1. This appeal is directed against the order of the Collector of Customs (Appeals) bearing No. S/49-193/87GC (BMY) dated 24-10-1988 whereby he has set aside the order-in-original No. 87/87(DC) dated 8-6-1987, has ordered issue of gold dealers licence to the respondent herein.
2. Before dealing with the matter, it may be clarified that pending appeal before us, the respondent in this matter filed a Writ Petition No. 3722 of 1988 in the High Court of Judicature at Bombay for an order directing the licensing authorities to issue the licence, pursuance of the order passed by the Collector of Customs (Appeals). In this matter, the Hon'ble High Court has granted rule and further directions to issue the licence by 31-1-1989 unless the order of the Collector (Appeals) is set aside by that time. The statement is made on behalf of the department that in pursuance to the directions issued by the High Court in the said Writ Petition the licence has already been issued. However, the same is made subject to the decision of the appeal.
3. We have examined the memo of petition to examine as to whether we are competent to pursue the appeal further. From the memo of petition produced before us, it appears that what is challenged before the High Court is the act of non implementation of the order of the Collector and the H igh Court has not given any findings on the merits. The observation made by the High Court that there is no defence, to withhold the licence there is no levy of the order under which the department has been directed to give the licence. It appears that the High Court has not decided the main issue nor that Writ Petition on that ground. There appears no objection in dealing with the matter on merits.
4. Shri D.H. Shah, the learned Advocate, appearing on behalf of the respondent, has also accepted the position and submitted that the appeal may be heard on merits and decided.
5. The respondent applied for grant of licence as a gold dealer vide his application dated 12-5-1986 which was received by the office on 26-7-1986. The respondent mentioned in his application that he was working with M/s. Kothari Jewellers, Ghatkopar from 2-1-1981 to 15-5-1988 and with M/s. Rajendra Jewellers, Malad from 25-1-1983 to 1-8-1986. The licensing authority's finding that the respondent did not possess sufficient experience and that he was not in continuous employmnt with a single dealer, show cause notice dated 12-3-1987 was issued. The respondent submitted the reply on 4-4-1987 and asked for personal hearing which was granted. The licensing authority vide his order dated 8-6-1987 however, held that the respondent was not in continuous employment with particular gold dealer for a period of five years as required under proviso (f) to Clause (f) to Rule 2 of the Rules and hence he was not entitled to exemption from operation of Clause (f) to Rule 2. He applied the ratio of the CEGAT South Regional Bench decision in Uttamchand Jain's case. He also held that there was no proportionate increase in the turn-over and hence rejected the application for grant of licence. In the appeal preferred against the said order, the Collector (Appeals) allowed the appeal holding that the turn-over was enough so as to justify grant of licence and ordered granting of licence. Henceforward to the decision of CEGAT West Regional Bench in Shantilal Jain's case.
6. Shri Arya, arguing on behalf of the appellant, submitted that the approach of the Collector (Appeals) has held regarding that the criteria of turn-over, which is mandatory requirement of Clause (f) to Rule 2, has not been proper with and therefore, the order of the Collector (Appeals) is bad in law and requires to be set aside. He also submitted that the provisions of Rule 2 of the Rules are mandatory in nature and that it was not open for the Collector (Appeals) to hold that it was permissible to use the discretion. Apart from that, the respondent did not possess requisite experience of five years contemplated under proviso (f) to Clause (f) of Rule 2 and whatever experience that he had was not with only one gold dealer but he worked with two persons and as held by the CEGAT in the case of Collector of C. Ex., Madras v. S. Uttamchand Jain reported in 1986 (23) E.L.T. page 443, that cannot be considered. He submitted that the order of the licensing authority may be restored by setting aside the order of the Collector (Appeals).
7. Shri D.H. Shah, appearing on behalf of the respondent, supported the order of the Collector (Appeals) and submitted that the Collector (Appeals) was correctly and rightly held that the turn-over was enough so as to justify for grant of licence. He also submitted that there was no criteria laid down for assessment of the turn-over so far as the metropolitan city like Bombay is concerned, as there is no notification issued under Section 27 (6A) of the Customs Act. He also submitted that the ratio laid down in the case of UttamchandJain is not a correct one and the same should not be relied upon.
9. So far as the order of Collector (Appeals) is concerned, it does not appear to be suffering from any infirmity so as to call for any interference. He has duly applied the turn-over criteria, and has correctly applied the ratio of the decision of this Bench in Shri Shantilal Jain case. The submission is made by Shri Arya, that the provision of Rule 2 of the Licensing of Dealers Rules are mandatory in nature. For the same reasons as mentioned by the Collector (Appeals) in his order, the said argument cannot be sustained. Mr. Arya placed reliance on the decision of CEGAT North Regional Bench reported in 1986 (26) E.L.T. 173 (Tribunal) also docs not completely support his sub-mission that no discretion is available. 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 arc 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 observes 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 take 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 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 license on the ground that he did not possess the requisite experience for a period of five years 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. Once 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 the 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 are also 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 turn-over aspect should be considered. This turnover aspect should not be looked upon as a mere arithmetical gymnastic but should be considered as a guiding factor, which should be applied, when there is a noticiable fall in turn-over year to year.
11. We may also observe that the Assistant Collector has denied benefit of exemption from application of Clause (I) to Rule 2 of the Gold Control (Licensing of Dealers) Rules, on the ground that the respondent has not served continuously for a period of five years with one single employer and has placed reliance on the decision of CEGAT (South Regional Bench) in Shri Uttamchand Jain - 1986 (23) E.L.T. 443.
However, reading of proviso (f) to Clause (f) to Rule 2, shows that, it neither contemplates "continuous employment" or "employment with a single dealer". What is contemplated is the experience for a period of not less than five yeras. It is a cardinal principle of law that the law as framed has to be read and no supplanting is permissible and in such circumstances, proposition laid down in S. Uttamchand Jain remains a doubtful proposition. Here, when the Collector (Appeals) has held that the respondent is eligible to get licence, irrespective of whether proviso (f) to Clause (0 to Rule (2) is applicable or not its which an agreement, we do not express any positive opinion on the interpretation of proviso (f) to Rule 2(f) made by the South Regional Bench.