Full Judgment
2. Brief facts of the case so far as relevant for the purpose of this appeal are that as a result of the search of the business-cum-residential premises of the appellant on 12-6-82 gold ornaments weighing 6,001.000 gms. gross (2911.750 gms. net) valued at Rs. 3,57,492/- were recovered and seized by the Headquarters (Preventive) Customs. On 13-6-82 also, while conducting the search of the remaining portion of the house which could not be searched on 12-,6-82 the Preventive Party recovered the following gold ornaments from the possession of the members of the family of the appellant :--------------------------------------------------------------------------------- Gross weight Net Weight Jaiwant Mal Duggar.
374.500 196.000-------------------------------------------------------------------------------- Since the above gold Ornaments recovered from the possession of the, members of the family of the appellant were found to be within the permissible limit under the Gold (Control) Act, the same were allowed to retain by the respective family members. It is alleged that, on enquiry with regard to the gold ornaments weighing 6001.000 gms. gross (2911.750 gms. net) recovered on 12-6-82, the appellant stated that he had not made any declaration at any stage about the possession of the gold ornaments. As a follow up action a show cause, notice was issued to the appellant calling upon, him to show cause as to why the seized gold ornaments be not confiscated and why the penalty be not imposed on him. In reply to the show cause notice the appellant admitted the recovery of the said gold ornaments weighing 2911.750 gms. net but contended that the seized gold ornaments were mortgaged with him by the various parties and since the quantity of ornaments did not exceed the limit prescribed under the Gold (Control) Act, there was no necessity for any, declaration to be filed in respect of that gold under Section 16, of the Gold '(Control) Act He further submitted that the pawn broker business is carried on by a firm of HUF and not a partnership firm and therefore Sub-section 2(f) of Section 16 was also not applicable to the appellant and, therefore, the-question of filing any declaration under Section 16, ibid did not arise. After the usual enquiry, the Adjudicating Authority held that the appellant was under legal obligation to file the declaration under Section 16, ibid and since he failed to do so he had made himself liable under Section 16 read with Section 6(1) of the Gold (Control) Act, Consequently, the Adjudicating Authority imposed a personal penalty of Rs. 25,000/- on the appellant under Section 74 of the Gold (Control) Act, 1968 and also observed in the operative portion of the impugned order that the seized gold shall be released to the appellant on payment of the personal penalty and due declaration be filed within one month of the release of the ornaments.
3. Shri G.K. Rana, learned Counsel for the appellant contended before me that the appellant and his wife constitute one family and the pawn broker business is carried on by a firm of HUF; that the seized ornaments weighing 6001.000 gms. gross (2911.750 gms. net) were mortgaged with the appellant by the various parties and since the appellant and his wife constitute one family which is entitled to possess gold ornaments upto 4,000.000 gms. and since the total net weight of the ornaments in their possession was only 3,145.250 gms.
(2911.750 gms. of seized mortgaged ornaments + 233.500 gms. belonging to his wife), there was no need for filing the declaration under Section 16. In nutshell his contention was that the quantity of both the pledged and personal ornaments should be clubbed together for the purpose of making a declaration under Section 16 read with Section 6(1) of the Gold (Control) Act. As against this, Smt. Nisha Chaturvedi, learned SDR supported the impugned order.
4. From the impugned order, I observe that the said contentions were also raised before the Adjudicating Authority who after negativing the same held the appellant guilty for contravening the provisions of Section 16(2)(m) read with Section 6(1) of the Gold (Control) Act, 1968.
5. For better appreciation of the. respective contention raised, it would be useful to set-out the relevant portions of Sections 6(1) and 16 of the Act which run as under:-- "6(1) Power of Administrator to call for returns as to receipt or sale of hypothecated gold. The Administrator may if he is of opinion that it is necessary in the public interest so to do, require any person who lends or advances money on the hypothecation, pledge, mortgage or charge of any article or ornaments to make to him, in such form and within such time as may be specified, a return as to the receipt, delivery or same of such article or ornament and as to the persons from whom they were received or, as the case may be, to whom they were delivered or sold." "Section 16, Declaration as to the articles or ornaments t-(1) Save as otherwise provided in this Chapter, every person who owns, or is in possession, custody or control of any article or ornament at the commencement of this Act, or acquires the ownership, possession, custody, or control of any article or ornament thereafter shall make, within thirty days from such commencement or from such acquisition as the case may be, or within such further period as the Administrator may, on sufficient cause being shown allow, a declaration in the prescribed form as to the quantity, description and other prescribed particulars of any article, or ornament, or both, owned, possessed, held or controlled by him:Provided ...
