1. Shri Ganesh Chandra Golui of Bargachi, P.O. Bargachi, Dist. Howrah, has filed a revision application to the Administrator, (Gold Control), Ministry of Finance, Dept. of Revenue, New Delhi being aggrieved from order No. 26 (Gold) 79/6 of 1980, dated 20th May, 1980 passed by the Collector of Central Excise, Calcutta. After the coming into existence of the Tribunal, the said revision application stands transferred to the Tribunal under Section 82 of the Gold (Control) Act, 1968 to be disposed of as an appeal.
2. At the outset of the hearing, it was brought to the notice of the learned Junior Departmental Representative Shri B. Bhowmik that there is a cross objection, but no notice of hearing has been issued by the Registry. If he has got no objection, the same may also be heard along with the appeal.
3. In reply Shri B. Bhowmik, the learned J.D.R. has stated that he has got no objection if the cross objection is also heard along with the appeal and Shri N.C. Sen, the learned advocate has also stated that he has got no objection if the cross objection is heard. Accordingly, the cross objection is also being heard.
4. Briefly the facts of the case are that on the basis of an information, a batch of Gold Cell Officers, Calcutta, headed by the Superintendent, Gold Cell, Calcutta, searched the sbop-cum-working premises of Shri Ganesh Chandra Golui at Bargachia Bazar P.O.Bargachia, Dist. Howrah, on the strength of a search authorisation issued by the competent authority. On verification of physical stock of his gold ornaments with reference to his book balance in the statutory Books of Accounts, the said officers found in excess a quantity of 823.000 grms gold (gross) or 375.000 grms (net) of assorted new gold ornaments mostly multiple in number of same type and design over the book balance. The appellant could not adduce any evidence documentary or otherwise in support of his acquisition or possession of the same.
The gold ornaments weighing 823.000 grms. (gross) or 375.000 (nett.) valued at Rs. 39800/- were seized for the contravention of the provisions of the Gold Control Act, 1968. One G.S. 13 Register and one Private book of account, were also seized and taken into custody as the private account book contained illicit transaction of gold and gold ornaments.
A voluntary statement of the appellants was recorded on the 3rd August, 1979. The appellant had mentioned that his working premises was searched on 3-8-79 and gold ornaments weighing 299.000 grm (nett) and Bronze based gold ornaments weighing 51.000 grms. (nett) or gross 474.000 grms. and lac based gold Ruli weighing 25.000 grms. (nett) or 50.000 (gross) were recovered. Gold weighing 823.000 grms. (gross) or 375.00 grms. (nett) was not accounted for in the G.S. 13 Register. The quantity which tallied with the G.S. 13 Register, was released. Summons under Section 63 of the Gold Control Act, were issued to the appellant and on 24th August, the appellant's statement was recorded. In the statement, the appellant has stated that he had received old gold and silver ornaments from the villagers and remade the same into new ornaments and delivered those to the respective owners and at the time of receipt of old ornaments he entered the particulars in his note book first and then entered in G.S. 13 Register. In order to keep confidence of the customers he recorded the price of old gold ornaments in his note book, and out of ignorance, the remade ornaments were returned by him without making any entry in his G.S. 13 Register. The private books of accounts of the appellants were also examined. It was recorded there that the appellant had received gold and gold ornaments weighing 253.372 grms. (not available for seizure) valued at Rs. 126.599/- and gold ornaments were delivered weighing 989.526 grms. (not available at seizure) valued at Rs. 1,03.900/- during the period from 25-1-86 B.S.to 17-4-86 B.S.A show cause notice dt. 14th December, 1979 was issued desiring the appellant to show cause as to why the new old ornaments weighing.
823.000 grms. should not be confiscated in terms of Section 71 of the Gold (Control) Act, 1968 and why penalty should not be imposed on him in terms of Section 74 of the Gold (Control) Act, 1968 for the contravention of the provisions laid down in Gold (Control) Act, 1968.
In reply to the said show cause notice, the appellant had stated that he carried out his business as goldsmith and had not crossed the limit of his business as provided under the law. The appellant has also denied to have made any purchase or sale of primary gold as stated in the show cause notice. The appellant has contended that he was an illiterate person and he used to enter these receipts in kacha note-book of account and then with the help of other person entered the same in G.S. 13 Register and the gold ornaments in question weighing 823.00 grm. under seizure, were received by him from different customers and their names were in his note-book for final entry in the statutory record. The appellant disputed that the gold ornaments under seizure were not fully entered in G.S. 13 Register. He also denied the charges framed under the show cause notice.
