1. In this appeal, the appellants have challenged the validity of confiscation of gold under Section 71(1) of the Gold (Control) Act, 1968 (hereinafter referred to as the Act) by the learned Collector of Central Excise, Kanpur. This appeal is preferred under Section 82 of the Act.
2. The facts of the case are that on 7-5-1987, a Divisional Preventive party of Central Excise, Sitapur visited the business premises of M/s.
Ram Chandra Daya Shankar Rastogi, Nawabganj, Sandi, Hardoi and conducted the search of the aforesaid business premises on the authority of search warrant in presence of two independent witnesses.
As a result, new gold ornaments weighing 699.500 gms valued at Rs. 1,93,200/- were recovered from a box from the said business premises.
The search was attended by the appellant. The statement of the appellant was recorded. A panchnama was prepared and the gold was seized. A summons dated 11-5-1987 was issued and in response, the appellant and his son appeared before the Superintendent (Preventive), Central Excise, Sitapur on 15-5-1987. The sealed box containing the seized gold ornaments was opened before him and panch witness and itemwise list was prepared. The statement of Sh. Bhavesh Rastogi son of the appellant was also recorded on 15-5-1987. A further statement of the appellant was also recorded. In the show cause notice dated 27-10-1987 issued thereafter, the variation in the statement with those of the statements made later were referred and the subsequent statement was taken as an "after thought". The show cause further alleged that they contravened the provisions of Sections 8(2) and 27 of the Act inasmuch as they had acquired and possessed thereafter, gold ornaments in trade quantity unauthorisedly and were engaged in the purchase and sale thereof. The appellant submitted his explanation on 30-12-1987 and also in support of his statement produced the following evidence - 1. Cash memo No. 814 dated 20-5-1987 of Bipul Photo Studio, Badri Nath Dham, Chamoli 2. Receipt No. 60 dated 1-6-1987 for Rs. 11/- of Sh. Kedar Nath Mandir Simiti, Badrinath 3. Receipt No. 133 dated 2-6-1987 for Rs. 5/- from Baba Kamti Panchayat Kshctriya Branch, Garhwal 4. Receipt No. 7507 dated 3-6-1987 for Rs. 20/- as rent from Lal Devi Dayal Sukh Dayal Dharamshala, Hardwar 5. Receipt No. 92539 dated 5-6-1987 for Rs. .5/- donation from Parmarth Ashram Hardwar 6. Receipt No. 8665 dated 8-6-1987 for Rs. 30/- as rent from Lala Devi Dayal Sukh Dayal Dharamshala.
The appellants also produced the copies of G.S. 13 record of three goldsmiths and their affidavits were also filed and an affidavit of a customer also filed. Further affidavits of Panch witnesses with regard to the statements made by appellant at the time of seizure were also filed by the appellant. The main contention of the appellant had been that there were marriages in their family. The old jewellery weighing 750 gms. in their house had been given to the three gold smiths for making new jewellery and the said three goldsmiths had made entries of the same in their GS 13 registers. The said goldsmiths after making new jewellery had delivered it to the appellant. The appellant out of fear of theft in the house, had kept it in safe custody in his shop. The marriage was to be celebrated a week later and in proof of it, he had produced the marriage invitation cards also.
3. The learned Collector had analysed the statements made at the time of seizure with those given later by the appellant and his son and had found descripancy and contradiction. Besides, he found the materials on record not sufficient to drop the proceedings. Therefore, he totally disbelieved the version of the appellants and held that the gold jewellery were in trade quantities. The Collector disbelieved the version of the appellants that the gold jewellery was not for sale but belonged to their family and had been kept in the shop for safety. The learned Collector relying upon the statement of the appellant of 7-5-1987 had inferred that the appellant had acquired the gold jewellery illegally for sale.
4. Sh. A.K. Jain, advocate for the appellant streneously argued and demonstrated that there was absolutely no infirmity in the statements of the appellant and his son, nor the evidence of the appellant was such as to be disbelieved. He submitted that possession of a large quantity of gold jewellery is no proof of an attempt for sale. An attempt for sale is distinct from intention to sell. Intention to sell does not constitute an offence under Section 27(1) of the Act. He further submitted that under Section 8(2) of the Act mere possession of gold ornaments does not constitute as an offence unless there is an offence or contravention of the provisions of the Act. He argued that the ornaments neither had been displayed for sale nor any attempt was made for sale and hence there was no contravention of the provisions of the Act. He relied upon several citations of this Tribunal and those of various High Courts to show that mere possession of gold jewellery was not an offence and suspicion however grave it might be, it cannot assume the place of proof. Shri A.K. Jain submitted that the learned Collector had seriously erred in rejecting the overwhelming evidence of the appellants in the form of the affidavits of the goldsmiths, their extracts of G.S. 13 register, the affidavit of customers, the affidavit of the Panch witnesses who testified to the fact, the version as given later was also stated by the appellants but the officers had not recorded it. He further submitted that the preventive officers have not found even a single paper in the shop to show that they were dealing in gold or gold jewellery nor they have recovered any tools of business like balances, dusting or testing tools like touch stone which are required for sale of jewellery. He further pointed out that the Act permits a family to hold gold jewellery upto 4000 gins. He submitted that there was absolutely no infirmity in the evidence and the learned Collector on mere surmises and conjectures decided the matter which is unsustainable in law. The learned counsel relied upon several judgments in support of his contentions.
