TMI Blog1984 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... with others, and a statement recorded from the son of the Appellant. (Appellant in Appeal No. 4 of 1982). (c) The Appellant was, admittedly, not in station. He returned only in the last week of October, 1980. (d) In his statement, recorded on 1-11-1980, he stated. (i) the circumstances in which his son was unable to account for the gold ornaments in question; and (ii) The names of the owners who had given him old ornaments (and their detailed particulars) for the making of new. They were his wife, his sister and two other relatives. (e) Pursuant to the statement of the Appellant, the statements of the owners of the gold ornaments in question, as well as that of the goldsmith, Achrekar were all recorded on 4-11-1980. (f) In their statements, - (i) The four ladies claimed the ownership of the ornaments and prayed for their return; and (ii) Shri Achrekar, the Goldsmith explained the circumstances in which the gold ornaments were delivered to him, the entries he made in his own register and the return of the new ornaments by him on 7-10-1980. (g) The Department, thereupon, issued notices on diverse dates to the four ladies requiring them to produce documentar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in regard to violation of any provision of the Act in relation to the gold ornaments in question but others weighing 263 grams which were also seized in the search aforesaid. This order was dated 30-9-1982. An Appeal to the High Court, in Appeal No. 864 of 1982, resulted in the confirmation of the Additional Chief Metropolitan Magistrate s order on 10-2-1983. 3. By an application dated 9-3-1983, the Appellant sought to file a paper book containing the judgment of the High Court and the order of the Additional Chief Metropolitan Magistrate. This was pursuant to this Tribunal s notice dated 21-12-1982 and it was prayed that it may be taken on record condoning the delay. A copy of the paper book was forwarded to the Respondent by the office of the Tribunal on 14-3-1983. No objection for the inclusion of the judgment of the High Court and Order in prosecution was made by the Respondent. 4. Notwithstanding that there was no objection from the Respondent for the inclusion of the aforesaid judgment and order in the prosecution case, Shri Krishan Kumar for the Respondent made a futile bid to urge that they should not be looked into. We were unable to accede to the request seeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) that was alleged against the appellant and not Sections 36 and 55. (iii) It is the issue of a voucher in relation to the gold accepted or received that is made obligatory upon a licensed dealer in terms of Section 36 read with Rule 13 and not the making of the relevant entries in the account books. The failure to make entries in the accounts in regard to any gold in his possession, custody or control if it is in his capacity as a licensed dealer, is penalised in terms of Section 55 of the Act. A licensed dealer is not, therefore, obliged to enter in his accounts any gold received by him in a personal capacity. (iv) Again, it does not follow that, once the gold has not been entered in the accounts, it has necessarily been, acquired from a source other than one explained, and accordingly there has been a contravention of Section 31. Even more so, if there is no statutory obligation to enter into the accounts gold accepted in his capacity other than that of a licensed dealer. (v) Indeed, it was the case of the appellant all along that the gold ornaments were received by him from his wife, sister and other relatives, not qua licensed dealer but in his personal capacity. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of violation. No evidence sufficient to exclude the applicability of the proviso to Section 31 is brought on record and mere violation of Section 55, even if proved, does not, as already observed, necessarily lead to an inference of contravention of Section 31. 7. The learned Gold Control Administrator, in his order dated 27-7-1982, did not also look into these aspects of the case. He largely proceeded on improbabilities, without investigating if the gold was received by the appellant in his capacity as a licensed dealer, or into the violation of Rule 13, notwithstanding the proviso to the said Rule, or contravention of Section 31 in despite of the proviso thereto. 8. In the premises, we have no hesitation in concluding that on the evidence brought on record, it is not possible to establish contravention by the appellant of any of the provisions of the Act that he is charged with. Accordingly, the penalty levied upon him in a sum of ₹ 2500/- has to be set aside and the amount, if paid already has to be refunded to him. 9. In terms of Section 71 of the Act, confiscation of any gold can be ordered only if any provision of the Act or Rule or Order made thereunder has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction itself cannot be arrived at without giving an opportunity to the persons claiming the ownership to establish their title to it. On a show cause notice being given pursuant to the unanimous statement of the appellant, the claimants themselves and the goldsmith and supported by the entries in the seized register, it might have been possible for the claimants to establish not only their title to the gold, notwithstanding that no voucher had been issued to them by the appellant, but that they had neither known nor connived at the act or omission that rendered the gold in questions to be confiscated. No such notice having, admittedly, been given, the order of confiscating the gold is vitiated. 12. In the premises, we hereby allow the appeal in toto, set aside the orders below of penalty and confiscation, and direct that : (a) the amount of penalty, if paid, should be refunded, (b) the gold be released from the order of confiscation, and (c) the redemption fine, if paid, should be refunded. 