1. The aforesaid 12 appeals arise out of the common order passed by the Collector of Customs (Prev.) Bombay bearing F.No. XVII (GC) 8-12/88 dated 1-2-1989, ordering confiscation of primary gold weighing 2325.400 gms valued at Rs. 7,32,500/- under Section 111(d) of the Customs Act and Section 71(1) of the Gold (Control) Act.
2. Since all these appeals are against the order of absolute confiscation of the gold and they are from the persons connected with the Tirumala Tirupathi Devasthanams, whose gold was ordered absolute confiscation, common arguments were advanced and they were heard together and hence this common order.
3. The brief facts for the purpose of disposal of these appeals can be stated as under: Tirumala Tirupathi Devasthanamas in Andhra Pradesh receive offerings in Hundis at the temple. These offerings include inter alia primary gold, articles of gold, gold ornaments etc. These offerings of gold are entered in the prescribed records and declared to the Gold Control authorities in the form of monthly returns and are periodically taken to the Government of India Mint at Bombay after obtaining the requisite permission from the Gold Control Administrator, where they are deposited for conversion into standard gold bars, which they receive from the Mint for utilisation for religious purposes such as making of religious coins, gold plating etc...with the permission granted by the Gold Control Administrator in respect of a quantity weighing 264.013 kgs at the Government of India Mint, Bombay. The Refinery Officer attached to the Government of India Mint detained a quantity of gold weighing 2325.400 gms under detention memo for further enquiries, out of the lot of the aforesaid gold tendered at the Mint. This gold alleged to be of foreign origin, was subsequently seized under a panchanama by the Gold Control Officers of Bombay Customs (Prev.) Collectorate. In the adjudication proceedings initiated by the Collector of Customs (Prev.) Bombay, while the individual appellants were discharged from the penal liability, the aforesaid gold weighing 2325.400 gms was ordered absolute confiscation under the provisions of the Gold Control Act and Customs Act. The present appeals are against the aforesaid order of absolute confiscation passed by the Collector of Customs (Prev.) Bombay.
4. Shri George Cheriyan, on behalf of the appellants, at the outset contended that even according to the findings of the Collector, the gold is undoubtedly belonging to Tirumala Tirupathi Devasthanams as part of the offerings made by the devotees of Lord Venkateshwara.
Hence, the ownership of the gold vests with T.T.D. However, the impugned order of absolute confiscation of gold has been passed without issue of show cause notice to the T.T.D. duly represented by the Board of Trustees. The show cause notices have been issued to the individuals viz. Chairman, Financial Advisor, Executive officer, 2 Asstt. Executive officers and U.D. Clerk by name. Since the interests of the T.T.D. are mainly affected, the T.T.D. also have filed an appeal on their own apart from the appeals from the individuals. Shri Cheriyan thereafter took us through the provisions of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. He pointed out that T.T.D. have been separately defined under Section 2(28) of the aforesaid Act. He also pointed out that under Section 111 of the aforesaid Act, T.T.D. shall have its own funds, the corpus of which shall include all the amounts received by it by way of donations, gifts, kanukas including offerings deposited in Hundis and any income from any other source. He also pointed out that the said funds shall be operated by an officer or officers authorised by the Board of Trustees in such manner and subject to such conditions as may be prescribed. He pointed out that Chapter XIV of the aforesaid Act is wholly devoted to the T.T.D. According to Section 97 of the said Act, the administration of the T.T.D. shall vest in the Board of Trustees, and this Board shall manage the properties, funds and affairs of the T.T.D. He, therefore, contended that no notice has been issued to the T.T.D. represented by the Board of Trustees, who manage the properties and affairs of the T.T.D. This has also been pointed out in reply to the show cause notice of the individual appellants. Notwithstanding this position, the Col lector has ordered absolute confiscation without giving an opportunity to the proper owner of the property. He also referred to the findings of the Collector, wherein the Collector himself has admitted that the gold is undoubtedly a part of the offerings made by the devotees of the Lord. Hence, the adjudication order passed without a notice to the owner, is contrary to the provisions of Section 124 of the Customs Act and Section 79 of the Gold Control Act, and is therefore required to be set aside. Since no notice can be issued at this stage and the period of six months having been already over, the gold ordered confiscation is required to be restored to the T.T.D.Apart from the short point, he also argued elaborately on the merits of the case. He took us through the letter addressed