1988 (8) TMI 233 - AT - Central Excise

Issues Involved:

1. Whether the Collector was unjustified in holding that the appellant Shri Maneklal contravened Section 27 of the Act.
2. Whether the Collector was not justified in holding that the appellant Shri Maneklal contravened Section 8(1) of the Act.
3. Whether the Collector was unjustified in ordering absolute confiscation of primary gold bearing foreign marks weighing 5.800 gms valued at Rs. 812.00.
4. Whether the Collector was unjustified in ordering confiscation of primary gold weighing 46.200 gms and allowing redemption on payment of fine of Rs. 2,000/-.
5. Was the penalty on the appellant Shri Maneklal harsh and unreasonable.
6. Whether penalties on the other appellants were illegal and unjustified.

Issue-wise Detailed Analysis:

1. Whether the Collector was unjustified in holding that the appellant Shri Maneklal contravened Section 27 of the Act:

Section 27(1) prohibits a person from carrying on business as a dealer without a valid license. The term "dealer" is defined under Section 2(h) of the Act. The Collector concluded that Shri Maneklal acted as an agent (bailee) for the four other owners of the gold, thus falling under the definition of a "dealer." However, the Tribunal found that the Collector did not record a finding that Shri Maneklal carried on the business specified in Section 2(h) either on his behalf or on behalf of his principals. Without evidence of such business activities, the Tribunal held that the Collector misunderstood the legal position and erred in holding that Shri Maneklal contravened Section 27 of the Act.

2. Whether the Collector was not justified in holding that the appellant Shri Maneklal contravened Section 8(1) of the Act:

The appellant was found in possession of primary gold weighing 1231.500 gms, valued at Rs. 1,65,838.00, which he was not authorized to possess. Despite the appellant's defense that the gold belonged to others, the Tribunal held that mere possession and custody of the primary gold were sufficient to establish a contravention of Section 8(1). Thus, the Collector was justified in holding that Shri Maneklal contravened Section 8(1) of the Act.

3. Whether the Collector was unjustified in ordering absolute confiscation of primary gold bearing foreign marks weighing 5.800 gms valued at Rs. 812.00:

The Tribunal found no evidence to support the appellant's claim that the foreign-marked gold was given to him by a third party. Given the serious nature of possessing foreign-marked gold, the Tribunal upheld the Collector's order of absolute confiscation, considering it justified.

4. Whether the Collector was unjustified in ordering confiscation of primary gold weighing 46.200 gms and allowing redemption on payment of fine of Rs. 2,000/-:

The appellant's contention that the gold pieces were for worship and not for sale was dismissed. The Tribunal noted that these pieces were found with other primary gold in the business premises, and the Collector's decision to allow redemption on payment of a fine of Rs. 2,000/- was reasonable and not excessive.

5. Was the penalty on the appellant Shri Maneklal harsh and unreasonable:

The penalty of Rs. 1,00,000/- was imposed based on the appellant's possession of a large quantity of primary gold and the alleged contravention of Section 27(1). Given that the Tribunal set aside the finding of contravention under Section 27(1) and considering the value of the gold actually belonging to the appellant, the Tribunal found the penalty harsh and unreasonable. The penalty was reduced from Rs. 1,00,000/- to Rs. 10,000/-.

6. Whether penalties on the other appellants were illegal and unjustified:

The show cause notice alleged that the other appellants aided and abetted Shri Maneklal, but the Collector did not record any findings to support this allegation. Without evidence or findings of knowledge or connivance, the penalties imposed on the other appellants were deemed unjustified. The Tribunal set aside the penalties on these appellants.

Conclusion:

Appeals 53 of 82, 56 of 82, 57 of 82, and 58 of 82 were allowed, and the penalties on the appellants were set aside, with refunds ordered if penalties were paid. Appeal G/52 of 82 was allowed in part, reducing the penalty on Shri Maneklal to Rs. 10,000/- while confirming the confiscation orders.

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