1. Shri Deepchand S. Jain has filed an appeal dated 24.3.1980 under old Section 80 of the Gold (Control) Act to the Gold Control Administrator and this has been transferred to the Tribunal in terms of Section 82K ibid. and is to be treated as an appeal before the Tribunal. Similarly, the appeal dated 20.3 1980 of M/s. Gulabchand Jawanmal & Co. has also been transferred to the Tribunal for being heard as an appeal. Both these appeals had been filed against the order No. XV1I(GC)8-16/78 dated 21.2.1980 passed by the Collector of Customs (Prey.) Bombay, under which he had levied a redemption fine of Rs. 40,000/- in lieu of confiscation of gold weighing 2340.300 gms. valued at Rs. 1,39,825/- seized from the premises of Shri Deepchand S. Jain and under which the Collector had imposed a penalty of Rs. 15,000/- on Shri Deepchand S.Jain under Section 74 for contraventions of the Gold (Control) Act and a penalty of Rs. 15,000/- on M/s. Gulabchand Jawanmal & Co. for abetting Shri Deepchand S. Jain in the commission of the offences under the Gold (Control) Act. Since both these appeals arise out of common facts and order, they were heard together at the request of the appellants' advocate and hence this common order.
2. The brief facts of the case are that the Gold Control Officers on the basis of information raided the residential premises of Shri Deepchand S. Jain and the business premises of M/s. Gulabchand Jawanmal & Co. Bombay on 30.1.1978. From the residential premises of Shri Deepchand the officers seized gold ornaments weighing 2336.600 gms. and primary gold weighing 3.700 gms. alongwith certain incriminating documents. Nothing incriminating was recovered from the business premises of M/s. Gulabchand Jawanmal & Co. The necessary investigations were carried out, show cause notices were issued to the appellants and others. After holding the process of adjudication, the Collector of Customs (Prev.) Bombay passed the order dated 21.2.1980 levying the fine of Rs. 40,000/-in lieu of confiscation of the seized gold and gold ornaments and levying penalties of Rs. 15,000/-each on Shri Deepchand S. Jain and M/s. Gulabchand Jawanmal & Co.
Appearing on behalf of the appellant Shri Deepchand S. Jain Advocate Shri Wazifdar first narrated briefly the facts of the seizure and the Collector's order passed against him. He drew our attention to Shri Deepchand's statement dated 30.1.1978 under which he had stated that some of the gold ornaments recovered from his residence belonged to his wife except those found in the brass box which belonged to H.U.F. Shri Wazifdar also drew our attention to the copy of the panchanama dated 30.1.1978 in which the recovery of the gold ornaments and gold pieces had been mentioned. He contended that the old and the new ornaments were recovered separately from two different boxes. The new ornaments were not exhibited for sale and there was no activity of dealership on the part of Shri Deepchand as held by the Collector. As regards the ornaments belonging to H.U.F. Shri Wazifdar contended that under Section 16 of the Gold (Control) Act, gold ornaments upto 4000 gms.
could be kept without making any declaration. Shri Wazifdar also drew our attention to the explanation of Shri Deepchand regarding the H.U.F.ornaments vide page 53 of the Paper-Book. As per this statement the gold ornaments weighing 1638.200 gms. belonged to Shri Deepchand and his brother Pukhraj as members of H.U.F. Certain ornaments had been remade by Shri Deepchand. In support of his contention, the affidavit of Shri Deepchand's wife Smt. L. Lekuben and his brother Shri Pukhraj had been filed before the Collector of Customs (Prev.) Bombay.
Similarly, the appellant had submitted the Partition Deed (P. 122 of the P.B.) of the family property under which the appellant had acquired the ornaments and the English translation of the Partition Deed had also been furnished (P. 118 of the P.B.). Shri Wazifdar further contended that Shri Deepchand was earning a small commission by receiving old ornaments from his customers and getting them re-made as per their requirements through some goldsmiths. In this connection Shri Wazifdar drew our attention to Shri Deepchand's statement dated 5.6.1978. He further argued that the gold dealers and goldsmiths to whom the show cause notices had been issued, had been let off by the Collector on the ground that they had petty sales. But similar leniency was not shown to Shri Deepchand. There was no evidence of his acting as the gold dealer. Regarding the ornaments belonging to the H.U.F. Shri Wazifdar contended that this claim was supported by shown affidavits of the appellant's wife and his brother. Relying on the ratio of the decision reported in 1983 F.CR 2077-D. Shri Wazifdar argued that the sworn affidavits could not be dis-believed. He contended that there was no finding by the Collector that the gold ornaments were stock-in-trade of Shri Deepchand. As regards the primary gold weighing 3.700 gms., Shri Wazifdar contended that it was a piece of broken bangle and under the definition of "ornaments" the same was classifiable thereunder and not as gold bullion which has been clarified in Shri Deepchand's statement dt. 30.1.1978. The so called gold bullion were i pieces of Remnants of gold ornaments. The same item had also been included at Sl.No. 12 of the Annexure 'A' to the Panchanama dated 30.1.1978. The description was 3 small beads of primary gold and one small broken piece of bangle. Hence the so called gold bullion was not bullion, but parts of ornaments. Shri Wazifdar therefore requested that the confiscation order should be set aside and the amount of fine may be ordered to be refunded. As regards the levy of penalty of Rs. 15,000/- Shri Wazifdar pleaded for leniency on the ground that the same was very heavy.
4. On behalf of the Collector, Shri Pattekar also drew our attention to the panchanama of the seizure. He contended that items 1 to 12 of Annexure 'A' to the panchanama were meant for sale. This was very clear from the fact that the weight of each item was mentioned and each item was kept separately in paper packets. Besides in case of some items, names of the owners had also been mentioned. If these had been personal ornaments or H.U.F. ornaments, there would have been no need for the weights to be indicated or for keeping each item separately. Besides, the description in the panchanama of these items was that they were all new. This had also been mentioned in the Collector's order and he drew our attention to the Collector's finding on page 14 of his order.
Besides, the statements of Shri Vinodrai Atmaram Soni, Shri Mukund Balkrishna Paithankar and the statements of 2 gold dealers confirmed that Shri Deepchand S. Jain was dealing in gold ornaments. Further, more Note Books had been recovered and these also confirmed Shri Deepchand's dealings in gold. It had been claimed that Shri Deepchand was employed by M/s. Gulabchand Jawanmal & Co. on a yearly salary of Rs. 11,000/-. If he had not been dealing in gold ornaments and did not have other income, he could not have made transactions in gold ornaments of a value exceeding Rs. 10 lakhs. Shri Deepchand's statements were contradictory. He had been acting as a dealer in gold though it was admitted that he did not have shop for exhibiting any gold ornaments. This was because he did not have any dealers' licence.
