Customs, Excise and Gold Tribunal - Mumbai
B.B. Jewellers vs Collector Of Customs on 10 March, 1988
Equivalent citations: 1988(16)ECC181, 1988(36)ELT304(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. The Revision Application filed before the Govt. of India against the Order-in-Appeal bearing No. S/49-9/82GC dated 14-6-1982 passed by the Collector of Customs (Appeals), Bombay statutorily stood transferred to the Tribunal.
2. The undisputed facts are :
That on 15-9-1981, the Gold Control Officers visited the licensed premises of the appellants and verified the statutory records and the physical stock. They found the following difference between statutory records and physical stock :
(1) Primary gold weighing 29.400 gms. (2) Old gold ornaments weighing 74.800 gms. (3) New gold ornaments weighing 591.400 gms.
Having regard to the said discrepancies, the said quantity of gold was seized under a Panchnama. The statements of the partners of the firm were recorded and thereafter show cause notices were issued as to why the seized gold should not be confiscated and why penalty should not be imposed. After the receipt of the reply and after affording personal hearing, the Deputy Collector of Customs, Gold Control, ordered confiscation of the seized gold but allowed redemption on payment of fine of Rs. 5.000/-. He also imposed a personal penalty of Rs. 500/- on two partners of the firm: In the appeal filed by the firm and the partners, the Collector (Appeals) while confirming the order of confiscation, reduced the fine from Rs. 10,000/- to Rs. 5.000/- but confirmed the penalty. Hence this appeal.
3. During the hearing of this appeal, Shri D. H. Shah, the appellants' learned advocate firstly contended that the seizure itself is illegal inasmuch as the excess was arrived at on the basis of the gross weight and not on the basis of the net weight. If the net weight had been taken into consideration there would be no excess and therefore the confiscation as well as imposition of penalty are bad-in-law. Shri Shah's second submission was that what had been seized was not the gold in respect of which there was contravention of any of the provisions of the Gold Control Act but the equal quantity of gold which according to the Department was found in excess. Shri Shah urged that it is not permissible in law to seize any gold and that the gold that could be seized are those in relation to which there was contravention of the Gold (Control) Act or Rules. The third submission of Shri Shah was that the quantity seized included 143.850 gms. of gold ornaments received by the firm for repairs, which were not accounted in a separate repair register, but formed part of the stock-in-trade. Shri Shah contended that the appellants wanted to establish the above by production of paper packets and sheets bearing the names of the persons who had given the gold ornaments for repairs and for that purpose they had sought cross-examination of the panchas and the seizing officer. But then, their request was not granted. The adjudicating authority, though put certain questions to the seizing officer (Superintendent), did not allow the advocate to put any questions. The Appellate Collector gave a curious reasoning that there is no provision in the Gold (Control) Act or Rules laying down inherent right of cross-examination. Shri Shah urged that thus there was total denial of principles of natural justice. The fourth contention of Shri Shah was that after the adjudication and after there was an order for release of gold, they were made over to the Income-tax authorities and the Income-tax authorities got the gold assayed by an approved valuer and they found the net weight to be 451.000 gms. but whereas for the purpose of adjudication the weight taken was 695.600 gms. Shri Shah submitted that as per the voucher prescribed and as per the registers particularly G.S.12 the Gold Dealers are required to maintain the accounts showing both gross and net weights. Therefore, it was obligatory on the seizing officer to mention in the panchnama as to the gross and net weights of new gold ornaments. But in the panchnama or in the Adjudication order there is no indication as to the gross and net weights of the ornaments found. The further sob-mission of Shri Shah was that immediately after the seizure the statements of the parties were recorded. In their statements they explained as to the primary gold found and their explanation was that they were remnants received from the goldsmith while receiving the new gold ornaments. They had further stated that no stock had been taken for six months. Therefore, there was sufficient explanation regarding the primary gold found. Shri Shah further submitted that the seizing officers record indicated that as against 180 gms. in the G.S. 12 register there was 80 gms. of material other than gold. Shri Shah submitted that the entire seizure was not based on any contravention but was done without taking into consideration the appellant's explanation as well as the actual gross and net weight. Shri Shah therefore prayed that the order passed by the authorities below may be set aside.
4. Shri Prabhu appearing for the Collector, however, justified the orders passed by the authorities below. He contended that the seizure took place in the presence of the partners. The partners did not raise any objection at that stage. On the other hand, they admitted the contraventon. Therefore, it is not open to them to contend that what was seized was not the unaccounted gold.
5. As regards the denial of principles of natural justice, Shri Prabhu submitted that there is no legal right to cross-examine the witness and as such the denial cannot be made a grievance. Shri Prabhu in other respects supported the reasons given in the two orders. He also submitted that I laving regard to the value of the gold the fine and penalty cannot be considered as unreasonable. He prayed that the appeal may be rejected.
