1984 (1) TMI 329 - AT - Central Excise

Issues Involved:

1. Establishment of ownership and possession of gold ornaments.
2. Conscious possession of gold ornaments.
3. Issuance of mandatory show cause notices.
4. Violation of Section 71(1) proviso of the Gold Control Act.
5. Claims of customers regarding ownership of gold ornaments.
6. Evidentiary value of affidavits and statutory records.
7. Basis for confiscation and imposition of fines.
8. Reasonable belief of the seizing officer.
9. Mis-appreciation of evidence by the Appellate Tribunal.

Issue-wise Detailed Analysis:

1. Establishment of ownership and possession of gold ornaments:
The Tribunal examined whether the Department had legally established that the new gold ornaments weighing 1029.400 grams belonged to the applicant firm and were possessed in contravention of the Gold (Control) Act, 1968. The Collector of Central Excise concluded that the seized ornaments belonged to the applicant and were manufactured illicitly, violating Section 8(2), Section 36, and Section 55 of the Act along with relevant rules.

2. Conscious possession of gold ornaments:
The Tribunal considered whether the applicant firm had conscious possession of the gold ornaments, especially since one partner was exonerated. The Collector's adjudication held that both partners were present during the search, and Krishan Gopal admitted the ornaments belonged to the firm and were not entered in the records, indicating conscious possession.

3. Issuance of mandatory show cause notices:
The Tribunal discussed whether the proceedings were vitiated due to the lack of mandatory show cause notices to the owners of the gold ornaments under Section 79 of the Act. It was noted that no proper show cause notice was given to the claimants, which could have allowed them to establish ownership and lack of connivance in the contravention.

4. Violation of Section 71(1) proviso of the Gold Control Act:
The Tribunal examined whether the mandatory provisions of the proviso to Section 71(1) were violated. The Collector's order indicated that the applicant failed to issue vouchers for the gold, leading to confiscation under Section 71 with an option to redeem on payment of a fine.

5. Claims of customers regarding ownership of gold ornaments:
The Tribunal assessed whether the claims of customers regarding ownership were negated by the Department. The Collector dismissed the claims as unsubstantiated, noting that the customers had no receipts for handing over the gold to the goldsmiths, and the Tribunal upheld this view.

6. Evidentiary value of affidavits and statutory records:
The Tribunal evaluated the evidentiary value of the affidavits and statutory records presented by the applicant. The Tribunal found the application for correction of Krishan Gopal's statement suspicious due to delayed submission, and the affidavits and GS 13 registers were not given significant weight.

7. Basis for confiscation and imposition of fines:
The Tribunal reviewed the basis for confiscation and the imposition of fines. The Collector ordered confiscation under Section 71 and imposed fines, which the Tribunal confirmed, except for reducing the penalty from Rs. 25,000 to Rs. 10,000.

8. Reasonable belief of the seizing officer:
The Tribunal considered whether there was a reasonable belief in the mind of the seizing officer at the time of seizure. The initial search and seizure were conducted under the belief that the provisions of the Act were contravened, leading to confiscation.

9. Mis-appreciation of evidence by the Appellate Tribunal:
The Tribunal addressed whether there was any mis-appreciation of evidence. The Tribunal's findings were based on the evidence presented, and it concluded that the applicant's version was to be rejected.

Conclusion:

The Tribunal allowed the application and referred the question of law to the Hon'ble High Court of Judicature at Allahabad, focusing on whether the failure to issue show cause notices to the persons claiming ownership of the new gold ornaments vitiated the order of confiscation. The Tribunal also clarified that the application was not barred by limitation, as it was filed within the prescribed period.

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