Customs, Excise and Gold Tribunal - Mumbai
Damodar Kanji Soni vs Collector Of Customs on 9 December, 1987
Equivalent citations: 1989(39)ELT410(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. The appeals filed before the Gold Control Administrator against the order F.No. XVII(GC)8/60/80-2038, dated 18.6.1981 passed by the Collector of Customs (P) Bombay statutorily stood transferred to the Tribunal.
2. As these two appeals arise out of a single order and as they involve common questions of law and facts, they are clubbed together, heard together, hence this common order.
3. The facts required for the disposal of these appeals lie in a small compass: On 18.11.1980 the officers of the Gold Control, Bombay searched the business premises of the appellants who are brothers and the search resulted in the recovery of gold and gold ornaments weighing 2969.350 gms. in respect of which no accounts were maintained. The officers seized the said gold and gold ornaments under a panchnama. During the course of the investigations the statements of the present appellants as well as others were recorded. After the completion of the investigations and after issue of show cause notice, the Collector of Customs (P) Bombay held the enquiry. After considering the reply to the show cause notice and after affording personal hearing the Collector ordered confiscation of the seized gold but allowed redemption on payment of fine of Rs. 25,000/-. He also imposed a penalty of Rs. 1,000/- on each of the appellants. He further imposed a penalty of Rs. 100 each on 3 other persons who have not chosen to file any appeals.
4. Shri Shah appealing for the appellants submitted that the confiscation of the gold and gold ornaments is bad in law. He urged that the statements of the appellants as well as the documentary evidences available with the department clearly established that the seized gold belonged to the customers. The names of the customers were found on the packets which were seized. During the investigations particularly in their statements the appellants have agreed to furnish the addresses of the customers who had given the old gold ornaments for making new gold ornaments. Shri Shah also submitted that during the proceedings before the Collector affidavits of the owners were also produced. The Collector without assigning any valid reason had rejected the affidavits. He, therefore, prayed that the confiscation, consequently the fine levied in lieu of confiscation as well as penalty may be set aside. It may be stated here that Shri Shah admitted that the appellants had not maintained accounts in their GS-13 register. He also contended that GS-13 register does not provide column for entering primary gold left over. It was the contention of Shri Shah that until the gold ornaments are manufactured it is not possible to enter in the GS-13 registrar the pieces of gold ornaments obtained during the manufacturing process. Therefore, it cannot be said that there is contravention of any of the provisions of the Gold (Control) Act or any rule or order made thereunder.
5. Shri Senthivel, appearing for the Collector, supported the order of the Collector. He submitted that the Collector's finding that the appellants have contravened the provisions of the Gold (Control) Act is correct. No dealer manufacture gold ornaments except for sale. Shri Senthivel further submitted that there was an admission on the part of the appellants that 1000 gms of primary gold belonged to them. But then, even if each one of the appellants is considered as a separate goldsmith, the quantity of primary gold together exceeds 600 gms. Therefore, there is a clear contravention of Section 42(ii) of the Gold (Control) Act. Shri Senthivel further submitted that the appellants had admitted the violation of the provisions of Section 55 and in the said circumstances the order passed by the Collector is sustainable, and the same may be maintained.
6. I have considered the submissions made on both the sides and perused the records of the case. Show cause notice was issued to the appellants alleging contraventions of Sections 27(1), 39(8), 42(ii) and 55 of the Gold (Control) Act. The Collector had exonerated the appellants for the offence under Section 39(8). He had found them guilty under Sections 27(1), 42(ii) and 55. In the whole of his order the Collector had not given a single instance of purchase or sale of gold ornaments which can be attributed to the dealers. In the said circumstances, his finding that the appellants have contravened Section 27(1) is not borne out from-any evidence.
7. As regards the contravention of Section 42(ii), one of the appellants viz. Shri Damodar had admitted that out of the seized gold 1 kg. belonged to him and his brother. He further admitted that 1 kg. represents pieces, and remnents of the ornaments which are considered as primary gold by the appellants themselves. Under Section 42 certified goldsmiths are permitted to possess primary gold upto 300 gms. only. Having regard to the admission made by the appellant Shri Damodar, the appellants did contravene the provisions of Section 42(ii).
