1978 (12) TMI 51 - HC - Central Excise

Primary gold or ornaments - Words and phrases - Gold ornaments - Seizure - Gold (Control) Act - Repeal of Enactment - Writ jurisdiction - Writ petition

Summary

Issues Involved:

1. Whether the 47 items of gold seized were primary gold or gold ornaments.
2. Legality and timeliness of the notice issued by the Collector of Customs under the Gold Control Rules.

Issue-wise Detailed Analysis:

1. Whether the 47 items of gold seized were primary gold or gold ornaments:

The petitioner-firm received insured parcels containing gold items from Bombay. The Customs and Central Excise Department officials suspected the source and seized the items, which were tested and found to be of high fineness. The Collector of Customs issued a notice requiring the petitioner to prove that the gold was not smuggled and why it should not be confiscated under the Customs Act and the Defence of India (Gold Control) Rules. Upon investigation, the Collector concluded that 19 items were finished ornaments, but the remaining 47 items were primary gold, not ornaments. This finding was based on the fact that the items were crude, unpolished, and had sharp, unjoined edges. The Gold Control Administrator and the Government of India upheld this decision, confirming that the items were primary gold and not ornaments.

The Supreme Court in Badri Prasad v. Collector Central Excise established that the distinction between an article and an ornament is based on factors like purity, size, weight, description, and workmanship. The Collector applied these tests and found the items to be primary gold. The revisional authority also confirmed this finding, noting that the items were soft, highly malleable, and in the form of rods with sharp ends, resembling primary gold rather than ornaments. The authorities concluded that the items were not old ornaments but newly made to look like old ornaments to evade the law.

2. Legality and timeliness of the notice issued by the Collector of Customs under the Gold Control Rules:

The petitioner contended that the notice issued on 24-12-1968 under the Gold Control Rules was illegal and barred by time, as it was issued beyond six months from the date of seizure. The Gold (Control) Rules were repealed by the Gold (Control) Ordinance, which was later replaced by the Gold (Control) Act. Section 79 of the Gold Control Act prescribes a six-month period for issuing a notice of adjudication of confiscation or penalty. However, the Gold (Control) Rules did not prescribe any period of limitation.

The Supreme Court in Assistant Collector, Customs, v. Malhotra held that the period laid down in Section 110(2) of the Customs Act affects only the seizure of goods and not the validity of the notice. The Gold (Control) Ordinance and Act contained saving clauses that allowed for the continuation of liabilities incurred under the repealed rules. Section 6 of the General Clauses Act, which applies to repeals, was expressly made applicable, ensuring that liabilities incurred under the Gold (Control) Rules could still be enforced.

The Supreme Court in Jayantilal v. Union of India affirmed that the absence of a saving clause in a new enactment does not extinguish liabilities under the repealed law unless the new enactment expressly indicates a contrary intention. The Jammu and Kashmir High Court in Romesh Chander v. Superintendent, Customs held that Section 6 of the General Clauses Act did not apply to the Gold (Control) Act, but this view was contrary to the Supreme Court's principle that liabilities under repealed laws continue unless expressly extinguished.

Therefore, the notice issued by the Collector of Customs was valid and not barred by time, as the liabilities incurred under the Gold (Control) Rules continued to be enforceable under the Gold (Control) Act.

Conclusion:

The High Court dismissed the writ petitions, upholding the findings that the 47 items were primary gold and that the notice issued under the Gold Control Rules was valid and timely. The authorities' decisions were based on objective evidence and legal principles, and the petitioners' contentions were found to be without merit. The court affirmed the confiscation of the primary gold and the imposition of penalties, rejecting the argument that the notice was barred by time.