1988 (10) TMI 139 - AT - Central Excise

Summary

Issues:
1. Confiscation of primary gold under Section 71 of the Gold (Control) Act.
2. Imposition of penalty under Section 74 of the Gold (Control) Act.

Analysis:
1. The appeal challenged the order of confiscation of primary gold weighing 1440.900 gms under Section 71 of the Gold (Control) Act and the imposition of a penalty of Rs. 20,000/- under Section 74. The appellant argued that the gold was obtained by melting old ornaments given by customers, making confiscation illegal. The appellant's counsel cited precedents to support the contention that if gold is not liable for confiscation, no penalty can be imposed. The appellant's age and lack of intent were highlighted. The Collector contended that the gold could not be correlated with the ornaments and the appellant failed to explain the excess gold found. The Collector justified the confiscation and penalty imposition.

2. The show cause notice charged the appellant with contravention of Section 42(ii) and Section 55 of the Gold (Control) Act. The appellant admitted exceeding the prescribed quantity under Section 42(ii), but challenged the penalty imposition under Section 74. The appellant disputed the incriminatory nature of open entries under Section 55, but the record showed the appellant's admission of violations. The department did not allege unaccounted gold or illegal acquisition. The appellant claimed the primary gold was from melted ornaments of customers, making it customer gold. As the department did not establish customer knowledge or connivance, confiscation was deemed illegal. The confiscation order was set aside, and the gold was to be returned to the appellant for conversion into ornaments.

3. Regarding the penalty, it was reduced from Rs. 20,000/- to Rs. 2,500/- due to multiple blank entries and discrepancies in stock records. The reduction was based on the seriousness of the offense and the appellant's circumstances. The appellant was granted relief for any excess penalty paid.