1. Both these appeals arise out of and are directed against the order-in-original bearing No. F. No. XVII (GC) 8-36/Adj/81/828 dated 7-3-1983 passed by the Collector of Central Excise & Customs, Pune.
2. As these appeals involve common questions of law and facts they were clubbed together, heard together, hence this common order.
3. The subject of challenge in these appeals is the order of confiscation of primary gold weighing 197.100 gms. in the form of rava, foils patyas and wires and absolute confiscation of 15 gold coins weighing 29.200 gms. and also the confiscation of gold ornaments weighing 1409.600 gms. and the fine of Rs. 20,000/- levied in lieu of confiscation as well as the penalty of Rs. 5,000/- on the appellant in appeal No. 73/83 and Rs. 1000/- on the appellant in appeal No. 72/83.
4. The appellant in appeal No. 73/83 is the son of the appellant in appeal No. 72/83. They alongwith the wife in appeal No. 73/83 were living together at the relevant time.
5. On 29-3-81, the Gold Control Officers searched the residential cum business premises of the appellants and seized primary gold, gold coins and gold ornaments described in the seizure panchanama. The statements of the appellants were also recorded. The appellant Shri A.H. Gandhi, among other things, stated that they are doing the business of sales and purchases of the gold ornaments. The gold and gold ornaments seized were out of the sales-purchase transactions of their shop. In his further statement recorded on 6-4-81, he however contended that the seized gold ornaments belonged to his late father and they were in the possession of his mother. But then, he had admitted that at the time of seizure the officers had returned the gold ornaments of his wife, mother, his sons as well as his father. At the time of seizure a testing stone and bottle of acid were also found in the shop.
6. The Collector who held the enquiry after duly complying with the procedural requirements ordered confiscation of primary gold weighing 197.100 gms. and the gold ornaments weighing 1409.600 gms. on the ground that they were stock-in-trade and that there was no Gold Dealer's licence to carry on the business in gold. He ordered confiscation of 15 coins out of 20 coins on the ground that a person cannot possess more than 5 gold coins weighing 50 gms.
7. During the hearing of these appeals Shri Solanki firstly contended that the confiscation of 15 gold coins is wholly illegal. He submitted that even in the seizure panchanama, all the 20 gold coins have been described as ancestral gold. Therefore, there is no scope to apply the provisions of Section 8(5) of the Gold (Control) Act. (to be hereinafter referred to 'the Act'.) He, therefore, pleaded that the confiscation of 15 gold coins should be set aside.
8. The further submission was that excepting the bare statements of the appellants there was no evidence whatsoever to establish that the appellants were dealing in gold. The statements at best established possession of gold and gold ornaments. Mere possession would not be sufficient to hold that the appellants were dealing in gold. He vehemently urged that all the seized gold other than those released to the ladies belonged to the father of the appellant Shri A.H. Gandhi and they were in the possession and custody of his mother Smt. R.H. Gandhi, after the death of his father in the year 1941. The only two pieces of documentary evidences on which the department relied relate to a small purchase of gold ring for his own use and another gold ring prepared for a relation and they did not establish that the appellants were dealing in gold. He, therefore, urged that the Collector was unjustified in ordering confiscation of the remaining primary gold as well as the gold ornaments. Shri Solanki referred to the cross-examination of the panchas, recitals of the panchanama, the statements of the two appellants. Finally, Shri Solanki urged that the facts and circumstances of the case did not justify ordering absolute confiscation of the primary gold of 197.100 gms. or imposing penalties of Rs. 1000/- and Rs. 5000/- on the appellants.
9. Shri Arya, appearing for the Collector fully supported the order passed by the Collector. He contended that the defence put-forward that the primary gold ornaments belonged to the late father is unbelievable.
Even according to the version given by the appellants, the father had died in the year 1941. Though, at that time the only son was of the age of 1-1/2 years, by the time the seizure took place he has crossed 40 years. He got married in the year 1970. Further, after coming into force of the Gold (Control) Act, declarations were required to be made.
No declaration was made in respect of the seized gold. Though the documentary evidence pertained to two small transactions, the other circumstances such as the existence of testing stone, rava, foils, coins and wires coupled with the statement made by the appellant Shri Anandlal Hiralal Gandhi amply made clear that the transactions in gold were made clandestinely and therefore, the Collector was justified in passing the order. Shri Arya tried to support the confiscation of 15 gold coins by contending that there had been no declaration in respect of those coins as required under Section 16.
10. I have carefully considered the submissions made on both the sides and perused the available records. I agree with the contention of Shri Solanki that the Col lector committed an error in ordering confiscation of 15 gold coins seized in this case. The only ground on which the confiscation was ordered was that the appellants contravened Section 8 (5) of the Act. It was not the case of the department that the finding of the Collector was that the 15 gold coins formed the part of the stock-in-trade. On the other hand the panchanama description clearly support the contention of Shri Solanki that they are ancestral coins.