5. Miss Rcnuka Mann, the learned Departmental Representative, stoutly defended the order of the learned Collector and pointed out several contradictions in the statements of the appellant when given on the first occasion with those of statements made later. She further argued that the gold jewellery was in large quantity and this also definitely indicate that they are in trade quantities. The Departmental Representative further submitted that the learned Collector was justified in rejecting the evidence of the appellant as an 'after thought' and as a belated story and hence sought for the dismissal of the appeal.
6. We have heard both the sides, perused the records and the evidence of the appellant before the Collector and carefully gone through each of the contentions raised by the appellant in the appeal memo and in the arguments. The only question that arises for our consideration is as to whether the appellants have violated any provisions of the Act by keeping in possession of the gold jewellery and as to whether they were carrying on trade without licence as required under the Act.
(a)(i) acquire or agree to acquire the ownership, possession, custody or control of, or (ii) buy, accept or otherwise receive or agree to buy, accept or otherwise receive any ornament, unless he knows or has reason to believe that such ornament, being required to be included in a declaration, has not been so included; (b) sell, deliver, transfer or otherwise dispose of or agree to sell, deliver, transfer or otherwise dispose of any ornament, but shall not do so if the ornament being required to be included in a declaraion has not been so inluded".
"No declaration referred to in Sub-section (1) or Sub-section (3) shall be required to be made - (b) in relation to any ornaments, or both articles and ornaments, where both articles and ornaments are owned, possessed, held or controlled, unless the total weight of such ornaments or both articles and ornaments, as the case may be, owned, possessed, held or controlled by - "No person shall commence or carry on business as a dealer unless he holds a valid licence".
8. From the reading of these two sections with proviso, it is abundantly clear that there is no prohibition for acquisition, to possess or to control or to buy and accept but save as provided for in the Act. Further, the Act also permits a family to hold total gold ornaments to an extent of 4000 gms.
9. The main charges made out against the appellants are that he did not hold any certificate recognising him as a goldsmith nor a gold dealer's licence to deal in gold and gold ornaments. The appellant had throughout denied the charge that he was a dealer or a goldsmith or that he had possessed these ornaments with a view to deal or sell them.
He had stated in the first statement that he had purchased it from someone but however this statement is in variance with the second one in which he has stated that jewellery of his family had been given for remaking it into new ones for the purposes of marriages in the family which were to be celebrated in a week's time. This statement of the appellant is corroborated with of his son's statement and supported by the affidavit of panchwitness, who has stated that this fact was stated by the appellant in the first statement recorded on the spot on 7-5-1987 to the Investigating officer. It appears that this part of the statement was not recorded by the Investigating officer, hence this has been disbelieved by the Collector. The appellant in order to prove his case had produced the affidavit of customer and those of three goldsmiths who had remade there old jewellery into new ones alongwith their extracts of G.S. 13 register. The learned Collector had disbelieved this part of the evidence as he found discrepancy in the entries in G.S. 13 register with regard to the date of return of jewellery to the appellant by the goldsmith. The learned Collector had also found discrepancy in dates of return of jewellery in the affidavits of the goldsmiths and hence he had concluded that the documents were fabricated. Be that as it may, what is to be seen now is as to whether there was sufficient materials to hold the charges of appellant having dealt with the gold jewellery by way of sale and as to whether there were series of transactions committed by them in violation of the provisions of the Gold Control Act to hold the charges levelled against him. The Department should show that the appellant had been dealing in jewellery, doing business and transacting in gold or gold ornaments or jewellery without gold licence regularly, not by an instance of a stray case of a sale but by series of transactions conducted during the course of time. In the instant case, there is absolutely no evidence on record to show that the appellant was dealing in gold jewellery by way of sale to any customer. There is not a scrap of paper or any material recovered from the appellant shop to hold the charges. There is not even one withness examined to show that he had purchased jewellery from the appellant or that they had given any