M. Pukhraj Sowcar vs Collector Of Central Excise on 29 May, 1986

Customs, Excise and Gold Tribunal - Tamil Nadu

Equivalent citations: 1986 (26) ELT 159 Tri Chennai

ORDER

S. Kalyanam, Member (J)

1. The appeal filed before the Gold Control Administrator by the appellant herein against the order of the Collector of Central Excise, Madras, referred to supra, imposing a fine of Rs. 2 lakhs in lieu of confiscation of gold and gold ornaments weighing 2820 gms. under Section 73 besides a penalty of Rs. 50,000/- on the appellant under Section 74 of the Gold (Control) Act, 1968, hereinafter referred to as the Act, stands transferred to the Tribunal in terms of Section 82K of the Act for being disposed of as if it were an appeal.

2. The appellant is a pawn broker and on 28.10.1980, the Preventive Officers of the Central Excise, conducted a search of the appellant's residence as well as his pawn broking premises. The authorities found gold and gold ornaments wrapped in paper and kept secreted amidst the pawned brass vessels and tiffin boxes in the rear room of the shop and they were also not accounted in the accounts maintained by the appellant. It is in these circumstances 2771 gms. of gold and gold ornaments recovered from the appellant's shop and 49 gms. of primary gold from the residence of the appellant were seized under mahazar as per law attested by witnesses. The details of ornaments seized with their purity have been detailed in the original order of adjudication. The appellant gave a statement before the authorities on 28.10.1980 to the effect that the gold and ornaments under seizure were kept by him only for the purpose of sale and they did not belong to his family. It is in these circumstances, after due investigation, proceedings were instituted against the appellant which ultimately resulted in the impugned order now appealed against.

3. The learned counsel for the appellant submitted that the appellant has been proceeded against on charges of contravention under Sections 27(1), 16(4), 8(1) and 6(2) of the Act and made submissions with reference to the maintainability of the charges in the light of the evidence available on record.

4. In respect of the charge under Section 27(1) of the Act the learned counsel contended that in order that a person could be proceeded against as a dealer without a licence the Department must be able to prove by legal evidence that there was continuity of transaction on the part of the appellant dealing in gold and gold ornaments as a dealer within the meaning of Section 27(1) of the Act. It was urged that mere recovery of certain gold and ornaments from the custody or possession of the appellant would not ipso facto make for a charge that the appellant was dealing in those gold and gold ornaments as a dealer within the meaning of Section 27(1) of the Act. The learned counsel also placed reliance on the ratio of the ruling of the Madras High Court in the case of Kanyalal Chandrakumar v. Union of India, reported in 1979 2 MLG 379 and contended that the word 'carry on' occurring in Section 27(1) of the Act has been interpreted as connoting continuity of transaction on the part of a person charged with the offence of a dealer without licence under Section 27(1) of the Act. The learned counsel also placed reliance on the ruling of the Supreme Court in the case of Mohd. Shabbir v. State of Maharashtra, reported in AIR 1979 SC

5. In respect of the charge under Section 16(4) relating to declaration, it was urged that a pawn broker under the provisions of the Act is not under any statutory obligation to give a declaration at all unless the quantity of gold ornaments, possessed, or controlled by him as an individual exceeds 2000 gms. and as a family exceeds 4000 gms. in terms of Section 16(5) of the Act. It was contended that in the instant case, the total quantity of ornaments under seizure is of the order of only 2771 gms. and as such the appellant is not under any legal obligation to file a declaration.

6. In respect of the charge under Section 8(1) of the Act relating to the recovery of 49 gms. of primary gold from the residential premises of the appellant, the learned counsel merely pleaded guilty to the charge and only submitted that the quantity being small and negligible and the purity also being low, a lenient view may be taken.

7. In respect of the charge under Section 6(2) of the Act, the learned counsel contended that inasmuch as the Gold Control Administrator has not prescribed any particular form or account under Section 6(1) of the Act, the appellant need not maintain any account at all and in such a situation, it was contended, the charge against the appellant under Section 6(2) is not legally tenable. The learned counsel further urged that the account contemplated by Section 6(2) is referable to the one prescribed under Section 6(1) by the Administrator and inasmuch as no form or type of account has been prescribed by the Administrator under Section 6(1), the appellant should be exonerated of the charge under Section 6(2) of the Act. It was further urged by the learned counsel that in respect of the ornaments mentioned in Annexure A by the appellant and claimed as articles pledged before him by various persons, even if the entire quantity of ornaments did not tally with the accounts produced by the appellant, such of those ornaments which found a place in the Annexure and which could be tallied with the relevant entries in the account book should be excluded as ornaments which have been lawfully pledged with the Appellant. The learned counsel submitted that this factor should be taken into consideration in assessing the quantum of fine and also the quantum of penalty. Finally the learned counsel fervently pleaded that in any event, having regard to the purity and nature of the ornaments and the small quantity of primary gold involved, the quantum of redemption fine is very harsh and excessive. The learned counsel also pleaded for reduction of penalty in the facts and circumstances of this case.

8. The learned DR submitted that the charge under Section 27(1) has been clearly made out in view of the very statement of the appellant before the authorities on 28.10.1980 confessing to the fact that the gold ornaments and articles under seizure were not covered by any pawn receipts or accounts and that they were kept by the appellant only for purposes of sale. In respect of the charge under Section 16(4) the learned DR submitted that the appellant himself has clearly pleaded guilty to the charge by stating that due to 'unavoidable circumstances' the appellant could not make the declaration and in the teeth of such an admission on the part of the appellant, it is not now open to him to question the correctness of the finding under the impugned order. The learned DR further urged that in terms of Section 16(4) if a person had been making a declaration under the Defence of India Rules, 1962, he should make a declaration as contemplated by Rule 4(1) of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968 and in accordance with Form GS 3A. So far as the charge under Section 6(2) is concerned, the learned DR urged that Section 6(2) is independent of Section 6(1) and placed reliance on the ratio of the ruling of the Madras High Court in the case of Kanyalal Chandrakumar v. Union of India, referred to supra. Regarding the quantum of fine and penalty, the learned DR merely submitted that he would leave the matter for the consideration of the Tribunal.

9. We have considered the submissions of the parties herein. So far as the charge under Section 27(1) is concerned, we are not able to concede to the plea of the learned counsel for the appellant that unless continuity of transaction is proved by the Department, contravention of a charge under Section 27(1) of the Act could not be said to be made out against the appellant. In the instant case, immediately on seizure of a large quantity of gold ornaments and articles, the appellant gave a statement before the authorities on 28.10.1980 admitting the fact that those gold ornaments were kept by him in the shop only for purposes of sale and those ornaments were not covered by any pawn receipts or accounts. This statement of the appellant dated 28.10.1980 is clearly inculpatory in nature and confessional in character. We went through the statement of the appellant and we are satisfied that the same is true and voluntary. The ratio of the decision in the case of Kanyalal Chandrakumar v. Union of India relied upon by the learned counsel for the appellant is not applicable to the facts and circumstances of this case. That was a case where the Court found that excepting bare possession of the gold jewels there was no further evidence on record to prove that the person concerned in that case was a dealer. The Court has observed:

"In this case, admittedly, there is no material to show that the petitioner has been dealing in gold in any of the modes referred to in the definition of "dealer" apart from carrying on the pawn broker's business. As already stated, the possession of unaccounted jewels by a pawn broker may amount to an offence under the Act in view of Section 6(2) but that does not automatically follow that such a pawn broker who was in possession of gold jewels which he could not account, is a dealer in gold or gold jewels. In this case, straight away an inference has been drawn based on mere possession of unaccounted jewels by a pawn broker."

In the instant case, apart from the unaccounted possession on the part of the pawn broker, there is a clear and unambiguous confessional statement to the effect that the appellant was keeping those gold ornaments only for purposes of sale. The ratio of the ruling of the Supreme Court in the case of Mohd. Shabbir v. State of Maharashtra, referred to supra and relied upon by the appellant is also not applicable to the facts and circumstances of this case. That was a case of criminal prosecution under the provisions of the Drugs and Cosmetics Act, 1940 and it is settled proposition of law that proof beyond reasonable doubt which is essential in a criminal prosecution in a criminal court cannot be applied in adjudication proceedings where preponderence of probabilities would be the guiding factor. We, therefore, hold that the evidence on record clearly bears out the charge of contravention of the appellant under Section 27(1) of the Act.

10. So far as the charge under Section 16(4) is concerned, we are not able to accept the submission of the learned counsel for the appellant that the appellant being a pawn broker is not under any statutory obligation to submit any declaration under the provisions of the Act. As rightly contended by the learned DR, the appellant, who admittedly had been filing the declaration till about 1974, has pleaded guilty to the contravention of the charge under Section 16(4) submitting that he could not file declaration "due to unavoidable circumstances". The appellant has admitted the offence under Section 16(4) before the adjudicating authority and merely pleaded for condonation of the same on the ground that the contravention is purely of a technical nature. The plea of the learned counsel that it is open to him to put forth a legal plea notwithstanding the admission on the part of the appellant is not acceptable in the facts and circumstances of this case. In our view, if the appellant, as admitted by him, had been continuously filing the declaration up to 1974, he should file a declaration in respect of the quantity of gold ornaments under his custody and control in terms of Rule 4(1) of the Gold Control (Forms etc.) Rules, 1968 and in accordance with Form GS3A. A reading of Section 16(4) of the Act would make this position very clear and for purposes of convenience, we have extracted Section 16(4) hereunder:-

Section 16(4) : "If any person who has made a declaration, whether under Sub-section (1) or under Sub-section (3) or under Part XII-A of the Defence of India Rules, 1962, or under the Gold (Control) Ordinance, 1968 (6 of 1968) as to gold owned, possessed, held or controlled by him, acquires (whether by succession intestate or testimanetary or otherwise), or parts with, after such declaration, the ownership, possession, custody or control of any quantity of gold, he shall, as often as he acquires or parts with, the ownership, possession, custody or control of any quantity of gold, make, within thirty days from the date of such acquisition or parting with, or within such further period, as the Administrator may, on sufficient cause being shown, allow a further declaration in the prescribed form stating the quantity, description and other prescribed particulars of the gold in relation to which such ownership, possession, custody or control has been acquired, or parted with by him and giving the prescribed particulars of the person from whom the ownership, possession, custody or control of such gold was acquired or in whose favour the ownership, possession or control of such gold was parted with, as the case may be."

We would like to note that Section 16(5) expressly excludes Sub-sections (1) and (3) of Section 16 but not Section 16(4). We, therefore, hold that the charge under Section 16(4) has been clearly made out against the appellant not only by his very admission but also by other circumstances available on record.

11. In respect of the charge under Section 8(1), since the appellant has pleaded guilty and only prayed for liniency we shall take it up at the end when we deal with the question relating to quantum of fine & penalty.

12. The plea of the learned counsel in respect of the charge under Section 6(2) that the appellant need not maintain any accounts when no accounts or forms have been prescribed by the Gold Control Administrator under Section 6(1) is not legally tenable. As rightly contended by the learned DR, Section 6(2) is totally independent of Section 6(1). We are fortified in this -view by the ratio of the ruling of the Madras High Court in Kanyalal Chandrakumar case referred to supra, wherein His Lordship Justice Ramanujam has interpreted the ruling of the Supreme Court in the case of Badri Prasad v. Collector of Central Excise - AIR 1971 SC 1170 - and held that Section 6(1) and 6(2) of the Act are not intended to serve the same purpose, and the observation of the Supreme Court in that case does not lay down that Section 6(2) of the Act cannot operate without there being a previous action under Section 6(1). Section 6(1) of the Act enables the Administrator, if it is necessary in public interest, to require any person who lends or advances money on the hypothetication, pledge, mortgage or charge of any article or ornament to file a return as to the receipt, delivery or sale of such article or ornament and as to the persons from whom they were delivered or sold. Sub-section (2) of Section 6, however, enables the Administrator to authorise any Gold Control Officer to examine the accounts relating to the receipt, delivery or sale of any gold, of any person who advances any money on the hypothetication, pledge, mortgage or charge of any article or ornament and if any gold is found in the possession of such persons which is not entered in such accounts or which is in excess of the quantity shown in such accounts and which is not otherwise accounted for to the satisfaction of the officer, such gold shall be deemed to be in the possession of such person in contravention of the provisions of this Act. Section 6(2) does not refer to the return contemplated under Section 6(1) of the Act. Section 6(2) merely authorises the Administrator to have the accounts of any person who advances money on hypothetication, pledge mortgage or charge of any article or ornament checked by Gold Control Officer and to treat the amount of gold which has not been duly accounted for as excess gold. Therefore, Section 6(2) is totally independent of Section 6(1) and in the instant case, we find from the materials available on record that the ornaments under seizure have not been accounted for as per law by the appellant and we, therefore, hold that the charge under Section 6(2) against the appellant has been clearly made out.

13. In the result, we find that the impugned order appealed against is clearly sustainable in law and the charges under Section 27(1), 16(^), 8(1) and 6(2) of the Act against the appellant have clearly been made out and substantiated by the evidence available on record.

14. Lastly coming to the question of the quantum of fine and penalty, we find that the old gold ornaments are of only 16 to 20 ct. purity and comprise of 30 items weighing 2029 gms. The new gold ornaments comprise of 1^ items and are of 20 to 22 ct. purity, weighing in all 675 gms. The two items of gold articles are only 12 gms. of 22 ct. purity. Taking the nature of the ornaments and the low purity of the same into consideration, in the facts and circumstances of this case we feel interests of justice would be met if the quantum of fine and penalty is reduced. Accordingly, we reduce the fine in lieu of confiscation from Rs. 2 lakhs to Rs. 75,000/-(Rupees Seventy five thousand only) and the penalty from Rs. 50,000/- to Rs. 25,000/- (Rupees twentyfive thousand only). Except for the -above modifications, the appeal is otherwise dismissed.

15. The primary gold concerned in the case should be converted into ornaments through a licenced gold dealer or certified goldsmith by the appellant within 30 days of redemption of the same and the appellant shall report compliance of this order to the authorities, failing which the primary gold will be liable for confiscation.