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Sivasankaran Chettiar Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1983)LC598DTri(Chennai)
AppellantSivasankaran Chettiar
RespondentCollector of Central Excise
Excerpt:
.....and, in particular, these specified in clauses (a), (b) and (c) of rule 2 of the licensing rules, relevant to the instant case ; (v) it is only after such consideration of the totality of the relevant criteria that an application for licence could be either rejected or granted ; (vi) there is nothing on record to show that all the aforesaid criteria relevant to the instant case had been duly considered and weighed against the penalisation of the appellant specified in rule 2(e) of the licensing rules ; (vii) both the authorities below had been obsessed with the penalisation of the appellant previously to the exclusion of all other relevant criteria in rejecting the application for licence ; (viii) notwithstanding that the refusal of a licence was discretionary, it could still be.....
Judgment:
1. In this appeal directed against the concurrent orders below of the Additional Collector and the Appellate Collector of Central Excise refusing the grant of a dealer's licence, on an application in the prescribed form, to the Appellant in partnership with his son, the material facts, in a brief compass, are- (a) consequent upon a check carried out on 21-1-67 in the licensed business premises of M/s Muthuswamy Chettiar & Sons, Madurai, of which the Appellant and his son were, amongst others, partners, two bags containing 307.00 gms. of primary gold, 2583.200 gms. of gold ornaments unaccounted in the prescribed registers of the firm along with some amount in cash and 368 chits containing identifying particulars were seized ; (b) the Appellant was found to have contravened Rules 126F(1), 126C(1) and 126H(2) of the Defence of India Rules, 1962 and was penalised by (i) con-fiiscation of the entire gold weighing 2890.200 gms. in all, subject to redemption by the Appellant himself, or by the firm of which he was a partner on payment of a some of Rs. 25,000/-and (ii) penalty of Rs. 5,000/- under Rule 126L(16) of the said Rules ; (c) the penalty imposed on the Appellant had been confirmed by the Gold Control Administrator in Appeal as well as the Government of India in Revision (on 24-7-78) and had now become conclusive ; (d) on an application by the Appellant and his son for grant of a dealer's licence in the prescribed form sometime towards the end of 1980 or the beginning of 1981, a notice was issued on 7-7-81 requiring the Appellant to show cause as to why the application "should not be rejected", inasmuch as- (i) "he was involved in an offence during the year 1967 for being in possession of ornamental gold without proper entry in the Gold Control account" and a penalty had been imposed on him, and (ii) "Rule 2(e)(1) of the Gold Control (Licensing of Dealers) Rules, 1969, prescribes that a Gold Dealer Licence should be given only to a person who had not been convicted of an offence or otherwise penalised under the Gold Control Act, 1968." (e) on cause being shown, the Additional Collector of Central Excise, Madurai, was not satisfied that the Appellant was qualified under Rule 2(e)(i) of the aforesaid Rules to be granted a licence and consequently rejected the application ; (f) the aforesaid rejection was confirmed in appeal by the Appellate Collector of Customs by her order No. C.24 GC/23/1981, dated 21-1-1982 and communicated to the Appellant on 4-5-82.

2. In the present appeal, the Appellant impugns the rejection on the grounds, inter alia, of the failure of the aforeaid authorities to- (i) the offence in question was committed not in his individual capacity by the Appellant but as partner of M/s Muthuswamy Chettiar & Sons ; (ii) nevertheless, the licence was renewed year after year in favour of the aforesaid firm ; (iii) the Appellant's conduct after the check and seizure had been so much above board that he is entitled to a licence in his own name ; (iv) the revision petition in the penalty proceedings was preferred on behalf of the firm only in respect of proceedings, which, in essence, were initiated against it and the Appellant cannot be vicariously held liable for the act of the firm ; (c) notice the true purport and effect of Rule 2(e) which merely enumerates the matters to which regard shall be had before the issue of a licence ; and (d) consider that, once the Appellant had been convicted, he is not permanently debarred in terms of the Rules from the grant of a licence, notwithstanding his unimpeachable conduct ever since.

