1986 (9) TMI 242 - AT - Central Excise

Issues Involved:
1. Legality of carrying on business outside licensed premises under Section 27(7)(b) of the Gold (Control) Act, 1968.
2. Validity of permissions granted by authorities to transact business outside licensed premises.
3. Imposition of fines and penalties on appellants for contravention of Section 27(7)(b) of the Act.
4. Consideration of bona fide belief and past permissions in mitigating penalties.

Detailed Analysis:

1. Legality of Carrying on Business Outside Licensed Premises:
The primary issue was whether a licensed gold dealer could legally conduct business outside the licensed premises under Section 27(7)(b) of the Gold (Control) Act, 1968. Section 27(7)(b) clearly stipulates that "a licensed dealer shall not carry on business as such dealer in any premises other than the premises specified in his licence." This statutory provision is mandatory and cannot be bypassed by any executive authority. The judgment referenced the Supreme Court ruling in 'Manick Chand Paul and others v. Union of India and others,' which upheld the constitutional validity of Section 27(7)(b) and affirmed that it is regulatory in nature, confining a licensed gold dealer to the premises specified in their license. Furthermore, the Division Benches of the Andhra Pradesh, Allahabad, and Punjab and Haryana High Courts supported this interpretation, emphasizing that any concession or permission granted beyond the statutory limits would be illegal and void.

2. Validity of Permissions Granted by Authorities:
The appellants argued that they had been permitted by authorities since 1963 to conduct business outside their licensed premises, subject to certain conditions. They cited Trade Notices issued by the Collector of Central Excise, Hyderabad, which allowed such sales. However, the judgment highlighted that no authority had the right, power, or jurisdiction to bypass the mandatory provision of Section 27(7)(b). It was noted that the permission accorded by authorities, as per Trade Notice No. 8/74 dated 30-11-1974, was revoked, and the facilities were withdrawn. Additionally, an order by the Central Government on 8-6-1984 revoked the facilities given to licensed dealers to transact business through traveling salesmen outside their licensed premises. Thus, the endorsements made by authorities in various documents permitting such transactions were deemed absolutely without jurisdiction and void ab initio.

3. Imposition of Fines and Penalties:
The judgment upheld the confiscation of the gold ornaments in question, as the transactions outside the licensed premises were in contravention of Section 27(7)(b). The learned counsel for the appellants argued that the imposition of fines and penalties was not legally sustainable, given the permissions granted by authorities. However, the judgment affirmed the legality of confiscation and the imposition of fines, though it considered the quantum of fines in light of the appellants' bona fide belief.

4. Consideration of Bona Fide Belief and Past Permissions in Mitigating Penalties:
The judgment acknowledged that the appellants acted under the bona fide impression that they were entitled to transact business outside their licensed premises due to the permissions granted by authorities. It referenced the Supreme Court ruling in 'M/s. Hindustan Steel Ltd. v. The State of Orissa,' which held that penalties should not be imposed for technical or venial breaches of the law or when the breach flows from a bona fide belief. Consequently, the judgment set aside the penalties imposed on the appellants, recognizing that there were no laches on their part and that the authorities themselves were responsible for granting the permissions. However, the confiscation of the goods was upheld, and the quantum of fines was modified. For M/s. Jewellery House, the fine was reduced from Rs. 25,000/- to Rs. 20,000/-, while the fine for Shantilal Jain remained unchanged due to additional contraventions.

Conclusion:
The appeals were dismissed with modifications in the quantum of fines, upholding the confiscation of the gold ornaments and setting aside the penalties imposed on the appellants due to their bona fide belief and past permissions granted by authorities.

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