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(2) For the removal of doubts, it is hereby declared that the declaration referred to in this section shall be made, in relation to any article, or ornament or both- (a) owned by a minor or a lunatic, by the guardian or manager of such minor or lunatic, as the case may be; (b) owned by an idol or a deity, by the manager of such idol or deity, whether known as sheball or by any other name;.
(c) owned, possessed, held or controlled by a person whose properties are under the management of any administrator or receiver, by such administrator, or receiver; (d) owned, possessed, held or controlled by a person whose properties are under the management of a Court of Wards, by the manager of such Court; (e) vested in an executor or an, administrator of a will or other testamentary disposition, ;by such executor or administrator; (f) owned, possessed, held or controlled by the members of a firm, by arty partner of such firm; (g) owned, possessed, held or controlled by a Hindu Undivided family, by the head or Karta of such family; (h) which is the subject-matter of any public or private trust, by the trustee of such trust; (i) owned, possessed, held or controlled by a company, whether incorporated in or outside India, by any person in charge of the management of the affairs of such company; (j) belonging to a temple, church, mosque, gurdwara or any other religious institution, by the person in charge of the management of such temple, church, mosque, gurdwara or other religious institution; ( (1) owned, possessed, held or controlled by any society, club or other association, by the Secretary or Manager of such society, club or other association; (m) owned, possessed, held or controlled by any other person, by such person as may be prescribed.
(3) If any person who did not own, possess, hold on control, before the commencement of this Act, any quantity of gold in excess of the quantities specified in Sub-section (5), acquires after such commencement, the ownership (whether by succession, intestate or testamentary, or otherwise), possession, custody or control of any gold and if, as a result of such acquisition, the total quantity of gold owned, possessed, held or controlled by such person exceeds the quantities specified in Sub-section (5), such person shall, within thirty days from the date of such acquisition or within such further period as the Administrator may, on sufficient cause being shown, allow, make a declaration in the prescribed form station the total quantity, description and other prescribed particulars of- (a) the gold owned, possessed, held or controlled by him immediately after such acquisition, and (b) the person from whom the ownership, possession, custody or control of such gold was acquired.
(5) No declaration referred to in Sub-section (1) or Sub-section (3), shall be required to be made,- (a) in relation to articles, unless the total weight of articles owned, possessed; held or controlled by - (i) a minor, who is not a member of a family, exceeds twenty grammes, (ii) an individual (other than a minor), who is not a member of a family exceeds fifty grammes, (iv) any person referred to in clauses (b) to (f) and (h) to (m) of Sub-section (2), exceeds fifty grammes; (b) in relation to any ornaments, or both articles and ornaments, where both articles and ornaments are owned, possessed, 'held or controlled unless the total weight of such ornaments or both articles and ornaments, as the case may be, owned, possessed, held or controlled by,- (i) an individual who is not a member of a family, exceeds two thousand grammes, (c) in relation to any ornaments, or both articles and-ornaments, owned, possessed, held or controlled by any person, referred to in clauses (b) to (f) and (h) to (m) of Sub-section (2), unless the total weight of such ornaments, or both articles and ornaments, exceeds two thousand grammes.
(6) For the purposes of this section, "family" shall be deemed to consist of (ii) any two or more of them, but shall not be deemed to include any other person.
(7) Every licensed dealer or refiner shall make a declaration or further declaration, as the case may be, in accordance with the provisions of this section in relation to. any gold owned, possessed, held or controlled by him in any capacity other than the capacity of a licensed dealer or refiner and the provisions of Sub-section (5) shall not apply to such gold. Explanation "- Where the licensed dealer or refiner is a company or other body corporate or a firm, the declaration referred to in this sub-section shall also be made by every director of such company on body corporate or, as the case may be, every partner of such firm, in respect of the gold owned, possessed, held or controlled by him in any capacity.