by the T.T.D. to the Gold Control Administrator, requesting for permission to convert a quantity of 264.013 kgs of gold varieties accumulated from 1-4-1986 to 31-8-1987 into standard gold bars in the Government of India Mint, Bombay and to keep gold bars derived out of the same as reserve stock for preparation of gold dollars and ornaments etc. Thereafter, he took us through the permission given by the Government of India in their letter dated 29-1-1988 for conversion of the aforesaid quantity through the Government of India Mint, Bombay. This permission has been granted under Section 13 of the Gold Control Act. He also referred to the detention memo of the Refinery Officer of the Government of India Mint in respect of 2325.400 gms of foreign marking consisting of gold coins and gold biscuits. This detention has been made only for certain further verification as per the detention memo. He also referred to the panchanama to show that the gold was tendered by the Refinery Officer of the Mint and from whom it was seized. He also took us through the inventory of the gold seized to show that some of the gold do not even bear foreign markings. He contended that on the basis of these documents, it is clearly established that they have complied scrupulously with every provision of the Gold Control Act. Chapter IV of the Gold Control Act is applicable to the Public Religious Institutions and according to Section 13 of the Gold Control Act, notwithstanding anything contained in this Act, a public religious institution may receive gold as offerings, and where any such primary gold is received by the institution as an offerings, they can convert the same with the previous permission of the Administrator, into ornament for deity or idol, or into new articles which may be required for worship etc. In this case, primary gold has been admittedly received as an offering in the Hundis. This has been included in the monthly returns and the same has been taken into Government of India Mint for conversion into standard gold bars in accordance with the previous permission granted by the administrator and hence every provision contained in Section 13 has been scrupulously complied with and hence there is no justification at all for confiscation under the Gold Control Act. As for the confiscation under the Customs Act, he contended that the primary gold seized has been tendered by the T.T.D.as part of the hundis collections and hence reasonable belief cannot be entertained. He also contended that there is no valid seizure in this case since the goods were in the custody of the Government of India Mint. In this connection he referred to the Supreme Court's decision reported in 161 ITR 505. He also contended that Section 123 is not applicable and hence the burden is on the department to establish the illicit origin. He also contended that since no notice has been given to the T.T.D. within the stipulated period of six months, the gold is liable to be returned to the owner. In this context, he cited the judgment of the Calcutta High Court reported in AIR 1975 Cal. 131. Shri Cheriyan also pointed out that there is no distinction made in the Gold Control Act with regard to the foreign gold and other gold. The definition of only primary gold has been given. Any religious institution receiving primary gold has to enter in the prescribed register and furnish monthly return. This has been duly complied with.
As per Section 13 of the Gold Control Act, permission has also been obtained from the Gold Control Administrator for depositing in the Government of India Mint for conversion of the primary gold for religious purposes. Hence, confiscation on the ground that the impugned gold is of foreign origin and hence declaration filed and the permission given by the Gold Control authorities do not cover the proceedings under the Gold Control Act, is not tenable. He also contended that if there had been any requirement that foreign gold is to be separately shown in their records as well as in the returns and also while making application to the Gold Control Authorities, they would have definitely complied with. Shri Cheriyan also pointed out that subsequent to the seizure, they approached the Collector and the Ministry, pointing out that this type of foreign gold is noticed often, seeking for a permanent solution. The Collector and the Ministry have, however, and also intimate the jurisdictional Asstt. Collector, which they are doing now. If such requirement had been stipulated earlier, they would have definitely complied with Shri Cheriyan finally submitted that in case the gold is technically liable for confiscation under the Customs Act, the Tirumala Tirupathi Devasthanams should be permitted to redeem it on payment of a nominal fine so that the gold can be deposited in the Government of India Mint, where it has been brought for deposit, and on due conversion utilized for religious and charitable purposes.
5. Heard Shri Arya. He contended that though permission has been granted for conversion into standard gold bar in the Government of India Mint, this cannot override the provisions of the Customs Act.
