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Choksi Purshottam Vishrambhai Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMumbai High Court
Decided On
Case NumberWrit petition No. 795 of 1980
Judge
Reported in1989(23)LC306(Bombay); 1984(17)ELT46(Bom)
Acts Central Excise Act
AppellantChoksi Purshottam Vishrambhai
RespondentUnion of India and Others
Excerpt:
.....items should be taken as ornaments as satisfied all the criteria laid down in the definition of ornament. like bangles came to the market regularly, and were used by ladies for adornment. 11. strong reliance was placed upon the observation of the revisional authority that the sides of the bangles were rough and would cause abrasions and injury upon the arms of the wearer. 13. it will have been noted that the authorities viewed the aspect of failure to maintain the requisite records upto date in the light of their finding that the bangles were not ornaments and had been illegally acquired by the petitioners. the collector of customs shall issue a fresh show cause notice in respect of the alleged failure of the petitioners to maintain the requisite record upto date and he shall, after..........the sale and manufacture of jewellery and ornaments. in the course of their business they purchase gold ornaments and send the same to the official mint for melting down into bears of standard purity. on 14th day 1969 the petitioners sent 222 gold bangles weighing 4813.800 grams to the mint for this purpose. the officers of the central excise (gold division) posted at the mint passed the bangles as ornaments as defined in the act and issued a receipt to that effect. before the bangles could be melted, however, officers of the gold circle, bombay (preventive and intelligence) seized them. a statement was taken from a partner of the petitioners, arvind kumar mohanlal choksi. a panchnama was made, at which the panchas were popatlat purshottamdas soni and himatlal deepchand gandhi. it was.....
Judgment:

1. The petition raises the question as to whether certain gold bangles are ornaments within the meaning of the Gold Control Act, 1968.

2. The petitioners are a partnership firm and they deal in the sale and manufacture of jewellery and ornaments. In the course of their business they purchase gold ornaments and send the same to the Official Mint for melting down into bears of standard purity. On 14th day 1969 the petitioners sent 222 gold bangles weighing 4813.800 grams to the Mint for this purpose. The officers of the Central Excise (Gold Division) posted at the Mint passed the bangles as ornaments as defined in the Act and issued a receipt to that effect. Before the bangles could be melted, however, officers of the Gold Circle, Bombay (Preventive and Intelligence) seized them. A statement was taken from a partner of the petitioners, Arvind Kumar Mohanlal Choksi. A panchnama was made, at which the panchas were Popatlat Purshottamdas Soni and Himatlal Deepchand Gandhi. It was noted in the panchnama that it was found on a careful examination that the articles seized were gold bangles numbering 222 of different sizes, weights and designs and the approximate purity of 22 to 23 carrots. On 8th September 1969 the petitioners were served with a notice to show cause why the bangles should not be confiscated under Section 71 of the Act. The annexure to the notice, which set out the facts, stated that after the seizure an officer of the Gold Circle visited the premises of the petitioners and examined their registers. These revealed that no entry in respect of the bangles had made. The partner of the petitioner who had been examined had stated that the entries in the registers had been posted only upto 12th May 1969 and that the entries in respect of the bangles were to be made on the morning of 14th May 1969. A panchnama was made of the bangles and registers at which the panchas were the same as for the earlier panchnama. They noted that 222 gold bangles had been sorted out according to design and this showed that there were 5 designs consisting of 62, 51, 47, 35 and 27 bangles. On 13th November 1969 a show cause notice was issued to the petitioners in supersession of the earlier show cause notice dated 8th September 1969. This alleged that the petitioners had contravened the provisions of the Act inasmuch as they had acquired the bangles in a manner otherwise than provided by Section 31 of the Act and had failed to furnish particulars in the required registers. The annexure to the notice stated that the bangles did not appear to be in a finished form and it was unlikely, if the bangles has been purchased from different customers, that they could have the same design, shape and weight. It was also stated that the petitioners partner could not correlate them with the purchases shown in their accounts. On 24th November 1969 the petitioners replied to the show cause notice and submitted that they had not contravened the provisions of the Act.