The prohibition regarding possession of more than 5 coins contemplated by Sub-section 5 of Section 8 relates to receipt of coins either by way of gift or transfer and they do not relate to gold coins which were inherited.
11. As regards the contention of Shri Arya that there was no declaration in respect of those coins, suffice it to say that there was no charge of non-declaration in the show cause notice and also no finding by the Collector in his order. I, therefore, reject the submission of Shri Arya.
12. Having regard to my finding that the 15 coins are not liable to confiscation under Section 8 (5), I set aside the order of absolute confiscation of those 15 gold coins and direct that the said coins shall be returned to the appellants.
13. Now coming to the order of absolute confiscation of primary gold weighing 197.100 gms. and confiscation of gold ornaments weighing 1409.600 gms., it is difficult to accept Shri Solanki's contention that these were the ancestral gold belonging to the late father of Shri A.H.Gandhi. The father had died in the year 1941. The seizure took place in the year 1981, after a lapse of 40 years. It is significant to note that the primary gold consists of rava, foils, patyas and wires. Shri Solanki admits that these are obtained during the manufacture of ornaments either by converting old gold ornaments into new gold ornaments or in the manufacture of new gold ornaments from primary gold. The story of the appellants that this primary gold also stored for 40 years would have been accepted if these primary gold as well as all the seized gold ornaments were found together. But then, the evidence as well as the panchanama clearly establish that all the seized ornaments were not found in the drum as contended by the appellants. They have found in different drums and are in different places. The definition of 'dealer' takes within its ambit 'manufacture of gold' also. Looking to the quantity of primary gold in the form of rava, foils, patyas and wires it can be safely inferred that manufacturing activity was not a single act but series of acts.
Therefore, it is clear that the appellant Shri A.H. Gandhi atleast had been carrying on business in gold without a licence. If that fact is established by the evidence on record the contention of Shri Solanki that there should not have been absolute confiscation of primary gold, the purity of which is only 21 cts. cannot be accepted. A person who carries on business without obtaining gold dealer's licence and a person who carries on business after obtaining gold dealer's licence cannot be treated equally. The redemption of primary gold on payment of fine is normally ordered so that the same may be converted into new gold ornaments by the dealers who possess the licence to deal in gold.But in the case of persons who do not possess gold dealer's licence such an option should not be granted because they cannot deal again in that gold since they have no licence and they will be committing a further offence. I, therefore, reject Shri Solanki's contention challenging the order of absolute confiscation of primary gold.14. Now coming to the confiscation of the gold ornaments, the evidence on record established satisfactorily that these ornaments were not the family ornaments as has been made out by the appellants and as contended by Shri Solanki. On the date of seizure, the wife of the appellant Shri A.H. Gandhi and his mother were present. The seizing officers were fair. They allowed them to take their ornaments. They picked up their ornaments. It is to be remembered that out of the 3 persons, 2 were ladies. One of them is the appellant's mother who is an old lady. If really, the other gold ornaments seized by the department belonged to the deceased husband of Smt. R.H. Gandhi who was stated to be in custody and possession, one would have expected her to pick up those ornaments also. She did not do so. It was not the case of the appellant that those ornaments were pledged with them in connection with the money lending business. Looking to the places from where they seized and taking into consideration the items seized and coupled with the admission of the appellant Shri A.H. Gandhi, the Collector, in my opinion was justified in recording a finding that there had been contravention of Section 27 (1) of the Act. Therefore, the order of confiscation of gold ornaments weighing 197.100 gms. Was correct in law. The fine levied in lieu of confiscation was Rs. 20,000/-. Looking to the value of the gold ornaments this fine cannot be considered as harsh or even unreasonable. Therefore, I see no reason to interfere with that part of the Collector's order.
15. The only other aspect that remains for consideration is about the penalty imposed on the appellants. Though, there may be justification for the Collector to impose penalty on the appellant Shri A.H. Gandhi, I do not see any justifiable reason for the Collector to impose penalty on the mother Smt. R.H. Gandhi. The clandestine business would have been carried on by the son, who had come of age, and not the old lady.
There was no admission by the lady that she was carrying on the business in gold whereas the son did admit it. In the circumstances, I set aside the penalty of Rs. 1000/- imposed Smt. Ratanbai Hiralal Gandhi.
16. In the result, the order of absolute confiscation of 197.100 gms.
primary gold, the order of confiscation of 1409.600 gms. of gold ornaments and fine in lieu of confiscation of Rs. 20,000/- and the penalty of Rs. 5,000/- imposed on the appellant Shri Anandlal Hiralal Gandhi are confirmed. The order of absolute confiscation of 15 gold coins weighing 29.200 gms is set aside so also the penalty of Rs. 1000/- on Smt. Ratanbai Hiralal Gandhi. The gold coins shall be released to her. The penalty, if paid, shall be refunded to her.