In these circumstances, Shri Pattekar submitted that the Collector's order of confiscation of the gold ornaments and levy of fine was correct and also imposition of the penalty. The finding of the Magistrate in which Shri Deepchand had been acquitted was not relevant for the purposes of the departmental adjudication.
5. We have examined the submissions made on both the sides. Shri Deepchand S. Jain had been held to be a dealer in gold ornaments by the Collector of Customs in contravention of Section 27 of the Gold (Control) Act and accordingly gold ornaments weighing 2336.600 gms.
which were recovered from Shri Deepchand's premises were confiscated under Section 71. It is seen that Shri Deepchand had claimed these ornaments as belonging to his wife and as belonging to H.U.F. The Panchanama of the seizure also confirms that the ornaments were recovered separately. The ornaments weighing 1442.400 gms. were recovered from the brass boxes kept in the steel cupboard in the front room of the residential premises. These are listed in Annexure 'A' to the panchanama. With each of the above items a paper chit had been found showing the weight of the items and in some cases the names of presumably the owners. All these ornaments were found to be new. Sl.
No. 12 of Annexure 'A' covers the so called gold bullion. The learned advocate has contended that as per the definition of "ornaments" under Section 2(p) the piece of broken bangle and the 3 beads had to be treated as ornaments and not gold bullion. Even if this argument is conceded it is seen that this item was recovered alongwith other items which were meant for sale. There are evidences of some persons including the dealers, goldsmiths and purchasers which go to show that Shri Deepchand had been carrying on business as a gold dealer in contravention of Section 27 of the Gold (Control) Act. From this point of view, there is no infirmity in the Collr's order of confiscation of 1442.400 gms. of gold ornaments and we confirm the Collr's. order of confiscation of this quantity of gold and gold ornaments. So far as the remaining gold ornaments consisting of 9 items and weighing 897.900 gms. concerned, which were found in red plastic box in the steel cupboard, it is seen that these ornaments were old. The Collector had not recorded any reason for treating them as the stock-in-trade of Shri Deepchand. On the other hand, these are claimed to be personal ornaments. The affidavits had also been filed in support of this contention. In absence of any finding by the Collector that these are meant for sale, the Collector's order of confiscation of these ornaments cannot be sustained. Accordingly, we set aside the Collector's order of confiscation and allow them to be released to Shri Deepchand. In this view, the redemption fine of Rs. 40,000/- imposed by the Collector also requires to be modified. Considering all the facts and circumstances of the case, we reduce the redemption fine from Rs. 40,000/- to Rs. 25,000/- (Rupees twenty five thousand) only. As regards the Collector's order of levy of penalty of Rs. 15,000/- on Shri Deepchand, it is seen that Shri Deepchand's transactions as a dealer run to a value of more than Rs. 10 lakhs. The evidence that Shri Deepchand was working as a dealer is furnished by the statements of the 2 dealers and the goldsmith. In addition, the documentary evidence recovered from Shri Deepchand premises also confirmed this fact.
Considering the magnitude of the transactions as a dealer, the imposition of the penalty of Rs. 15,000/- on Shri Deepchand is quite appropriate in the circumstances of the case and does not call for any modification.
Except for the above mentioned modification in the Collector's order of confiscation of the ornaments, his order in respect of Shri Deepchand is confirmed and the appeal is otherwise rejected.
6. On behalf of the appellants M/s. Gulabchand Jawanmal & Co. advocate Shri Wazifdar stated that their appeal was against the levy of penalty of Rs. 15;000/- imposed on them under Section 74 of the Gold (Control) Act. He drew our attention to the show cause notice issued to them. He stated that in addition to asking the firm to show cause against the levy of penalty, the partners of the firm were also similarly proceded against. So far as the present appeal was concerned, it involved father and 4 sons as partners. The allegation was that they allowed their employee to carry on business as a gold dealer in their licenced premises in contravention of Section 88(1) of the Gold (Control) Act.
The learned advocate contended that Section 88 came under Chapter XV which dealt with the offences and their trial and therefore Section 88 was not applicable to departmental adjudication for contravention of Gold (Control) Act Hence, the learned advocate contended that the Collector's adjudication order levying the penalty of Rs. 15,000/- on M/s. Gulabchand Jawanmal & Co. was vitiated. Accordingly, he submitted that the penalty was void and required to be set aside. The advocate further referred to the statement of Shri Bhavarlal Pukhraj Bafna, a partner of the firm dated 24.1.1979. In this statement Shri Bafna had stated that Shri Deepchand had been removed from the service of the appellants on or about 15.1.1978 and that he or his firm was not concerned with the seizure of the gold and other documents from the residence of Shri Deepchand. Shri Bafna further added that during the time Shri Deepchand was in the firm's employment, they had no knowledge or evon suspicion that Shri Deepchand was dealing privately in gold ornaments and if they had known about it he would have been removed from the service. Shri Wazifdar further submitted that there was no justification for penalising the firm and if at all, only the Managing Partner should have been penalised. Besides, there had been no finding by the Collector that Shri Deepchand was an employee of M/s. Gulabchand Jawanmal & Co. No question was put to the Managing partner about Shri Deepchand's business from his shop. As regards Shri Deepchand's own statement, no evidence was contained therein to show that he had been dealing in gold ornaments from the premises of M/s. Gulabchand Jawanmal & Co. The advocate therefore pleaded that the Collector's order of levy of penalty on the appellants was illegal and that the same required to be set aside.