jewellery for remake or repair. The jewellery recovered was not displayed for sale or kept in glass case or exhibited for sale. It had been kept in a sealed box inside an almirah safely which goes merely to show that the appellant had kept the jewellery safely to prevent from any theft. The evidence produced by him cannot be rejected totally on mere technical lapse or error of typing in affidavit of goldsmiths or on such ground unless it is shown that the evidence is so flimsy and shakeable that no reasonable person can believe the veracity of the same. The reasons assigned by the Collecter for rejecting the evidence is on the ground that of dates of return of jewellery as stated by the three goldsmiths is the same day i.e. 3-5-87 which according to Collector is strange. It could be a mere coincident. This cannot be a ground to reject the entire evidence of the appellant. Moreover, even if this evidence is rejected, even than the Department has not produced any evidence to show that he was dealing in gold jewellery. There is nothing on record to show that he had dealt or was dealing in gold jewellery. The contention of the appellant that he had kept the jewellery in shop for safety in almirah to prevent from theft in his house, is probable and believable. The evidence produced by the appellant of the goldsmiths and of the extracts of G-13 register, the affidavit of customer to dispel the variance in statements, the marriage invitation cards, all go to corroborate the statement of the appellant. It is true that people take extra care to safeguard valuables from thefts in a marriage house both from thieves as well as from ungrateful guests and invitees. It is quite common in Indian homes that marriage jewellery are shown to all the guests, relatives and invitees. There is always an element of fear of loss by theft and misplacement. Hence, people take care to keep their valuables in safe valets in banks, homes and in shops. In this case, the appellant had felt it safe to keep it in his safety box in the almirah of his shop till the day of marriage. That by itself cannot be taken as an intention to sell or deal in jewellery, as no series of transactions has also been brought on record to hold the charge by the Department.
The Colector had also drawn an inference that the appellant was keeping these jewellery for sale on account of its trade quantities. Shri Jain argued that mere possession of gold jewellery by itself cannot be held as for the purpose of sale and such an inference is a mere surmise and a suspicion and therefore, suspicion however, grave cannot take the place of proof. Hence, we are not inclined to accept the views and reasoning given by the Collector.
10. Sh. A.K. Jain, advocate for the appellant, in support of his case submitted a large number of citations on this aspect of the matter to strengthen his arguments. We note below a few of them.
11. In an unreported judgement of Madras High Court in its judgment in C.A No. 299 of 1974 dated 1-4-1976 Asstt. Collector of Central Excise, Coimbatore II v. Natarajan, it has been held that "it is well settled that in order to hold a person to be a dealer, continuity of business viz. the several transactions, has to be proved." In another unreported decision of Patna High Court in its judgement in the Union of India v. Ramlakhan Mandal & Other in criminal appeal No.127 of 1968 dated 20-5- 1975, held that "There is no reliable evidence on the record to suggest that these respondents exposed or offered for sale 22648.500 grammes of gold ornaments of having gold of purity exceeding 14 carats and two packets of gold watches having gold of purity of 18 carats at the relevant period as mentioned in the charge."In Assistant Collector of Central Excise (Preventive), Madras v. K.S.Chandrasekaran (Para 4) Cencus Manual of Gold Control corrected upto 1st January, 1982 Page 589 dated 26-11-1979, it has been held that "evidence of actual trading in gold ornaments required to establish contravention of Section 27(1).
In Seshmal M Jain v. Collector of Central Excise, Bangalore reported in [1987 (27) ELT 504] the Tribunal has held that acceptable legal evidence is required to prove a charge under Section 27. However grave suspicion be, cannot take place of proof.
In Shri Nunna Venkaterao v. Collector of Central Excise,Guntur reported in [1987 (10) ECR 404 (CEGAT SRB)] has held that mere possession of gold is no contravention or offence.Collector of Central Excise, New Delhi v. Subhas Chandra reported in [1987 (12) ECR 157 (CEGAT WRS], it has been held that mere possession of large quantity of gold ornaments even with intention to sell not sufficient. Actual selling and not passive possession is required for a charge under Sections 27 and 71., In S.K.M. Anjaneyiilu v. Collector of Central Excise, Guntiir reported in [1987 (13) ECC T-364 (CEGAT SRB)] at para 5, it has been observed that proof of acting as dealer in gold necessary for proving infringement of Section 27. Keeping ornaments in show case no such proof. Suspicion however grave it may be, cannot take place of proof.
