Customs, Excise and Gold Tribunal - Mumbai
Prabhakar S. Baikerikar vs Collector Of Customs (P) on 20 September, 1987
Equivalent citations: 1988(19)ECR315(TRI.-MUMBAI), 1989(39)ELT67(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. This appeal arises out of and is directed against the order in original bearing No. XVII (GC) 8-3/83/3951 dated 30.8.85 passed by the Collector of Customs (P), Bombay.
2. The subject of challenge is the order of confiscation of the new gold ornaments weighing 925.000 gms and the fine of Rs. 15,000/- levied in lieu of confiscation as well as the penalty of Rs. 2500/- imposed on the appellant.
3. According to the department, on the basis of information, on 4.2.83 that about a kg. of new gold ornaments not covered by valid documents would be brought by a person for sale to the shop of M/s. Shantilal Shobhavat and Co. they visited the said premises and found the appellant along with others holding a briefcase. On inspection of the briefcase they found new gold ornaments weighing 925.000 gms alongwith 96 pieces of German silver screws. After carrying on the search of the premises of M/s. Shantilal Shobhavat and Co. a panchanama was done as to the gold ornaments contained in the briefcase whicn the appellant was carrying. He was also questioned and he appears to have stated that he had brought the gold ornaments for selling them since he was in need of monty. He further appeared to have stated that he was not in possession of any documents or vouchers in respect of the gold ornaments he was carrying. Thereafter, the residence as well as the business premises of the appellant were searched. Nothing incriminating was found. The officers however, found that the appellant's G.S. 13 register was written up to 14.1.83. No voucher was pending with him.
4. On 5.2.83 the appellant however wrote a letter stating that a portion of the seized gold ornaments belonged to two gold dealers firms and the remaining portion belonged to his wife and mother. One of the gold dealer also wrote to the department claiming gold ornaments weighing 58.950 gms.
5. After the completion of the investigation show cause notice was issued to the appellant alleging contravention of Section 27(1) and requiring him to show cause as to why the seized gold should not be confiscated and why penalty should not be imposed. In reply to the show cause notice the appellant reiterated the defence taken in his letter dated 5.2.88 and also produced the affidavits of the two gold dealers besides the zerox copies of the relevant entries in the G.S. 11 and 12 registers.
6. The Collector of Customs(P) who held the inquiry after duly complying with the procedural aspects as stated earlier ordered confiscation of the seized gold but allowed redemption on payment of fine of Rs. 15,000/-. He had also imposed a penalty of Rs. 2500/-on the appellant.
7. For his finding that the appellant had contravened provisions of Section 27(1), the Collector entirely relied on the appellant's statement recorded on the date of seizure. He brushed aside the defence put up on 5.2.83 and subsequently as an after-thought.
8. During the hearing of this appeal Shri Shah appearing for the appellant vehementally contended that the Collector was unjustified in holding that there was contravention of Section 27(1). There was no proof of the same. On the other hand, the appellant was only found in possession of gold in a dealers' premises. No statement of the dealer or any of the persons who were present at the relevant time was recorded. The department did not make any effort to find out whether the defence put forward on 5.2.83 was true or not. Even the statement of the two gold dealers and the statement of the wife and mother were also not recorded. No verification of the statutory records of the two gold dealers whose affidavits were filed along with the reply to the show cause notice was done. No effort was made to find out whether any portion of the seized gold belonged to persons other than the person from whose possession they were found. If the seized gold belonged to persons other than the person from whose possession they were seized, even if an offence had been committed in relation to the said gold, no confiscation could be ordered since there was no compliance of Section 79. In that connection Shri Shah relied on the judgment of the Kerala High Court reported in Part II/353/ Kerala 1987 Cen-Cus Gold Control Manual. Shri Shah also placed reliance on the decision of this Tribunal reported in 1987 (30) ELT 450 (Tribunal) -1987 (12) wherein under similar circumstances the said Bench held that there was no contravention of Section 27(1). Shri Shah, therefore, submitted that the Collector's order may be set aside. Incidentally Shri Shah mentioned that in the criminal prosecution against the appellant he was discharged.
9. Shri Arya appearing for the Collector supported the order of the Collector. He submitted that even if there had been a small lapse on the part of the inspecting agency in not verifying the truthfulness of the defence taken on 5.2.83, having regard to his earlier statement made on 4.2.83, which was more specific viz. that the gold was brought for sale and there was no voucher evidencing the possession or manufacture. Further statement of the appellant that the seized gold belonged to the dealers or his wife and mother as well as the defence put forward on 5.2.83 and the subsequent documents produced are all false. Therefore, he urged that the appeal may be rejected.
10. I have carefully considered the submissions made on both the sides and perused the available records. The only charge against the appellant was contravention of Section 27(1). There was no other charge not even a charge under Section 55 or contravention of any other Section of the Gold Control Act or Rules.
11. Section 27(1) prohibits a person from carrying on business as a dealer in gold unless he holds a valid licence issued in this behalf by the Administrator. Admittedly, the appellant did not hold any licence to carry on business as a dealer in gold. It was not the contention of the appellant also that he had a licence to deal in gold.
12. It was the allegation of the department that the appellant was a dealer in gold and therefore he required a licence under Section 27(1). It is for the department to establish by satisfactory evidence that the appellant carried on business as a dealer in gold without a valid licence. The only piece of evidence adduced in this case is the possession of a briefcase containing gold ornaments of various types in a gold dealer's shop and the statement made by the appellant that he had come to that shop for the purpose of selling. There is no other evidence. The departmental authorities during the investigation had carried out the search of the residential premises as well as the business premises of the appellant. They did not find a scrap of paper to show that at any time earlier to the date of seizure the appellant had indulged in carrying on business as a dealer in gold. No statement of any person had been rocorded to establish that at any time prior to the date of seizure the appellant had indulged in carrying on business as a dealer in gold. Therefore, the question arises whether acceptance of the department's evidence that the appellant had come to sell the ornaments would be sufficient to hold that the appellant had contravened the provisions of Sectionn 27(1).
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 what-so-ever 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 1 he 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.