1986 (7) TMI 265 - AT - Central Excise

Summary

Issues Involved:
1. Confiscation of excess gold ornaments.
2. Imposition of personal penalty under Section 74 of the Gold Control Act.
3. Interpretation of Section 55 of the Gold Control Act.
4. Validity of the Collector of Customs (Appeals) decision.
5. Appropriateness of the penalty amount.

Detailed Analysis:

1. Confiscation of Excess Gold Ornaments:
The initial search of the appellants' business premises on 16.9.1982 revealed four pieces of new gold ornaments weighing 134.550 grams in excess of the recorded stock. The Adjudicating Authority concluded that the appellants had contravened Section 55 of the Gold Control Act by not accounting for the gold in their stock register immediately upon receipt. The Collector of Customs (Appeals) set aside the order of confiscation, indicating that the imposition of a penalty was not authorized by Section 74 of the Gold Control Act. However, the Tribunal noted that the gold ornaments were liable to confiscation under Section 71 of the Gold Control Act, as the appellants had failed to maintain proper records.

2. Imposition of Personal Penalty under Section 74 of the Gold Control Act:
The Adjudicating Authority imposed a personal penalty of Rs. 5000/- on the appellants under Section 74 of the Gold Control Act. The Collector of Customs (Appeals) overturned this decision, arguing that the penalty was incongruous since the gold was not proven to be liable for confiscation. The Tribunal disagreed, stating that Section 74 provides for a penalty if any act or omission renders the gold liable to confiscation. The Tribunal reinstated the penalty but reduced the amount.

3. Interpretation of Section 55 of the Gold Control Act:
The Tribunal referenced the case of L. Kashi Nath v. The Collector, Central Excise, Allahabad, which clarified that the term "as and when" in Section 55 implies contemporaneous action. The legislative intent is for licensed dealers to make entries in the registers immediately upon buying or acquiring gold. Failure to do so contravenes Section 55, as timely record-keeping is essential for regulatory checks.

4. Validity of the Collector of Customs (Appeals) Decision:
The Tribunal found that the Collector of Customs (Appeals) erred in setting aside the Adjudicating Authority's order. The Tribunal emphasized that the omission to make contemporaneous entries in the stock register constituted a violation of Section 55, justifying the imposition of a penalty under Section 74. The Tribunal noted that the Collector of Customs (Appeals) misinterpreted the provisions and the legislative intent of the Gold Control Act.

5. Appropriateness of the Penalty Amount:
The Tribunal acknowledged the respondent's contention that the penalty of Rs. 5000/- was excessive. Citing previous decisions, the Tribunal concluded that a reduced penalty would suffice to ensure compliance and vigilance in the future. Consequently, the penalty was reduced from Rs. 5000/- to Rs. 1000/-.

Conclusion:
The Tribunal allowed the appeal, setting aside the Order-in-Appeal passed by the Collector of Customs (Appeals), New Delhi. The Order-in-Original by the Additional Collector of Customs and Central Excise, Chandigarh, was restored with a reduced penalty of Rs. 1000/-.