3. At the instance of the petitioners the two panchas were subjected to an examination. Popatlal stated that he was a licensed goldsmith, who had been in the business for 14 years and had large experience with ornaments. He stated that the bangles were ornaments and would be considered to be in a finished form. Such bangles were worn by ladies. In the course of his business he had received similar bangles for purchases to be made by his firm. The designs on the bangles received in the market were of the type on the seized bangles. They showed some signs of use and that is why they did not seem to be very much polished. He could not say whether the bangles had been machine polished because they were used. There were some edges to the bangles. He could not say in what form the bangles had been used. If the bangles had been used for a short duration the edges might not be rubbed off but the polish would go because of weather conditions.

4. In answer to the petitioners counsel, Himatlal stated that he had gained experience about ornaments over a period of 20 years in the shop of Ambalal Amirchand where they were brought. He had experience in finding out the purity of gold and in the designs and pattern of various types of ornaments. The bangles were ornaments in a finished form. Ladies used such bangles frequently. They were ornaments of regular use.

5. On 23rd October 1970 the Collector of Customs (Preventive) passed an order on the show cause notice. He observed that a large part of the bangles had the same design, shape and almost the same weight. They did not appear to be in a finished form. It was unlikely that they could be of the same design, shape and weight, if purchased from different customers. The petitioners could not correlate them with the purchase recorded in their books. It, therefore, appeared that they had acquired the bangles in a manner otherwise than provided under Section 31 of the Act. The Collector noted that he had examined the bangles. they could not be said to be in a finished form. The die in respect of each of the five patterns was rough and there was no polish whatsoever. Therefore, they could not be said to be in a finished form and fell outside the scope of the definition of ornaments given in Section 2(p) of the Act. The Collector was not convinced of the plea that such ornaments were normally used. It was difficult for him to go by the evidence of the panchas on this score since one of the panchas had been working with the petitioners and his sympathy would naturally be with the petitioners, but even he had admitted that there were some rough edges on the bangles. When purchases were made from many people belonging to different places it was not possible to get ornaments of similar finish, similar die, similar weight and similar fineness. The Collector was, therefore, inclined to believe that the petitioners had been trying to deal in contraband gold under the guise of ornaments and it was for this reason that the ornaments were not in a finished form and did not show the normal polish. Having found that the ornaments were not the type of ornaments which could be passed under the provisions of the Act the Collector felt that the other aspect about the maintenance of accounts had to be viewed in a different light. Consequently, he ordered outright confiscation of the ornaments and imposed a penalty of Rs. 10,000/- upon the petitioners.

6. The petitioners preferred an appeal before the administrator (Gold Control). On 2nd June, 1972 the appeal was rejected. Relying upon the Collector's observations in respect of the bangles, his finding in respect thereof was upheld.

7. The petitioners thereupon preferred a revision application to the Government of India. By its order dated 18th October, 1979 it was dismissed. The authority passing the order noted its observations of the bangles. They were sorted out in 5 lots, each lot having a uniform design on the outer side. Most of the bangles had a smooth inner surface but practically all of them had uneven and rough surface on the sides. The purchase vouchers under which the bangles had been purchased were taken at random for verification and it was found that the parties shown as sellers of the bangles were 'fictitious'. If gold was crudely given a shape resembling an ornament without its being manufactured by a specialist like a goldsmith then the purpose of Gold Control Act would be defeated, as there would be no control on the person who just gave a shape to gold resembling an ornament. To make the Act more purposeful and to have control on the manufacture of ornaments, it was necessary that only such items should be taken as ornaments as satisfied all the criteria laid down in the definition of ornament. Applying this test, the bangles were not in finished form and their sides were not smooth. They could not be used for personal adornment as the rough edges of the sides would cause abrasion and injury to the user. The workmanship of the bangles showed that these could not be used for personal adornment, but had been given a shape resembling an ornament by passing the gold through a dye-casting machine.