This permission was only in respect of the provisions of the Gold Control Act. The gold is an item specified under Section 123 of the Customs Act. Judged from the purity and marking they are clearly of foreign origin and no permission is granted by the Reserve Bank of India for import by the individual for domestic consumption. Hence the very presence of gold of foreign origin in the country in the hands of individuals invoke reasonable belief. In this case, T.T.D. claims ownership and the burden of proof even as per Section 123 extends to any person who claims ownership of the goods. Thus he supported the order of the Collector. He also contended that the Collector has been liberal in taking a judicious view in discharging the individuals from the penal liability. As regards the foreign marked gold, even though they might have complied with the provisions of the Gold Control Act, their liability to confiscation under the Customs Act cannot be existinguished merely becasue they have complied with the provisions of the Gold Control Act. Shri Arya also contended that the Show cause notice has been issued to the Chairman and Executive officers of T.T.D.They are the persons responsible for the conduct of the affairs of the T.T.D. even as per the provisions of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. He, therefore, contended that the requirement of issuing notice to the owner has been duly complied with. He also maintained that notice to the Chairman and the Executive Officer were issued only in their capacity as Chairman and Executive officer of T.T.D. and not in their individual capacities.
Their names have been mentioned only for the purpose of proper service of the notice.
6. After hearing both the sides and perusing the available records, we find that the only issue to be decided in these appeals is whether absolute confiscation of gold bearing foreign mark weighing 2325.400 gms valued at Rs. 7,32,500/- is justifiable under Section 111(d) of the Customs Act and Section 71(1) of the Gold Control Act.
7. On going through the findings of the Collector we notice that he himself is convinced of the bona fides in this case. He has observed as below: "Here the facts and circumstances of the case clearly show that none of these respondents were knowingly concerned with the act of illegal importation of gold, liable for confiscation. Each one of them had acted in absolutely religious faith and had tendered the same gold for conversion before the Government of India Mint. The gold is undoubtedly a part of the offerings made by the devotees of the Lord Venkateshwara." These findings are also amply supported by the documents through which we were taken by the learned advocate for the appellants, viz. the request for permission to deposit 264.013 kgs of various items of gold, permission given by the Government of India for this quantity to be deposited in the Government of India Mint, the fact that they were actually deposited at the Mint where it was detained and subsequently seized for further verification, amply justify the findings of the Collector that the very same gold which was put in Hundi has come to be deposited in the Government of India Mint in accordance with the permission granted by the Gold Control Administrator. We also note that it is not the case of the department that any one of the officers or staff connected with the T.T.D. has substituted foreign gold in the place of some other gold deposited in the Hundi. The fact that the Collector has come to the conclusion that the very same gold which has been put as offerings in the Hundi has come to the Mint in accordance with the permission granted by the Gold Control Administrator has a considerable significance, while deciding on the question of absolute confiscation of gold.8. In the case of public religious institutions, as per the provisions of Section 13 of the Gold Control Act, gold including primary gold can be received as offerings. However, when such gold is received as offerings in the Hundi, that institution has to dispose of such primary gold in the manner prescribed under Section 13(b) of the Gold Control Act. It is not the case of the department that any of the officers of the Devasthanam have failed to comply with this requirement. Once this is admitted, no offence under Gold Control Act can be alleged with regard to the primary gold. We also note the argument advanced by Shri Cheriyan that under the Gold Control Act, no distinction is made between primary gold of foreign origin, vis-a-vis other. In the circumstances, primary gold of whatever origin received by the public religious institutions in accordance with the provisions of Section 13 of the Gold Control Act, cannot be held liable for confiscation under Section 71(1) of the Gold Control Act. Hence the order of the Collector confiscating primary gold of foreign origin under the Gold Control Act is required to be set aside.
