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Karendra Kumar and Co. Vs. S.D. Shahapurkar - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberMisc. Petition No. 521 of 1974
Reported in1989(22)LC565(Bombay); 1989(42)ELT381(Bom)
ActsCentral Excise Act
AppellantKarendra Kumar and Co.
RespondentS.D. Shahapurkar
Appellant AdvocateK.H. Bhabha, ;A. Hidayatulla and ;C.M. Mehta, Advs.
Respondent AdvocateD.R. Dhanuka and ;S.G. Shah, Advs.
.....are primary gold must lead better evidence to gold and silver ornaments. on february 2nd, 1970, the petitioners claim to have purchased gold ornaments of the following description from various customers. ------------------------------------------------------------------------description number of pieces weight in gms.------------------------------------------------------------------------pherwas 10 156.800hairpins 25 329.300bangles 70 958.500---------1444.600------------------------------------------------------------------------the petitioners forwarded these ornaments to the government mint on february 3rd, 1970 and the mint has issued receipt in favour of the petitioners stating that the articles are gold ornaments. on the same day the superintendent central excise seized these ornaments on the assumption that the items.....

1. A short controversy that falls for determination in this petition is that whether 25 hairpins together weighing 329.300 gms. can be described as ornaments or as primary gold. The facts which are not in dispute are as follows :-

2. The petitioner are a registered partnership firm carrying on business in gold and silver ornaments. On February 2nd, 1970, the petitioners claim to have purchased gold ornaments of the following description from various customers.

------------------------------------------------------------------------Description Number of pieces Weight in gms.------------------------------------------------------------------------Pherwas 10 156.800Hairpins 25 329.300Bangles 70 958.500---------1444.600------------------------------------------------------------------------

The petitioners forwarded these ornaments to the Government Mint on February 3rd, 1970 and the Mint has issued receipt in favour of the petitioners stating that the articles are gold ornaments. On the same day the Superintendent Central Excise seized these ornaments on the assumption that the items are not gold ornaments but primary gold. The panchnama of seizure was prepared and panchnama recites that the articles seized are gold ornaments. The Superintendent Central Excise, recorded the statement of the two partners of the petitioners and thereafter show cause notice was issued on August 21st, 1970, calling upon the petitioners to explain why the articles should not be confiscated.

3. The Deputy Collector of Central Excise heard the petitioners in person on March 2nd, 1971. Before the Deputy Collector no evidence was led on behalf of the department to indicate that the articles confiscated were not ornaments. The Deputy collector inspected the articles and on such personal inspection was satisfied that the articles sized were not ornaments but primary gold. After the personal hearing on March 17th, 1971, the petitioners addressed a letter to the Respondent No. 2, requesting that they should be given opportunity to examine the witnesses to establish that in the trade market the items are known as ornaments. This letter was received by the Respondent No. 2, on March 19th, 1971, but without considering the request of the petitioners on March 20th, 1971, an order was passed confiscating the articles under Section 71 of the Gold Control Act and a penalty of Rs. 5,000/- each was imposed on each of the petitioners and on the firm. The Respondent No. 2, held on personal examination that all the items confiscated were primary gold and not ornaments. The Respondent No. 2, was impressed by the fact that through notices were issued to various customers whose names were furnished by the petitioners, not a single customer came forward to establish the said transaction.

4. The petitioners carried an appeal before the Controller of Customs, Respondent No. 3. The Appellate Authority held that the articles like Pherwas and bangles which were confiscated were gold ornaments and no order of confiscation should be passed in regard to these ornaments. The Appellate Authority on inspection held that 25 items of hair-pins were not gold ornaments but was only primary gold. The Appellate Authority held that the hair pins are twisted at their end and their ends are very rough to indicating that they cannot be used as hair-pins. The Appellate Authority set aside the order of Respondent No. 2, with regard to bangles and pherwas, but confirmed the order as regards the hair pins. The penalty imposed by the Respondent No. 2, was also confirmed. The petitioners carried a revision before the Government of India but it ended in dismissal by an order dated 21st January, 1974. In the meanwhile on June 8th, 1973, the department issued a show cause notice to the petitioners to explain why their licence for dealing in gold ornaments should not be cancelled, under the provisions Section 50 of the Gold (Control) Act, for breach of the provisions. The petitioners have filed the present petition under Article 226 of the Constitution to challenge the validity and legality of the order confiscating the hair-pins and imposing penalty and also the action of issuing a show cause notice for cancellation of licence.

5. Mr. Bhabha the learned counsel appearing in support of the petition contended that the authorities below have clearly misconceived the position and wrongfully assumed that the hairpins are not gold ornaments but only primary gold. The learned counsel submitted that there is no material on record and that the burden was on the department to establish that the articles seized were primary gold. No effort was made to lead any evidence save and except the personal inspections by Respondents No. 2 and 3. The learned counsel also made grievance that inspite of letters by Respondent No. 2 before passing the order under challenge for examination of witness to establish the trade practice, the Respondent No. 2, has given no heed to that request. The learned counsel further submitted that both the appellate authority and revisional authority ignored the petitioner's plea to lead evidence in support of his claim inspite of specific grievance before them.

6. On behalf of the department Mr. Balkrishna Madhav Bidkar, the Superintendent, Central Excise & Customs has filed a return on 10th July, 1979, and it is not disputed that save and except the personal inspection of Respondents 2 and 3, there is no other material on record to hold that the articles are seized are not gold ornaments. In view of this return, I enquired from Mr. Dhanuka, the learned counsel appearing for the department as to whether I could have a look at the hairpins confiscated by the department. Mr. Dhanuka very fairly produced the 25 articles for my inspection and in my judgment it is impossible to hold that the articles seized are gold ornaments. The grievance of Mr. Bhabha that it is not proper merely to rely upon the visual inspection by the officers to hold that the articles are not gold ornaments in sound. It is always dangerous to base the conclusion on visual inspection and experience of a particular individual to decide whether the article is gold ornaments or not. The two authorities below here recorded contrary findings in respect of Pherwas and bangles. As indicated herein above my inspection of the articles (hairpins) and conclusion therefrom is contrary to that of the authorities below. It is, as I have pointed out above, dangerous to rely upon the judgment of an individual in such cases, and the department whose duty it is to establish that articles seized are primary gold must lead better evidence to establish it. It cannot be overlooked that in a proceedings for confiscation the burden is initially heavy on the department, and the burden cannot be held to have been discharged by visual inspections by the Respondents No. 2 and 3. On this short ground itself, the petition deserves to be allowed. As the order of Confiscation of hair pins is required to be set aside, the consequential order imposing punishment must also be set aside. The show cause notice issued on June 8th, 1973, on the petitioner to explain why the licence issued under Gold (Control) Act should not be cancelled must also be quashed because this show cause notice was issued only in the basis of order of confiscation and penalty imposed by the Respondents 2 and 3.

7. In the result, the petition succeeds and the rule is made absolute in terms of prayer (a) and (b) of paragraph 16 of the petition. The respondents are directed to return the articles seized to the petitioners within a period of four weeks from to-day. In the circumstances of the case, there will be no order as to costs.

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