3. (a) In the course of arguments, the learned counsel for the Appellant, while traversing the same ground, however, fairly conceded that it is no longer open to him to contend against- (i) the culpability of the Appellant in his individual capacity and not on behalf of the firm in view of the finality of a finding to that effect in the proceedings relating to the levy of penalty; or (ii) the grant of licence to the firm and not to the Appellant in his individual capacity during the intervening years between the seizure and the instant application for licence, so that the periodical renewal of the licence in favour of the firm is not of any relevance in the matter of the grant of licence to the Appellant either solely or in partnership with his son.

(i) the order-in-appeal of the Appellate Collector was vitiated being unreasoned ; (ii) it was not a mandatory requirement of Rule 2(e) of the Gold Control (Licensing of Dealer's Rules) that an application by a person on whom any penalty was imposed should be straightaway rejected for that reason alone, without more ; (iii) on the language of the aforesaid Rule 2(e), the previous penalisation of the applicant for licence can be only one of the factors, amongst others, which "the Administrator shall have regard to" and not the sole criterion ; (iv) accordingly, it has to be cumulatively considered along with the other criteria and, in particular, these specified in Clauses (a), (b) and (c) of Rule 2 of the Licensing Rules, relevant to the instant case ; (v) it is only after such consideration of the totality of the relevant criteria that an application for licence could be either rejected or granted ; (vi) there is nothing on record to show that all the aforesaid criteria relevant to the instant case had been duly considered and weighed against the penalisation of the Appellant specified in Rule 2(e) of the Licensing Rules ; (vii) both the authorities below had been obsessed with the penalisation of the Appellant previously to the exclusion of all other relevant criteria in rejecting the application for licence ; (viii) notwithstanding that the refusal of a licence was discretionary, it could still be interfered with in appeal, if there was no due regard to factors that are relevant for the grant of licence or the refusal thereof.

4. While it may be that the order of the Appellate Collector was indeed laconic, as contended, we are unable to agree with the learned Counsel that it is, on that account, vitiated seeing that- (i) it was only an order confirming the speaking order of the Additional Collector refusing the grant of licence to the Appellant ; and (ii) no new ground that required to be discussed had been urged in the appeal.

5. (a) On the construction and determination of the true scope and effect of Rule 2 of the Licensing Rules, in the context of his submissions summarised in sub-paras (ii), (iii), (iv) and (v) of para 3(b) supra, the learned Counsel invited our attention to the expression "shall have due regard to the following matters" occurring therein and interpreted it to mean that all the matters enumerated in the Sub-clauses of the aforesaid Rule to the extent they are material in the context of the instant case, have to be duly taken into account and considered cumulatively or collectively to determine the eligibility of an applicant for licence and not any one of them solely or in isolation. Reliance was placed on the decisions reported in- (i) (1909) 2 K.B. 703 (McDermott v. Owners of S.S. Tintoretto), (ii) AIR 1943 P.C.164 (Ryots of Garabandho v. Zamindar of Parlakimidi), (iii) AIR 1957 Orissa 121 (New Orissa Transport Co. v. Regional Transport Authority, Cuttack), (iv) AIR 1971 Madras 245 (Sundarlingam v. State of Madras) for a construction of the aforesaid expression.

(b) The Senior Departmental Representative, on the contrary, contended that if, in the circumstances of the case, the applicant has been convicted of an offence or any penalty had been imposed on him, in terms of Sub-clause (e) of Rule (2), that by itself, would disqualify and disentitle him for the grant of a licence regardless of the fulfilment of the other criteria enumerated in the other Sub-clauses of the said Rule. He invited our attention to certain unreported decisions of the Kerala and Allahabad High Courts in- (i) O.P. No. 67 of 1970 (K.S. Joseph v. The Assistant Collector, Central Excise, Trivandrum), (ii) W.A. No. 186 of 1970 (D.K. Bhat v. Assistant Collector of Customs and Central Excise, Cochin), (iii) Civil Miscellaneous Writ No. 2347 of 1973 (Shri Premnath Khanna v. The Assistant Collector of Central Excise, Allahabad).

