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Govindaraju and anr. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1985)(22)ELT546Tri(Chennai)
AppellantGovindaraju and anr.
RespondentCollector of Central Excise
.....dated 19-11-84 the collector of central excise, bangalore has ordered confiscation of 2032 gms. of gold ornaments which was claimed to be the gold belonging to nandakumar and govindaraju, under section 71(1) of the gold (control) act, 1968 and fixed a fine in lieu of confiscation of rs. 30,000. he has also imposed a penalty of rs. 8000 on nandakumar and rs. 5000 on govindaraju. as the incident leading to the appeals and the order against which the appeals have been filed are common, i am disposing of these two appeals by a common order.2. the brief facts of the case are that on 13-9-76 the departmental officers challenged govindaraju when he was exhibiting certain ornaments on the glass show-case of anita jewellers, bangalore. search of a rexin bag that he was carrying resulted in the.....
1. By order Sl. No. 14/84 dated 19-11-84 the Collector of Central Excise, Bangalore has ordered confiscation of 2032 gms. of gold ornaments which was claimed to be the gold belonging to Nandakumar and Govindaraju, under Section 71(1) of the Gold (Control) Act, 1968 and fixed a fine in lieu of confiscation of Rs. 30,000. He has also imposed a penalty of Rs. 8000 on Nandakumar and Rs. 5000 on Govindaraju. As the incident leading to the appeals and the order against which the appeals have been filed are common, I am disposing of these two appeals by a common order.

2. The brief facts of the case are that on 13-9-76 the Departmental Officers challenged Govindaraju when he was exhibiting certain ornaments on the glass show-case of Anita Jewellers, Bangalore. Search of a rexin bag that he was carrying resulted in the recovery of some more gold ornaments, these together weighed 2032 gms. Statements were recorded from Govindaraju and Nandakumar when it was stated that they were certified goldsmiths of Coimbatore, and the ornaments seized were partly manufactured by the two certified goldsmiths and partly by ten others of Coimbatore. These had been brought for disposal, the ornaments belonging to other goldsmiths were being sold on a commission basis. It was elicited that some quantities of gold ornaments had earlier been sold in Salem resulting in the realisation of Rs. 3500 which was found on the person of Nandakumar. Though at the time of search Govinadaraju and Nandakumar stated that no entries had been made in their respective G.S. 13 accounts, these books were produced at a later point of time during the proceedings before the Collector. The Collector found that the accounts could not be believed because of the appearance of the books, the nature of entries made therein and the falsity of some entries in relation to earlier sale of gold ornaments to parties in Bangalore. After issue of a show cause notice and personal hearing, the Collector found that there was violation of Section 41(b) of the Act read with Section 27(1) thereof, as well as Section 55(1) to (3); hence the action as indicated above.

3. Before me the representative of the appellant stated that the penalty on the persons is not sustainable as there is no evidence regarding acquisition of ornaments contrary to the Act. There was no continuity of transactions of sale to constitute "business" as referred to in Section 27(1) of the Act. In this connection he relied on the decision of the Supreme Court in the case of 'Barendra Prasad Ray and Ors. v. Income-tax Officer, 'A' Ward, Foreign Section and Ors."--(1981) 2 Supreme Court Cases 693. He also claimed that the ornaments seized were the personal ornaments of the two appellants and they are worth about a lakh of rupees, each on the basis of statements to the representative orally by the appellants. Sale of personal ornaments would not constitute an offence under the Act; hence he pleaded that the order of the Collector should be set aside in toto.

4. As an alternate plea, he urged that the quanta of fine in lieu of confiscation and penalty be reduced.

5. The Departmental Representative, on the other hand, referred to certain features of the case which would conclusively establish the offence. The ornaments were new; no documents regarding the possession of ornaments were available at the time of seizure; in fact the ornaments were not claimed as personal property at that time. In the statement recorded immediately after the seizure the claim was that ornaments had been brought for the purposes of sale either on the account of the appellants themselves or ten others whose addresses were withheld from the department. The entries in the GS 13 accounts were found to be fabricated. Even according to the statement of one of the appellants, Nandakumar, this was not the first sale that was attempted at Bangalore; there had been sale in Salem resulting in realisation of Rs. 3500. The claim that the ornaments belonged to either of the appellants in their personal capacity is not in keeping with the financial status of either of them. In fact, Nandakumar in his statement dated 13-9-76 mentioned that he had no landed property and that he was living in a rented house paying Rs. 200/- per month. The provisions of Section 41(b) are clear that a certified goldsmith cannot buy or agree to buy or sell or agree to sell any ornaments save as otherwise provided in the Act. In the circumstances of the case none of the sayings in the Act would apply to either of the appellants.

Considering the total value of the gold ornaments involved, he stated that the redemption fine or the personal penalty are not heavy.

6. I have considered the arguments of both sides. That the ornaments could be the pesonal property of either Nandakumar or Govindaraju is not borne out by any evidence on record. It is difficult to believe the say-so of the representative of the appellants at the bar when he himself candidly admitted that the appellants' worth was based on oral statement of his clients to him. It is on record that Nandakumar has no landed property and he is living in a house with a rental of just Rs. 200-/. I also note that the items seized consist among others, of 50 small rings, 83 assorted rings, 27 single-row chains, 254 ear studs, another 66 ear tops with stones and 13 vanki with stones. The circumstances in which the seizure has been effected and the number of items in each category leaves no doubt in my mind the plea that the ornaments are the personal property of either of the appellants is not acceptable.

7. The seizure was effected at the time when a part of the ornaments were exhibited on the show case of Anita Jewellery; on his own statement Govindaraju accepts that sales had been made earlier at Salem. Viewed in the context of this statement and the quantum of the individual group of items of ornaments, it is clear that the persons were selling or attempting to sell new ornaments, which they are not entitled to do in terms of Section 41(b) of the Act, quite apart from the liability under Section 27(1) itself. The case cited by the representative of the appellants is hardly relevant. In the cited case their Lordships of the Supreme Court were really considering whether 'business earnings' would include an earning from a professional connection. What exactly the term 'business' means was not the subject matter of detailed consideration by Their Lordships. Merely culling out a few sentences here and there from the Judgment does not amount to citation of a precedent of binding nature.

8. The Collector has also found that there has been violation of Section 55(1) to (3) of the Act, in respect of which no arguments have been advanced before me on behalf of the appellants. On the facts of the case that charge is proved.

9. Thus on facts and in law, confiscation of gold ornaments under Section 71(1) of the Act is maintainable. So too is the imposition of the penalties under Section 74.

10. A vague plea was made by the representative of the appellants that the fine in lieu of confisction is a common one though the ornaments belonged to two parties and hence the order would be bad in law. I see no force in this argument; whoever is the owner will have to establish his claim for the ornaments before the Department for purposes of redemption. (I note that I am dealing with an order of de novo adjudication, and the ornaments have in fact been cleared on payment of fine fixed by an earlier order, which was set aside by the Tribunal, much earlier to the date of the present order itself).

11. The quantum of gold ornaments involved is 2032 gms. Transgression of the Gold (Control) Act, particularly by certified goldsmiths, has to be visited with exemplary punishment so that the concessions granted to certified goldsmiths to enable genuine ones to earn a livelihood from the only trade that they know is not made use by unscrupulous elements from amongst them to flout the law. In this view of the matter I should think that the penalties are on the lower side. The fine in lieu of confiscation is not disproportionate to the value of the goods involved. In the result the appeals are dismissed in toto.

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