1987 (8) TMI 228 - AT - Central Excise

Issues Involved:
1. Confiscation of seized gold ornaments.
2. Imposition of penalty on the appellants.
3. Validity of affidavits as evidence.
4. Requirement of issuing Show Cause Notice to alleged customers.
5. Applicability of Sections 74 and 75 of the Gold (Control) Act for penalty imposition.
6. Justification for the amount of redemption fine and penalty.

Detailed Analysis:

1. Confiscation of Seized Gold Ornaments:
The appellants, licensed Gold Dealers, were found with 1502.000 grams of gold ornaments in excess during a search. The Collector concluded that the appellants acquired the excess gold ornaments unauthorizedly and failed to make the required entries in the statutory records, thus contravening Sections 8 and 55 of the Gold (Control) Act. Consequently, the Collector ordered the confiscation of the excess gold ornaments with an option to redeem the same on payment of a redemption fine of Rs.1,25,000/-.

2. Imposition of Penalty on the Appellants:
The Collector also imposed a penalty of Rs.50,000/- on M/s Man Singh Lamba & Sons and Rs.10,000/- on each partner under Section 74 of the Gold (Control) Act. The appellants contended that the excess ornaments belonged to their customers and were received for repairs. However, the Collector found that the appellants failed to satisfactorily explain the excess quantity and did not make the necessary entries in the Repair Register.

3. Validity of Affidavits as Evidence:
The appellants presented affidavits from 15 customers claiming the excess ornaments were for repairs. The Collector and the Tribunal found no substance in this defense, noting that the affidavits were produced more than a year after the seizure without explanation for the delay. Additionally, the Repair Register did not support the appellants' claims, and no customers came forward to claim the ornaments. The Tribunal held that affidavits alone, without cross-examination or immediate submission, were insufficient as evidence.

4. Requirement of Issuing Show Cause Notice to Alleged Customers:
The appellants argued that Show Cause Notices should have been issued to the alleged customers. The Tribunal clarified that under Section 71 of the Gold (Control) Act, the burden of proving the ownership of gold lies with the person from whose possession it was seized. Since the appellants failed to establish that the excess gold belonged to the customers, issuing notices to the alleged customers was unnecessary.

5. Applicability of Sections 74 and 75 of the Gold (Control) Act for Penalty Imposition:
The appellants contended that the contraventions should have been punished under Section 75, not Section 74. The Tribunal explained that Section 74 applies to acts or omissions rendering gold liable to confiscation, while Section 75 is a residuary provision. Given the appellants' failure to account for the excess gold and the non-entry of Issue Vouchers, the imposition of penalties under Section 74 was justified.

6. Justification for the Amount of Redemption Fine and Penalty:
The Tribunal found no justification to reduce the redemption fine or the penalties imposed. The penalties were deemed appropriate given the circumstances and the appellants' failure to comply with statutory requirements.

Conclusion:
The appeals were dismissed for lack of merit, and the Cross Objections, being replies to the grounds of appeal, were deemed disposed of by the same order. The Tribunal upheld the confiscation of the excess gold ornaments, the imposition of penalties, and the rejection of the appellants' defenses.

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