Skip to content


Hazari Lal Gauri Shankar Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(19)ELT200TriDel
AppellantHazari Lal Gauri Shankar
RespondentCollector of Central Excise
Excerpt:
....."(i) whether the department had established by any legal evidence on record or proved that the new gold ornaments weighing 1029,400 grams in fact belong to the applicant firm and possessed by the applicant in contravention of the gold (control) act, 1968 and rules made thereunder ; (ii) whether the department had establishsd any conscious possession of new gold ornaments weighing 1029.400 grams by the applicant firm especially when the learned respondent himself has exonerated the partner of the firm of the charge of contravention of the provisions of the gold (control) act, 1968 and the rules made thereunder; (iii) whether the whole proceedings are vitiated inasmuch as no mandatory show cause notices were issued to the respected owners of the gold ornaments under section 79 of the gold.....
Judgment:
1. In this application under Section 82B of the Gold (Control) Act, 1968, read with Section 821 thereof, (hereinafter referred to as the Act), the Applicant requires the Tribunal to state a case to the Hon'ble High Court of Judicature at Allahabad, in regard to the following questions, said to be questions of law arising out of the Tribunal's orders dated 29-7-83, dismissing the Appeal filed by the Applicant originally before the Gold Control Administrator, [in terms of Sec. 80 of the Act, as it stood at the material time] but transferred to the Tribunal and heard as an Appeal, pursuant to Section 82K of the said Act:- "(i) Whether the Department had established by any legal evidence on record or proved that the new gold ornaments weighing 1029,400 grams in fact belong to the applicant firm and possessed by the applicant in contravention of the Gold (Control) Act, 1968 and Rules made thereunder ; (ii) Whether the Department had establishsd any conscious possession of new gold ornaments weighing 1029.400 grams by the applicant firm especially when the learned Respondent himself has exonerated the partner of the firm of the charge of contravention of the provisions of the Gold (Control) Act, 1968 and the Rules made thereunder; (iii) Whether the whole proceedings are vitiated inasmuch as no mandatory show cause notices were issued to the respected owners of the gold ornaments under Section 79 of the Gold (Control) Act, 1968; (iv) Whether the mandatory provisions of the Proviso Clause Subsection (1) of Section 71 of the Gold Control Act, 1968 has been violated; (v) Whether the claims of the customers of their respective gold ornaments is negative in any way by the Department; (vi) Whether the claim of the respective customers their affidavits claiming the ownership of the goods, the affidavits of the goldsmiths supported by the entries in their statutory records and confirmed on enquiries made by the Department, the affidavit of Shri Inder Gopal has no evidentiary value in the eyes of law; (vii) Whether the statement of Shri Krishan Gopal dated 29-3-1980 duly corrected soon thereafter within a couple of days could form the Sound basis for confiscation of the ornaments, with an option to redeem the same on a huge fine of Rs. 50,000 and also imposition of personal penalty of Rs. 10,000 on the firm; (viii) Whether there was any reasonable belief in mind of the seizing officer at the time of the seizure of the goods; (ix) Whether there is any mis-appreciation of evidence on record in the order passed by the Appellate Tribunal." (a) the Applicant is a partnership firm of licensed Gold Dealers under the provisions of the Act in Badaun. The partners are Shri Gauri Shankar and his son, Shri Krishan Gopal; (b) a search of the shop of the Applicant was conducted in the afternoon of 29th March, 1980; (c) a secret iron safe installed in the room adjacent to and connected with the shop was discovered and got opened; 275 pieces of new Gold ornaments weighing 1092.400 grams valued at Rs. 1,06,640, apart from some 20.900 grams old gold, valued at Rs. 2,400 were found and seized as gold unaccounted in the prescribed records, in terms of Sec. 66 of the Act, under a reasonable belief that the provisions of the said Act were contravened in respect of them; (d) both the partners of the Applicant firm were present at the time of search and seizure. Shri Krishan Gopal had admitted that the seized gold ornaments belonged to the Applicant and the same were prepared by goldsmiths.[sic] Statement dated 29-3-1980]. He further admitted that they were not duly entered in the records. He stated that his brother, Inder Gopal had received the ornaments and he was then out of station. As regards 20,900 grams of gold, he pleaded that the same belonged to Jagdish Chand, his relative who had left it in the shop; (e) in adjudication, the Collector of Central Excise, Kanpur held that- (i) the seized new gold ornaments belonged to the Applicant and were got manufactured otherwise then as provided in the Act illicitly; (ii) the charges of contravention of the provisions of Sec. 8(2) of the Act, Sec. 36 of the Act, read with Rule 13 of the Gold (Control) (Forms Fees & Miscellaneous Matters) Rules, 1968 and Sec. 55 of the Act, read with Rule 11 of the aforesaid Rules in respect of the new gold ornaments weighing 1092 400 grams had been conclusively established; (iii) the pieces of old gold ornaments weighing 25.900 grams were claimed by Shri Jagdish Chand. In the absence of evidence to the contrary, his claim was allowed and he was, accordingly, given the benefit of the proviso to Section 71 of the Act; (iv) nevertheless, the charge of contravention of Sec. 36 of the Act, read with Rule 13 of the Gold (Control) (Forms Fees & Miscellaneous Matters) Rules, 1968 and Sec. 55 of the Act read with Rule 11 of the said Rules in respect of the pieces of old ornaments by the Applicant is proved beyond doubt, inasmuch as the explanation of the Applicant for the failure to issue vouchers to Shri Jagdish Chand cannot be believed.

