments weighing 640.480 grams under Section 71 permitting redemption of the same on payment of a fine of Rs. 50,000/- in lieu of confiscation under Section 73 besides a personal penalty of Rs. 25,000/- under Section 74 of the Gold (Control) Act, 1968 hereinafter referred to as the Act. On 5-3-1987 the Central Excise authorities searched the business premises of the appellant at Meerut and found him in possession of 640.480 grams of gold and ornaments as Dealer. Since the appellant was not found in possession of any valid licence under the Act, the authorities effected seizure of the same under a Mahazar as per law. The appellant gave a statement before the authorities on 5-3-1987 that he was doing gold business as the sole heir of his late uncle Shri Om Prakash Agarwal, who was the owner of the firm M/s. Kashmir Jewellers - a licensee under the Act and after the death of his uncle he was conducting the business as a legatee under a registered Will dated 30-4-1976 bequeathed in favour of the appellant. The authorities on perusal of the Will was of the view that the appellant was only an executor under the Will and was not a legatee in terms of Section 103 of the Act and it is in these circumstances the authorities issued a show cause notice to the appellant dated 26-3-1987 for charges of contravention under Sections 8 and 27 of the Act and the proceedings instituted in pursuance thereof eventually culminated in the present impugned order appealed against.
4. Shri S.K. Dhanda, the learned Consultant for the appellant submitted that subsequent to the death of the appellant's uncle on 30-1-1986, the appellant claiming himself to be a legatee under a registered Will dated 30-4-1976 executed by his uncle, sought permission of the Department to continue the business in terms of Section 103 of the Act in March 1986. It was urged that the appellant had also enclosed the required documents to the authorities along with a copy of the said Will and the same was received by the Inspector (Gold), Meerut on 13-3-1986. It was further contended that the said application of the appellant was processed by all jurisdictional Gold Control Officers upto the rank of the Assistant Collector for the grant of a licence in terms of Section 103(1) of the Act and the authorities permitted the appellant to function as a gold dealer and authenticated his records such as GS 11, GS 12, GS 13 and receipt and issue vouchers and also accepted the returns which were filed by the appellant from time to time under the Act. It was urged that the authorities having permitted the appellant to transact the business in March 1986 cannot, without any notice and opportunity, effect confiscation on the appellant's gold and ornaments from the business premises in March 1987. The learned Consultant also assailed the impugned order as violative of the principles of natural justice and contrary to the tenor and spirit of Section 103 of the Act.
5. Miss Renuka Mann, the learned SDR submitted that the appellant was not in possession of a valid licence to transact business in gold and ornaments under the Act and the authorities have found that the plea of the appellant that he was a legatee under the Will executed by the appellant's late uncle was not acceptable in terms of the recitals in the Will. The learned SDR, therefore, urged that the impugned order is sustainable.
6. We have carefully considered the submissions made before us. The fact that on 5-3-1987 the authorities effected seizure of gold ornaments weighing 640.480 gms from the possession of the appellant does not admit of any controversy and is indeed admitted. The short question that arises for our consideration in the present appeal is whether the charges of contravention under Sections 8 and 27 of the Act can be said to have been established particularly in the context of Section 103 of the Act in the facts and circumstances of the case. At the outset we would like to note that the charge of contravention under Section 8 of the Act would appear to be misconceived in law as well as on facts because neither the show cause notice nor the impugned order nor any record indicates that the appellant was ever in possession of any primary gold. We have also gone through the panchnama and no quantity of primary gold has been seized from the possession of the appellant and the entire quantity of 640.480 gms was only gold ornaments in trade quantities of 22 carat purity. Therefore, the charge under Section 8 of the Act is mis-conceived and therefore fails.
7. Even at the time of seizure the appellant put forth a plea that he was carrying on the business of his late uncle as a legatee in terms of a Will executed by the deceased uncle on 30-4-1976 and registered on 3-5-1976. The records clearly show that the appellant sent an application to the authorities in March 1986 within the stipulated time in terms of Section 103 of the Act claiming that the business of the appellant's uncle, a licensed dealer, has, passed on to the appellant under a testament and Will. In other words, the appellant claimed to have succeeded to the business of his late uncle as a legatee under a registered Will referred to supra and made application to the Department for the issue of licence under the Act. This application was received by the authorities on 13-3-86 and the authorities also authenticated the appellant's records such as GS-11,12,13 and receipt and issue vouchers and also accepted the returns submitted by the appellant under the Act from time to time. This factual position is not disputed by the Department and has also been adverted to in the impugned order. The adjudicating authority in this context has observed under the impugned order as follows :
"The Noticee pleading that for nearly one year the officers had signed their records and did not make any objection to carrying business has certainly some force. There has been an obvious failure on the part of the Departmental officers to react immediately on the basis of the Will."
