1. This appeal is directed against the Order of the Collector of Customs (Appeals) bearing No.S/49-275/87-GC, dated 7-11-1988, where he has set aside the order passed by the Deputy Collector of Customs bearing No. 100/87 (DC) (File No.XVII(GC)7-14/86), dated 26-6-1987 and has directed the department to grant gold dealer's licence to the respondent. The department being aggrieved by the said order they filed the present appeal.
2. The respondent herein vide his application dated 14-1-1986 in G.S.6, had applied for grant of gold dealer's licence. The matter was investigated vide Rule 2 of the Gold Control (Licensing of Dealers) Rules, 1969. The investigations revealed that the applicant was a partner in M/s. Bombay Gold Industries, Bombay from March 1982 to October, 1985 and as such he had not completed the requisite period of five years as the partner in the said firm. It was also found that the application has not been made within 60 days and as such proviso (e) to Clause (f) to Rule 2 of the said Rules was not attracted. The department therefore, issued a show cause notice as to why his application for grant of licence should not be rejected. The respondent, however, did not file any reply nor did he appear before the competent authority in response to the said show cause notice. The Deputy Collector, therefore, vide his order dated 26-6-1987 rejected the application of the respondent holding that the case was not covered under proviso (e) to clause (f) of Rule 2 of the Rules and that the turnover figures, contemplated to be considered under Clause (f) of Rule 2, did not warrant any further increase in the number of licence holders. The respondent therefore filed the appeal to the Collector (Appeals) who vide his order dated 7-1-1988, rely upon principles laid down in decision of the CEGAT reported hi 1988 (17) ECR 389 in the case of Shri Shantilal G. Jain, observed that the turnover was enough so as to permit increase in the number of licence of dealers, and that there was no objection in granting the licence to the respondent. He, therefore, directed that the licence be granted as prayed for to the respondent.
3. Shri C.P. Arya, the learned SDR, appearing on behalf of the department, challenged the correctness of the said order of the Collector (Appeals) by pleading that the respondent has not shown any cause when called upon to do so by issue of show cause notice and he has not been able to satisfy about his eligibility for obtaining gold dealers licence. He also submitted that the instructions contained in Rule 2 of the Gold (Control) (Licensing of Dealers) Rules, 1969 are mandatory in nature and that compliance thereof was essential. He also submitted that the respondent has not possessed adequate experience as required under proviso (e) to Clause (f) to Rule 2 of the Rules as he has not worked as a partner in the gold dealers firm for a period of five years. The SDR also cited before us the decision of the Tribunal in the matter of Collector of Customs & Central Excise v. Talvar Diamonds reported in 1986 (26) ELT 173 (Tribunal). He also cited before us another decision of the Tribunal in the matter of Collector of Central Excise v. S. Uttamchand Jain reported in 1986 (23) ELT 443 (Tribunal). Shri Arya submitted before us that the order of the Collector was not just and proper and the same should be set aside and that the order of the Deputy Collector should be restored.
4. Shri D.H. Shah, the learned advocate, appearing on behalf of the respondent herein, however supported the order of the Collector (Appeals) and submitted before us that the appeal over the said order could only be entertained, if the order is bad in law. He also submitted before us that here was a case where one of the partners was separating from the partnership firm and the partnership firm was already possessing a gold dealers licence. He also took us to the judgment of the Collector (Appeals) where the Collector has considered the turnover aspect and has held that there was no justification in witholding the licence on the point of there being no adequate turnover of gold. He further argued that there is no criteria laid down as contemplated under Section 27(6) of the Gold (Control) Act as to the number of gold dealers of the standard for turnover for issuance of licences in the cities like the metropolis of Bombay and further urged that under the circumstances, Rule 2(f) cannot be attracted. He also contended that the Rules are not mandatory in nature and that discretion was always available to the licensing authority to grant the licence.
5. Referring to the scheme for grant of licence under the Gold Control Act, Section 27 provides for issue of licence. Sub-section 6(a) of Section 27 puts an impediment to grant of licence and makes it obligatory for the licensing authority to make certain specific enquiries-Section 114 of the Act provides for framing of the Rules and in pursuance of the powers so invested, specific Rules have been framed known as Gold Control (Licensing of Dealers) Rules, 1969. Rules 2 of the same Rules provides for the matters to which regard shall be had before issuing of a licence. Clause (a) to (f) of the said Rules provide the points which should be examined before grant of licence.
However, a proviso is added to Clause (f) which provides that if certain conditions are existing then provisions of clause (f) should not be insisted upon or that exemption from the applicability of the said clause be granted. The grounds under which provision of Clause (f) have not been made applicable are clearly mentioned as proviso (a) to (f) of the same Rules.
