1986 (8) TMI 228 - AT - Customs

Issues Involved:
1. Jurisdiction of the Collector of Customs to adjudicate under the Gold (Control) Act, 1968.
2. Validity of the show cause notice issued by the Additional Collector.
3. Reliability of the appellants' retracted statements.
4. Obligation of the appellants to declare gold and ornaments.
5. Evidence of the gold and coins being of foreign origin.
6. Legality of the confiscation of silver ingots and the penalty imposed on appellant Ratnakara Pai.

Detailed Analysis:

1. Jurisdiction of the Collector of Customs to Adjudicate Under the Gold (Control) Act, 1968:

The appellants contended that the Collector of Customs lacked jurisdiction to adjudicate under the Gold (Control) Act, 1968, as per Notification No. SO 985 (E) dated 27-12-1980. However, the Tribunal found this plea legally untenable. It referenced Notification S.O. 130 dated 9th January 1963 and subsequent notifications, which authorized officers of the Central Excise Department, including the Collector of Customs, to exercise powers under the Gold (Control) Act without monetary limits. The Tribunal emphasized that the monetary limit of Rs. 1,00,000 for adjudication by an Additional Collector did not restrict the Collector's powers, thereby affirming the Collector's jurisdiction.

2. Validity of the Show Cause Notice Issued by the Additional Collector:

The appellants argued that the show cause notice issued by the Additional Collector was invalid as the adjudication was done by the Collector without issuing a fresh notice. The Tribunal dismissed this argument, stating that the primary purpose of a show cause notice is to inform the aggrieved party of the charges, enabling them to respond effectively. The appellants had participated in the adjudication proceedings without objection, indicating no prejudice. Thus, the Tribunal found no legal basis for requiring a fresh show cause notice.

3. Reliability of the Appellants' Retracted Statements:

The Tribunal reviewed the statements given by the appellants on 24-12-1982 and their subsequent retraction on 31-12-1982. It concluded that the original statements were true and voluntary, while the retraction was belated and appeared to be an afterthought. Consequently, the Tribunal accepted the original statements and rejected the retraction.

4. Obligation of the Appellants to Declare Gold and Ornaments:

The appellants claimed that the gold and ornaments were family property, not part of the firm's stock-in-trade, and thus did not require declaration. The Tribunal rejected this argument, noting that the appellants, as partners of a licensed gold dealer firm, were responsible for the firm's affairs. The non-declaration of the gold and ornaments constituted a contravention under Section 16(7) of the Gold (Control) Act. The Tribunal referenced a previous case involving the appellants where similar non-declaration had led to penalties.

5. Evidence of the Gold and Coins Being of Foreign Origin:

The Tribunal examined whether the confiscated gold coins and primary gold were of foreign origin. It noted that the presence of royal emblems alone was insufficient to prove foreign origin. The Department had not provided conclusive evidence, such as assaying by a competent authority, to establish the gold's foreign origin. The Tribunal cited Delhi High Court rulings, emphasizing that high purity alone does not indicate foreign origin. Consequently, the Tribunal exonerated appellant Chandrasekhara Pai of the charge under Section 112 of the Customs Act and set aside the penalty of Rs. 1,00,000.

6. Legality of the Confiscation of Silver Ingots and the Penalty Imposed on Appellant Ratnakara Pai:

The Tribunal found that the silver ingots were acquired and stored in violation of the Customs Act, 1962, as Ernakulam is within a specified area under Government Notification No. GSR 37 dated 3-1-1969. The explanation provided by Ratnakara Pai for burying the silver ingots was found unconvincing. The Tribunal accepted the statement given by Ratnakara Pai on 24-12-1982 and rejected the retraction. It confirmed the confiscation of the silver ingots under Section 113(1) of the Customs Act and upheld the penalty imposed under Section 114.

Conclusion:

The Tribunal upheld the findings of the adjudicating authority regarding contraventions under the Gold (Control) Act, 1968, and the Customs Act, 1962, with some modifications. The absolute confiscation of primary gold was modified to allow redemption on payment of a fine, and the penalty on appellant Chandrasekhara Pai under the Customs Act was set aside. The confiscation of silver ingots and the penalty on appellant Ratnakara Pai were confirmed. The appeals were disposed of accordingly.

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