It was also contended before the adjudicating authority that the appellant used to visit various places from morning till evening and procure the orders from various customers and collect old gold ornaments. He used to return back in the evening to the shop.
Thereafter he used to note down the various orders booked by him during the course of a day and record in his private account book which he used to carry with him. The appellant had also disclosed the names of so-called customers from whom he had received old gold ornaments for the purpose of remaking new ornaments. Shri Golui gave the names of six persons (i) Shri Sankar Mondal, (ii) Shri Abdul Rahman Milla, (iii) Shri Amar Panja, (iv) Shri Ahuti Bhusan Mal, (v) Shri Phani Bhusan Samanta and (vi) Shri Ajit Ali Molla. The appellant could not give the details of old gold ornaments given by the aforesaid six customers. The sealed packet containing the seized ornaments was opened and the appellant was asked to identify the ornaments which belonged to each of the six customers, but Shri Golui could not do so and there are no corresponding entries of the aforesaid six customers in the G.S. 13 registers. It was conceded that the names of the six persons were neither in the private account book nor in the G.S. 13 register.
Regarding the mentioning of the price of the gold, it was further enquired from the appellant as to how he has written the price of the gold in the terms of 24 carats purity while taking the orders unless he was taking the order in cash basis and purchasing the gold from the market for the purpose of making new ornaments because if he has been receiving old ornaments from the customers for making new ornaments, the question of writing the current price of the gold in terms of 24 carats purity did not arise and the appellant could not answer to the same. The learned Collector of Central Excise, did not accept the contention of the appellant. He had confiscated the gold ornaments weighing 823 grms. (gross) worth Rs. 35,250,/- but had given an option to redeem the same after payment of a fine of Rs. 35,000/- and had also imposed a personal penalty of Rs. 2,00,000/- for contravention of the various provisions of the Gold (Control) Act, 1968. Being aggrieved from the aforesaid order, the appellant had come in appeal before this Court.
5. Shri N.C. Sen, the learned advocate with Shri K.L. Mukherjee Advocate has appeared on behalf of the appellant. He has reiterated the facts. He has referred to page 52 of the paper book which is the Panchnama. He has pleaded that as per Panchnama, 823 grms. gross gold ornaments (nett 375 grms.) valued at Rs. 35,250/- were seized by the revenue authorities. One G.S. 13 Register containing 46 pages and one private book of account containing 378 pages were also seized. He has referred to page 50 of the paper book which is the statement of the appellant and was recorded on 3rd August, 1979. He has pleaded that summons were issued to the appellant and on 24th August, 1979, another statement of the appellant was recorded which is at page 46 of the paper book. He has submitted that in the statement recorded on 24th August, 1979, the appellant had duly stated that the price of the gold ornaments was just noted for creating confidence among the customers and in the statement, the appellant had duly mentioned that due to ignorance, he had delivered some ornaments which could be quickly made, without recording in the G.S. 13 Register. He is a rustic. He does not know proper accounting system and it is always (not) possible for him to write G.S. 13 register. He has also stated that certain transactions were recorded in the account book as well as in the G.S. 13 register too and the appellant had made a request that the Panama note-book may be treated as G.S. 13 Register. The learned advocate has referred to the show cause notice dated 12th December, 1979 which appears at page 38 of the paper book and in the show cause notice, there is mention of violation of Section 27(1), 41(b) and 55 of the Gold (Control) Act, 1968. The learned advocate has pleaded that there is discrepancy in the show cause notice. In the show cause notice, the weight of the gold is 989.526 grms., but the correct figure is 823.00 grms. (gross). So the learned Advocate has pleaded that the show cause notice is defective.
He has referred to Section 34 of the Indian Evidence Act, 1872 and has stated that as per provisions of Section 34, entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the Court has to enquire but such statements shall not alone be sufficient evidence to charge any person with liability.
The learned Advocate has pleaded that the seized note-book and the G.S.13 register contains the complete details of the customers and the revenue authorities did not make any enquiries. The learned advocate has referred to the reply to the show cause notice dt. 20th February, 1980 appearing at page 23 of the paper book and has stated that the first charge has been duly replied by the appellant in para No. 1(3).
