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TMI Blog1988 (4) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... s that a quantity of 1690.300 grams of gold valued at Rs. 2,48,400/- was seized on 21-03-1985 from the licensed premises and in an adjudication proceeding, the seized gold was ordered to be confiscated but allowed release on payment of redemption fine of Rs. 1,24,000/- and further a penalty of Rs. 25,000/- on the firm and Rs. 5,000/- each on the two partners were imposed. Because of the above proceedings, a show cause notice was issued to the respondents on 19-12-1986 requiring them to show cause why their renewal application should not be rejected under Section 27(6)(b) of the Gold (Control) Act read with Rule 3(f) of the Gold Control (Licensing of Dealers) Rules, 1969. In their reply to the show cause notice, the gold dealer's firm contended that they had preferred appeals against the penalties and fine and the appeals were still pending. It was also urged that in both the cases the violation alleged are of technical - nature which did not call for non-renewal of licence. It was also contended that there were no change of circumstances during the year 1985-86. 3. The Deputy Collector of Customs, as Gold Control Officer, held the enquiry and passed a short order which reads : "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for renewal of the licence can be rejected if the dealer had contravened any term or condition of licence or any provision of the Gold (Control) Act or any Rule or order made thereunder or contravention of the provisions of the Customs Act and the Foreign Exchange Regulation Act. Shri Senthivel submitted that in respect of two seizures there was not merely allegation of contravention but adjudications were also held and in the adjudication the contravention of the Gold (Control) Act and the Rules were held to be established. Therefore, the Dy. Collector had rightly rejected the renewal application. Shri Senthivel further submitted that the pendency of appeals against the adjudication orders do not debar the authority from rejecting the renewal - applications. It is nowhere laid down in the Gold (Control) Act or Rules that renewal application should not be rejected till the contravention have become final in the sense that till the appeals filed by the dealer is finally disposed of by the Tribunal. He, therefore, urged that the Collector (Appeals) committed an error in law in setting aside the order of the Deputy Collector. It was also the submission of Shri Senthivel, if the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the dealer's possession, custody or control. Having regard to the serious consequence that ensues, Shri Shah urged that unless and until the adjudication order would become final, the request for renewal cannot be refused. It was also submitted by Shri Shah that renewal of licence should not be rejected for each and every breach of the provisions of the Gold (Control) Act or Rules. Renewal can be refused if the gold dealer is a habitual offender or repeatedly contravenes the provisions of the Gold (Control) Act or Rules or indulges in possessing smuggled gold. The further submission of Shri Shah was that the practice of rejection of renewal applications was started after the Govt. of India issued instructions to the Collectors by letter dated 9-7-1986. Shri Shah pointed out that in the said letter, the Collectors were informed that the provisions of Rule 3 are mandatory in nature and leave no scope for discretion on the part of the Departmental Officers. It further provided that the licences of the gold dealers who have violated the Gold Control Rules cannot be renewed. Shri Shah contended that the instructions contained in the letter dated 9-7-1986 was subsequently withdrawn and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shah submitted that due weight has to be given to the recommendation of the Committee. Shri Shah also placed reliance on the order of the Collector of Customs (Appeals) reported in 1987 (12 E.C.R. page 713). 10. Shri Shah then submitted that the renewal application was rejected solely on the ground that in one adjudication proceeding gold and gold ornaments weighing 449.500 gms. valued at Rs. 68,277/- were seized on 12-8-1983 and in the adjudication proceedings penalties were imposed both under the provisions of the Gold (Control) Act as well as under the Customs Act. The appeal filed before the Collector of Customs (Appeals) had been rejected. Further, there was another seizure of gold and gold ornaments valued at Rs. 2,48,400/- on 21-3-1985 and in the adjudication order dated 4-12-1986 the seized gold were ordered to be confiscated but redemption was allowed on payment of fine of Rs. 1,24,000/- and there was also a penalty on the firm and the partners. Shri Shah submitted that in respect of both the seizures, the matters are pending before the Appellate Tribunal and the orders have not become final. Until they are finally decided by the Appellate Tribunal, renewal should not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e control, of the production, manufacture, supply, distribution, use and possession of, and business in gold ornaments and articles of gold and for matters connected therewith or incidental thereto (See preamble). 14. After coming into force of the Act, no person can carry on business as a dealer in gold unless he holds a valid licence issued in this behalf by the Administrator. Section 27(2)(c) of the Gold Control Act, 1968 (for short the Act) provides for renewal of the dealers licence from time to time. Sub-section 6(b) of Section reads : "No application for the renewal of a licence to carry on business as a dealer shall be rejected unless as the holder of such licence has been given a reasonable opportunity of presenting his case and unless the Administrator is satisfied that - (i) The application for such renewal has been made after the expiry of the period specified therefore, or; (ii) any statement made by the applicant at the time of the issue or renewal , of the licence was incorrect or false in material particulars, or (iii) the applicant has contravened any term or condition of the licence or any provisions of this Act or any Rule or order made thereunder or of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al application is, however, required to take into consideration Rule 3 also. The combined reading of Section 27 (6) (b) of the Act and Rule 3 of the Rules would indicate that - ordinarily Gold Dealers Licence should be renewed. It cannot be refused to be renewed if the Gold Dealer fulfils the qualifications set out in Rule 3. 19. Before rejecting the application for the renewal of the application the Administrator is also required to bear in mind the consequences that ensures if the rejection is ordered. He should further bear in mind the other provisions, such as, suspension and cancellation of licence provided in the Act. 20. Section 50 of the Act provides for cancellation and suspension of licences. The provisions contained in this Section is more or less identical to the provisions contained in Section 27(6)(b). Under Section 50 suspension and - cancellation of licences can be made by the Administrator if he has any reasonable cause to believe that the statement made by the licence-holder at the lime of issue of licence or at the time of renewal was incorrect or false in material particulars and also on the ground if the licence-holder had contravened any of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate cases or serious and deliberate contraventions of law i.e. where smuggled goods have been found action under Section 50 would be desirable and should be seriously considered. In the same letter it was further stipulated that in case of renewal of licence due regard should be given to the nature and gravity of the contravention, for it will be unfair to refuse the licence for merely technical or petty contravention of law. 24. He has also referred to the letter dated 8-1-1971 wherein it has been stated: ''While action to suspend the licence may be taken immediately after ad-judication of a case, action to cancel a licence should normally be deferred till the outcome of the appeal or revision against original order is known". 25. Besides the above instructions of the Govt. of India, we had earlier referred to the recommendation of the Working Group on Gold Control Machinery. One of the recommendations made by them was that the provision regarding renewal of licence at periodic intervals should be dispensed with. Another recommendation made was that cancellation of a licence may only be considered when a licensee has been convicted in a court of law either under the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion should not be taken either to cancel a licence or to reject the renewal application when the licensee brings to the notice of the adjudicating authority that the adjudication orders on which he places reliance for taking action against the licensee is the subject matter of appeal. The adjudicating authority should await the final outcome of the appeal. 30. Shri Senthivel had contended that if the Administrator is required to wait till the finality of the adjudication order then no action for cancellation of licence or -rejection of renewal application is possible even if the licensee indulged in gross violation of the provisions of the Act or Rules or possess contraband gold and thereby contravene the provisions of the Customs Act or even F.E.R.A. The argument, no doubt, appears attractive. But then the argument overlooks the remedies available to the Department for taking action against a habitual offender or a licensee who repeatedly violates the provisions of the Act or the Rules. 31. The Act provides for suspension of licence. Besides providing for cancellation and refusal to renew the licence. 32. Suspension of licence would only prevent the licensee from carrying on bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of licence during the pendency of the adjudication proceeding was made in the context of the facts of that case. From the facts of that case, it is seen that the Court had earlier directed the licensing authority to consider the petitioner's case for licence. Another direction was also issued in the same regard but the licensing authority did not comply with the direction and later explained that since the adjudication proceeding was pending the licence application was not processed. On those facts the Court observed : "The Asstt. Collector, Central Excise has a mandatory duty to consider and dispose of the petitioner's application for licence. He has failed to exercise the jurisdiction rested in him by law. He has failed to carry out the instruction issued by M.M. Seth (J) in Writ No. 1190 of 1972 and he further failed to carry out the direction issued by me on 17th August, 1973 without there being any sufficient cause. His plea that since the adjudication proceedings are pending application for grant of licence could be considered is not tenable in law. The Asstt. Collector, Allahabad has acted in an irresponsible manner in by passing the order of the Court and deferring the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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