Similar is the view taken in J.N. Ambi Achari and Ors. v. Collector of Central Excise, Madras [1989(39) ELT 288 (Tribunal)], by the Tribunal at para 8 that there must be evidence on record to show that the person commenced was carrying on business as a dealer to sustain a charge under Section 27 (1).
In Prabhakar S. Baikerikarv. Collector of Customs (Preventive) Bombay reported in 1989 (39) E.L.T. 67 (Tribunal)], it has been observed that possession even intended for sale not sufficient to hold one guilty of a charge under Section 27(1). Expression 'business' under Section 27(1) contemplates series of transactions and not a stray or a single transaction.
12. The law laid down in these cited cases squarely apply to the case in hand and hence the appellant is entitled to succeed in this appeal.
The appeal is allowed. The appellent is entitled for return of his jewellery under confiscation and detention.
13. [Per: P.C. Jain, Member (T)]. -I agree with the conclusions of my learned brother that the appeal deserves to be allowed but for somewhat different reasons. Those reasons are set out below: - 14. Allegations of contravention of the provisions of Section 8(2) of the Gold Control Act and/or of Section 27 of the said Act were made.
15. Extracts of Section 8(2) have already been set out in the order of Shri S.L. Peeran. It is apparent from the said Section that the receipt of ornaments by a person is prohibited only if he knows or has reasons to believe that such ornaments, being required to be included in declaration, have not been so included. The relevant provision for declaration of ornaments is given in Section 16 of the said Act. There is no material on record to establish that the appellant herein contravened the provisions of Section 8(2) because he knew or had reasons to believe that such ornaments were required to be included in a declaration and had not been so included. The contravention of Section 8(2), therefore, is not at all established in the facts and circumstances of the case.
16. So far as the contravention of Section 27(1) is concerned, the allegation is that the appellant is carrying on a business as a dealer without a licence under the Gold Control Act. Now, the term 'business' has been held by the various Courts to mean where there are a series of transactions of purchase and sale and a stray incidence of purchase and sale would not indicate that the person concerned was carrying on business. No evidence whatsoever has been brought on record, except the incident in question alone, that the appellants were carrying on business in gold in the aforesaid sense.
17. It is observed that the adjudicating authority has drawn the inference of the appellant indulging in sale and purchase of the gold ornaments from the following circumstances:- (1) Initial statement of Shri Daya Shankar Rastogi on the day of detection indicated that the new gold ornaments under consideration were purchased from some unknown persons.
(2) The statement of Shri Bhavnesh Rastogi recorded, even 8 days later, on 15-5-87 indicated that the gold ornaments were purchased from someone against old gold ornaments on account of some marriage in the famiiy.
(3) This statement was affirmed to be correct by Shri Daya Shankar Rastogi F/o Shri Bhavnesh Rastogi.
(4) Subsequent stand of the appellant that the old gold ornaments have been given to the three goldsmiths for remaking of new gold ornaments is an afterthought in view of the statements recorded earlier on two occasions mentioned above. Quantity of some of the items of gold ornaments seized by the Department are in trade quantities. Therefore, the subsequent stand that these were required for marriage purposes on account of some marriages in the family is not believable.
18. I agree with the learned adjudicating authority that the appellant appears to be shifting his stand from time to time. His subsequent defence in reply to the show cause notice is not believable in the light of his earlier two statements. Despite this shifting character of the appellant's stand can it be said that the appellant has contravened the provisions of Section 27 and can it be inferred that he had been carrying on business as a dealer in gold on the basis of his first statement itself? Gist of the statement of Shri Daya Shankar Rastogi has been given by the Collector in the impugned order. It is as follows:- "(i) that he did not hold any certificate recognising him as a goldsmith nor a golddealers licence to deal in gold and gold ornaments; (ii) that the said gold ornaments were purchased by him from a person coming from outside about whom he had no knowledge; (iii) that the officers also checked the pawned ornaments and the connected records and found them to be in order; (iv) that the gold ornaments under reference were not entered in the Register or Bahi Khatas of the firm; that the same were purchased by his father who looked after the business.
(v) that it was not possible to prepare itemwise list of the recovered ornaments due to paucity of time." 19. From a perusal of the above gist the only incriminating facts which can be considered relevant for the purposes of Section 27 are:- (i) the said gold ornaments were purchased by the appellant from a person coming from outside about whom he had no knowledge and (ii) he did not hold any certificate recognising him as a goldsmith; nor did he have a gold dealers licence to deal in gold and gold ornaments.
These two facts are not sufficient to constitute contravention of Section 27(1) of the Gold Control Act in view of the interpretation of the scope of the term 'business' as already stated earlier.