It is indeed surprising that the authorities should have taken nearly a year or more to scrutinise the terms of the Will for coming to the conclusion that the appellant is not a legatee of the deceased licensee in terms of the Will relied upon by the appellant. Be that as it may, Section 103 of the Act is very clear that if an application is made by a person before the expiry of 60 days after the transmission of the business intestate or testamentory, the person concerned would be entitled to carry on the business as a dealer even after the expiry of the said period of 60 days till a notice in writing is issued by the administrator that such licence cannot be granted to him. In the instant case the appellant's uncle admittedly was a licensed dealer under the Act and it is not disputed that he died on 30-1-1986. The appellant herein claiming himself to be a legatee under a Will of the late deceased dated 30-4-1976 and registered on 3-5-1976, sent an application to the authorities in terms of Section 103 of the Act for the issue of a licence enclosing a copy of the Will, a copy of the death certificate, TR-6 challan, 4 copies of the site plan of business premises and other necessary particulars and the same was received by the authorities on 13-3-1986. Thereafter the authorities also authenticated the statutory records in the possession of the appellant as indicated above and also accepted returns from the appellant. In other words, the authorities did not pass any order or issue any notice in writing except the show cause notice dated 26-3-1987 followed by corrigendum dated 27-4-1987 preceding the impugned order informing the appellant that licence cannot be granted to him. If the plea of the appellant claiming himself to be a legatee under a Will is not acceptable, the Department should have disposed of the application of the appellant made under Section 103 of the Act as per law and in confirmity with the principles of natural justice by affording the appellant an adequate opportunity of being heard. In the present case the Department did not reject the appellant's application in terms of Section 103 of the Act till the passing of the impugned order and therefore under the Act in terms of the proviso to Section 103 of the Act the appellant would be entitled to carry on the business as a dealer until he is issued a notice in writing that licence cannot be granted to him. Unfortunately in the present case all that has happened is a search and seizure of the ornaments in the possession of the appellant on 5-3-1987 which was followed by a show cause notice on 26-3-1987 followed by corrigendum dated 27-4-1987 resulting in the impugned order whereunder the application of the appellant of March 1986 under Section 103 of the Act for grant of a licence has been rejected. As stated earlier, proviso to Section 103 of the Act would entitle the appellant to carry on the business till after his application made thereunder for the grant of a licence is rejected by the authorities. The authorities also would not be entitled to reject such an application without affording the appellant an opportunity of being heard. In the present case the application of the appellant was rejected only under the impugned order wherein it is observed as follows:
"In view of the discussion here-in-before, I reject the application of the Noticee for the gold dealers licence under Section 103 of the Gold (Control) Act. Since the Noticee was not entitled within the meaning of Section 103 to carry on business in gold, the Noticee is liable to penal action, both in regard to personal liability as well as liability of gold to confiscation."
We, therefore, hold that the appellant cannot be said to have contravened any provisions of the Act till after his application admittedly made to the authorities under Sec. 103 of the Act was rejected. The impugned order in regard to confiscation and imposition of penalty is, therefore, not sustainable in law and the same is accordingly set aside. We would like to make it clear that by setting aside the impugned order we are not holding that the appellant would be entitled to the grant of a licence in terms of Sec. 103 of the Act. Since in our opinion that the issue relating to the same should have been decided prior to the passing of the impugned order and not clubbed with the impugned order alleging contraventions under the Act. We direct that the issue as to whether the appellant would be entitled to claim of the benefits of Section 103 of the Act as a legatee may again be gone into after affording the appellant an adequate opportunity of being heard. We further direct that the inquiry in this regard shall be taken up expeditiously and concluded preferably within three months from the date of receipt of this order; and in the meanwhile the appellant would not be entitled to carry on business as a licensed dealer. In the result the impugned order confiscating the gold ornaments in the possession of the appellant and permitting redemption of the same on a fine of Rs. 50,000/- with consequential penalty of Rs. 25,000/- is, therefore, set aside and the appeal allowed to that extent.