1987 (3) TMI 244 - HC - Customs

Summary

Issues Involved:
1. Applicability of the Gold (Control) Act, 1968 to gold acquired from the Reserve Bank of India.
2. Compliance with Section 27(7)(b) regarding premises specified in the license.
3. Applicability of Section 55 on gold acquired under the authorisation of the Administrator.
4. Validity of penalty imposed under Section 74 without notice.
5. Exhaustion of statutory remedies before invoking the jurisdiction of the High Court.

Detailed Analysis:

Issue 1: Applicability of the Gold (Control) Act, 1968 to Gold Acquired from the Reserve Bank of India
The petitioner argued that gold acquired from the Reserve Bank of India is exempt from the provisions of the Act under Section 3. However, the court held that the exemption only applies to gold in the possession, custody, or control of the Reserve Bank of India or the Government. Once the gold is sold and comes into the possession of the purchaser, the exemption ceases to exist. Therefore, the petitioner's submission on this point failed.

Issue 2: Compliance with Section 27(7)(b) Regarding Premises Specified in the License
Section 27(7)(b) mandates that a licensed dealer must conduct business only in the premises specified in the license. The petitioner contended that selling gold through commission agents who are also licensed dealers should be considered as conducting business within the licensed premises. The court rejected this argument, stating that the licensed premises of the commission agents are separate and distinct from the petitioner's licensed premises. Thus, the petitioner could not shift its business operations to the premises of the commission agents. This submission was found to be without merit.

Issue 3: Applicability of Section 55 on Gold Acquired Under the Authorisation of the Administrator
The petitioner argued that the requirements of Section 55, which pertain to maintaining accounts, do not apply to gold acquired under the authorisation of the Administrator as per Section 9. The court disagreed, stating that Section 9 imposes restrictions on the disposal of such gold and requires the purchaser to observe conditions specified by the Administrator. Since the authorisation did not specify any disposal conditions, the petitioner was not authorised to sell the gold. Therefore, the submission on this point also failed.

Issue 4: Validity of Penalty Imposed Under Section 74 Without Notice
The court found that the notice issued to the petitioner was under Section 75, which prescribes a maximum penalty of Rs. 1,000 for each contravention. The adjudicating authority imposed a penalty of Rs. 30,000 under Section 74 without issuing a notice for the same. The court held that imposing a higher penalty under Section 74 without proper notice and an opportunity to be heard was a violation of natural justice. Therefore, the imposition of the penalty under Section 74 was quashed, and the penalty was reduced to Rs. 2,000 in accordance with Section 75.

Issue 5: Exhaustion of Statutory Remedies Before Invoking the Jurisdiction of the High Court
The respondent argued that the petitioner should have exhausted the statutory remedies available under the Act before approaching the High Court. The court rejected this argument, stating that the order imposing the penalty was in violation of natural justice as no notice under Section 74 had been issued. The court cited precedents to support the view that the High Court can exercise its jurisdiction in cases where the order is passed without jurisdiction or in violation of natural justice.

Conclusion
The court quashed the imposition of the Rs. 30,000 penalty under Section 74 and reduced it to Rs. 2,000 under Section 75, finding that the petitioner was not given proper notice and an opportunity to be heard. The writ petition succeeded in part, and the court assessed the hearing fee at Rs. 200.