7. On behalf of the Collector, Shri Pattekar contended that the various contentions raised by the learned advocate had been taken into account by the Collector in his adjudication order vide page 46 of the paper-book. The Collector had held that the transaction of Shri Deepchand in gold ornaments had exceeded Rs. 10 lakhs when he was in service with M/s. Gulabchand Jawanmal & Co. He had been removed only about 15 days before the search of the premises. The statements of various persons brought out that Shri Deepchand carried out the transactions in gold in his capacity of the Manager of the appellants firm. Shri Pattekar further drew our attention to the Collector's finding that Shri Vinodrai Atmaram Soni had categorically stated that he had done the work for M/s. Bafna Jewellers. Shri Bhavarlal Pukhraj Jain a partner of the firm in his statement dated 3.7.1978 had admitted that he had taken loans from Shri Deepchand S. Jain. The Collector had further held that Shri Deepchand had been doing work for the appellants as per the statements of Shri Vinodrai Atmaram Soni and Shri Mukund Balkrishna Paithankar. It had therefore been established that Shri Deepchand's business as a gold dealer in contravention of Section 27 was with the knowledge and connivance of M/s. Gulabchand Jawanmal & Co.
Shri Pattekar further contended that there was no evidence about Shri Deepchand's removal from the service of the appellants. In the aforesaid circumstances, Shri Pattekar contended that the levy of penalty on the appellants under Section 74 was quite in order, even if Section 88 were to be ignored. Apart from this, Shri Pattekar submitted that reliance on a wrong Section would not vitiate the levy of penalty if it was justified in the eyes of law. In support of his contention, Shri Pattekar relied on the Supreme Court's decision in the case of N.B. Sangma v. Elphinston Mills Ltd. He concluded that the penal action was justified and submitted that the appeal should be rejected.
8. In reply advocate Shri Wazifdar drew our attention once again to Shri Bhavarlal Pukhraj's statement dated 20.5.1978 and his further statement dated 3.7.1978. In this statement Shri Bhawarlal had clearly clarified that Shri Deepchand was removed from their service and that the appellants did not have any knowledge of his transactions as a gold dealer. Shri Wazifdar submitted the court's order under which the partners of the appellants' company had been discharged and also a copy of this Bench's order in the case of S.G. Kaigaonkar reported in 1985 ECR 2139 to say that the penalty on the appellants was not justified.
9. We have examined the submissions made on both the sides. The main contention advanced by the learned advocate against the levy of penalty is that the same is described as illegal on account of the fact that the Collector had invoked Section 88(1) of the Gold (Control) Act which is available for the purposes of prosecution but not for adjudication.
Therefore, the first contention to be examined is whether even without resorting to Section 88, the Collector could have levied penalty under Section 74 on the appellants. Under Section 74, penalty is leviable on the person for act of commission or omission which would render the gold liable to confiscation or abets such commission or ommission.
Therefore, the question for consideration is whether the gold in question seized by the Gold (Control) Authorities was liable to confiscation. The learned advocate has not contested the liability of the gold ornaments and gold to confiscation. Therefore, the only question which requires to be determined is whether the appellants had committed any act of commission or commission or whether they had abetted such an act. It has been held by the Collector that the act of commission or omission was committed by Shri Deepchand S. Jain and that M/s. Gulabchand Jawanmal & Co. had abetted him in the aforesaid contravention of the Gold (Control) Act. Therefore, the question boils down to determine whether there was an abatement on the part of M/s.
Gulabchand Jawanmal & Co. In this behalf, the learned departmental representative has contended that there was such an abatement and this would be evident on the basis of the statements of 2 goldsmiths Shri Vinodrai A. Soni and Shri M.B. Paithankar. They had clearly stated that Shri Deepchand's dealings were on behalf of M/s. Gulabchand Jawanmal & Co. It is further seen that Shri Deepchand was employed by the appellants on a salary of Rs. 11,000/- per year. Such a low paid employee could not have entered into transactions of gold exceeding Rs. 10 lakhs in value. It is therefore reasonable to draw an inference that these transactions were on behalf of the appellants. Therefore, besides direct evidence, circumstantial evidence is also available against the appellants. Shri Deepchand had dealings with other licenced dealers and goldsmiths. The licensed dealers and the goldsmiths know the Gold (Control) Act very well. They would not have entered into business commitments with Shri Deepchand in his individual capacity but only on behalf of M/s. Gulabchand Jawanmal & Co. Therefore, these transactions also provide further circumstantial evidence against the appellants.
Furthermore, it is seen that Shri Deepchand was in the appellants' service for a long period of about 12 years. It would not be unreasonable to presume that during such a long tenure the appellants would have remained unaware of the business of the employee as a dealer which would have been competitive with their business. In view of the foregoing facts, we find that the Collector's order of levy of penalty of Rs. 15,000/- on the appellants is both legal and proper. We confirm the same and reject the appeal of M/s. Gulabchand Jawanmal & Co.
1. I have had the advantage of going through the order proposed by brother Dilipsinhji. With great respect I disagree witn his conclusion that gold ornaments weighing 897.900 gms. which are the subject matter of the appeal G.C.(T)BOM. A 30 of 80 are not liable to confiscation and they are required to be released to the appellant Shri Deepchand S.Jain. 1 further disagree with brother Dilip-sinhji's view that there should be reduction in redemption fine from Rs. 40,000/- to Rs. 25,000/-. In my view the appeal GC(T) BOM. A 30 of 80 should be rejected.
2. I also disagree with the view of brother Dilipsinhji that the appeal filed by M/s. Gulabchand Jawanmal & Co. GC (T)BOM 31 of 80 should be rejected. In my view, the said appeal of the said firm deserves to be allowed and the penalty imposed on the firm deserves to be set aside.
My reasons for the above views are recorded hereunder.
3. Since brother Dilipsinhji had set out the facts as well as the contentions urged before us, 1 do not consider it necessary to set out the facts or the contentions again in detail.
4. From the order of the Collector of Customs (Preventive), which is under challenge, it is clear that the officers of the Gold Control, Bombay had information that the firm M/s. Gulabchand Jawanmal & Co., Shri Deepchand S. Jain residing at 15A, Second Pophalwadi, 1st floor, Bombay and a goldsmith by name Mithaiwala working at second floor, Daryasthan Street Yusuf Maharalli Road, Bombay are clandestinly dealing in gold. In prsuance of that information, the officers of the Gold Control on 30.1.78 raided and searched the premises of the abovesaid firm and person. Nothing incriminating was found in the premises of the firm or in the premises of the goldsmith Mithaiwala. The search of the residential premises of the appellant Deepchand resulted in the recovery of primary gold weighing 3.700 gms. and gold ornaments weighing 2336.600 gms. and also certain incriminating documents. Since the appellant Deepchand could not give satisfactory account for the gold as well as the incriminating documents they were seized by the Gold (Control) Officers under a panchnama in the reasonable belief that there had been contravention of the provisions of the Gold (Control) Act. During the course of investigation, the statements of the various persons were recorded and after the completion of the investigation a combined show cause notice was issued to the present appellant and others. The charges or the allegations levelled against the present appellant and others are, to quote: Whereas it appears that Shri Deepchand Santokchand Jain residing at Room No. 1, 1st floor, 15-A, 2nd Pophalwadi, Bhuleshwar, Bombay 2 has contravened the provisions of (1) Section 8 (1) read with Section 8(6) of the Gold (Control) Act, 1968, in as-much-as he owned or had in his possession, custody or control primary gold weighing 3.700 gms. without holding any authorisation issued by the Gold Control Administrator (2) Section 27(1) of the Gold (Control) Act, 1968, inasmuch as he carried on business as a gold dealer without holding a valid Gold Dealers' Licence.
