1. This appeal arises out of the Order-in-Original No. Gold/19/1976 dated 12-7-1977 passed by the Collector of Central Excise, Nagpur by which he directed the confiscation of 878.800 gms. of gold ornaments and primary gold. But however, gave the option to the appellants to redeem the same on payment of fine of Rs. 13,000/-. He also imposed a personal penalty of Rs. 10,000/-.
2. Feeling aggrieved by the order of the Collector, the appellant filed an appeal before the Gold Control Administrator and the said appeal stood statutorily transferred to this Tribunal under Section 32K of the Gold Control Act (hereinafter referred to as Act).
That the appellant one Shri Ram Prasad Gopilal Soni was a certified goldsmith and was carrying on his activities at Anjad in a residential cum business premises. On 25-6-1976, the officer of the Central Excise Department, Indore Division carried out a search of the said business-cum-residential premises and seized primary gold and gold ornaments from the shop premises as well as residential premises set out as under : 4. Subsequently, a show cause notice was issued to the appellant alleging that he contravened the provisions of Section 8(1), 42 and 55 of the Act. The appellant however, denied that he contravened any of the provisions. He also contended that the Primary gold and gold ornaments found in the shop premises belonged to the customers and the primary gold and gold ornaments found in the room adjacent to the shop premises belonged to his sister and wife and the primary gold ornaments found in the first floor of the premises belonged to his mother. The Collector of Central Excise, Nagpur who held the enquiry did not accept the contention of the appellant that the primary gold and gold ornaments found in the premises adjacent to the shop premises and in the first floor of the premises belonged to his sister, wife and mother. He however, accepted appellant's contention that the primary gold and gold ornaments found in the shop premises belonged to the customers and he directed return of the ornaments and the primary gold found in the shop premises. With regard to the other items of gold, primary gold and gold ornaments as stated before, he directed confiscation but gave an option to redeem them.
5. In this appeal, Shri Ishwar Chand Upadhyay; Learned Advocate for the appellant vehemently contended that the Central Excise Officers have seized the gold ornaments primary gold from the residential premises without there being any reasonable belief that the appellant has committed any offence or contravened any of the provisions of the Act and therefore the search and seizure are illegal. The second contention was that immediately after the seizure, the appellant was questioned by the Central Excise Officers and the appellant has explained his possession of the gold in the shop premises and had also given an explanation to the persons to whom the gold ornaments and primary gold, found in the residential portion of the premises, belonged. During the hearing the appellant had also produced affidavits of the mother, sister and brother-in-law besides the affidavits of the customers. The learned Collector accepted the affidavits of the customers and released the primary gold and gold ornaments found in the shop premises but however, ordered confiscation in respect of other items solely on the ground that the affidavits of the relatives in the absence of corroborative evidence are not acceptable. For the appellant it was contended that the Learned Collector was unjustified in not accepting the affidavits when the department has not produced any evidence to show that the gold ornaments do not belong to the persons stated by the appellants. It was urged that if the Learned Collector had reasons to disbelieve the affidavits he ought to have examined the persons who had sworn to the affidavits and subjected them to cross examination. Under the Law, in the absence of counter-affidavit or other evidence, Collector could not reject the affidavits merely on the ground that the persons sworn to the affidavits are related to the appellant. The third contention of the Advocate was that in the whole of the order, Collector nowhere states that the appellant had contravened the provisions of Section 55. On the other hand, the Collector accepted the appellant's contention that the primary gold and gold ornaments weighing about 91.600 gms. found in the shop premises belonged to the customers, and released them. In the said circumstances, the Collector was totally unjustified in directing confiscation of the ornaments and primary gold found in the residential portion of the premises in respect of which the appellant was not obliged to keep account.
Finally, Shri Upadhyaya contended that the total quantity of primary gold, ordered to be confiscated, amounted to 290 gms, and under Section 42(ii) of the Act, a Certified goldsmith is entitled to keep in his possession primary gold not exceeding 300 gms. In the said circumstance it cannot be said that the appellant contravened Section 42 of the Act.
So far, as the confiscation of gold ornaments found in the residential premises was concerned, Shri Upadhyaya contended that the Order of the Collector is clearly illegal in that gold ornaments cannot be considered as receptacle or package or covering for keeping the primary gold. He therefore prayed for setting aside the order of the Collector in its entirety.
6. Shri Krishan Kumar, junior Departmental Representative however, supported the Order of the Collector. He drew our attention to certain discrepancy in the statement of the appellant and the affidavit filed by his brother-in-law. He, however, conceded that the quantity of primary gold in respect of which the appellant was stated to have contravened the provisions of the Act did not exceed 300 grms.
7. Having regard to the rival contentions, the one and the only question that falls for determination in this appeal is whether on the facts and circumstances of the case, Collector was unjustified in directing the confiscation of the primary gold and gold ornaments found in the residential premises of the appellant and whether the Collector was unjustified in imposing a personal penalty of Rs. 10,000/- on the appellants.
8. Admittedly, the appellant is a certified goldsmith. He has his place of business in a portion of his house. There is no evidence that the appellant carried on his business in any other portion of his premises.
In so far as primary gold and gold ornaments which were found in' the business premises, these were ordered to be returned and the Collector did not hold the appellant guilty of contravention of either Section 8(1) or Section 55 or Section 42 of the Act. When that was so, whether the appellant could be said to have contravened Sees, either 8(1), or 42 or, 55 of the Act in respect of primary gold or gold ornaments admittedly found in the residential portion of the premises. It is for the department to establish that the residential portion was also being used or at any, time being used by the appellant, as business premises.
There is no evidence whatsoever that the appellant at any time used the residential portion as business premises. If certain primary gold or gold ornaments were found in the residential premises in the absence of evidence that these gold ornaments were prepared by the appellant in his capacity as certified goldsmith' and in the absence of evidence that the primary gold found in the residential premises belonged to the appellant, there is no scope whatsoever to hold the appellant guilty of contravention of Section 8(1) or 42 -or Section 55 of the Act. It is not disputed that the residential premises were not in the sole occupation of the appellant. They were being occupied by others as well, namely the appellant's wife, sister and mother. The learned Collector appears to have proceeded on the footing that the entire burden was on the appellant to establish that the gold ornaments and primary gold found in the residential premises in the occupation of the appellant and others did not belong to him. This presumption of the learned Collector is totally erroneous and opposed to Law. In law the initial burden of establishing the contraventions of any of the provisions of the Act lies on the Department and it is only when that burden is discharged that onus is shifted to the appellant to explain as to how he came to possess primary gold and gold ornaments seized in this case. In the instant case, the department have failed to discharge the initial burden, in that there was neither direct or circumstancial evidence to establish that the primary gold and gold ornaments found in the residential premises belonged to or were possessed by the appellant. It is significant to note that immediately after the seizure, the appellant was questioned and the appellant told the Central Excise Officers that the gold ornaments and primary gold found in the residential premises belonged to the women folk. For reasons best known to the Central Excise Officers they did not choose to record the statements of the women-folk who were available for questioning.
Merely because there were certain discrepancies in the affidavit filed by the brother-in-law of the appellant and statement of the appellant, the Collector was not justified in disbelieving the version of the appellant which finds support from the affidavits filed by the brother in-law, mother and others. The reasoning of the Learned Collector that the affidavits cannot be relied upon because the persons sworn to the affidavits are relations of the appellant is highly unsatisfactory.
When the appellant as well as the women contended that the gold ornaments and primary gold belonged to the women then the best persons who could speak of it could be the appellant and the women folk and.
none else. In the absence of independent evidence...the affidavits could not have been rejected. It is really surprising that the Central Excise officers did not choose to issue a show cause notice either to the appellant's wife or his mother or his sister when at the earliest instance the appellant gave the statement that the gold and gold ornaments found in the residential premises belong to those persons. In our opinion, there was hardly any evidence before the learned Collector to hold that the primary gold and gold ornaments found in the residential premises belonged to or were possessed by the appellants.
In the circumstances, it cannot be said that the appellant contravened any of the provisions with which he was charged. The finding of the Learned Collector that the gold ornaments are either the covering or respectable of the primary gold and therefore liable to be confiscated under Section 71 is the result of improper understanding of the provisions of Section 71 and under no stretch of imagination the gold ornaments could be considered as package, covering or respectable of the primary gold. Therefore, the gold ornaments could not have been confiscated under Section 71(2) of the Act. Each and every contention urged by the learned Advocate is sound and acceptable.
9. On careful consideration of the evidence as a whole, we are satisfied that the order passed by the Collector is erroneous and unjustified and therefore we allow this appeal and set aside the order of the Collector in its entirety. The fine and penalty, if any paid, shall be refunded to the appellants within four months from the date of receipt of this order.