8. As regards the contravention of Section 55 is concerned, Shri Shah himself had conceded that GS-13 register had not been maintained by the appellants. He, however, contended that the form prescribed does not provide the column for maintenance of primary gold. He also contended that unless and until the new ornaments are prepared it is not practicable to enter the primary gold left over during the process of manufacture, in the GS-13.
9. I have perused the prescribed form GS-13. This form does provide for furnishing of description of article/ornament manufactured and primary gold left over. Therefore, Shri Shah's contention that there is no column in the GS-13 for maintaining primary gold left over, does not hold any water. As regards the second contention, it is not the contention of Shri Shah that the orders placed by all the customers were not got executed or new gold ornaments required to be manufactured as per their orders were not manufactured. Shri Shah had produced the extract of the private register maintained by the appellants which furnishes particulars of gold ornaments wrapped in paper-packets bearing name of the customers, quantity of gold given by them, quantity of new gold ornaments prepared as well as the quantity under process. The perusal of that extract shows that the appellants, in respect of 2 persons; Shri Ukabhai Patel and Shri Radial Nathabhai their orders were completely executed and nothing was under process. It was for the appellants to establish that the remnents which are considered as primary gold were not accounted because there was no total execution of the orders placed by the customers. Such evidence is not forthcoming. Therefore, Shri Shah's contention that particulars regarding the left over of the primary gold were not entered in the register for the reason stated by him, also has no force. There is clear violation of the provisions of Section 55.
10. The Collector had ordered confiscation of the entire quantity of the seized gold ornaments. The evidence on record clearly established that excepting the primary gold the quantity according to Shri Damodar's admission is 1000 gms. and according to the contention of Shri Shah before the adjudicating authority 1200 gms. the rest belonged to the customers. The statement of the seizing officer and the documentary evidence produced are all supporting the contention of the appellants that the gold ornaments seized belonged to the customers. From the order of the Collector, it appears that during the adjudication proceedings, the affidavits of the customers were also filed. The seizing officer had admitted in die cross-examination that the names of the customers were found on the packets seized. The statement of the appellant Shri Chandrakant was to the effect that he could give particulars of the customers whose orders have not been executed. He could also give the addresses. It was for the department to verify the correctness of his statement. For reasons best known to them the department did not question any of the customers or sought any clarification as to the correctness or otherwise of the statement made by Shri Chandrakant. The Collector's findings are based on improper consideration of the evidences on record. In the circumstances, the confiscation of the entire seized quantity of gold, is not valid in law. Under Section 71 of the Gold (Control) Act, the gold belonging to a person other than the person who has contravened the provisons of the Gold (Control) Act cannot be ordered to be confiscated unless there is evidence to establish that the, actual owner had the knowledge of contravention or had connived in the contraventions of the provisions of the Act by the person whose action or omission rendered the gold liable to confiscation. There is no such evidence in the present case.
11. But then, the entire seized gold admittedly did not belong to the customers. Even according to Shri Damodar 1000 gms. of primary gold belonged to the appellants and in respect of 1000 gms. no accounts were maintained. The quantity is in excess of permissible limit. There is thus contravention of Sections 42(ii) and 55 of the Gold (Control) Act. Therefore, though the Collector was not correct in ordering confiscation of the entire seized quantity there could have been confiscation of the primary gold belonging to the appellants. Since the Collector had allowed redemption on payment of fine the appellants are entitled to redeem their gold on payment of fine. I, therefore, reduce the quantum of fine from Rs. 25,000/- to Rs. 10,000/- (Rupees ten thousand).
12. As regards penalty the Collector had imposed Rs. 1000/- each on the appellants. Looking to the contravention committed by the appellants the penalty cannot be considered as harsh and even unreasonable. I, therefore, see no reason to interfere with that part of the Collector's order. The appellants shall be granted consequential relief by way of refund of the excess fine amount, if they have paid.