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M. Sadananda Pai and ors. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1986)(6)LC189Tri(Chennai)
AppellantM. Sadananda Pai and ors.
RespondentCollector of Central Excise
Excerpt:
.....who are licensed gold dealers and found that a total quantity of 1263 gms.comprising new and old gold ornaments, gold articles, gold sovereigns and primary gold bars had not been declared as per law in terms of section 16(7) of the act. sadananda pal, father of the other appellants gave a statement before the authorities that the excess gold ornaments found during the search by the authorities from the residential premises and possessed by him were not declared by oversight.proceedings were instituted against the appellants as per law by the authorities by issue of show cause notice which ultimately culminated in the impugned order now appealed against.5. the learned counsel for the appellants submitted that out of the 1263 gms: of gold ornaments, etc., about 571 gms. have been.....
Judgment:
1. The revision application filed before the Government of India against the order of the Gold Control Administrator referred to supra stands transferred to the Tribunal in terms of Section 82K of the Gold (Control) Act, 1968, hereinafter referred to as the Act, for being disposed of as if it were an appeal.

2. The Additional Collector of Customs, Cochin, by his order C.No.XVII/3/2/75 GC dated 5.12.75 imposed a redemption fine of Rs. 25,000/- on the appellant under Section 73 of the Act, besides imposition of a penalty of Rs. 1,000/- each on all the appellants under Section 74 of the Act. On appeal by the appellants, the order of the Additional Collector was confirmed by the Gold Control Administrator against which the appellants preferred a revision before the Government of India which was dismissed, against which the appellants filed a writ petition in the High Court of Kerala in O.P. NO. 4090/80R and the High Court of Kerala by its order dated 4.2.83 set aside the impugned order of the Government of India and remitted the matter back to the revisional authority, viz. Government of India, for consideration afresh the plea of the appellants viz-a-viz Section 16(3) and (7) of the Act. and accordingly the revision application that stood transferred before the Government of India pursuant to the order of the High Court stands again retransferred to the Tribunal as stated above.

3. Sadananda Pai died on 28.1.85 and the other appellants who are his legal heirs are permitted to prosecute the appeal on behalf of Sadananda Pai as his legal representative.

4. On 21.10.74, the Superintendent of Central Excise, Ernakulam, with his officers visited the residential premises of the appellants, who are licensed gold dealers and found that a total quantity of 1263 gms.

comprising new and old gold ornaments, gold articles, gold sovereigns and primary gold bars had not been declared as per law in terms of Section 16(7) of the Act. Sadananda Pal, father of the other appellants gave a statement before the authorities that the excess gold ornaments found during the search by the authorities from the residential premises and possessed by him were not declared by oversight.

Proceedings were instituted against the appellants as per law by the authorities by issue of show cause notice which ultimately culminated in the impugned order now appealed against.

5. The learned counsel for the appellants submitted that out of the 1263 gms: of gold ornaments, etc., about 571 gms. have been properly accounted for by the appellants as representing ornaments gifted to a child in the family on 6.10.74 in connection with the cradling and 'annaprasannam' ceremonies in accordance with the family tradition and convention in Kerala. Regarding the balance, it was urged that weighment by the authorities was incorrect' and a co-relation statement was filed by the appellants to prove the correctness of the declaration filed by them earlier in accordance with law. The learned counsel assailed the impugned order as legally untenable on the ground that the personal diaries of Kurup and Sreedharan, Inspectors who conducted the search were not summoned despite a request therefore from the appellants. He further urged that there was no specific finding in the impugned order about the appellants' contravention of Section 16(7) and therefore, the impugned order is liable to be set aside. The learned counsel assailed the impugned order as bad in law since a copy of the mahazar was not given to all the appellants. It was also submitted that when search and seizure were effected from the residential premises where all the appellants were residing, the charge should specifically indicate the nature of offence committed by each of the appellants with precise particulars, the absence of which in the show cause notice as well as in the adjudication order would invalidate the impugned order.

6. The learned counsel urged that at best one can only entertain a suspicion against the appellants regard the alleged contravention and suspicion can never take the place of proof. Finally he submitted that principles of natural justice having been violated remand of the appeal to the adjudicating authority at this distance of time would be unjust and unfair.