And whereas it appears that M/s. Gulabchand Jawanmal and Co. (Bafna Jewellers), holding G.D.L. No. 39/Gold/69 at shop No. 13, Dagina Bazar, Bombay-2 and S/Shri Pukhraj Gulabchand Bafna Bhavarlal Pukhraj Bafna. Vimalchand Pukhraj Bafna and Vijayraj Pukhraj Bafna partners of the above firm, have contravened, the provisions of Section 88(1) of the Gold (Control) Act, 1968 in as-much-as they have abetted Shri Deepchand Santokhchand Jain, an employee of their firm in the contravention of Section 27(1) of the Gold (Control) Act, 1968 by allowing him to use their licensed premises for dealing in gold during the course of his employment.
And whereas it appears that S/Shri Vinodrai Atmaram Soni and Mukund Balkrishna Paithankar both certified goldsmiths of Bombay have contravened the provisions of Section 55 of the Gold (Control) Act, 1968 inasmuch as they failed to maintain a true and complete account in their registers in form G.S. 13 of the gold received by them from Shri Deepchand Santokhchand Jain for manufacture of new ornaments.
And whereas it appears that M/s. K.K. Jewellers, M/s. Jarupji Lakhaji & Co., M/s. C. Maneklal & Co. M/s. Nitin Jewellers and Shri Chokshi Hamirbhai Narayandas, all holding gold dealer's licences in Bombay have contravened the provisions of (1) Section 31 of the said Act inasmuch as they bought or otherwise acquired or accepted or otherwise received gold ornaments from Shri Deepchand Santokhchand Jain, (2) Section 36 of the Gold (Control) Act, 1968 read with Rule 13(1) of the Gold Control (Forms, fees and miscellaneous matters) Rules, 1968, inasmuch as they failed to issue vouchers while acquiring or accepting the gold ornaments from Shri Deepchand Santokhchand Jain who was not a licensed dealer at the material time and (3) Section 55 of the said Act, that they failed to enter the transactions with Shri Deepchand Santokhchand Jain in their statutory account books maintained under the provisions of the Gold (Control) Act, 1968.
5. From the show cause notice, it is seen that the charges or the allegations against the appellant Shri Deeepchand S. Jain were (1) that he contravened the provisions of Section 8(1) read with Section 8(6) of the Gold (Control) Act inasmuch as he owned or had in his possession custody or control primary gold weighing 3.700 gms. without holding any authorisation issued by the Gold Control Administrator, and (2) that he contravened Section27(1) of the Gold (Control) Act inasmuch as he carried on business as a gold dealer without holding a valid Gold Dealer's Licence.
6. The charge or the allegation against M/s. Gulabchand Jawanmal & Co.
and partners was that they contravened the provisions of Section 88(1)of the Gold (Control) Act inasmuch as they have abetted Shri Deepchand Jain, an omployee of their firm in the contravention of Section 27(1) of the Gold (Control) Act by allowing him to use their licensed premises for dealing in gold during the course of his employment. No other allegation or charge was levelled or made against the firm or the partners or any one of the partners.
7. The Collector in his order had held that both the allegations in the show cause notice made against the appellant Deepchand had been established. Therefore, he had ordered confiscation of the seized gold and gold ornaments but allowed redemption on payment of fine of Rs. 40 000/. He had also imposed a penalty of Rs. 15,000/- on Shri Deepchand.
in his appeal, Deepchand had challenged the order of confiscation as well as imposition of penalty On behalf of Shri Deepchand, it was contended by Shri Wazifdar that the ornaments seized from the residence of Deepchand were not exhibited for sale and they were not intended for sale. They are the ornaments of his wife and Hindu Undivided Family. To substantiate his contention, Shri Wazifdar had drawn our attention to the affidavits filed by the wife as well as the brother. Besides a deed of partition entered into between the members of the family, it was also contended by Shri Wazifdar that the Collector had not levied any penalty against goldsmith and dealers who are alleged to have transacted gold dealer's business with the appellant Deepchand. The further contention of Shri Wazifdar was that there was no evidence that the appellant Deepchand had carried on gold dealer's business. There is no merit in any of the contentions of Shri Wazifdar. Admittedly the residential premises of the appellant Deepchand was searched on 30.1.1978. the search took place in the presence of independent panchas. The search yielded new gold ornaments totally weighing 1442,400 gms and new and old gold ornaments totally weighing 897.900 gms. In the Annexure A to the panchanama the description of the new gold ornaments were given. In Annexure B' to the panchnama the description of the old and new ornaments were given. But then, it was not specifically stated which items are old ornaments and which items are new ornaments But in the body of the panchnama, it was stated that the plastic red box contained new and old ornaments. Brother Dilipsinhji proceeded on the footing that the entire quantity of gold ornaments weighing 897.900 gms. set out in Annexure B to the pachnama to be old ornaments. Factually, it is incorrect As stated earlier, Annexure B contained description of gold ornaments found in plastic box. According to the body of the panchnama, the plastic red box contained both new and old ornaments. The Collector ordered confiscation of the seized gold on the ground that the appellant Deepchand had been deal in gold without obtaining gold dealer's licence. According to the findings of the Collector, the ornaments seized are liable to confiscation since they relate to the transactions entered into by the appellant Deepchand. The Collector had relied on the documentary evidence for his conclusion that the appellant was dealing in gold and the value of the gold dealt with by him was about Rs. 10,00,000/-. The finding of the Collector is based on the documentary evidence which were seized from the residence of the appellant. The statements of the witnesses relied on by the Collector and the documents seized from the residence of the appellant, established beyond doubt that the appellant was indulging in gold dealer' s business. The appellant did not possess any licence.
