2015 (12) TMI 872 - HC - Central Excise

Confiscation of seized gold - ownership of gold / ornaments - violation of provisions of Gold (Control) Act, 1968 - Penalty u/s 74 - Held that - gold seized were bangles having design on the outer side of the pieces and inner surface of those bangles were smooth. In the light of the finding given by the Additional Collector, CEGAT proceeded to decide the issue involved relying upon a decision in the case of M/s Choksi Purshottam Vishrambhai Vs. Union of India and others, reported in 1984 (1) TMI 318 - BOMBAY HIGH COURT - On examination of the bangles produced it appears that there is design in each of the bangles on their outer side and the inner side of each of the bangles was smooth. Moreover, this being a question of fact and a finding has already reached by the fact finding authority, the same cannot be interfered with unless the same is illegal, based on no evidence and perverse. Unless the owner of the gold, namely, the opposite party is given an opportunity to show cause with regard to the allegations made and is provided with the materials to that effect, she would not be in a position to give reply to the same. Thus, for compliance of the principles of natural justice, it was incumbent on the Additional Collector to give an opportunity to the opposite party to reply on the question of purity of the gold seized. As such, the opposite party had no occasion to give any reply on the report, if any, of the Government mint with regard to purity of the gold seized. At this stage, Mr.Mishra contended that the gold seized were of highly purity and ordinarily ornaments are not prepared from the gold of high purity. This is again a question of fact. Evidently, neither any question with regard to the same was raised nor evidence to that effect was adduced by the Department at the time of adjudication before the Additional Collector. Hence, the same is not available to be raised by the petitioner at the stage of reference to this Court. Evidently, neither any question with regard to the same was raised nor evidence to that effect was adduced by the Department at the time of adjudication before the Additional Collector. Hence, the same is not available to be raised by the petitioner at the stage of reference to this Court. Thus, the contention raised by Mr.Mishra to the effect that for non-acceptance of the report from Government mint with regard to purity of the gold seized the impugned order is vitiated, cannot be held to be correct. Thus, the CEGAT was correct in not accepting the report of the Government mint with regard to purity of the gold seized. - Decided against Revenue.

Summary

Issues Involved:
1. Limitation of show cause notice under Section 79 of the Gold (Control) Act, 1968.
2. Determination of whether the seized gold was primary gold or ornaments.
3. Reliance on the purity test of the seized gold.

Detailed Analysis:

1. Limitation of Show Cause Notice:

The primary issue is whether the show cause notice dated 14.05.1990 is hit by the limitation under Section 79 of the Gold (Control) Act, considering the judgment dated 17.10.1989. The court noted that Section 79 mandates that no order of adjudication of confiscation or penalty shall be made unless the owner of the gold is given a notice in writing within six months from the date of seizure or within such further period as the Collector may allow. The explanation to the second proviso specifies that where any fresh adjudication is ordered, the period of six months shall be computed from the date of such order.

The court held that the direction for fresh adjudication made by the High Court in its judgment dated 17.10.1989 is valid, and the period of limitation should be computed from the date of the judgment, not the decree. Since the notice was issued on 14.05.1990, beyond the six-month period from the judgment date, it is barred by limitation. The court referred to the decision in Sk Jalil & Anr. Vs. Gopal Charan Mohanty & Ors., which supports the view that the date of the decree is the date of the judgment. Thus, the question is answered in the negative against the petitioner.

2. Determination of Whether the Seized Gold Was Primary Gold or Ornaments:

The second issue is whether the seized gold was primary gold or ornaments. The court observed that the main contention throughout the proceedings was whether the seized gold was primary gold or ornaments. The CEGAT concluded that the seized gold was ornaments, based on the examination of the gold, which showed that the bangles had designs on the outer side and smooth inner surfaces. The court found that this conclusion was supported by evidence and not perverse. The court also referred to the Supreme Court decision in M/s Choksi Purshottam Vishrambhai Vs. Union of India, which held that crude bangles with designs can be considered ornaments.

The court inspected the seized gold and confirmed that the bangles had designs, supporting the CEGAT's finding. Since this is a question of fact and the finding is based on evidence, the court upheld the CEGAT's conclusion.

3. Reliance on the Purity Test of the Seized Gold:

The third issue is whether the CEGAT was correct in not relying on the purity test, which was not mentioned in the show cause notice. The court emphasized that the principles of natural justice require that the show cause notice must contain clear allegations, providing the owner an opportunity to respond. Since the purity of the gold was not mentioned in the show cause notice, the opposite party had no chance to address it. The court held that the purity test cannot be relied upon if it was not part of the original allegations.

The court noted that the Department did not raise the issue of purity or provide evidence during the adjudication before the Additional Collector. Therefore, the argument regarding the purity of the gold being of high purity and not suitable for ornaments was not available to be raised at this stage. The CEGAT's decision to not accept the purity test report from the Government mint was correct.

Conclusion:

The court dismissed the Special Judicial Case (S.J.C.) as devoid of merit, answering all the questions of reference against the petitioner. The CEGAT's conclusions regarding the limitation of the show cause notice, the nature of the seized gold as ornaments, and the non-reliance on the purity test were upheld. The court found no basis to interfere with the CEGAT's findings, and no order as to costs was made.