Accordingly, he ordered confiscation of the seized new gold ornaments weighing 1092.400 grams under Section 71 of the Act with an option of redemption on payment of a fine of Rs. 50,000 within 3 months of the receipt of the order and also imposed a penalty of Rs. 25,000 on the Applicant under Sec. 74 of the Act. He, however, ordered the release of the pieces of old gold ornaments weighing 20.900 grams to Shri Jagdish Chand.

(f) in the Appeal heard by the Tribunal, on its transfer, the order in adjudication was confirmed except for a reduction of the penalty of Rs. 25,000 to Rs. 10,000.

3. The contentions that were advanced in the Appeal, in the main, were that- (a) by inadvertence, an error had crept into Krishan Gopal's statement dated 29-3-80. He stated that the ornaments belonged to the firm while he wanted to say that they did not. On 31-3-80, he applied for correction. This was duly supported by the affidavit of Inder Gopal dated 9th April, 1980 and the entries in the GS 13 registers maintained by the concerned goldsmiths as well as the various letters written by the customers to the Adjudicating Officer claiming the ornaments. As against this weight of evidence, the Department had failed to adduce any evidence in rebuttal; (b) the confiscation of the gold ornaments under Sec. 71 of the Act was unsustainable for non-compliance with the provisions of Sec. 79 of the Act, notwithstanding that the various customers to whom the new gold ornaments belonged had lodged their respective claims before the learned Adjudicating Officer even before the issue of any show cause notice, apart from affidavits filed by them. No reasons have been advanced in the adjudication order to show how they were all unreliable.

(a) Para 6 of the order wherein it was observed that-"A serious attempt has been made to rely upon application dated 31-3-80 of Krishan Gopal to the effect that ornaments did not belong to the firm. A photostat copy of the said application has been produced by Shri Ganesan during the course of arguments. On the face of it, that is of a doubtful nature. Firstly, the date mentioned therein is 31-3-80 and the same has been underlined and then the date mentioned is 2-4-80. However, that was delivered in the respondent's office only on 23-4-80. Krishan Gopal has not explained anywhere as to why this application was delivered in the office after 20-21 days. It does not bear any stamp to indicate that the same was scribed on 31-3-80. It is admitted that it was prepared by Krishan Gopal himself. A gap of 20-21 days gives an indication that this application was not written on the claimed date otherwise it would have been delivered in the office without any loss of time. The delay in submitting the said application to the offices goes to show that it was written much later than as claimed and as such it loses its value. An adverse inference is accordingly to be drawn that after discussion plea was taken that as a matter of fact ornaments are not owned by the firm but by the customers. We do not find any force in the said contention." (b) para 7 of the order wherein the probative value of the evidence of Inder Gopal and the extracts of GS 13 registers of four goldsmiths was discussed; "Further, it is submitted that many customers have come forward to claim the ornaments. The Department has rejected their claim as being unsubstantiated. Reliance is being placed on photostate copies of application at Annexures A to D. In our opinion, there is nothing wrong in rejecting the same since the customers claiming the ornaments had no receipt of handing over the gold to the goldsmiths through Inder Gopal. It is not difficult to arrange for a few persons to depose in a particular manner. The circumstances must corroborate the claim otherwise that has to be isolated and rejected." 5. Before us, Shri Ganesan appearing for the Applicant pressed for a reference of questions (ix) & (iii) only out of the questions reproduced in para 1 supra. In particular, he contended that the observations of the Tribunal in para 6 in relation to what was thought to be a belated submission of the application dated 31-3-80 (requesting for correction of the statement of Krishan Gopal) was not borne out by the record. He submitted that it is not correct to say that the said application was actually delivered in the Respondent's office only on 23-4-80. Such a conclusion could have arisen on account of misreading of the date 3-4-80 which was the date when the application was actually submitted. Still, the erroneous conclusion could have influenced the decision of the Tribunal.