9. Now the point for consideration is whether the said gold is liable for confiscation under Section 111(d) of the Customs Act. Though the Customs Act is an independent enactment, it is a well known fact that the Gold Control Act has been enacted mainly with a view to prevent receipt and distribution of smuggled gold. It is in the form of a supporting enactment to the Customs Act especially with a view to prevention of smuggling of gold. Import of gold cannot be made by any one excepting with a special permission issued by the RBI. There are special provisions in the Customs Act for throwing this burden of proof on the persons from whose possession and custody foreign gold is seized or from the persons who claimed the ownership thereof, to establish that the gold has been licitly imported in the country. The argument advanced by Shri Cheriyan was that in some of the pieces of gold, foreign markings were not found. All the same we notice that the purity in some cases is of 999.9. Some of the gold bars specifically bear foreign markings. On this basis, reasonable belief regarding their smuggled nature can be said to have been entertained by officers seizing the gold. Hence, the burden of proof that they are not smuggled ones is cast on the person from whose custody the gold has been seized or who claims the ownership thereof. We come across cases involving smuggling of foreign gold, where the individuals always dis-claim ownership as well as nexus with the foreign gold, to escape penal liability. Here is a case where the appellants viz. T.T.D. claim ownership and they have also clearly indicated that this foreign gold is an offering found in the Hundi and that is why it has come into their possession and ownership. The Collector has absolved all the concerned of any penal liability on the basis of his conclusion that this foreign gold is part of the offerings made in the hundi.
10. We also note that the T.T.D. having come into possession of the said gold, have followed the requirements under Section 13 and 14 of the Gold Control Act. There is no allegation of substitution of the foreign gold by any of the persons connected with T.T.D. The finding of the Collector is clear that it is the very same gold which has been deposited in the hundi. In the circumstances, when the provisions of the allied Act intended to prevent receipt and disposal of smuggled gold have been substantially complied with, that religious institution cannot be said to have violated the provisions of the Customs Act merely because a part of the offerings made in the hundi happen to be of smuggled origin, on account of which they became liable to confiscation. We do appreciate that the yardstick for imposing penalty and that for ordering confiscation may be different. All the same, by absolute confiscation, the valuable property is sought to be taken away, which, in some cases, costs more than imposition of penalty. In view of this consideration, while we hold that though the foreign gold deposited by some devotees who have smuggled it into the country may be legally liable to confiscation under Section 111(d) of the Customs Act, the public religious institutions having received the same in the form of an offering in the hundi and having followed all the provisions of the requirements of Gold Control Act, cannot be deprived of the same.
In this case, it is observed that this institution has observed all the provisions contemplated in the Gold Con trol Act, which is intended to lend support to the provisions of the Customs Act. In this view of the matter, taking into account the peculiar nature and circumstances of the case, while we are to uphold the order of confiscation of the gold under Section 111(d) of the Customs Act, we would deem it proper and just to allow its redemption by the Tirumala Tirupathi Devasthanam on payment of a nominal and token fine of Rs. 1,000/- (Rupees one thousand) only. Since the gold has already been brought for depositing in the Mint, the same should be restored to the Govt. Mint for being taken as deposit in the account of the T.T.D. on payment of redemption fine by the appellant T.T. Devasthanam.
11. On the short point argued by Shri Cheriyan, we are not in fully agreement with him that no notice has been given to the owner. We observe that the Chairman and the Executive officer have been served with notices and the findings of the Collector also go to show that the notices have been issued to them only in their capacity as officers concerned with the conduct of the affairs of the T.T.D. Merely, non-compliance of technical formality of issuing another show cause notice to T.T.D. represented by the Board of Trustees, cannot be construed as non-issue of notice to the T.T.D.12. Before parting, we would like to observe that offerings made in the Hundi by public religious institutions could be of an assorted nature including those items which are smuggled ones or prohibited under various laws. Such a situation may occur quite often. It is necessary and desirable that suitable guidelines are formulated by the Government to deal with such situations, when the temple authorities notice objectionable items, which are liable for confiscation either under the Customs law or any other law. In the absence of such guidelines, it is likely that genuine parties may suffer, while unscrupulous may take advantage of this position. Atleast in so far as the provisions of the Customs Act are concerned, it is desirable that the C.B.E.C. New Delhi may like to prescribe suitable guidelines for the public religious institutions to follow, whenever they come across any offerings in the nature of smuggled goods. We direct that a copy of this order may be sent to the Central Board of Customs and Excise, New Delhi for consideration of this aspect.