Therefore, the Collector's finding, that the appellant had contravened Section 27(1) of the Act, is unassailable.
8. The next question that arise for consideration is whether any of the gold ornaments seized from the residence of the appellant belonged to the appellant personally or to his wife or to Hindu Undivided Family (HUF). The panchnama in this case was drawn up on 30.1.1978, namely on the date of seizure. It was stated in the panchnama: As Shri Deepchand could not satisfactorily account for the possession of the said new and old gold ornaments, primary gold and the documents mentioned in Annexure "A", "B", & "C" and also could not produce any authorisation or permit from the Gold Control Authorities to possession of the said primary gold, the Superintendent seized the said new and old gold ornaments totally weighing 2336.600 gms valued at Rs. 1,39,600/- and the said piece of primary gold weighing 3 700 gms. valued at Rs. 225/- in our presence in the reasonable belief that the provisions of the Gold (Control) Act, 1968 have been contravened.
Thus it is seen that at the time of seizure the appellant Deepchand did not give any satisfactory explanation as to the gold ornaments both old and new and primary gold which were seized from his residence.
According to the panchanama the wife of the appellant Smt. Laheriben, alias Lakuben was also present. The panchanama further discloses one more plastic box was recovered from the cupboard and that box was found to contain old and used gold kendora and the pendent of the Kendora and they were found to weigh 93.800 gms. The said ornaments were returned to Shri Deepchand in addition to the gold ornaments worn by Smt.
Laheriben being claimed as her personal ornaments. She had worn four bangles, one chain, 2 ear tops and one nose pin and two hair pins. It is thus seen besides the seized new and old ornaments there were other ornaments which were returned to the appellant and which were claimed by the wife of the appellant as her personal ornaments. If any of the items of the seized ornaments was the personal ornaments of the wife of the appellant one would have expected her to make a claim as had been done by her in respect of a gold Kendora and pendent of kendora, 4 bangles, one chain, 2 ear tops and one nose pin. The appellant, Deepchand's statements were recorded on 30 1.1978 twice. His statement was also recorded on 9.5.1978, again on 5.6.1978 and on 3.7.1978.
Initially, the appellant stated: During the search of my premises by you some like new gold bangles, necklace and some other used old ornaments, bangles, necklace, rings, etc. were found belonged to my wife. The ornaments, i.e.
bangles, rings, etc. which were found in the brass box did not belong to me nor my family members but of H.U.F. You have searched my whole residential premises in the presence of panchas when I remained present. You have taken out two boxes from the steel cupboard having a nameplate of "Sureshkumar Deepchand" and on opening of the said two boxes you found new and old gold ornaments and three small pieces of Rava weighing in all 2340,300 gms. and value thereof was Rs. 1,39,825/- and in addition to the same, some books and papers were found which were seized by you and regarding the same I have to say that the above mentioned ornaments belonged to me and my wife.
This version is different from the version which he has given earlier.
Earlier, he had stated that ornaments, bangles, rings etc. which were found in the brass box did not belong to him or to his family members but to H.U.F. But in the second statement, he stated that the entire quantity weighing 2340.300 gms. belonged to him and to his wife. He was questioned regarding as to why so many sets of ornaments and his answers were: 6 sets of ornaments were found at my residential premises for which I have to state that the said designs were liked by me and my wife and the same were made and kept by me. Regarding bangles, which have been seized by you for which. I have to state that the designs were liked therefore made and kept.
It is my request that the ornaments which have been seized by you belong to me and my family therefore release the same as early as possible.
Now I have to say that the gold ornaments weighing 2340.300 gms.
found from my cupboard belonged to me, my wife and of my H.U.F. and the said eight books and papers are mine. I used to receive from my customers old ornaments for making new ornaments, I give the same to my goldsmith for making new ornaments, I give the same to my goldsmith for making new ornaments and on having received the same new ornaments from the goldsmith 1 give the same to my customers.
Thus the appellant himself admits that he was receiving ornaments from his customers for making new ornaments. If really the seized ornaments or any one of them belonged to the wife of the appellant, she would have put forward her claim at the time of seizure. Being a woman, she would even identify her ornaments. She had not chosen to do so. The natural inference to be drawn is that that none of the items of the seized ornaments belonged to the wife of the appellant. It is true that she filed an affidavit when the matter was before the adjudicating authority. The exact date of the affidavit is not found from the copy of the affidavit included in the paper-book. But it was filed in the month of December, 1978. No explanation is forthcoming. Why the wife of the appellant in whose presence the seizures took place did not make any claim to the seized items and no explanation is also forthcoming as to why she waited till December, 1978, to put forward her claim. If any of the seized ornaments belonged to the wife of the appellant as having been given to her either by her father as dowry at the time of her marriage or by her mother-in-law, one would have expected her to claim those ornaments either at the time of seizure or immediately thereafter and not after 11 months. The other affidavit filed is that of the brother of the appellant. This affidavit is also filed in the month of December, 1978, nearly 11 months after the date of seizure. He also does not give any explanation as to why he did not make his claim earlier or why he waited till December, 1978 to put forward his claim.
It is not stated in the affidavit that he was unaware of the seizure.