7. The learned DR submitted that the particulars in the declaration filed by the appellants have been spelt out in the mahazar and over and above the quantum specified in the declaration of the appellants, a quantity of 1263 gms. has been found not declared and as such, the charge under Section 16(7) of the Act is clearly proved. He further urged that when appellant Sadananda Pai has categorically admitted in his statement before the authorities on 22.10.74 that due to oversight he had not declared the excess ornaments and when this statement is proved to be true and voluntary, the charge should be held properly proved. Regarding the diaries which the appellants wanted to be summoned, the learned DR submitted that both the searching officers Kurup and Sreedharan have been cross-examined on behalf of the appellants by their advocate on 8.9.85 and as such the plea of the appellants is factually incorrect. It was further submitted by the learned DR that even assuming that, a copy of the mahazar has not been furnished to all the appellants, when the contents of the mahazar have been clearly set out in the show cause notice, the appellants have been clearly made aware of the same and in the absence of proof of any prejudice, non-furnishing of a copy of the mahazar would not in any way affect the impugned order. He also joined issue with the appellants regarding the allegation relating to vagueness of the charge and contended that apart from the show cause notice expressly making clear the charge against the appellants under Section 16(7) of the Act, the adjudicating authority has also found about the non-declaration.

Finally the learned DR urged that there is no violation of the principles of natural justice in the case and even if the Tribunal were to hold that certain factual positions have to be clarified, at best the matter can only be remanded for readjudication and the impugned order cannot be set aside once and for all.

8. I have carefully considered the submissions of the parties herein.

As rightly contended by the learned DR the weight of the ornaments and connected particulars given in the declaration have been set out in the mahazar and proceedings have been instituted against the appellants only in respect of 1263 gms. of gold ornaments, which, according to the Department, have not found a place in the declaration. It is no doubt true that the appellant has taken up a plea at the earliest opportunity that seven sovereigns and some gold ornaments were presented to the child born in the family on 6.10.74, even though the appellant was not able to substantiate the exact quantity and weight. If seven gold sovereigns and some ornaments were presented to the child in the family on 6.10.74, the appellant would have time to make a declaration thereof as per law within 30 days from the date of such acquisition in terms of Section 16(10) of the Act. Therefore the appellant should be given the advantage of time in making a declaration in respect of the seven sovereigns and other ornaments gifted to the child on 6.10.74. It is relevant to note in this context that the High Court of Kerala has adverted to this aspect of the matter and remitted the matter for fresh consideration in the light of the specific plea Of the appellant. This aspect of the matter has not been properly considered by the original adjudicating authority or by the appellate authorities as held by the High Court of Kerala. Notwithstanding this, the question for consideration would be whether the appellants can be held to have contravened Section 16(7) of the Act de hors the acquisition by gift on 6.10.74. As pointed out by the learned DR., appellant Sadananda Pai has in categorical terms admitted before the authorities in his statement of 22.10.74 that excess gold ornaments possessed by him had not been declared due to oversight. The learned counsel for the appellants was not able to convince me that this statement of Sadananda Pai was either not voluntary or untrue. He merely submitted that this solitary statement should not be taken into consideration to fasten a liability on the appellants. On consideration of the records, I find that there is nothing to indicate that this statement is either not voluntary or true. I therefore hold that this statement of Sadananda Pai to be true and voluntary and find that it is admitted by appellant Sadananda Pai himself that there has not been a full declaration with reference to the entire quantity of gold ornaments and articles under seizure. The contention of the learned counsel that there is no specific finding by the adjudicating authority of a charge of contravention of Section 16(7) of the Act is not acceptable. It is no doubt true that the adjudicating authority could have given a more precise finding with reference to the contravention of Section 16(7) of the Act, but none-the-less that would not detract from the acceptability of the order of adjudication. The adjudicating authority has also found that 1263 gms. of gold have not been declared and further held that they have been deliberately kept outside the accounts for obvious purposes of clandestine sale. Perhaps this observation of the adjudicating authority has impelled the learned counsel for the appellants to contend that the finding would appear to be more for an alleged contravention of. Section 55 of the Act and not for a charge under Section 16(7) of the Act. I have carefully gone through the finding portion of the order of adjudication and even though the findings could have been more precisely worded, 1 am not inclined to hold on that ground that there was no appelication of mind of the adjudicating authority into the charge under consideration. The reasoning and the concluding portions of the order make it clear that the adjudicating authority was, on consideration of the materials, satisfied about the contravention of the charge under Section 16(7) of the Act. The contention of the learned counsel for the appellants that because a copy of the mahazar was not furnished to all the appellants, the impugned order must be declared bad in law is not legally tenable.

