1979 (7) TMI 111 - HC - Central Excise

Summary

Issues: Determination of whether 25 hairpins weighing 329.300 gms. are ornaments or primary gold.

Analysis:
1. The petitioners, a partnership firm in the business of gold and silver ornaments, purchased various gold ornaments from customers, including 25 hairpins, and sent them to the Government Mint, which issued a receipt confirming them as gold ornaments. However, the Central Excise seized the items, claiming they were primary gold, not ornaments.

2. The Deputy Collector of Central Excise held a hearing where no evidence was presented by the department to prove the items were not ornaments. Despite a request by the petitioners to examine witnesses to establish the trade market classification of the items, an order was issued confiscating the articles as primary gold and imposing a penalty.

3. The petitioners appealed to the Collector of Customs, who determined that pherwas and bangles were ornaments but classified the hairpins as primary gold based on their physical characteristics. The penalty imposed by the Central Excise was upheld for the hairpins.

4. The petitioners then sought revision from the Government of India, which was dismissed. Subsequently, a show cause notice was issued for the cancellation of their license under the Gold Control Act. The petitioners challenged the confiscation of the hairpins, the penalty, and the license cancellation in a petition under Article 226 of the Constitution.

5. The petitioners argued that the authorities wrongly classified the hairpins as primary gold, emphasizing the lack of evidence beyond visual inspection by the officers. They contended that the burden of proof was on the department, which failed to provide substantial evidence beyond personal examination.

6. The Superintendent of Central Excise & Customs admitted that apart from personal inspections, no other evidence existed to support the claim that the items were not ornaments. Upon personal inspection by the judge, it was concluded that the seized hairpins were indeed gold ornaments, contradicting the previous findings. The judge highlighted the danger of relying solely on visual inspection and individual judgment to determine the nature of the articles.

7. Consequently, the judge ruled in favor of the petitioners, setting aside the confiscation of the hairpins, the penalty, and the show cause notice for license cancellation. The respondents were directed to return the seized articles to the petitioners, and no costs were awarded in the case.