The charge No. 2 has been replied in para No. 1(4) and charge No. 3 in para No. 1(5). The learned advocate has pleaded that the appellant should not be penalised for technical lapses on his part. He has referred to judgment of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa--1978 E.L.T. (J 159). He has stated that the Hon'ble Supreme Court had held that no penalty should be imposed for technical or venial breach of legal provisions or where the breach flows from the bona fide belief that the offender is not liable to act in the manner prescribed by the statute. The learned advocate has pleaded that the show cause notice was issued without making any enquiry and the charges were framed in an arbitrary manner.
The learned advocate has also referred to article 20(3) of the Constitution of India which provides that no person accused of any offence, shall be compelled to be witness against himself. He has pleaded that there is violation of fundamental rights. The learned advocate has also referred to order-in- original passed by the Collector of Central Excise at pages 19, 20 and 21 of the paper book, the learned advocate has pleaded that the learned Collector has not appreciated the facts properly. He has pleaded that in the last para of the order, the learned Collector of Central Excise has referred that there is no evidence on record that the appellant had melted gold with foreign markings. He has laid special emphasis on the following extracts from the operative portion of the order.
"Further, in view of the fact that substantial quantity of gold has been obtained from unauthorised sources and after converting the same into new ornaments, Shri Golui has sold the same to various customers, a deterrent punishment is necessary to check such unauthorised transactions in foreign marked gold obtained from unauthorised sources which is melted immediately for the purpose of making new gold ornaments, I impose penalty of Rs. 2 lakhs (Rupees two lakhs only) on Shri Ganesh Chandra Golui for contravention of the various provisions of the Gold (Control) Act, 1968." The learned advocate has referred to the judgment of the Hon'ble Supreme Court in the case of J.A. Naidu v. State of Maharashtra reported in 1983 E.L.T. 611(S.C.) wherein the Hon'ble Supreme Court had held that it was for the prosecution to prove affirmatively that the contraband articles were in the conscious possession of the accused and that the accused had received currency notes as claimed by the prosecution. To presume the accused guilty unless he proved innocence was not the correct approach to the appreciation of evidence. Nor the suspicion, however, grave can take the place of proof. Therefore, conviction based on such criteria was illegal and invalid. He has laid special emphasis on para 21 and 22 of the aforesaid judgment. The learned advocate has pleaded for the acceptance of the appeal. 6. In reply Shri B. Bhowmik, the learned JDR has pleaded that in the instant case, the appellant has accepted the offence. He has pleaded that unauthorised transactions have to be seen and the accounting discrepancy in the weight shown in the show cause notice as 989.526 grms instead of 823.00 grms., does not vitiate the show cause notice.
The learned J.D.R has referred to the statement of the appellant which appears at page 50. He has also pleaded that the entries in the note-book show that there are no receipts of gold, but delivery of gold is there. (The revenue has not filed any paper book). The learned J.D.R has stated that the appellant was duly intimated that he could inspect the records if he so desires. But the appellant has not done any inspection. He has referred to the statement of the appellant at page 50 of the paper book and laid special emphasis on lines 13 and 14 where the appellant himself admitted that the new ornaments weighing 823.000 grms. gross were not entered in the G.S. 13 register and the appellant has duly owned the Panama note-book which is private note-book and the appellant is an important person in a small village. The learned JDR has referred to page 5 and 6 of the order in original. He has stated that the judgments cited by the learned advocate are under the Customs Act and not under the Gold (Control) Act and the transactions in the private note-book are in the hands of the appellant and there is no necessity of any enclosure. He has pleaded that Section 99 of the Gold (Control) Act, 1968 provides that any person who has in his possession, custody or control any primary gold, article or ornament shall be presumed, unless the contrary is proved, to be the owner thereof. He has submitted that the gold was found from the appellant and as such, he is to be treated under Section 99 of the Gold (Control) Act, 1968.
7. In reply, Shri Sen, the learned advocate has referred to the judgment of the Hon'ble High Court in the case of K. K. Goenka v.Superintendent of Customs, Preventive reported in 1978 E.L.T. (J637) wherein it was held that "under Section 108 of the Customs Act, the authorities have no right to compel any person to give evidence against himself because this provision is subject to constitutional bar as contained in article 20(3). Therefore, any person can at all time during the enquiry by the Customs Authority, decline to answer to any question which may incriminate him." The learned advocate has also again pleaded that there is no evidence that there was foreign gold and the finding of the learned Collector is without any basis. He has pleaded for the acceptance of the appeal.
