Judgment:
1. Facts in brief as alleged in the show cause notice dated 29.6.1981 commencing the proceedings in this case are as follows: 1.1 The shops of the first appellant, licensed gold dealer were searched by Income Tax authorities of Delhi on 16.6.1980. From shop No. 1734, 3 pcs. of primary gold weighing 59.700 gms. valued at Rs. 7760/- were recovered and seized by the Income Tax authorities as these were not accounted for.
1.2 From the other shop No. 307, Dariba Kalan, Delhi, gold ornaments weighing 923 500 gms. valued at Rs. 52,482/- were recovered and seized as unaccounted for by the Income Tax authorities. The matter was referred by the income Tax authorities to the Collector of Central Excise for enquiry and necessary action under the Gold (Control) Act, 1968.
1.3 The first appellant was summoned by the Supdt. Gold Control (Preventive) New Delhi. Shri Suresh Chand Jain, Partner of the first appellant appeared before the said Supdt. and tendered his statement on 19.2.1981. Be, inter alia, admitted the recovery of the aforesaid primary gold and gold ornaments and stated that these were not accounted for in their G.S. 11 and G.S. 12 registers He also stated that these 3 pcs. of primary gold were given by a lady Smt Dhano Devi, the 2nd appellant herein and meanwhite the Income Tax authorities arrived at their shop. Smt. Dhano Devi was also summoned and in her statement dated 13.4.1981 she admitted that she gave the three pieces of gold to Shri Chander Kumar on 16.6.1980 for making six bangles. She also stated that Chander Kumar Jain did not issue any receipt for this gold. She further stated that this gold was given to her by her late husband 40 years ago and she did not know that keeping of gold was an offence under the Gold (Control) Act.
She also admitted of not having informed the Gold Control Officer regarding possession of this gold. She stated that she did not possess any other gold/gold ornaments.
1.4 In his statement Shri Suresh Chand Jain stated about the seized ornaments that some of these ornaments were accounted for in their register of repairs; that the repair register was misplaced somewhere and was not traceable and was also not traceable on 16. 6.
1980 at the time of visit of the Income Tax Officers. He also stated that out of the above said gold ornamerits, those mentioned at s.
No. 37 of the Valuation Report had been declared by him in form GS. 3 and these were brought by him in his shop for valuation purpose.
1.5 Accordingly, the aforesaid show cause notice was issued to the first appellant for contravention of provisions of Sections 8, 31, 32, 33 and 55 of the Gold (Control) Act, 1968 and Rule 13 of the Gold Control (Forms, Fees & Misc. Matters) Rules, 1968 inasmuch as they acquired, possessed, kept in custody or control the said primary gold weighing 59.700 gms., accepted the primary gold from Smt. Dhano Devi, kept gold ornaments in the licensed premises which was not a part of thair stock-in-trade and did not maintain any account of the gold ornaments weighing 923.500 gms. valued at Rs. 52,482/- for repairs, did not issue a voucher to Smt. Dhano Devi for receipt of the said primary gold. 1.6 The same show cause notice also alleged against the 2nd appellant that she has contravened the provisions of Section 8 ibid inasmuch she possessed, kept in custody or control unauthorisedly the aforesaid primary gold weighing 59.700 gms. valued at Rs. 7760/-.
1.7 The cause was to be shown to the Addl. Collector of Central Excise, New Delhi.
1.8 The adjudication proceedings were going on before the Additional Collector and there had been a substantial exchange of correspondence between the appellants and the adjudicating officer when in 1984 an addendum dated 5.12.1984 to the show cause notice dated 29.6.1981 was issued. The effect of the addendum was that - (i) instead of the value of gold/gold ornaments at Rs. 60.242/- as shown in the show cause notice dated 29.6.1981 (Rs. 52,482 + Rs. 7760/-) it was shown as Rs. 1,77,573/- in the addendum.
(ii) the ornaments were seized in room No. G-22, C.R. Building, New Delhi from Suresh Chand, partner of M/s. Ranjit Singh Jain Jewellers, the 1st appellant, on 23.7.1984.
The appellants' case in this respect is, it is to be noted here, that pursuant to the assessment order dated 1.3.1983 passed by the Income Tax Officer accepting the appellants' claim that the remaining gold items worth Rs, 55,284/- belonged to the customers and the primary gold worth Rs. 7760/-belonged to Smt. Dhano Devi.
The Income Tax department released the said gold on 23.7.1984 which was taken over by the Gold Control Officers showing recovery from the appellant in Income Tax PRO's room No. G-22 at C.R. Building, New Delhi.
(iii) the cause was now to be shown to the Collector of Central Excise rather than to the Additional Collector.