6. Shri Bhatia for the Respondent "submitted that no question of law arises at all out of the order of the Tribunal.

7. It would appear that there is substance in the contention that the application of Krishan Gopal dated 31-3-80 was in fact delivered on 3-4-80 and not on 23-4-80, seeing that the Adjudicating Officer himself had stated in his order that the letter of Krishan Gopal dated 31-3-80/2-4-80 was received in his office on 3-4-80. It could not have been, therefore, that it was delivered on 23-4-80 as observed by the Tribunal in its order (extracted above). To this extent, it could be said that the finding that it was actually delivered on 23-4-80 was arrived at without any evidence to support it. Even so, it was not crucial or decisive for the determination of the issues arising in the Appeal. The Tribunal would appear to have considered the other evidence on record to conclude that the Applicant's version was to be rejected.

The result of the Appeal did not appear to turn on the finding that the application for correction of an alleged error in Krishan Gopal's statement was belated. In the premises, even if, it may be, that a question of law arises on the finding of the Tribunal, as one without any evidence to support it or inconsistent with the evidence on record, or arrived at upon a view of the facts which could not be reasonably entertained, a reference thereof is an exercise in futility.

8. In terms of Sec. 71 of the. Act, confiscation of any gold can be ordered if any provisions of the Act or Rules or Orders made thereunder has been contravened in respect of it, unless "it is established to the satisfaction of the officer adjudging the confiscation that such gold...belongs to a person other than the person who has, by any act or omission, rendered it liable to confiscation and such act or omission was without the knowledge or connivance of the person to whom it belongs." In the premises, satisfaction that the relevant criteria had been established for confiscation, necessarily, involves an enquiry not merely into the alleged contravention but also into the ownership as well as the knowledge or connivance of the owner in the contravention alleged. Even more so, in a case where, as in this case, the ownership is not merely claimed by others but supported by the entries made in the GS 13 registers of four goldsmiths. Obviously, no such enquiry can take place without affording an opportunity to the persons claiming to be the owners to prove such ownership. Without any such opportunity to the claimants, it is not possible to arrive at a summary finding, as the Respondent did in his adjudication order, that the plea of ownership by persons other than the Applicant was nothing but concocted. (Para 9 of the discussions and findings in the adjudication order). Nor could the claims be dismissed out of hand merely on the ground that the customers claiming the ornaments had no receipts with them in token of handing over the gold to the goldsmiths for re-making.

(Para 8 of the order of the Appellate Tribunal). That by itself cannot dispense with an enquiry, although it may be a relevant factor to decide against the claims made, provided that the claimants were given an opportunity to explain the same in any enquiry, preceded by a proper show cause notice to them.

9. The Act, indeed, provides for an opportunity to the owner of gold after the issue of show cause notice (Sec. 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 Sec. 79 is to be issued only on being satisfied that the claimants or owners in terms of proviso to Sec. 71 of the Act, since no such satisfaction can 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 claims made by the various persons supported by the entries in the registers of the goldsmiths, it might have been possible for the claimants to establish not only their respective title to the gold, notwithstanding that no voucher or receipt had been issued to them by the Applicants, but that they had neither known nor connived at the act or omission that rendered the gold in question liable to confiscation.

10. In the premises, the following question of law (reframed by us) would appear to arise out of the order of the Tribunal in the circumstances of the case, to be referred to the Hon'ble High Court- "Whether in the facts and circumstances of the case and on a true construction of Sections 71 and 79 of the Act, the failure to give show cause notices to the persons claiming ownership of the new gold ornaments had vitiated the order relating to their confiscation." 11. In the result, the application is allowed. The question set out in para 10 supra is referred to the Hon'ble High Court of Judicature at Allahabad as a question of law arising out of the order of the Tribunal dated 29-7-83.

12. Incidentally, a question of limitation was raised by the Registry in filing the instant application. It would appear that the Tribunal's order dated 29-7-83 was received by the Applicant on 10-8-83 and the application itself was filed on 10-10-83. In terms of Sec. 82B of the Act, an application for reference to the High Court of any question of law arising out of the order of the Appellate Tribunal is to be preferred "within 60 days of the date" upon which the applicant is served with a notice of the Tribunal's order. The word 'of (underlined) is the equivalent of "after". (Stroud's Judicial Dictionary Fourth Edition-p. 1823). If, therefore, the service of the order was effected on the Applicant on 10-8-83, the period of limitation of 60 days commenced to run after the date of service, i.e. to say from 11-8-83 onwards. Apart from this, 8th and 9th October, 1983 were closed Holidays for the Tribunal and the application could have been presented on the 10th October, 1983 in terms of Clause 10 of the General Clauses Act, 1897. Accordingly, the application is not barred by limitation.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //