1. By the impugned order dated January 25, 1973 as per Annexure 'A' passed by the Collector of Customs & Central Excise, Ahmedabad, primary gold totally weighing 1598.400 gms. valued at about Rs. 35,100/- at the time of the seizure thereof on February 12, 1971 was ordered to be confiscated under section 71 of the Gold Control Act, 1968 for the violation of section 8(1), section 11 and section 27 of the Act. A penalty was also imposed against the persons from whose possession the gold was seized, (penalty of Rs. 10,000/- was imposed on petitioner No. 1 and Rs. 4000/- on petitioner No. 2 and Rs. 2000/- each on petitioners Nos. 3, 4 & 5). It is this order of confiscation and imposition of penalty which has been challenged by the petitioners under Article 226 of the Constitution of India. The petitioners have also challenged the appellate order dated January 24, 1976 passed by the appellate authority and the revisional order dated June 21, 1978 as per Annexure 'C' passed by the Central Government. The impugned order as confirmed by the appellate and the revisional authorities is challenged on the following two grounds :-
(1) That the show cause notice of adjudication and confiscation and penalty was illegal inasmuch as it was not issued within the period of six months but was issued during the extended period without affording any opportunity to the petitioners to show cause against the proposal to extend the period of six months.
(2) That the competent authorities have not taken into consideration the explanation offered by the petitioners.
2. The facts are not in dispute. The premises of the petitioners were raided on February 12, 1971. Primary gold and gold ornaments in excess of the quantities mentioned in the statutory registers (G.S. 13) were found from the premises. The extent of the excess was 2335.729 gms. A show cause notice was issued by the competent authority on October 15, 1971 and the petitioners were afforded an opportunity to show cause why the excess gold in respect of which the relevant provisions of the Act had been violated should not be confiscated and why penalty should not be levied. By the impugned order as per Annexure 'A' the Collector of Customs came to the conclusion that sufficient cause was shown for the release of gold ornaments weighing 737.300 gms. He was, however, of the opinion that so far as primary gold weighing about 1598.400 gms. was concerned, a violation of the relevant provisions had in fact taken place and in exercise of powers under section 71 he ordered the confiscation of the primary gold to that extent. It will be seen that the notice calling upon the petitioners to show cause against confiscation and penalty was issued on December 15, 1971 i.e. about 10 months and 3 days after the date of the seizure. It is in the context of these facts that the first submission has been urged. It is not in dispute that the Collector of Customs had extended the period for issuing the show cause notice in exercise of powers under the second proviso to section 79 which reads as under :-
'79. No order of adjudication of confiscation or penalty shall be made unless the owner of the gold, conveyance, or animal or other person concerned is given a notice in writing -
(i) informing him of the grounds on which it is proposed to confiscate such gold, conveyance or animal or to impose a penalty; and
(ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty mentioned therein and, if he so desires, of being heard in the matter :
Provided that the notice and the representation referred to in this section may, at the request of the owner or other person concerned be oral :
Provided further that where no such notice is given within a period of six months from the date of seizure of the gold, conveyance or animal or such further period as the Collector of Central Excise or of Customs may allow, such gold, conveyance or animal shall be returned after the expiry of that period to the person from whose possession it was seized.'
3. The grievance of the petitioners is that they were not afforded any opportunity to show cause against the extension of the period before the issuance of the show cause notice which was issued after the expiry of six months. In other words, the argument is that though the second proviso empowers the authority concerned to issue show cause notice within the period of six months from the date of the seizure of the gold or such further period as the Collector of Central Excise or of Customs may allow and though the period was extended as contemplated by the proviso, inasmuch as the period was extended without affording any opportunity to the petitioner to show that the period should not be extended, the show cause notice itself was bad in law and that the impugned order of confiscation and penalty was, therefore, rendered void. Reliance was placed on Assistant Collector, Customs v. Malhotra, A.I.R. 1972 S.C. 689 in support of this submission. In the said case, the question which came up before the Supreme Court was one relating to the interpretation of section 110(2) of the Customs Act of 1962. The said provision in so far as material is in the following terms :
'110(2). Where any goods are seized under sub-section (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized :
Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months.'
It will be seen that the proviso to sub-section (2) of section 110 empowers the competent authority making the seizure under the Customs Act of 1962 to extend the period for return of the seized goods 'on sufficient cause being shown' for a period not exceeding six months. We are concerned with section 79 of the Gold Control Act the wording of which is altogether different. The proviso does not require that the period for return shall be extended only on sufficient cause being shown. In other words, the crucial expression 'on sufficient cause being shown' is absent in the provision with which we are concerned. Under the circumstances, the decision in Assistant Collector, Customs v. Malhotra (supra) cannot come to the rescue of the petitioners. The identical question had come up before the Allahabad High Court in P. N. Agarwal v. Union of India, 1973 Tax. L.R. 2166. A Division Bench of the Allahabad High Court has taken the view that having regard to the difference in the language of the provision contained in the Gold Control Act and having particular regard to the fact that it was not incumbent on the competent authority to show that there was sufficient cause for extension before taking a decision to extend the period, the decision rendered by the Supreme Court in Malhotra's Case could be of no assistance. The reasoning which found favour with the Division Bench is contained in paragraph 8 of the judgment which to the extend relevant may be quoted :-
'It will be seen that there is material difference between the provisions of Section 110 of the Customs Act and S. 79 of the Gold Control Act which specifically lays down that before making an order directing confiscation or imposing penalty a notice in writing has to be given, on the other hand there is nothing in this section which indicates that the Legislature entitled (intended) the Collector of Central Excise to hear the person concerned before extending the period mentioned in the proviso to that section. Moreover, the words 'that an extension can be granted on sufficient cause being shown' which finds place in S. 110 of the Customs Act, are significantly absent in Section 79 of the Gold Control Act, 1968. In paragraph 13 of the judgment in AIR 1972 SC 689 (693) the Supreme Court has made the following observations :-
'The question therefore is as to the nature of such a function and power entrusted to and conferred on the Collector by this proviso. It will be noticed that whereas sub-section (1) of S. 110 uses the expression 'reason to believe' for enabling the Customs Officer to seize goods, the proviso to sub-section (2) used the expression 'sufficient cause being shown'. It would seem that sub-section (1) does not contemplate an enquiry at the stage of seizure, the only requirement being the satisfaction of the concerned officer that there are reasons to believe that the goods are liable to confiscation by reason of their illegal importation........ It is clear that the Legislature was not prepared to use the same language while giving power to the Collector to extend time and deliberately used the expression 'sufficient cause being shown' ... The word 'sufficient cause being shown' ... must mean the the Collector must determine on materials placed before him that they warrant extension of time ... ... ... ... ... ... ...
But there can be no doubt at the same time that the enquiry to be held by the Collector has to be on facts i.e. material placed before him. There is no question in such cases of the subjective satisfaction of the Collector for what he is asked to do by the proviso is to determine that the cause shown before him warrants an extension of time.'
4. It is the use of the expression 'on sufficient cause being shown', in proviso to Section 110 of the Customs Act and absence of such an expression in Section 110(1) that weighed with the Supreme Court in coming to the conclusion that the power to extend time given to the Collector of Customs under Section 110 of the Customs Act, was quasi-judicial. In Section 79 of the Gold Control Act the position has been reversed whereas sub-section (1) specifically required notice to the party concerned before adjudication, confiscation or penalty. Such requirement is absent in the proviso where even an expression similar to a sufficient cause being shown appearing in Section 110 of the Customs Act, has not been used. This section as it stands does not require any adjudication or judicial determination of facts before the time mentioned in the proviso is to be extended. We are accordingly of the opinion that there is nothing in Section 79 which implies that the power given to the Collector Central Excise for extending the period of six months for retention to goods seized under Section 79 of the Gold Control Act is to be exercised in a quasi-judicial manner. It is not necessary that the person from whose possession articles have been seized under Section 66 of the Act, should be given an opportunity for being heard before the Collector decides to extended by the period of six months. As notice under Section 79 of the Gold Control Act has already been issued to the petitioners within the period as extended by the Collector Central Excise they are not entitled to the return of the goods as long as proceedings under Section 79 are not concluded.'
We are in entire agreement with the reasoning of the Allahabad High Court. Second proviso to section 79 of the Gold Control Act empowers the competent authority to extend the period without engrafting any limitation on his powers to do so. It is not incumbent on him to take a decision to do so. It is not incumbent on him to take decision for extension only provided he is in a position to show that sufficient cause exists for extending the period. Since the power to extend has been conferred on the Collector of Customs and it has been exercised in accordance with the second proviso, it cannot be said that the show cause notice issued by the competent authority before passing the order of adjudication (ordering confiscation and penalty) was illegal or void. Apart from the difference in the language, the observations made by the Supreme Court in paragraph 15 Malhotra's case shows that the Supreme Court has based its decision mainly on the circumstances that the proviso empowers the Collector acting under the Customs Act to decide the question about extension provided and only provided existence of sufficient cause is established. This is evident from the circumstance that the Supreme Court has in terms observed that since the Collector has on facts to decide on the existence of a sufficient cause, although his decision as to sufficiency of materials before him may be within his exclusive jurisdiction, it is nonetheless difficult to comprehend how he can come to his determination unless he has before him the pros and cons of the question. Further onward the Supreme Court has observed that it cannot be said that the determination of the Collector that a sufficient cause exists is just and fair if he has before him only a one-sided picture without any means to check it unless an opportunity is afforded to the other side to correct or controvert it. It is only when such an opportunity is afforded that the enquiry into the sufficiency or otherwise of the material before the Collector for his determination on the question of extension can by tested. This is the essence of the decision which has mainly turned on the wording of the said proviso. Since no similar rider as regards the existence of sufficient cause has been engrafted on the powers of the Collector of Central Excise or of Customs acting in exercise of powers under section 79 of the Gold Control Act, it is futile to contend that the show cause notice issued by the competent authority beyond a period of six months but within the extended period is void.
5. In the view that we are taking it is not necessary to consider the alternative submission urged by the learned Standing Counsel for the Union of India in light of the law laid down in J.K. Bardolia Mills vs. M. L. Khunger, 16 G.L.R. 119, in support of the contention that the power to confiscate under section 71 is in no way controlled by the right conferred on the petitioners for a return of the seized articles under section 79.
6. A half-hearted contention was advanced to the effect that the explanation offered by the petitioners in regard to the possession of the gold which was seized from their possession at the time of the raid on February 12, 1971 had not been considered by the competent authority and that the impugned order was, therefore, vitiated for non-application of mind. We see no substance in this contention. Counsel for the petitioners has contended that an explanation was rendered to the effect that the petitioners had offered explanation that 'standard gold bars' had been purchased from one Jagannath Nathalal Parikh, a licensed gold dealer of Jetpur, on that very day and that entries in the register could not be made as the petitioners had forgotten to make entries in the time. On going through the well-considered order passed by the competent authority we find that this aspect has in terms been considered. It appears that the explanation was not considered acceptable having regard to the facts and circumstances of the case. In fact no such grievance was made before the appellate or the revisional authority. As has been pointed out in the affidavit-in-reply and as has been argued by the learned Standing Counsel, what was seized from the petitioner was 'primary' gold and not 'standard gold'. In the first place it was not stated as to how much standard gold was obtained from Jagannath Parikh. In the second place what was acquired from Jagannath Parikh were bars of standard gold and not primary gold. Learned Counsel has also called our attention to the requirement of rule 6 read with Schedule II to the effect that the following particulars shall be stamped on each standard gold bar :-
'(i) on the observe, the name or trade mark of the refinery, fairness and weight of the bar; and
(ii) on the reverse, the serial number of the bar, date and year of manufacture and code letter of the refinery.
Note : Serial number of the standard gold bar should be changed on first day of every month. Separate serial number may be used for the bars of 10, 50 and 100 grammes weight.'
'Standard gold bar' has been defined by section 2(u) as meaning primary gold of such fineness, dimensions, weight and description and containing such particulars as may be prescribed as may be prescribed. Rule 3 read with Schedule I defines standard gold bar as under :-
'3. Every standard gold bar shall be of such fineness, dimensions and weight as are specified in Schedule I.'
Schedule I reads as under :-
'SCHEDULE IWeight, fineness and dimensions of the standard gold bar(i) Weight ... ... 10.50 or 100 grammes(ii) Fineness ... ... 995.0 per mill(iii) Dimension.---------------------------------------------------------------------Weight of bar Length Breadth---------------------------------------------------------------------(a) 100 gm bar ... ... 34.0 mm 22.0 mm(b) 50 gm bar ... ... 25.0 mm 15.0 mm(c) 10 gm bar ... ... 16.0 mm 11.0 mm---------------------------------------------------------------------
7. Learned Standing Counsel has also called our attention to the fact that section 42 in terms provides that no certified goldsmith (petitioner No. 3, 4 & 5 claimed to be certified goldsmiths) shall either own or have at any time in his possession, custody or control any quantity of standard gold bars in excess of one hundred grammes, or any quantity of primary gold (including standard gold bars) in excess of three hundred grammes. Our attention is also called to section 32 which provides that no licensed dealer shall have at any time in his possession or custody primary gold in any form except in the form of standard gold bars subject to the restrictions imposed by the proviso. It is, therefore, clear that the explanation offered by the petitioners taken at its face value was not worthy of acceptance, what they calimed to have purchased from Jagannath Parikh were standard gold bars of unspecified quantity. What was found from them was primary gold and not permissible standard gold bars conforming to the specifications in the relevant rules. It is, therefore, obvious that the explanation was false. This was presumably the reason why no such contention was advanced at any stage before the Collector of Customs or appellate or revisional authority. What is more, it is finding of fact which cannot be assailed unless it is shown to be perverse or based on no evidence. Far from being perverse, it is the inevitable conclusion which flows from the facts and circumstances established before the competent authority. We see no substance in this contention.
8. The petition, therefore, fails and is rejected. Rule is discharged. There will be no order regarding costs.