1.9 On adjudication, the Collector has confiscated the gold ornaments with an option to the appellant to get them redeemed on payment of a fine of' Rs. 30,000/- in lieu of confiscation. He has also ordered absolute confiscation of the primary gold weighing 59.200 gms. A penalty of Rs. 55,000/- has been imposed on the 1st appellant and Rs. 5000/- against the 2nd appellant.
2. Learned advocate Shri A.C. Jain for the 1st appellant, has now urged, that the Collector of Central Excise, the adjudicating authority has grossly erred in relying upon the appellant's statement before the Income Tax authorities on 16.6.1980, when no copy of such a statement was ever relied upon in the show cause notice issued to him by the department. The error becomes all the more glaring and incongruous when the appellant has been deprived of the statements made by various persons before the Income Tax Officer claiming their various ornaments as having been given to the appellant for repairs. This is despite the fact, according to the appellant's learned advocate, that the various persons who had made such a claim before the Income Tax Officer had also filed their affidavits before the adjudicating authority.
2.1 He also submits that the basis of the show cause notice dated 29.6.1981 issued to the appellant was non-maintenance of any account of gold ornaments weighing 923.500 gms. valued at Rs. 52,482/- for repairs and non-issuance of voucher to Smt. Dhano Devi for receipt of the primary gold. In other words, he urges that the factum of receipt of ornaments weighing 923.500 gms. for repairs by the appellant was not disputed at all by the department.
2.2 The learned adjudicating authority, according to him, has also erred in ignoring the fact that the Income Tax Department had allowed deduction of Rs. 19,830/- Under Section 132(5) of Income Tax Act, 1961 in respect of Item Nos. 30, 31, 34 and 37 of the Valuation Reports on the basis that these items belonged to the person or partners or their family members and had been declared in Wealth Tax and Gold Control returns. There is absolutely no reason given in the impugned order which could deny the benefit to the appellant for the proceedings under the Gold (Control) Act. The other items were also stated as belonging to the customers who according to the assessment order by the Income Tax Officer identified the ornaments by and large. In the face of the aforesaid facts and evidence the learned advocate has urged that there is no justification for confiscating the ornaments at all.
2.3 He has also taken strongly the issue regarding determination of the value of the seized goods as given in the addendum dated 5.12.1984 to the show cause notice. The value of the gold ornaments should be taken the same as at the time of seizure by the Income Tax Officers. The date of formal seizure made in 1984 by the Gold Control Officers after release of the gold/gold ornaments by the Income Tax Officer could not be made the basis of valuation for the purpose of the proceedings under the Gold (Control) Act.
2.4 Regarding the receipt of primary gold from Smt. Dhano Devi the learned advocate has stressed upon the circumstances in which it was received by a son of one of the partners of the appellant firm pointing out that the old lady who delivered the primary gold pieces was the mother-in-law of Ranjit Singh Jain and she factually forced the son of the partner to keep the gold pieces despite his refusal.
This fact has been clearly corroborated by the statement of Smt.
Dhano Devi and there is no circumstance to contradict this fact. In these circumstances, the receipt could not be made because the concerned son of a partner of the appellant could not make the necessary receipt for want of knowledge with the rules and regulations and as the partners of the firm had gone to the other shop of the licensed dealer where the Income Tax Officers had come for checking of the stocks and records. In these circumstances, contravention of Section 55 for non-issuance of voucher to Smt.
Dhano Devi and of Section 8 for receipt of primary gold from an individual should be ignored.
3. Learned advocate Shri A.M. Guha appearing for the other appellant Smt. Dhano Devi urges that in the facts and circumstances of the case namely (i) the owner of the gold, the appellant herein is an old lady with no other means of subsistence available with her, (ii) she is illiterate and ignorant of the Gold Control law and (iii) the gold pieces were in her possession for the last 40 years as stated by her in her statement and unrebutted by any other evidence on record, He has also stated that such small quantity of gold was generally preserved by old Hindu ladies as a security for their old age when they have no resource to fall backon. No malafide intention should, therefore, be attributed. Accordingly, he urges that the primary gold be either released with the condition that the primary gold be converted into ornaments through a certified goldsmith.
4. Learned SDR, on the other hand, has reiterated the findings of the adjudicating authority.
5. We have carefully considered the pleas advanced on both sides and have gone through the impugned order and the relevant records. We find sufficient force in the plea of the learned advocate for the appellant that no reliance should be placed on the statement of Shri S.C. Jain, the partner of the first appellant firm before the Income Tax Officers inasmuch as no such reliance was placed in the show cause notice. The learned adjudicating authority's further argument in not relying on the claim of various persons to have given for repairs the ornaments to the appellant firm is that no such claim of ownership was registered by any such person with the departmental authorities immediately on recovery.