Being a brother, he would have certainly known the seizure or would have been informed by the appellant Deepchand. No credence whatsoever can be placed on the two affidavits. A belated attempt was made by the appellant Deepchand by persuading his wife and brother to file the affidavits. According to the affidavit of the brother of appellant Deepchand, the partition took place somewhere in the year 1958. It is highly unbelievable that even after the partition the ornaments belonging to the H.U.F. would be kept in the house of a divided member of the family. The stories spoken to in the affidavit by the brother of the appellant that after the death of another brother in the year 1962 the ornaments allotted to him in the partition of 1958 devolved on him and his brother also is unbelievable. If the affidavits cannot be relied upon there is no other evidence to support the claim of the appellant that seized ornaments or any one of them either belonged to him or to his wife or to his H.U.F. The Collector therefore was justified in holding that all the seized ornaments related to the business transactions of the appellant. The appellant himself had admitted that he had been receiving old gold ornaments from his customers and was giving to goldsmith for making new ornaments. The observation of brother Dilipsinhji that all the nine items found in the plastic box which are listed in Annexure B are old ornaments is factually incorrect. That box contained both old and new gold ornaments. Similarly the observation of brother Dilipsinhji that the Collector had not recorded any reason for treating them as stock in trade of Shri Deepchand is also not factually correct. The Collector had stated in his order that the ornaments seized related to the transactions carried out by the appellant Deepchand and there is documentary evidence to support. It is necessary to state that at the time of seizure handbooks, pocket books, diary and loose papers are also seized. The appellant has admitted in his statement that they belonged to him. Brother Dilipsinhji has placed reliance on affidavit but as pointed out by me earlier that these affidavits had seen the light of the day after 11 months after the seizure and they cannot be relied upon. Brother Dilipsinhji had also observed that in the absence of any finding by the Collector that ornaments weighing 897.900 gms are meant for sale, they cannot be confiscated. I am unable to agree with this view of my brother. In order to establish a charge under Section 27(1), it is not necessary for the Collector to record a finding that any particular item of gold was meant for sale. As a matter of fact, even in respect of new gold ornaments 1442.400 gms. the Collector did not record a finding that they are meant for sale. But brother Dilipsinhji upheld the confiscation of the said ornaments. All that the Collector is required to record a finding was whether the appellant carried on business as a dealer without a valid licence. The Collector's finding that the appellant carried on business as a dealer has been upheld by Shri Dilipsinhji. The Collector had recorded a finding that all the seized gold ornaments both new and old formed part of the appellant's transaction. Therefore, they became liable to confiscation.
9. In the above view of the matter, I am unable to agree with brother Dilipsinhji that gold ornaments weighing 897.900 gms. are not liable to be confiscated and that redemption fine should be reduced from Rs. 40,000/-to Rs. 25,000/-. I therefore confirm the order of confiscation of the seized gold ornaments as well as the fine levied in lieu of confiscation.
10. The only other aspect that remained in this appeal is about the order of confiscation of primary gold weighing 3.700 gms. The contention of Shri Wazifdar was that they are not primary gold, but are pieces of broken ornaments. Even if we are to concede that they are not primary gold the order of confiscation cannot be challenged because the confiscation was ordered because the appellant was found dealing in gold without obtaining a licence and that the primary gold or pieces of ornaments formed part of the transactions carried out by the appellant in the course of his business. Therefore, irrespective of whether they are broken ornaments or primary gold they became liable to confiscation.
11. In the result, I dismiss the appeal No. 30 of 80 filed by Shri Deepchand Santokhchand Jain.
12. As regards the appeal No. 31of 80 filed by M/s. Gulabchand Jawanmal & Co., the contentions of Shri Wazifdar are that the allegation in the show cause notice was that the appellants contravened Section 88(1) of the Gold (Control) Act in that they allowed the employee, namely, Deepchand to use their licensed premises for dealing in gold but then there was no evidence what so ever that they had allowed their employee to carry on gold dealer's licence in their licensed premises. Shri Wazifdar also contended that there was no finding at all by the Collector that the appellant's premises was used by that employee to carry on the Gold Dealer's licence. He further contended that Section 88 appears in the chapter of offences and therefore if there is any violation of Section 88 the firm could only be prosecuted and no penalty can be levied in adjudication proceedings. Shri Wazifdar had further contended that the entire transaction of the firm was carried out by one of the partners alone and the penalty if any could have been levied against that partner and not on the firm. Shri Wazifdar, therefore, prayed that the penalty imposed on the firm may be set aside.
13. There is considerable force in the contention of Shri Wazifdar that the charge that the appellant's firm had allowed its employee to carry on gold dealer's business in their premises had not been established.
As stated earlier, the definite allegation against the firm was that they had abetted Shri Deepchand S. Jain, their employee in the contravention of Section 27(1) by allowing him to use their licensed premises for dealing in gold during the course of his employment.
Having regard to the charge the Department has to establish the following ingredients: Firstly that Deepchand S. Jain was an employee of the firm, Secondly that as employee he carried on the business of gold dealer; Thirdly that he carried on the said gold dealer's business in the premises of the appellant firm; and lastly, that the appellant firm had abetted Shri Deepchand in carrying on the business of gold dealer in the licensed premises.
In the allegation made against Deepchand, it was not stated that he carried on the business as a gold dealer in the premises of the firm M/s. Gulabchand Jawanmal & Co. It is also not stated that he was the employee of the firm. Further, it was not stated as to the period during which he carried on the business as gold dealer. Similarly in the show cause notice '' issued to the appellant, it was not stated during which period they allowed their employee to carry on gold dealer's business. Further, show cause notice was issued to several others. In the allegation made against Vinodrai Atmaram Soni, it was alleged that he did not maintain proper account in respect of gold received by him from Deepchand S. Jain. Similarly in the allegations made against M/s. K.K. Jewellers, M/s. Nitin Jewellers and Shri Choksi Hamirbhai Narayandas, the allegation made was that they failed to issue vouchers while acquiring or accepting the gold ornaments from Deepchand. But then it was not alleged in the show cause notice that either Shri Vinodrai Atmaram Soni or others received gold from Deepchand while he was in the employment in the firm Gulabchand Jawanmal & Co. or that the gold were received from the premises of the firm Gulabchand. Thus the show cause notice is vague both regarding the period during which Deepchand carried on gold dealer's business and also regarding the place from where he carried on gold dealer's business.
14. Now coming to the finding of the Collector, the Collector has observed: On depositions of various persons as discussed above, it clearly indicates that they were entering into transactions with Shri Deepchand S. Jain his capacity as Manager of M/s. Gulabchand Jawanmal & Co. Shri Vinodrai Atmaram Soni has categorically stated that he has done the work for M/s. Bafna Jewellers to the exent of 1166.060 gms. The version of Shri Bhavarlal Pukhraj Jain one of the partners of M/s. Gulabchand & Co. (Bafna Jewellers) in his statement dated 3.7.1978 that they were taking loans from Shri Deepchand S. Jain on different occasions during 1965-76 appears to be far from truth. On their own admission Shri D.S. Jain was working with them on an annual salary of Rs. 11,000/-. In any case, the evidence on records shows that Shri Deepchand S. Jain was carrying on the business of dealing in gold from the premises of M/s. Gulabchand & Co. as their representative.
