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TMI Blog1985 (6) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... 645.200 Gms (203 pieces) of gold ornaments, of 231/2 carat purity and 22 carat purity, valued at Rs. 2,68,167/-, was found in excess of the recorded balance. Since no statutory records were found to have been maintained in respect thereto, they were seized by means of a Panchnama , prepared at the spot on the same day, which was duly signed by one of the partners, Shri Virendra Kumar Gupta, and two Panch witnesses, in whose presence the search and seizure was made, on having been summoned to the premises to witness the search by the concerned officers at 11 AM. 3. Said Shri Virendra Kumar Gupta gave out in his statement that the seized gold ornaments were part of their stock in trade, which statement was recorded the same day; namely, 3-9-1982. This statement of Virendra Kumar Gupta remained uncontroverted by him although, even after the proceedings were initiated by means of a show cause notice, issued on 7-10-1982, i.e., more than a month after the search and seizure, and even during adjudication proceedings. However, Shri Prem Narain Gupta - the father - sent a communication on 8-9-1982 to the Collector of Central Excise, New Delhi, stating that the closing balance, as record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge which remained unexplained was that of 3 pieces of the weight of 8.950 Gms, which according to him may have been misplaced. 5. He asserted that the entire quantity of the seized goods in the present case was in the nature of third party goods and that their names had been fully disclosed, volunteering that affidavits of the concerned persons would also be submitted and that proper enquiries could be conducted in this connection. He explained the default by saying that since the seizure had been effected the same day when the ornaments had been received; there had been no time to make the necessary entries in the statutory records and, consequently, no offence under the Gold (Control) Act could be deemed to have been committed and, even if there was some technical offence, the goods in any case were not liable to confiscation on account of their being third party goods. He accordingly requested for release of the goods, after conducting requisite inquiries, if necessary. 6. The Department followed up the seizure with the show cause notice issued on 7-10-1982, under Section 79 of the Gold (Control) Act, 1968 (hereinafter referred to as the Act ), which after narrating the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged from the hospital only on 8-9-1982, and the fact that he was taken ill at 11.30 AM on 3-9-1982 is supported by the affidavits of the two Panch witnesses, which affidavits they enclosed with the reply. 8. The Collector took note of all these pleas set forth in reply to the show cause notice and the earlier letter of 8-9-1982 but held that the facts and circumstances on record falsify the explanation rendered, firstly, by Prem Narain Gupta s letter dated 8-9-1982 and, subsequently, in reply to the show cause notice, by observing that although the Department had not questioned the authenticity of the voucher from M/s. Talwar Jewellers but expressed complete doubt about the timing when this voucher could have come into existence, holding categorically that it would not have been there when the officers visited the shop and effected the search inasmuch as had it been there, the very first reaction would have been to state this fact and produce the voucher, and that even if the appellants plea, that Prem Narain Gupta had taken ill at 11.30 AM, be accepted, even then he had had half an hour to produce the voucher, and his failure to do so leads to the inference that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t half an hour after the arrival of the Officers, but the request was declined by the Bench on the view that the Department should have envisaged the need for producing such an evidence because the appellant had come forward with this plea a few days after the seizure and that the request made at this late stage could not be entertained. Nevertheless, judgment for the Bench was first written by Shri H.R. Syiem who considered the explanation, put forward by the appellants, as being not worthy of any credence for the detailed reasons highlighted by him in his judgment recorded on 2-8-1984. However, when the proposed judgment went to the Learned Member Shri M. Gouri Shankar Murthy, he expressed his inability to agree, and after setting out the facts ad seriatum, he expressed the view that on a reading of the provisions of Section 71 including the proviso thereto, it was obvious that the ownership and title to seize goods had to be determined by the adjudicating authority which had to be in the nature of quasi-judicial determination, on evidence, and as a prelude to confiscation. He opined that once it is found that the gold belongs to a person other than the one by whose act or omissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of penalty independent of the liability or otherwise to confiscation of the seized goods, in case of contravention of any of the provisions of the Act and the Rules is established. Inasmuch as, admittedly, the statutory records were not maintained by the appellants which they, as licensced dealers were under statutory obligation to maintain as required by Section 55 of the Act, a case of imposition of penalty was made out but, here again, the learned Member proposed proportionate reduction in the amount of penalty because, in his view, Section 8, which was in general terms and applied to persons other than dealers, could not be invoked and the violation of Rule 12, namely, failure to maintain a Repair Register could also be not taken into account for determining the quantum of penalty as there was no charge in this regard in the show cause notice and that the end of justice required corresponding reduction of penalty which, according to him, could be 2/3rd of the amount of the penalty imposed by the Collector and upheld by the other learned Member and, thus, proposed a penalty of Rs. 7,000/-. 13. In view of the differences, it was felt to be a case fit for reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion for determination is as covered by point No. 1. The learned Counsel for the appellants vehemently canvassed the point that the order of confiscation of the gold in terms of Section 71 of the Act was wholly unsustainable inasmuch as there had been no opportunity to the claimants to prove their ownership in respect thereto and as there was nothing on record that the act or omission on the part of the present appellants in respect to seized gold was, in any manner, with the knowledge or connivance of the said claimants; the proviso to Section 71 was clearly attracted and, as such, the order of confiscation was liable to be set aside on this account. Shri Jain placed emphatic reliance on a judgment of Delhi High Court in the case of Sushil Kumar Others v. Collector of Central Excise Others reported in 1983 E.L.T. 687, where it was held that in the absence of notice to the owner of the seized goods informing him of the grounds on which it was proposed to confiscate the same, which notice had to be given within 6 months in terms of Section 79 of the Act; the gold seized was liable to be returned to the persons from whose possession it was seized. He also relied on a judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l must not rest on suspicion but on legal testimony and, further, that as held in AIR 1977 SC 1724; a party s admission in a case dispenses with all necessity for further proof, and that inasmuch as in this case the Collector himself has recorded in the Adjudication Order that authenticity of the voucher has not been disputed by the Department, there was no need for any further evidence to be produced by the appellants and that the Collector had erred in discounting the value of this voucher regardless of the fact that the Department, in spite of opportunity to do so have not done it by examining the record of M/s. Talwar Jewellers or proprietors thereof to determine the correctness of the assertions of the appellants and, thus, the facts as set out by the appellants having gone un-rebutted and uncontroverted, there was no reason to discredit the entire defence of the appellants nor any justification for dispensing with notice to the owners disclosed by the appellants. 