Mahazar is only a contemporaneous document that comes into existence at the time of effecting search or seizure of incriminating articles and when the contents of the mahazar have been clearly set out in the show cause notice which has been responded to by all the appellants and when the appellants have never made a grievance of the alleged non-furnishing of a copy of the mahazar at any time and indeed have actively participated in the adjudication enquiry without demur, it is not open to the appellants at this stage to contend that the fact of mere- non-furnishing of a copy of the mahazar would ipso facto invalidate the impugned order. It is settled proposition of law that when the party has been put on notice with reference to the various ingredients and other circumstances relating to the charge and when the party has without any demur participated in adjudication proceedings, it is not open to him to assail the validity of the order on grounds of non-furnishing of a copy of the documents unless he is able to prove prejudice thereby. The contention of the learned counsel with reference to the vagueness of the charge is, in my opinion, without any substance. This is a case where the father Sadananda Pai and his sons, the other appellants herein, were partners of the firm and' the father and the sons were admittedly residing in the house where the search and seizure were conducted. In such a situation, when under law every partner has to make a declaration of even his personal possession of gold and gold ornaments in terms of Section 16(7) of the Act, the plea that the charge has not specifically stated about the quantum of non-declaration in respect of each of the partners is untenable in the factual context and background of this case. Though the learned counsel contended that there has been violation of principles of natural justice, he was not able to substantiate the same in the light of any materials available on record. This is a case where pursuant to a search effected in the residential premises of the appellants a quantity of 1263 gms. of gold ornaments, etc. were found by the authorities not declared in terms of Section 16(7) for which proceedings were instituted against the appellants by issue of a proper show cause notice. The appellants have participated in the adjudication proceedings through their counsel, have cross-examined the officers who effected the search, and in such a situation if the appellants put forth a plea that the ornaments found in their residential premises have been duly declared, it is for them to prove it, particularly when the earlier declaration forms filed by the appellants, relied upon by the adjudicating authorities and referred to in the mahazar do not evidence the same. On consideration of the entire materials on record I am inclined to hold that the charge of contravention under Section 16(7) of the Act has been made out.

9. Since I have already found that the appellants have been satisfactorily able to explain that seven sovereigns and certain other items of gold ornaments were gifted to the new born child in the family on 6.10.7 10. The learned counsel submitted that the appellants have been in gold business for nearly about 100 years and have never been involved in any contravention at any point of time nor have they ever come to the adverse notice of the Department. Taking into consideration the clean past antecedents of the appellants, coupled with the fact that the ornaments under seizure are of varying purity from 14 ct. to 22 ct., and having regard to the nature and quantity-of ornaments involved and the nature of contravention 1 am inclined to take a lenient view regarding the quantum of redemption fine and penalty. It should be observed that the submission of the learned counsel for the appellants that for a charge of non-declaration in respect of a small quantity of gold ornaments of low purity, it will not be legal or just to penalise all the partners is not without force. In the factual background and circumstances of this case and having regard to the fact that Sadananda Pai was the head of the family managing the licensed firm, I hold that he alone shall be liable for contravention of a charge under Section 16(7) and in the absence of any satisfactory convincing materials individually against the other partners they should be given the benefit of doubt and exonerated. Accordingly I set aside the penalty of Rs. 1,000/- each imposed on the other appellants except appellant Sadananda Pai by giving them the benefit of doubt. So far as appellant Sadananda Pai is concerned, after giving due allowance for the seven sovereigns and other ornaments gifted to the child in the family on 6.10.74, 1 am inclined to hold that interests of justice would be met if the redemption fine is considerably reduced. In giving reduction in the quantum of redemption fine 1 also take into consideration factors like the long established tradition of the appellants' family in gold business with unblemished record as well as the quantity, purity and nature of the ornaments, the place where from the ornaments were recovered, viz., the residential premises of the appellants vis-a-vis the charge of non-declaration. Accordingly I reduce the redemption fine from Rs. 25,000/- to Rs. 10,000/- (Rupees ten thousand only) and consequently the penalty is reduced to Rs. 100/-(Rupees one hundred only). Except for the above modifications, the appeal is otherwise dismissed.

11. In my opinion, the technical breach of contravention Of Section 16(7) of the Act in the facts and circumstances of the case relating to the year 1974 should not at this distance of time be held to be an offence for purposes of non-renewal of the licence of the appellants.


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