Thus the finding of the Collector is that Vinodrai A. Soni has done the work of M/s. Bafna Jewellers to the extent of 1666.060 gms. Shri Deepchand Jain was carrying on the business in his capacity of Manager of Gulabchand Jawanmal & Co. and as a representative. The allegation in the show cause notice was that the appellant firm abetted the contravention of Section 27(1) by Deepchand by allowing him to use their licensed premises for dealing in gold during the course of his employment. In other words, Deepchand was carrying on gold dealer's business independently and the appellant allowed their premises for Deepchand to carry on gold dealer's business. But the finding of the Collector was that Deepchand carried on the business in his capacity as Manager of M/s. Gulabchand Jawanmal & Co. and as their representative.
There was no finding by the Collector that Deepchand carried on gold dealer's business independently. In the absence of such a finding the question of abetting the contravention of Section 27(1) by Deepchand would not arise. There is no allegation against the firm that the gold ornaments and primary gold found in the residential premises of Deepchand belonged to the appellant's firm. There is also no allegation that the appellant's firm entered into illegal transaction through their employee Deepchand and thereby contravened any of the provisions of the Gold (Control) Act. The definite allegation was they abetted the contravention of Section 27(1) by Shri Deepchand by allowing him to use their licensed business premises for carrying on the gold dealer's business. But then that allegation has not been established. It is not sufficient if the Department establishes that Deepchand was carrying on gold dealer's business or that his business transaction was to the extent of 36926.050 gms. valued at Rs. ten lakhs. In order to establish the charges against the appellant firm it is necessary for the Department to establish that Deepchand carried on gold dealer's business independently from the firm's premises. As pointed out earlier in the allegation made against Deepchand in the show cause notice it was not mentioned where he was carrying on Gold Dealer's business. None of the witnesses also stated that Deepchand as carrying on gold dealer's business from the premises of the appellant firm. Deepchand also did not state in the statements that he carried on gold dealers business in the firm's premises. The partner of the firm whose statement was recorded denied that Deepchand carried on gold dealer's business from their premises. It is also very unlikely that the appellant firm would allow its employee to carry on gold dealer's business from their premises, in competition with the firm's business.
In order to carry on gold dealer's business, Deepchand should have his own safe and almirahs. Though the search of the premises of the firm was carried out, nothing belonging to Deepchand was found in the firm's premises. All the gold and gold ornaments were seized only from the residence of Deepchand. Deepchand apparently was carrying on gold dealer's business in his residence and not in the premises of the appellant firm. The charge against the appellant firm is not that they allowed their employee to carry on the gold dealer's business. The charge was that they allowed their employee to use their licensed premises to carry on the gold dealer's business. There is neither evidence nor finding by the Collector that Deepchand had independently carried on the gold dealer's business in the premises of the appellant firm. On this ground alone the appeal filed by the firm is required to be allowed. Brother Dilipsinhji has also recorded a finding that a low-paid employee like Deepchand could not have indulged in transactions of gold exceeding Rs. 1,00,000/-. It is, therefore, reasonable to draw an inference that these transactions were on behalf of the appellant. But then brother Dilipsinhji apparently did not advert to the allegation or the charge made against the firm. As stated earlier, there was no allegation that the firm carried on its transaction through its employee Deepchand. The allegation against Deepchand was that he was independently carrying on the business. The allegation against the firm was that they abetted Deepchand by allowing him to use their premises to carry on Gold Dealer's business. It is not sufficient if the appellant firm had knowledge about the dealings of their employee. It is necessary to establish that the appellant firm permitted their premises to be used by Deepchand for carrying on gold dealer's business. No such evidence is forthcoming.
15. In the result and for the reasons stated above, I allow the appeal of 31of 80 filed by M/s. Gulabchand Jawanmal & Co. and set aside the penalty imposed on the firm. The penalty if paid, shall be refunded to the firm.Sd/- (K.S. Dilipsinhji) Sd/- (K. Gopal Hegde) Member (Technical) Member (Judicial) Since there is difference of opinion on the following points, the records be submitted to the President for referring the points of different to any one or more Members of the Tribunal as required under Section 81B of the Gold (Control) Act for Sub-Section (5) of Section 129-C of the Customs Act.
(1) Whether the appeal No. 30 of 80 filed by Shri Deepchand Santokh hand Jain should be rejected as held by Member (J) or whether the Collector's order of confiscation of ornaments weighing 897.900 gms.
should be set aside and the redemption fine in lieu of confiscation should be reduced from Rs. 40,000/- to Rs. 25,000/- as held by Member (T).
(2) Whether the appeal filed by M/s. Gulabchand Jawanmal and Co.
(Appeal No. 31 of 80) should be rejected as held by Member (T) or should be allowed and the penalty levied on the firm should be set aside as held by Member (J).Sd/- (K.S. Dilipsinbji) Sd/- (K. Gopal Hegde) Member (Technical) Member (Judicial) 1. These two appeals were heard by my learned brothers Shri K.S.Dilipsinhji, Member (Technical) and Shri K. Gopal Hegde, Member (Judicial). There was difference of opinion between them and as such, these matters have been referred to me by the Honourable President of the Cegat under Section 81-B of the Gold (Control) Act, 1968 read with Section 129-C(5) of the Customs Act, 1962. The points of difference have been enumerated in the foregoing differing note.
2. I have heard Shri Wazifdar for the appellants and Shri Pattekar for the respondent. The learned advocate for the appellants has stated that the order passed by the learned Member Judicial) in Appeal No. GC(T) (BOM) 30/80 is a judicious order and it is based on judicious reasoning. He has prayed that this appeal may be dismissed outright although the decision goes against the appellant. Arguing in Appeal No.GC(T)(BOM) 31/80 filed by M/s. Gulabchand & Co., the learned advocate has stated that the charge levelled against the appellants in the show cause notice is that they have contravened the provisions of Section S8(1) of the Gold (Control) Act, 1968 inasmuch as they have abetted Shri Deepchand Santokchand Jain an, employee of their firm in the contravention of Section 27(1) of the Gold (Control) Act by allowing him to use their licensed premises for dealing in gold during the course of his employment. He has stated that there is not an iota of evidence to prove this charge. The Department has not specified the period to which the transactions amounting to Rs. 10 lakhs relate.
