1988 (1) TMI 239 - AT - Central Excise

Issues Involved:
1. Confiscation and redemption of gold and gold ornaments.
2. Penalty imposition on appellants under the Gold (Control) Act, 1968.
3. Validity of the Amnesty Scheme by the Ministry of Finance.
4. Applicability of Sections 227 and 228 of the Indian Contract Act, 1872.
5. Binding nature of administrative instructions on quasi-judicial authorities.
6. Quantum of fine and penalty.

Detailed Analysis:

1. Confiscation and Redemption of Gold and Gold Ornaments:
The Collector of Central Excise, Cochin, confiscated 2261.750 gms. of gold and gold ornaments under Section 71 of the Gold (Control) Act, 1968, and allowed redemption upon payment of a fine of Rs. 1,00,000 under Section 73. The gold and ornaments were seized from Poornima Jewellery, which were not accounted for in the statutory accounts. Appellant Jose admitted to keeping the unaccounted gold and ornaments for sale. The Tribunal concluded that the gold and ornaments formed part of the stock in trade of the licensee Kuruvila and were kept in the licensed premises in contravention of the law.

2. Penalty Imposition on Appellants:
A penalty of Rs. 50,000 was imposed on each appellant under Section 74 of the Act. The learned counsel argued that Kuruvila had no knowledge of the gold and ornaments' presence in the licensed premises. However, the Tribunal held that Kuruvila, the principal, was bound by the acts of his Power of Attorney, Jose, and was privy to the contravention. The Tribunal confirmed the charges of contravention but reduced the penalties: Rs. 25,000 for Kuruvila and Rs. 10,000 for Jose.

3. Validity of the Amnesty Scheme by the Ministry of Finance:
The learned counsel argued that the Amnesty Scheme should prevent penal action. The Tribunal referred to the Supreme Court ruling in Orient Paper Mills Ltd. v. Union of India, which held that administrative instructions do not bind quasi-judicial authorities. The Tribunal concluded that the Amnesty Scheme, being an administrative instruction, did not have statutory force and was not applicable in this case.

4. Applicability of Sections 227 and 228 of the Indian Contract Act, 1872:
The learned counsel contended that the principal (Kuruvila) should not be liable for the acts of his Power of Attorney (Jose) if they acted beyond their scope. The Tribunal rejected this argument, stating that Kuruvila was privy to the contravention, and the gold and ornaments were part of the stock in trade of the licensed premises.

5. Binding Nature of Administrative Instructions on Quasi-Judicial Authorities:
The Tribunal emphasized that administrative instructions from the Finance Ministry do not bind quasi-judicial authorities, citing Supreme Court rulings. The Tribunal noted that the Amnesty Scheme did not apply to the charges in this case, as it was meant for voluntary disclosures, not for cases involving search and seizure.

6. Quantum of Fine and Penalty:
Considering the purity of the gold (20 to 21 ct.) and its value (Rs. 3,93,458.25), the Tribunal reduced the fine from Rs. 1,00,000 to Rs. 75,000 and the penalties on Kuruvila and Jose to Rs. 25,000 and Rs. 10,000, respectively.

Conclusion:
The Tribunal upheld the confiscation and penalties, with modifications to the quantum of fines and penalties. The appeals were otherwise dismissed.

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