6. It would be observed that in none of the cases cited by the learned Senior Departmental Representative, the argument relating to the construction of Rule 2 advanced on the lines enumerated in sub-paras (ii), (iii), (iv) and (v) of para 3(b) supra. This was also conceded by the learned Departmental Representative. Whether or not all the matters enumerated in Rule 2 are to be given due regard to in refusing a licence or once convicted or penalised, the licence could be straightaway refused without a consideration of the other factors enumerated therein did not arise for decision in the cases relied upon by the Senior Departmental Representative.

(a) In O.P. No. 67 of 1970, the contention was that the Rules did not warrant the rejection of an application for licence on account of the antecedents of the applicant in relation to any prior offence under the Gold (Control) Act committed by him. It was observed in the course of the judgment that the factum of the previous conviction of the applicant of an offence under the Gold (Control) Act, 1968 or the imposition of any penalty is "a relevant matter to be taken into consideration" for refusing a licence. This proposition is not disputed by the learned Counsel for the Appellant. His contention, on the contrary, is that all relevant matters arising for consideration in terms of Rule 2 have not been taken into account, notwithstanding that it was a mandatory requirement of the said Rule in the context of the use of the expression "shall have regard to the following matters".

(c) In Writ No. 2347 of 1973, the question for consideration was whether the grant of licence cannot be considered during the pendency of adjudication proceedings. It was held it could be. The observation, in passing, to the effect that a licence cannot be granted to a person convicted of an offence was itself not the purport of the decision therein.

7. On. the question of interpretation of the expression "shall have regard to the following matters" occurring in Rule 2, it does not appear that any exception can be taken to the submission of the learned Counsel for the Appellant as set out in sub-paras (ii), (iii), (iv) and (v) of para 3(b) supra, even without the weight of the authorities cited by him.

(a) in terms of Section 27(6) of the Gold (Control) Act, 1968, a licence could be granted only if the Administrator is satisfied that the licence should be issued ; ' (i) "having regard to such matters as may be prescribed-that is to say ;; in terms of Rule 2 of the Licensing Rules ; and (ii) after making such enquiry in respect of those matters as he may think fit ; (c) the enquiry in the present proceedings is in relation to one of such matters, namely, the previous penalisation of the Appellant for an offence under the Act ; and (d) accordingly, a show cause notice was issued to the appellant so as to afford him an opportunity to be heard.

9. The issue of the show cause notice in relation to the matter specified in Clause (e) of Rule 2 of the Licensing Rules, does not, necessarily, imply that the other relevant matters enumerated in the said Rule have not been duly taken into account. The enquiry is in respect of those matters the Administrator may think fit. It is for the Administrator to decide which of the matters enumerated therein shall be enquired into. It is not as if once he enquires into one of the matters, he has not taken into account the others.

10. Nor can the satisfaction of the Administrator in regard to the issue or otherwise of the licence, being discretionary in the light of the criteria laid down in Rule 2, interfered with, unless it is not in consonance with the principles of natural justice [1958 (1) MLJ 159 (S.C.)-Santosh Kumar v. Bhai Mool Singh-cited 11. The only criteria relevant in the context of the facts and circumstances of the instant case are admittedly those enumerated in Clauses (a), (b), (c) and (e) of Rule 2 of the Licensing Rules. The criterion laid down in Clause (f) may also require to be duly considered. It may be that the Additional Collector had duly taken into consideration the aforesaid criteria and it is only in relation to the matter enumerated in Clause (e) that he deemed fit to embark on an enquiry. Even so, it would appear necessary for an order refusing the grant of a licence to show ex facie that the matters relevant to the grant of a licence in the facts and circumstances of any particular case have duly been considered and taken into account. The order in the present proceedings of the Additional Collector does not appear to indicate ex facie that the matters enumerated in Rule 2 have been duly considered by him. For this reason, and for no other, we set aside the orders of the authorities below and remand the matter for a fresh consideration in the light of the observations we have made in the course of this order. The Additional Collector should complete the enquiry or remand expeditiously and in any case within two months of the date of communication of this order.

12. Incidentally, it would be observed that the order of the Appellate Collector dated 21-1-82 was actually communicated to the appellant on 4-5-82, after a delay of nearly 3 months. We do not see any reason why the order could not have been communicated as soon as it was made.


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