6. I have considered the submissions made on both the sides, perused the available records. Shri Shah is justified in making a grievance that the seizing officers are required to set out in the panchnama as to the net as well as gross weight of the ornaments. The vouchers prescribed require mentioning of the net and gross weight. Similarly the register G.S. 12 also requires mentioning of gross and net weight when those particulars are available, the seizing officer is duty bound to enter the same in the panchnama. Without those particulars, one cannot correctly conclude as to whether there is a difference between the actual stock and the stock entered in the respective registers. The subsequent weighment of the seized gold by the approved valuer of the Income-tax authorities amply establish that the net weight of the seized gold ornaments are only 451 gms. The Collector of Customs (Appeals) had taken this into consideration while reducing the fine from Rs. 10.000/- to Rs. 5,000/-. Thus the necessity of mentioning of the gross and net weight in the panchnama is amply established by the facts if the present appeal itself. If both the weights are not mentioned, there is a scope for distortion.
7. The contention of Shri Shah that what had been seized was not the gold in relation to which there was contravention of provisions of the Gold (Control) Act, is rather difficult to accept at this stage. In the panchnama, in more than one place it was stated that: what was seized was the gold unaccounted. Shri Shah had submitted that since the: panchas as well as the seizing officers were not allowed to cross-examination, the con-tents of the panchname should not be accepted. There is considerable force in the contention of Shri Shah on this ground. I would have straight away set aside the order and remanded the matter for consideration afresh after affording opportunities to cross-examine the panchas as well as the seizing officer. But then, gold had already been released, it will not be available for inspection and effective cross-examination will also not be possible. Shri Shah was therefore rightly did not press for remand of the case. The view taken by the Collector that there is no provision in the Gold (Control) Act or Rules laying down right of cross-examination and therefore the denial of the opportunity of cross-examination is not of any consequences, is wholly devoid of any merit. Section 79 of the Gold Control Act which is more or less similar to Section 124 of the Customs Act provides that before adjudging confiscation and penalty the persons concerned should be given a notice in writing informing him of the grounds on which the confiscation was to be done and the penalty to be imposed. If further requires giving reasonable opportunity of making representation in writing within such reasonable time as may be specifies in the notice against the confiscation or imposition of penalty. It further provides of giving of hearing if the person so desires/The expression "being heard in the matter" in an appropriate case would take within its ambit the right to cross-examine the witnesses. In the instant case, immediately after the seizure the appellants had requested the Department to examine the seized articles. They had further requested that certain of the ornaments seized were from the packets and the packets bear the names and the weight. It was also contended that the seizing Superintendent at the time of seizure was requested to note the above but then the name had not been done. This defence could be established only if the panchas and the seizing officers were produced for cross-examination. The adjudicating authority was satisfied that the appellants should be given an opportunity of establishing their contention but then he followed an unusual procedure. Instead of subjecting the seizing officer and panchas to cross-examination during the adjudication proceedings he himself put certain questions to the seeing Superintendent and got a negative answer from him. Even though the learned advocate for the appellant was present, the adjudicating authority did not permit him to put any question to the Superintendent. The procedure adopted by the adjudicating authority to say the least is an empty formality. It does not satisfy the reasonable opportunity of being heard contemplated by law. The Collector (Appeals) failed to notice that the Gold (Control) Act and Rules did not lay down the procedure regarding holding of adjudication. It is now well settled that adjudication is a quasi-judicial proceeding. One Of the requirement of such a proceeding is to comply with the principles of natural justice. The Gold (Control) Act and Rules nowhere lay down that cross-examination should not be permitted. Orissa High Court in the case reported in 1981 E.L.T. page 217 - Ramakrishna Aggarwal v. Collector of Customs & Central Excise, Orissa had an occasion to consider the effect of not allowing cross-examination of the seizing officer. The Division Bench of the High Court observed :
"It is not disputed before us by Learned Standing Counsel that the Petitioner was entitled to an adequate opportunity of substantiating his stand and we are not prepared to accept the position maintained in the counter-affidavit that the opinion of the adjudicating officer was final on the question as to what could be relevant for the defence of the Petitioner. The matter should have been left to the Petitioner and the adjudicating authority should not have taken that burden on him. We are inclined to agree with Mr. Mohante that principles of natural justice have been violated and the petitioner has been denied a reasonable opportunity to substantiate his stand".
Thus according to the above judgment if an opportunity to cross-examine the witness who effected the seizure is not given, it will amount to violation of principles of natural justice. This has been the view of the Central Board of Excise and Customs as is clear from the case of Vaidyanath Tobacco Agencies -1981 E.L.T. 94 CBEC. The Board held that the denial of cross-examination of the officer who conducted the inspection of stock is denial of natural justice. I do not think that there is any necessity to multiply the case law in this regard. What is to be borne in mind by the adjudicating authority and appellate authority is not that whether there is provision for cross-examination in the Gold (Control) Act or Rules but whether the facts and circumstances of the case justifies granting of such a request, made by a party who is required to rebutt the charges or who is required to establish his defence.
8. As observed by me earlier if the gold had not been released, 1 would have set aside the orders passed by the authorities below and remanded the matter but then the gold had already been released and no purposes will be served by remanding the matter but all the same Justice demand further reduction in the matter of fine. I, therefore, reduce the fine from Rs. 5,000/- to Rs 2.500/- (Rupees Two thousand five hundred only). Subject to the above modification in the quantum of fine this appeal fails and the same is rejected. The appellants be granted consequential relief.