6. Reading of the whole scheme of the procedure for grant of licence, it becomes clear that no business of dealing in gold can be done without holding a licence. No licence can be granted unless an enquiry as contemplated under Section 6(a) of the Act read with Rule 2 of the Rules is made and if the case falls within the proviso to Rule 2(f), then the provision of Clause (f) to Rule 2 need not be made applicable.
However, if the case does not fall within any of the proviso, then the provision of Rule 2(f) can be applied and the application may be examined accordingly.
7. We have considered the above arguments from both the sides. The question often raised is whether provisions of Rule 2 are mandatory in nature. In this context, the departmental representative has relied on the decision in the case of Talwar Diamonds reported in 1986 (26) ELT page 173 (Tribunal) and has pleaded that the provisions of Rule 2 of the Gold Control (Licensing of Dealers) Rules is mandatory in nature and each of the provision has to be strictly complied with. We have carefully gone through the judgment cited by the learned SDR. In that judgment the conclusion arrived at was that Rule 2 is mandatory to the extent that the Administrator is required to take into consideration the matters which are serially mentioned in sub-clause (a) to (f) of Rule 2 of the said Rules in deciding whether to grant or refuse the licence. However, while arriving at this conclusion the Tribunal has observed that no general rule can be laid down as to whether a provision in the statute is imperative or mere directory. It depends on the purpose for which requirement has been indicated particularly in the context of other provisions of the Act and the general scheme thereof. The Tribunal also observed that the word "shall have regard to the matters" would only mean that these provisions must be taken into consideration. There can be no dispute that the provisions contained in Rule 2 must be taken into consideration. The point here is whether they have to be considered in totality of the circumstances or in isolation.
On this, no finding has been specifically given in the citation referred to by the learned SDR. However, on this very issue we observe that a circular has been issued by the Government of India, Ministry of Finance, Department of Revenue vide F.No. 131/36/78-G.C. II (Pt) (Circular No. 27/78), dated 28-9-1978. The relevant para of the circular is extracted below :- "The matter has been re-examined in the light of the changed circumstances. The matters mentioned in Rule 2 of the Gold Control (Licensing of Dealers) Rules are not conditions of a mandatory nature governing the grant of a Dealer's licences. It may not be necessary that in each and every case all criteria mentioned therein should be fully satisfied. These rules give discretion to the licensing authority".
From the above, it is evident that the licensing authority cannot overlook the provisions contained in Rule 2 of the Gold Control (Licensing of Dealers) Rules but it is not necessary that in each and every case, all criteria mentioned therein should be fully satisfied and the Rules give the discretion to the licensing authority.
8. Though these are departmental guidelines, we are not in serious dispute even on legal grounds, on the aforesaid proposition made in the circular, for the following reasons. The wording of Rule 2 merely indicates "shall have regard to" various factors. This is mandatory to the extent that they have to be taken into account all these factors and they cannot overlook them. It does not absolutely bar discretion to the licensing authority if in any particular case all the criteria mentioned are not fully satisfied. The satisfaction should be to the totality of the circumstances having regard to those factors and not with regard to non-satisfaction of a particular aspect in isolation. In this view of the matter, we hold that nothing more can be read with regard to mandatory nature of Rule 2 of the Gold Control (Licensing of Dealers) Rules and accordingly answer the question.
9. In the present case, the Deputy Collector has rejected the application for grant of licence on the ground that he was not a partner in the firm for a period of five years and that he has not applied within 60 days after retirement and has also held that the annual turn-over does not warrant grant of further licence.
10. If the applicant does not have experience of five years and has not applied within 60 days, at the most, he can be considered as an applicant having experience but not fully satisfying the criterion prescribed for coming under the proviso to Sub-rule (f) of Rule 2 of the said Rules. In view of this position the application does not deserve outright rejection. The other circumstances may have to be considered. One such consideration which prevailed on the Licensing authority to reject the appellant's request was the ground that the annual turn-over figures did not warrant any further increase in the number of gold dealers. There is no discussion on this aspect as to how he has arrived at this conclusion. On the contrary the Collector (Appeals), in his order, has reproduced the turn-over showing a definite increase in the year 1985 as compared to 1984. Hence we are unable to appreciate as to how in the context of the figures given by the Collector (Appeals) in his order and in the absence of any discussion on this aspect by the licensing authority, the order of the Collector (Appeals) can be said to have factually erred. Moreover, we also are broadly in agreement with the view taken in the case of Shri Shantilal G. Jain reported in 1988 (17) ECR page 389 where certain guidelines have been prescribed as to how the turnover aspect should be considered. This turnover aspect should not be looked upon as a mere arithmetical gymnastics but should be considered as a guiding factor.
Where the turnover falls considerably from year to year, a view can be taken that no further increase in the number of dealer is warranted.
Here this is not the position. In this view of the matter, we see no reason to interfere with the order passed by the Collector (Appeals).
Accordingly, we reject the appeal filed by the Department.