However, Shri Bhawarlal Pukhraj Bafna, the Managing Partner of the appellant firm has stated that Shri Deepchand S.Jain was dismissed from the service of the firm on or about 15.1.1978. This statement was not challenged by the Department. In his letter addressed to Shri Deepchand S. Jain, vide page 86 of the Paper-Book in Appeal No. 30/80, the Superintendent of Central Excise said "your 'old' master named Shri Bhawarlal Pukhraj Bafna......." This shows that the Department was aware that Shri Jain ceased to be an employee of the appellant-firm. In their statements Sarvashri Deepchand Jain and B.P. Bafna have never said that the firm had anything to do with the gold or the records seized from the residence of Shri Jain nor had the firm any connection with the transactions amounting to Rs. 10 lakhs. They have also not admitted anywhere that the appellant-firm allowed Shri Jain to use their licensed premises for dealing in gold. The statements and depositions of Sarvashri Vinodrai Atmaram, Mukund Balkrishna Paithankar and Moolchand Himmatmal Jain, vide pages 63, 64, 69, 73, 74 and 76 of the Paper-Book in Appeal No. 31/80 do not prove that the appellant-firm allowed Shri Jain to use their licensed premises for his unauthorised dealings in gold. Shri Bafna stated that they had no knowledge that Shri Jain was dealing in gold. Shri Wazifdar has argued that the charge of abetment against the appellants does not stand and that Member (Technical) Shri Dilipsinhji has based his conclusions on inference and presumptions, which are not warranted. He has further argued that Section 88(1) does not apply to adjudication proceedings. This section applies to trials in the Court of law. The adjudicating authority has no jurisdiction to take action under Section 88 of the Gold (Control) Act. Regarding penalty imposed on the appellants M/s. Gulabchand Jawanmal, Shri Wazifdar has stated that the appellant-firm had 4 partners, out of which the statement of Shri B.P. Bafna only was recorded by the Department. No statement was recorded from the other three partners. In the circumstances, penalty could not be imposed on the firm. He has relied on the decision of this Tribunal in the case S G. Kaigaonkar v. Gold Control Administrator, New Delhi, reported in 1985 E.C.R. 2139 (Cegat Bombay) in support of his argument. In conclusion, he has prayed that the Appeal No. 30/80 may be dismissed and Appeal No. 31/80 may be allowed by the Tribunal in the interest of justice.
3. Shri Pattekar has stated that in view of the concession made by the learned advocate, the Appeal No. 30/80 filed by Shri Deepchand S. Jain should be dismissed outright. Arguing for the respondent--collector in Appeal No. 31/80, Shri Pattekar has reiterated what has been stated in the order-in-original and in the order recorded by the learned Member (Technical) Shri Dilipsinhji. He has also stated that penalty could be imposed on the firm as well as on the partner.
4. I have perused the orders recorded by my learned brothers Shri Dilipsinhji and Shri Hegde. I have also considered the case records and the arguments of S/Shri Wazifdar and Pattekar. I entirely agree with the order recorded by brother Hegde in respect of both the appeals. He has elaborately discussed all the points and drawn conclusions based on cogent and convincing reasonings. I fully endorse his findings and views. To avoid repetition. I refrain from recording detailed findings of my own, but I cannot restrain myself from only touching the main points. In Appeal No. 30/80, the belated affidavits are nothing but after thought. If the seized gold and gold ornaments were the property of Hindu Undivided Family or those belonged to his wife, brother or any other family members, then nothing could stand in the way of saying so at the outset. There is no reason why they took about 11 months to file the affidavits. These affidavits are not believable. It is seen from the panchnama that Shri Deepchand Jain could not satisfactorily explain the seized gold and the gold ornaments brother Hegde has discussed the various statements recorded during investigation and has given relevant extracts in his order. Panchnama says that the ornaments as per Annexure-B were new and old. I am, therefore, of the view that the entire seized gold and ornaments were liable to confiscation under Section 71 of the Gold (Control) Act and the Collector rightly confiscated the same with redemption fine of Rs. 40,000/-. Penalty of Rs. 15,000/-was also correctly imposed on Shri Deepchand S. Jain. There is no justification for reduction of fine and penalty. Shri Wazifdar appearing for the appellant Shri Jain has prayed that this appeal may be dismissed outright. Appeal No. GC(T)Bom.-30/80 is, therefore, dismissed.
5. So far as Appeal No. GC(T)(Bom)-31/80 is concerned, brother Shri Hegde has correctly analysed the various ingredients of the charge levelled against the appellants M/s. Gulabchand Jawanmal I need not go into detailed discussions. Shri Deepchand Jain has been charged for dealing in gold amounting to Rs. 10 lakhs (approximately) without any gold dealers' licence. But the Department has not specified the period to which the transactions relate. In reply to a query put by me, Shri Pattekar has said that this information is not available with him. Shri Jain was dismissed from service of the firm on or about 15.1.1978. The Managing partner of the appellant-firm Shri B.P. Bafna has said that they had nothing to do with the seized gold, documents and the transactions made by Shri Deepchand Jain. Seizure was made from the residence of Shri Jain. Shri Bafna has also stated that the appellants had no knowledge that Shri Jain was dealing in gold. There is no admission that the licensed premises of the appellants were used by Shri Jain for dealing in gold nor is there any evidence to prove it.
The statements of S/Shri Deepchand Jain, Bhawarlal Pukhraj Bafna, Vinodrai Atmaram, Mukund Balkrishna Paithankar and Moolchand Himmatmal Jain do not prove the charge of abetment. The appellants M/s.
Gulabchand Jawanmal & Co. are not liable to penal action under Section 74 of the Gold (Control) Act. [Section 88 of the Gold (Control) Act is not applicable to the adjudication proceedings]. In the result, I set aside the order of penalty so far as M/s. Gulabchand Jawanmal & Co. are concerned and allow the appeal filed by them.
The points of difference of opinion between the members of this Bench were referred by the President to the 3rd Member Shri D.C. Mandal in terms of Section 81-B of the Gold (Control) Act read with Section 129-C(5) of the Customs Act. Shri Mandal has recorded his order in the matter. As per the aforesaid provisions of law these appeals are required to be decided in terms of the majority opinion. As per the majority view, the appeal GC(T)(BOM) A. No. 30/80 filed by Shri Deepchand S. Jain is rejected Similarly, the appeal No. GC(T)(BOM) 31/80 filed by M/s. Gulabchand Jawanmal & Co. is allowed and the order of the Collector of Customs (P) levying a penalty of Rs. 15,000/- on this appellant is set aside. Consequently, the amount of penalty is ordered to be refunded, if paid.Sd/- (K. Gopal Hegde) Sd/- (K.S. Dilipsinhji) Member (Judicial) Member (Technical)