8. The petition impugns these orders. Mr. Talyarkhan, learned counsel for the petitioners, laid stress upon the aspect of the seizure of the bangles and it is that aspect which I consider first.

9. The panchas were selected by the authorities. They turned out to be goldsmiths. They were acquainted with the petitioners. But that is no reason to reject their evidence. Mere suspicion is not enough for the wholesale rejection of their testimony, to the extent that the revisional authority has not even considered it. Both the panchas deposed that the bangles are ornaments. They were such as are in constant use. Like bangles came to the market regularly, and were used by ladies for adornment. This evidence indicates that the bangles satisfy the test of ornaments provided by the Act.

10. Rather than proceed wholly upon the evidence of the panchas, though uncontroverted. I desired to satisfy myself about the appearance of the bangles. They were produced in Court and were inspected by me. There are indeed five sets of designs upon the bangles. The bangles are crude and would not be purchased by the sophisticate but they are not such as cannot be called ornaments within the meaning of that word in Section 2(p) of the Act. There an ornament is defined as a thing, in a finished form, meant for personal adornment or for the adornment of any idol, deity or any other object of religious worship, made of, or manufactured from, gold, whether or not set with stones or gems (real or artificial), or with pearls (real cultured or imitation) or with all or any of them, and includes parts, pendants or broken pieces of ornaments. The explanation to the definition states that, for the purposes of the Act, nothing made of gold, which resembles an ornament, shall be deemed to be an ornament unless the thing (having regard to its purity, size, weight, description or workmanship) is such as is commonly used as ornament in any State or Union territory. The evidence on record is that bangles of purity, size, weight, description and workmanship akin to the seized bangles are in fact used as ornaments by ladies. My observation of the bangles is that there is nothing in the workmanship thereof which can exclude them being used as ornaments or called such.

11. Strong reliance was placed upon the observation of the revisional authority that the sides of the bangles were rough and would cause abrasions and injury upon the arms of the wearer. I was much impressed by this observation until I saw the bangles myself and found that the edges could not be rightly described as 'rough' and they could cause no abrasions or injury. The revisional authority observed that the workmanship of the bangles was such that they could not be manufactured for personal adornment but had been given shape resembling an ornament by passing them through a dye-casting machine. This would appear to be a mere surmise for there is no evidence on record as to what happens when gold is passed through a dye-casting machine. The revisional authority found upon examination at random of the purchase vouchers of the bangles that the parties shown as the sellers of the bangles were 'fictitious'. There is no evidence no record which can lead to the conclusion that those who were shown upon the vouchers as the sellers were fictitious parties.

12. All in all, it must be held that there is material on record which leads to the conclusion that the bangles are ornaments within the meaning of the Act and, therefore, were acquired by the petitioners in a manner authorised by Section 31 of the Act.

13. It will have been noted that the authorities viewed the aspect of failure to maintain the requisite records upto date in the light of their finding that the bangles were not ornaments and had been illegally acquired by the petitioners. Now that finding is being set aside, the respondents shall have to examine the first finding afresh and the matter will be remanded for that purpose.

14. The order of the Collector of Customs dated 23rd October, 1970, the order of the Gold Controller (Administrator) dated 2nd June, 1972 and the order in revision of the Government of India dated 18th October, 1979 are quashed and set aside. The Collector of Customs shall issue a fresh show cause notice in respect of the alleged failure of the petitioners to maintain the requisite record upto date and he shall, after considering the reply of the petitioners and after granting them a personal hearing, come to fresh conclusion thereupon. In so doing the shall act upon the basis that bangles had not been illegally acquired by the petitioners. In view of the fact that the bangles shall remain in the custody of the respondents till such time as an order is passed, the Collector is directed to pass it on or before 31st March, 1984.

15. Rule accordingly. No order as to costs.


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