8. After hearing both the sides and going through the facts and circumstances of the case, I would like to observe that the maintenance of the G.S. 13 Register is a mandatory requirement. Non-maintenance of the same will defeat the provisions of the Gold (Control) Act, 1968.
Private 'Panama' book maintained by the appellant, cannot be treated as a substitute for the G.S. 13 Register. Undoubtedly, the 'Panama' book was maintained in the regular course of business. The minor discrepancy in weight as is shown in the show cause notice, does not vitiate the show cause notice. In other places of show cause notice, the weight has been correctly mentioned. The appellant in his statement had duly accepted that due to ignorance he did not maintain the accounts properly. The judgment of the Ho'nble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa-1978 E.L.T. (J 159) does not help appellant in any way. I very respectfully agree with the findings of the Hon'ble Supreme Court, but the facts of this case are different.
The appellant's voluntary statement was recoreded on the date of seizure and there he had accepted the facts. Even in subsequent statement, the facts are not disputed. In the instant case, it cannot be said that there is violation of Article 20(3) of the Constitution of India. The appellant's statement was voluntary and he was not compelled to give a statement against himself. There is no dispute that if the confiscation is based on assumption and presumption, the same is illegal. I very respectfully agree with the findings of the Hon'ble Supreme Court in the case of J. A. Naidu v. State of Maharashtra reported in 1983 ELT 1611 (SC). In the instant case, the gold was recovered and it is an accepted fact that there is no entry in the G.S.13 register. The learned advocate's submissions that the revenue should have sou motu enquired from the customers about the genuineness of the transaction, do not help him. The appellant should have produced the customers for their examination and confirmation of the transaction as his witnesses. Even in case of six names mentioned by the appellant, there is no entry in the G.S. 13 register or in the Panama note-book.
There is no evidence on record which can lead to the inference that the appellant had melted foreign marked gold for making ornaments. The said finding is not correct in law. Keeping in view the totality of the circumstances, I uphold the findings of, the lower authorities for the violation of the provisions of the Gold (Control) Act, 1968. The learned Collector had been very harsh in imposing a penalty of Rs, 2,00,000/-. The broad principle that punishment must be proportioned to the offence is or ought to be of universal application save where the statute bars the exercise of judicial discretion either in awarding punishment or in releasing an offender on probation in lieu of sentencing him forthwith. It was so held by the Hon'ble Supreme Court in the case of Arvind Mohan Sinha v. Amulya Kumar Biswas reported in AIR 1974 Supreme Court 1818. The relevant extract from para No. 10 of the said judgment is reproduced as under : "10. We are unable to accept the appellant's contention that the Probation of Offenders Act can have no application to offences consisting of the contravention of Customs Act or the Gold Control Rules contained in Part XII-A of the Defence of India Rules, 1962.
True, that these offences are fundamentally of a different genre and are calculated to involve consequences of a far-reaching character as compared with offences under the general law of crimes. These are mostly economic offences which in conceivable cases may pose a grave threat to the economy and the security of the country. But every contravention of the Customs Act or the Gold Control Rules cannot, without more, be assumed to be fraught with consequences of national dimension.
The broad principle that punishment must be proportioned to the offence is or ought to be of universal application save where the statute bars the exercise of judicial discretion either in awarding punishment or in releasing an offender on probation in lieu of sentencing him forthwith. The words of Section 4(1) of the Probation of Offenders Act are wide and would evidently include offences under the Customs Act and the Gold Control Rules." Keeping in view the fact that the appellant is an illiterate goldsmith in a village, the gravity of contravention of the provisions of the Gold (Control) Act, do not justify the imposition of such a heavy penalty which is much beyond the means of the appellant. I accordingly order to reduce the penalty from Rs. 2,00,000/- to Rs. 30,000/- (Rupees thirty thousand only). In the result, the appellant is entitled to reduction of Rs. 1,70,000/-(Rupees one lakh seventy thousand only). I also reduce the fine in lieu of confiscation from Rs. 35,000/- to Rs. 25,000/- (Rupees twenty-five thousand only). Except for this modification, the appeal is rejected.