13. [Order per : K.S. Dilipsinhji, Member (T)]. - S/Shri Jeevanlal K. Jain and Niranjanlal J. Jain have filed the appeals against the Order No. XVII (GC)-8-53-80, dated 14-5- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be taken on record. He also repeated that Shri Jeevanlal s acquittal was upheld by the Hon. High Court on the ground that he was not in Bombay. Since he was not in Bombay at the relevant time, there was no question of his being concerned for any of the violation of the Gold (Control) Act as mentioned in the show cause notice and therefore, he was not liable to any penalty to be imposed under Section 74. Shri Desai pleaded that the order of penalty on Shri Jeevanlal be annulled. As regards the confiscation of gold ornaments weighing 1133.500 gms. he submitted that ornaments weighing 263 gms. belong to the shop of M/s. Kapurchand Jethaji Co., while the remaining ornaments weighing 870.500 gms. belong to Smt. Ladibai Jeevanlal, wife of Shri Jeevanlal and other female relations of the partners. These four ladies had claimed ownership of the ornaments and the Collectors order of confiscation of these ornaments under Section 71 without giving notice to the four ladies was bad in law and should be set aside. As regards the contravention of Section 31, the learned Advocate referred to this Section and pointed out that Shri Jeevanlal had accepted the ornaments from the four ladies at h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (Control) Act under which they were summoned to give evidence. Similarly, Shri Achrekar s statement was also recorded under Section 63 and this should have been accepted by the Collector. In the end, the learned Advocate submitted that the order-in-original was bad so far as the confiscation of 870-500 gms. of gold ornaments belonging to the four ladies was concerned and that the penalty on Shri Jeevanlal was not justified. He requested that the gold ornaments belonging to the four ladies should be returned and the order of penalty on Shri Jeevanlal to be set aside. As regards the order of penalty on Shri Niranjanlal, he stated that the Magistrate had found him guilty and this was also upheld by the High Court. In view of this development, he would not press for any modification of the order of penalty with relation to Shri Niranjanlal. 14. The Departmental Representative has opposed the submissions. He has pointed that Section 77 permits other punishment besides confiscation of gold ornaments and personal penalty. As per this Section the prosecution of the offenders in a Court of law was quite justified. He requested that the orders of the Magistrate and the High Court were b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand Jethaji Co., and not to the four ladies in question and therefore, the four ladies were not required to be given a notice under Section 79 of the Gold Control Act. Since the claim of the four ladies is not supported by any evidence like the issue of vouchers by M/s. Kapurchand Jethaji Co., it is quite legitimate for the Collector of Customs (Prev.) to believe that these ladies were not the owners of the gold. ornaments in question and there was, therefore, no need for the issue of the show cause notice to them under Section 79, and therefore, the order of confiscation of the gold ornaments under Section 71 is quite legal and correct. It is also seen from the panchanamas that the quantities like 37 rings, 9 mangalsutras, 16 chains, 8 pendants are not such as can reasonably be ascribed to the ownership of the four ladies. On the other hand the ornaments in question were located as excess over the recorded balance and recovered from the shop premises. There is no explanation forthcoming as to why the ornaments were kept in the shop when they did not belong to the stock-in-trade of the shop. Both the gold dealers firm, M/s. Kapurchand Jethaji Co., and the goldsmith Shri Achr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the gold ornaments weighing 1133.500 grams passed by the Collector of Customs (Prev.), Bombay in his Order No. XVII (GC)-8-53/80/1588, dated 14-5-1981 but reduced the redemption fine from ₹ 50,000/- to ₹ 25,000/-. 17. This appeal was originally heard by Shri M. Gouri Shankar, Member (Judicial) and Shri K.S. Dilipsinhji, Member (Technical) who then constituted the West Regional Bench. By reason of difference of opinion between the two members, the President in exercise of his power under Section 129-C(5) of the Customs Act referred the matter to me for disposal. Accordingly I heard the arguments of Shri K.M. Desai, the learned Advocate for the appellant and Shri Krishan Kumar, the learned Departmental Representative. 18. The facts necessary for the disposal are found in the judgment of my learned brothers Shri M. Gouri Shankar and Shri Dilipsinhji and therefore, I do not propose to set them out again in detail. 19. The appellant is one of the partners of a partnership firm M/s. Kapurchand Jethaji Co. On 7-10-1980 the Gold Control Officers conducted a search of the firm s premises and during the search they found gold ornaments weighing 1133.500 grams ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gold in his personal capacity. The learned Member then held that such a finding cannot be arrived at without investigating the claim of ownership of gold set up by the four ladies. He also held that the licensed dealer is not obliged to issue a voucher in terms of the proviso to Rule 13 in respect of the gold which he accepted in his personal capacity and not as a licensed dealer. In the view that he has taken the learned Judicial Member set aside the personal penalty imposed upon the appellant and directed refund. In so far as confiscation of the gold is concerned the learned Judicial Member held that the confiscation is bad in law inasmuch as the persons who claimed ownership were not given an opportunity to establish their claim during the enquiry. The learned Judicial Member further held The Act, indeed, provides for an opportunity to the owner of gold after the issue of show cause notice (Section 79 of the Act), informing him of the grounds on which it is proposed to confiscate the gold and giving him a reasonable opportunity of making a representation and of being heard. It is not as if the show cause notice in terms of Section 79 is to be issued only on being