6. On the plain reading of Section 16, it is clear that it requires every person who owns, or is in possession, custody or control of any article or ornaments at the commencement of the Act or thereafter to make a declaration in the prescribed form and also that it is obligatory on every person unless he is exempted under Sub-section (5) thereof to make a declaration of all the gold articles and ornaments in his possession, custody or control. Clauses (a) to (m) of Sub-section 2 specifies the person who shall be responsible to make declaration referred to in Section 16 in relation to any article or ornaments or both. Clause (m) of Sub-section (2) is a residuary clause which provides that if the article or ornament or both are owned, possessed, held or controlled by any person, the declaration in relation to such person shall be made as may be prescribed. Pawn broker comes within the clutches of Section 16 also cannot be disputed in view of the law laid down in the case of Badri Prasad v. Collector of Central Excise reported in AIR 1971 SC 1170. A careful reading of the aforesaid provisions of Sub-sections (2) and (5) with its clauses (b) & (c) would show that any person may in relation to any ornaments or both articles or ornaments, own, possess, hold or control the same in two different capacities within the prescribed quantity in each of such capacities and in that event -he is not required to make any declaration under Sub-sections (1) & (3) of Section 16 of the Act Under Sub-clause (i) of clause (b) of Sub-section (5), a person may own, possess, hold or control the ornaments up to the quantity of 2000.000 gms. in the capacity of an individual and at the same time, under clause (c) of Sub-section (5), he may also own, possess, hold, or control the ornaments upto the quantity of 2000.000 gms. for others in the capacity of any other person referred to in clauses (b) to (f) and (h) to (m) of Sub-section 2 without making any declaration. Thus Section 16 read as a whole or any other provisions of the Act neither expressly nor by necessary implication contemplate that for purposes of making declaration the holding of ornaments or both articles and ornaments, of a person in two different capacities, i.e. his personal and on behalf of any persons will be clubbed together. Thus the contention of the learned counsel for the appellant that for the purpose of declaration under Section 16 read with Section 6(1) of the Gold (Control) Act the quantity of both the pledged and personal ornaments should be clubbed together in the instant case, cannot be accepted, otherwise, it would lead to hazardous results. For, if it were not so, then there may be cases where an-individual or a 'karta' of a family may not be entitled to hold any ornaments or both articles and ornaments if he holds the same for others to the maximum prescribed quantity and in such a circumstance, an individual or 'Karta' will never agree to hold for others, ornaments/articles or both in the capacities referred to in clauses (b) to (f) and (h) to (m) of Sub-section (2). To put it tersely, if the principle of 'clubbing together' as urged by the learned counsel for the appellant is accepted, it would lead to hazardous results. Take for an example the case of a Hindu Undivided Family in respect of which a person holds ornaments to the maximum prescribed quantity in the capacity of a Karta of Hindu Undivided Family and if for purposes of making a declaration in the Act he is required to club his personal holdings also which he holds in his individual capacity together with the holdings of others, then probably he may have to lose his own, the same being in excess of the prescribed limit.
7. From the record, I observe that during the adjudication proceedings, the appellant produced the money lending licence No. 13/F. It was issued in the name of the appellant in his individual capacity and not as 'Karta' of HUF and it was found by the Adjudicating Authority that the appellant was carrying on his pawn business as an individual and it was not the family business or a HUF business as claimed by him.
8. In the result, the household ornaments of the appellant could not be clubbed together with the pawn ornaments/articles, for the purpose of declaration under the Act. Since the appellant was found in possession of pawn ornaments weighing 6001.000 gms. gross (2911.730 gms.' net) which exceeded the limit of 2000.000 gms. in terms of Section 16(5)(c) the appellant was bound to file declaration which he failed to do so and therefore the Adjudicating Authority has rightly held him guilty for contravening the provisions of Section 16(2)(m) read with Section 6(1) of the Gold (Control) Act, 1968.
9. Before I part with the case, I would like 'to observe that the direction of the learned Adjudicating Authority that the seized gold ornaments shall be released to the appellant on payment of personal penalty adjudged was not according to law as no such, direction can be issued when the penalty simpliciter is imposed. On the point of dark, it may be mentioned that such direction may be necessary where in the case of confiscation the option to redeem in lieu of confiscation is given. However, during the course of arguments, Shri G.K. Rana, learned Advocate informed that the appellant has already paid the fine and the seized gold ornaments already stand released, hence no separate order with regard to this issue is required to be passed by me.
10. In the light of the foregoing discussions, the appeal fails being of any merits.