1987 (3) TMI 389 - AT - Customs

Issues Involved:
1. Imposition of penalties on partners of the partnership firm.
2. Confiscation of 619.250 gms. of gold ornaments received for repairs.
3. Confiscation of 629.000 gms. of gold ornaments for non-declaration by Smt. Kasturben.
4. Confiscation of 207.100 gms. of primary gold.
5. Confiscation of half a sovereign weighing 4 gms.
6. Treatment of gold ornaments weighing 1497.150 gms. seized from the residential premises as stock-in-trade.
7. Legality of the order of confiscation of the gold ornaments as the seized gold were not shown to be offended gold.
8. Contravention of the provision of Section 55 of the Gold Control Act as per the Supreme Court decision in 1984 S.C. page 1249.

Detailed Analysis:

1. Imposition of penalties on partners of the partnership firm:
The Tribunal found that the show cause notice was issued only to the firm, M/s. Patni Jewellers, and not to the individual partners. The show cause notice required the firm to show cause against the proposed confiscation and penalty. Under Section 79 of the Gold Control Act, no order of adjudication or penalty can be made without a notice in writing informing the person concerned of the grounds for the proposed penalty. Since no such notice was issued to the partners, the imposition of penalties on them was deemed illegal and unsustainable. The penalties imposed on the partners were set aside.

2. Confiscation of 619.250 gms. of gold ornaments received for repairs:
The Tribunal noted that the gold ornaments received for repairs were not liable for confiscation under Section 71 of the Act unless it was shown that the owners of the ornaments had contravened the provisions of the Act or had knowledge or connived with the licensee in the contravention. Since no show cause notice was issued to the owners and there was no finding of their knowledge or connivance, the confiscation of these ornaments was deemed illegal. The order of confiscation was set aside.

3. Confiscation of 629.000 gms. of gold ornaments for non-declaration by Smt. Kasturben:
The Tribunal found that the 629 gms. of gold formed part of the 1497.150 gms. seized from the residential premises and were admitted by Shri Jayantilal Vallabhdas Patni to be stock-in-trade of the firm. The contention that Smt. Kasturben was not required to make any declaration was dismissed as irrelevant. The Tribunal upheld the confiscation of the 629 gms. as part of the 1497.150 gms. seized.

4. Confiscation of 207.100 gms. of primary gold:
The Tribunal rejected the contention that the firm was entitled to possess primary gold up to 400 gms. The primary gold found was not shown to be obtained in the process of making, manufacturing, or repairing articles or ornaments. The order of confiscation of 207.100 gms. of primary gold was upheld.

5. Confiscation of half a sovereign weighing 4 gms:
The Tribunal rejected the contention that the half sovereign was a puja article. The statements of Shri Jayantilal and Maganlal indicated that it was received from a customer for manufacturing a ring. Since no show cause notice was issued to the owner and there was no finding of the owner's knowledge or connivance, the confiscation was upheld due to the absence of a specific contention that it belonged to someone else.

6. Treatment of gold ornaments weighing 1497.150 gms. seized from the residential premises as stock-in-trade:
The Tribunal upheld the finding that the seized gold ornaments were part of the stock-in-trade based on the admission of Shri Jayantilal. The contention that they were family ornaments was dismissed due to lack of evidence such as a declaration by Vallabhdas.

7. Legality of the order of confiscation of the gold ornaments as the seized gold were not shown to be offended gold:
The Tribunal found that the seized gold was admitted by the partner to be unaccounted for in the registers. The contention that the gold was not offended was rejected, and the order of confiscation was upheld.

8. Contravention of the provision of Section 55 of the Gold Control Act as per the Supreme Court decision in 1984 S.C. page 1249:
The Tribunal noted that the Supreme Court had directed the Administrator to address grievances regarding the inadequacy of forms G.S. 11 and G.S. 12 but did not exempt dealers from maintaining accounts. The partners admitted to failing to account for the excess gold ornaments. The finding of contravention of Section 55 was upheld.

Conclusion:
The appeal was allowed in part. The penalties on the partners were set aside, and the confiscation of 619.250 gms. of gold ornaments received for repairs was also set aside. The fine in lieu of confiscation of gold weighing 2783.750 gms. was reduced to Rs. 24,000/-. The fine of Rs. 5,000/- for 629.000 gms. of gold, already included in the 1497.150 gms., was set aside. In other respects, the orders of the lower authorities were confirmed.

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