satisfied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have set aside the personal penalty imposed on the appellant. The learned Judicial Member had held that there had been no contravention of the provisions of Section 31 of the Act. The learned Technical Member did not hold that there had been a contravention of Section 31. In the said circumstances it has to be said that there is no difference of opinion between the two members with regard to the imposition of penalty and contravention of Section 31 of the Act. Therefore, all that is required to be considered by me is : (1) Whether there had been contravention of Section 36(2) of the Gold Control Act read with Rule 13 of the (Forms, Fees and Miscellaneous Matters) Rules, 1968 and Section 55 of the Act. (2) Whether on the facts and in the circumstances of the case the authorities below were unjustified in ordering confiscation of the unaccounted gold ornaments. The two other identical questions that arise for consideration are. (3) Whether show cause notices ought to have been issued to the four ladies who claimed ownership of the gold ornaments. (4) Whether confiscation of gold ornaments without giving a notice in terms of Section 79 of the Act is vitiated. 24. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mith was also on 7-10-1980. The goldsmith returns the ornaments not to Niranjanlal but to Pukhraj and does not receive any voucher or receipt. The goldsmith delivered the ornaments in the shop and not in the residence. 33. The goldsmith had maintained the statutory register and entries have been made regarding the receipt of gold ornaments and preparation of new ornaments. 34. The Gold Control Act was enacted to provide, in the economic and financial interest of the community, for the control of the production, manufacture, supply, distribution, use and possession of, and business in gold ornaments, and article of gold and for matters connected therewith or incidental thereto. 35. Section 27 of the Act prohibits persons other than the licensee from commencing or carrying on business as a dealer. Section 33 prohibit keeping of any primary gold, article or ornaments by the licensed dealer in the premises where he carries on business as such dealer which is not a part of his stock-in-trade or held by him in his capacity as a dealer. It, further, provides that every primary gold, ornament or article found in the premises where the licensed dealer carries on his business shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in writing- (i) informing him of the grounds on which it is proposed to confiscate such gold, conveyance or animal or to impose a penalty; and (ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty mentioned therein and if he so desires, of being heard in the matter. The rest of the sections are not relevant for our purpose. 40. With this I shall now proceed to consider the questions that have been set out earlier. I shall in the first instance take up for consideration the questions (3) and (4). Shri K.M. Desai, the learned Advocate for the appellant vehemently contended that under the proviso to Section 71(1) of the Act the officer adjudging the confiscation is prohibited from ordering confiscation if it is established to his satisfaction the gold ornaments which became liable for confiscation by reason of the act or omission on the part of the licensed dealer belong to a person other than the licensed dealer and that person did not have the knowledge or connived with the act or omission of the dealer. Shri Desai urged that the satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice to the dealers or others who contravened the provisions of the Act and thereby render the gold or gold ornaments liable for confiscation. Shri Krishan Kumar submitted giving of opportunity to the owner arises only after the adjudging officer was satisfied as to the ownership. This satisfaction can be on the basis of the statements or during the enquiry to which the owners need not necessarily be a party. 42. I have carefully considered the submissions made on both sides. I have set out the provisions of Sections 71 and 79 of the Act. Section 71(1) is declaratory in nature. It makes the gold liable for confiscation if in respect of that gold any provision of the Act or Rule or Order made thereunder has been or is being or is attempted to be contravened. The proviso, however, requires the officer adjudging the confiscation not to confiscate the gold in respect of which any provision of the Act or Rule or Order had been contravened if he was satisfied that the gold belongs to a person other than the person who has by any act or omission rendered the gold liable for confiscation and that the other person did not have any knowledge or connived with the contraventions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the gold and not otherwise. To put it differently if in an enquiry the adjudicating officer arrives at a finding that the act or omission of the person to whom the show cause notice was issued did not result in contravention of any provisions of the Act or any Rule or Order made under the Act but comes to the conclusion that contravention is not of such a nature requiring confiscation of gold then the adjudicating officer is not required to issue any notice to the owner or to hear the owner. In order to find out whether there has been a contravention of any provision of the Act or Rule or Order made under the Act issue of notice and personal hearing if requested shall have to be given only to the person whose Act or omission rendered the gold liable for confiscation and at that stage the officer is not required to give any notice to the owner of the gold. The owner comes to the picture only after the officer adjudicating the confiscation decides that the gold is liable for confiscation. The notice is required to be given to the owner because under Section 71 the officer adjudging confiscation cannot order confiscation of the gold in respect of which contravention had taken pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the gold by misappropriation and therefore, on that ground it cannot be