1989 (4) TMI 232 - AT - Customs

Summary

Issues Involved:
1. Absolute confiscation of primary gold under Section 111(d) of the Customs Act and Section 71(1) of the Gold (Control) Act.
2. Non-issuance of show cause notice to the Tirumala Tirupathi Devasthanams (T.T.D.).
3. Compliance with provisions of the Gold Control Act.
4. Applicability of Section 123 of the Customs Act.
5. Redemption of confiscated gold by T.T.D.

Detailed Analysis:

1. Absolute Confiscation of Primary Gold:
The appeals challenge the order of absolute confiscation of primary gold weighing 2325.400 grams valued at Rs. 7,32,500/- under Section 111(d) of the Customs Act and Section 71(1) of the Gold (Control) Act. The gold, part of offerings received by the Tirumala Tirupathi Devasthanams (T.T.D.), was detained and subsequently seized by the Gold Control Officers of Bombay Customs (Prev.) Collectorate. The Collector of Customs (Prev.) Bombay ordered the confiscation, discharging individual appellants from penal liability but not the gold itself.

2. Non-Issuance of Show Cause Notice to T.T.D.:
The appellants contended that the confiscation order was passed without issuing a show cause notice to T.T.D., represented by the Board of Trustees. Instead, notices were issued to individual officers of T.T.D. The Collector's findings admitted the gold as part of the offerings made by devotees, and thus, the ownership vested with T.T.D. The adjudication order, passed without notifying the proper owner, was argued to be contrary to Section 124 of the Customs Act and Section 79 of the Gold Control Act.

3. Compliance with Provisions of the Gold Control Act:
The appellants argued that T.T.D. had complied with all provisions of the Gold Control Act, particularly Section 13, which allows public religious institutions to receive and convert primary gold offerings with prior permission from the Gold Control Administrator. The gold in question was included in monthly returns and taken to the Government of India Mint for conversion into standard gold bars, following the Administrator's permission. The appellants asserted that the gold was tendered for conversion in accordance with the Act, and hence, there was no justification for confiscation under the Gold Control Act.

4. Applicability of Section 123 of the Customs Act:
The respondents argued that the presence of foreign-marked gold invoked reasonable belief of smuggling, thus shifting the burden of proof to the appellants under Section 123 of the Customs Act. The appellants countered that the gold was part of the hundi collections and hence, no reasonable belief of smuggling could be entertained. They also contended that no valid seizure occurred since the gold was in the custody of the Government of India Mint. The appellants cited legal precedents to support their claim that the burden of proof lay with the department to establish the illicit origin of the gold.

5. Redemption of Confiscated Gold by T.T.D.:
The appellants requested that if the gold was technically liable for confiscation under the Customs Act, T.T.D. should be allowed to redeem it on payment of a nominal fine, so it could be utilized for religious and charitable purposes. The Tribunal, considering the bona fides of the case and the compliance with the Gold Control Act, deemed it proper to allow T.T.D. to redeem the gold on payment of a nominal fine of Rs. 1,000/-. The gold was to be restored to the Government Mint for deposit in T.T.D.'s account upon payment of the redemption fine.

Conclusion:
The Tribunal held that while the foreign gold might be legally liable for confiscation under Section 111(d) of the Customs Act, the public religious institution, having received the gold as offerings and complied with the Gold Control Act, should not be deprived of it. The Tribunal allowed T.T.D. to redeem the gold on payment of a nominal fine, emphasizing the need for guidelines to handle offerings in public religious institutions that might include smuggled items. The Tribunal directed that a copy of the order be sent to the Central Board of Customs and Excise, New Delhi, for consideration of this aspect.