While such an argument could have been valid if gold/gold ornaments had been seized in the first instance by the Gold Control Officers, we are of the view that such an argument would not be valid in the case of seizure of gold/gold ornaments by another authority i.e. the Income Tax authorities in the instant case. There is no doubt on record as is apparent from the order of the Income Tax Officer placed on record by the appellant firm that the regular claims were lodged by the concerned persons with the Income Tax Officer. The concerned assessing officer of the Income Tax department had also recorded a finding that the various claimants had by and large identified their ornaments what had been given by them for repairs to the appellant firm. In these circumstances, the technical defect whether on the part of the appellant or on the concerned persons, of not lodging their claim with the Gold Control authorities in pursuance of the show cause notice dated 29.6.1981 cannot be given much weight. Never the less, the appellant had filed affidavits of such claimants before the initial adjudicating authority, the Deputy Collector/Addl. Collector of Central Excise and he had also requested that these persons may be called for examination by the concerned adjudicating authority to testify to their affidavits. Despite this, the adjudicating authority did not pay any heed to such request of the appellant firm and has merely brushed aside these affidavits on the ground that no acceptable evidence of ownership like a written receipt has been produced. The Collr. has not adduced any evidence whether issuance of written receipt of repair is generally an accepted practice and ornaments are not received otherwise than without written receipts. It, however, remains an admitted fact on record that the appellant had not produced the repair register in which, according to him, the entries for receipt of ornaments for repairs were made; nor was such a register available at the time of visit by the Income Tax Officers. It is, therefore, proved on record in the facts and circumstances that the repair register was not maintained by the 1st appellant and therefore, contravention of the relevant rule under the Gold Control (Forms, Fees and Misc. Matters) Rules, 1968 is upheld. For non-maintenance of the repair register the gold is, therefore, liable to confiscation. Since, however, the show cause notices to the concerned owners of the gold ornaments, who had given to the appellant those ornaments for repairs etc., have not been given, these cannot actually be confiscated in terms of the proviso to Sub-section (I) of Section 71. Accordingly, we set aside the confiscation of the gold ornaments: as ordered by the adjudicating authority. The penalty is, however, liable to be imposed Under Section 74 of the Gold (Control Act) on the first appellant for non-maintenance of the register of repairs for the gold ornaments.
5.1 As regards the receipt of primary gold by the 1st appellant from the 2nd appellant Smt. Dhano Devi provisions of Section 8(1) which places a ban (i) on owning or having in possession, custody or control or (ii) on acquiring or agree to acquire the ownership, possession, custody or control or (iii) by accepting or otherwise receiving primary gold, are clearly contravened by both the appellants despite the circumstances mentioned by each of them. The mitigating circumstances pointed out by each of the appellants can only be taken into account for the purpose of determination of redemption fine or imposition of personal penalty. Accordingly, we hold that 59.700 gms. of primary gold is liable to confiscation and we order confiscation of the primary gold accordingly.
5.2 We also agree with both the appellants that the value of the gold/ gold ornaments for the purpose of determining the quantum of fine and penalty should be the initial date of seizure by the Income Tax authorities and not the formal date of seizure by the Gold Control authorities. If this position is not accepted, it would mean placing the citizens in a disadvantageous situation where the proceedings are not finalised expeditiously for no fault of theirs.
It is also a well settled position in law that the value on the date of seizure should be the guiding factor for the aforesaid purposes in para 5g (iii) at p. 999-1000 in Ashwanti Vanaspati Industries (P) Ltd. So far as the citizen is concerned, it is immaterial whether the seizure is made by one Government authority or another. The cause of action in the present proceedings is the detection of unaccounted for gold and gold ornaments on the day of visit by the Income Tax Officers i.e. 16.6.1980. Hence, the quantum of fine and penalty would have to be determined on the basis of value as given in the original show cause notice dated 26.5.1981.
5.2 Having regard to the aforesaid discussion, we reduce the penalty from Rs. 55,(100/- to Rs. 5000/- (Rupees five thousand only) on the 1st appellant. Confiscation of gold ornaments is set aside and therefore fine of Rs. 30,000/- imposed in lieu of confiscation of the ornaments weighing 923.500 gms. is set aside.
5.3 So far as Smt. Dhano Devi, the 2nd appellant is concerned we impose a penalty of Rs. 500/- (Rupees five hundred only) on her and order, while upholding the confiscation of primary gold, release of the same on payment of a fine of Rs. 1000/- (Rupees one thousand only) subject to the condition that she gets the primary gold converted into gold ornaments within one month of the release thereof as per the usual procedure.