argued that even before an enquiry by the adjudicating officer a show cause notice should be issued to the owners. There may be cases where immediately after the seizure the owner may come forward and claim the seized gold and the investigating agency at that stage were satisfied that the claim put forward is genuine a show cause notice may be given to the owner why the gold should not be confiscated or penalty should not be levied but the Act does not make it obligatory to issue such a show cause notice at that stage of the proceedings. Now it may be pointed out that issue of show cause notice at this stage may be redundant because the adjudicating officer at the stage of enquiry or adjudication may come to a conclusion either that there had been no contravention of any provisions of the Act or rule or order made under the Act or even after coming to a conclusion that there has been a contravention but contravention is not such requiring confiscation of gold. In the said situation no purpose is served by issuing a show cause notice to the owner. To my mind it looks that the Act envisages enquiry at two st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue vouchers as the transactions are not carried out in his capacity as a licensed gold dealer but as a member of the family and in his personal capacity. On the other hand, my learned brother Shri Dilipsinhji proceeded on the footing that the evidence on record established that the seized gold did not belong to the four ladies and it formed part of the stock in trade of the partnership firm and, therefore, the learned Collector was justified in ordering confiscation since there had been a contravention of Section 36 read with Rule 13(1) of the Rules and Section 55(3) of the Act. In view of the difference of opinion between the two learned Members it is necessary for me to consider afresh as to whether the appellants contention that out of 1133.500 grams gold, 870.500 grams gold belong to the four ladies has been satisfactorily established. Shri Desai, learned Advocate for the appellant pointed out that admittedly the appellant and his father who are the senior partners of the firm were away for nearly 2 months. The appellant s son was only a student and was looking after the business. He did not have sufficient knowledge as to the maintenance of accounts and therefore, 263 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 days after the seizure by which time there was enough time to concoct a story. Shri Krishan Kumar further submitted that no reliance can be placed on the statement of the goldsmith or on the statements of the ladies or even on register maintained by the goldsmith. He, therefore, prayed for the dismissal of the appeal. 49. Before proceeding to consider the contentions raised on both sides, I may usefully refer to the findings of the learned Collector who adjudged the confiscation and the Gold Control Administrator. After considering the contentions raised on behalf of the appellant herein this is what the learned Collector observed if the situation is analysed it comes down to the following sequence of events. 50. Shri Jeevanlal Kapurchand received the ornaments at his residence from four relations, gave them to a certified goldsmith without the knowledge of the other partner, Shri Achrekar, goldsmith made the ornaments and returned to shop without the knowledge of any of the partners, and the servant who had the knowledge of the receipt of the ornaments did not bother to bring it to the notice of the partner. It, therefore, boils down that the only person who has the kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Collector that there are improbabilities in the defence appears correct. I shall deal with this aspect later while considering the contentions urged on behalf of the appellant by his learned Advocate, Shri K.M. Desai. 51. The findings of the learned Gold Control Administrator, found in paragraph 4 of the order. The learned Gold Control Administrator came to the conclusion that the entire defence seems unbelievable. In support of his conclusion the learned Gold Control Administrator had pointed out that the appellant Jeevanlal who received the gold ornaments and who gave the same to the goldsmith could have atleast informed Niranjanlal while leaving the station, secondly, that even Shri Pukhraj the employee who received the gold ornaments would have come forward soon after the seizure and explained the position with regard to the ornaments. Thirdly, that the goldsmith also did not come forward soon after the seizure, fourthly, that the seizure took place on 7-10-1980 and Jeevanlal s defence came on 1-11-1980, there is considerable time lag for the appellant to built up the defence. Fifthly, that the G.S. 13 Register of the goldsmith is not worthy of reliance as the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also difficult to accept the explanation of the appellant that his son was unaware of his handing over of the old gold ornaments to the goldsmith. When the appellant was to be away from the town for a period of a month or two he would have left instructions with his son as to the conduct of the business and would have certainly told his son that old ornaments were given to the goldsmith. The very fact that Niranjanlal was unaware of the handing over of old gold ornaments and delivery of new ornaments by the goldsmith again establish that there is no truth in the defence put forward by the appellant. As has been pointed out by me earlier even though the appellant returned to Bombay on 27-10-1980, he does not address any letter to the Gold Control Officers that the seized gold belongs to the four ladies. It was only in his statement under Section 63 on 1-11-1980 the appellant has stated that the 4 ladies had given old gold ornaments with him for getting new ornaments prepared. 54. When the Gold Control Officers have seized and taken away gold ornaments weighing 1133.500 grams valued at ₹ 1,74,000/- one would have expected Niranjanlal to inform about this to the members of h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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