1989 (6) TMI 206 - AT - Central Excise

Issues Involved:

1. Validity of confiscation of gold under Section 71(1) of the Gold (Control) Act, 1968.
2. Alleged contravention of Sections 8(2) and 27 of the Gold (Control) Act, 1968.
3. Evaluation of evidence and statements provided by the appellant.
4. Determination of whether the appellant was carrying on business as a dealer without a license.

Issue-wise Detailed Analysis:

1. Validity of Confiscation of Gold under Section 71(1) of the Gold (Control) Act, 1968:
The appellants challenged the confiscation of gold under Section 71(1) of the Gold (Control) Act, 1968 by the Collector of Central Excise, Kanpur. The confiscation was based on the recovery of new gold ornaments weighing 699.500 grams from the appellant's business premises. The search was conducted with a search warrant, and a panchnama was prepared, leading to the seizure of the gold. The appellants argued that the gold was old family jewelry given to goldsmiths for remaking due to upcoming family marriages and was kept in the shop for safety.

2. Alleged Contravention of Sections 8(2) and 27 of the Gold (Control) Act, 1968:
The show cause notice alleged that the appellants contravened Sections 8(2) and 27 of the Act by acquiring and possessing gold ornaments in trade quantity unauthorizedly and engaging in their purchase and sale. Section 8(2) allows possession of gold ornaments unless they are required to be included in a declaration and have not been so included. Section 27(1) prohibits carrying on business as a dealer without a valid license. The appellants contended that mere possession of gold ornaments does not constitute an offense unless there is an intention to sell, which was not proven.

3. Evaluation of Evidence and Statements Provided by the Appellant:
The appellants provided various pieces of evidence, including cash memos, receipts, affidavits from goldsmiths, and marriage invitation cards, to support their claim that the gold was family jewelry. The Collector found discrepancies in the statements and the evidence, particularly the dates in the goldsmiths' affidavits and G.S. 13 registers, leading to the conclusion that the documents were fabricated. However, the Tribunal noted that the evidence should not be rejected based on mere technical lapses or coincidences unless it is shown to be flimsy and unreliable.

4. Determination of Whether the Appellant was Carrying on Business as a Dealer Without a License:
The main charge against the appellants was that they did not hold a goldsmith's certificate or a gold dealer's license. The Tribunal emphasized that to prove a contravention of Section 27(1), there must be evidence of a series of transactions indicating that the appellants were carrying on business as dealers. The Tribunal found no evidence of such transactions or any material recovered from the appellant's shop to support the charge. The possession of gold jewelry, even in large quantities, was not sufficient to prove that the appellants were dealing in gold. The Tribunal cited several judgments supporting the view that mere possession or intention to sell does not constitute an offense under the Act.

Conclusion:
The Tribunal concluded that the appellants did not contravene the provisions of Sections 8(2) and 27 of the Gold (Control) Act, 1968. The appeal was allowed, and the appellants were entitled to the return of their confiscated jewelry. The Tribunal emphasized the importance of concrete evidence to prove continuous business transactions as a dealer, which was lacking in this case. The decision was based on the interpretation of the legal provisions and the evaluation of the evidence presented.

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