20. Shri Sachar s reply to this contention was apart from pointing out that the Single Bench judgment of the Delhi High Court had been reversed by a Division Bench of the said Court as reported in AIR 1983 Delhi 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it becomes manifest that it is only when it is established to the satisfaction of the officer adjudging the confiscation that such gold or other thing belongs to a person other than the person who has ..... rendered it liable to confiscation.... (Emphasis supplied), that provisions thereof would come into play. 23. It is, thus, clear that in plain terms of Section 71, whenever any gold is found in possession of a person or dealer in respect of which any provisions of this Act or Rules framed thereunder have been contravened, the same becomes liable to confiscation unless it is shown to the satisfaction of the adjudication officer that the real owner of the gold was someone other than the one who was guilty of the contravention. The tenor of the wording of the proviso is such that the burden of satisfying the Adjudication Collector about the ownership of some other person, is on the one; from whose possession the gold had been seized or who was found to have contravened provisions of the Act or relevant rules. 24. The initial presumption of ownership is placed by Section 99 of the Act on the person who had gold in his possession, custody or control including gold ornaments. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wnership of third persons had been established but, on a totality of circumstances, that is not so. 29. It would seem, in the first instance, as observed by the Collector and the Learned Member (Technical), that neither M/s Talwar Jewellers nor any of the three ladies came forward before the Collector staking claim to the seized gold. They, therefore, cannot be deemed to be claimants before the Adjudicational authorities for the simple reason that no claim has been put forward by them at any stage. The voucher, or the affidavits, have only been handed over by them to the appellants who, in turn, annexed them with their reply to the show cause notice. The authorities relied upon by the Learned Counsel clearly indicate that either ownership had been accepted by the adjudicating authorities or the claims had been put forward by the persons concerned themselves. For instance, in the Delhi case of Sushil Kumar v. Collector of Central Excise (supra), it is clearly recorded by the Hon ble Judge in para 35 at page 695 that they (the adjudication authorities) have all found the will to be genuine, which finding was either express or implied. The ownership by the persons had been claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, has to be replied in the negative to the effect that the order of confiscation of gold could not be bad in this case on account of failure to afford an opportunity to the claimants to prove their ownership", inasmuch as there were no claimants before the Adjudicating Officer. 32. So far as satisfaction of the Adjudication Officer is concerned, the reasoning recorded by him in this regard sets out cogent and logical facts which weighed with him in coming to the conclusion that the version given by the appellants - firstly, through letter dated 8-9-1982 and, afterwards, in reply to show cause notice - was not worthy of reliance. Learned Member (Technical) has endorsed this finding for reasons recorded in his order, but to the same effect. Learned Member (Judicial) has not adverted to merits of this evidence, but has been swayed by the wording of Sections 71 79 which, with all respects, in my view, arise for consideration only on certain facts having been established. 33. I also endorse the finding of fact, recorded by the Learned Collector and the Learned Member (Technical), in so far as it relates to discrediting the theory of the seized gold belonging to persons othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntaining copy of the voucher which Prem Narain Gupta was under obligation to issue in favour of M/s Talwar jewellers while receiving the gold ornaments on approval, was found at the shop nor produced. It is apparently for the reason that none existed at the time search was made, and the gold seized. Such a voucher-book, for obvious reasons, could not have been subsequently made up as premises had been raided, and inventory of every thing found, including Books and records maintained at the shop, prepared; whereas a single voucher from some other party, who themselves have kept away from the proceedings, and whose books of account were not under scrutiny, could easily be procured. Even that voucher remains a dubious document in the absence of any evidence to corroborate credible value thereof, and Talwar Jewellers having at no stage come forward to stake a claim to this comparatively large quantity of gold ornaments. 36. For all the foregoing reasons, my conclusion would be that, on the facts of this case, proviso to Section 71 of the Act would not come into operation and, as such, the confiscation of the gold ornaments cannot be treated as illegal, for failure to afford opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that everything has been shown to have proceeded like a scheduled time-table and the Collector has also observed that, even if party s version that Prem Narain had taken ill at 11.30 AM be believed, in view of the fact that as an experienced Licensed dealer and as head of the family, he ought to have visualised, as soon as the search party arrived at the shop, that this huge quantity, which had been allegedly brought on that very morning, was bound to attract conspicuous notice; the very first thing in normal course of human conduct that he would have done, had such a voucher been in existence at that time, was to produce the same and offer the explanation, which he subsequently did. 42. It is also remarkable that the next partner - the elder of his two sons - gave an unequivocal statement that all the unaccounted for gold-ornaments were their stock in trade. Had those come in the morning in the manner now stated by Prem Narain, the only natural statement would have been that he was not aware and that his father, who had suddenly taken ill, was in the know of things, and that in the previous evening, all this stock of gold-ornaments was not at the shop, and that it was acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adies from different parts of the city would have come to the shop within a short span of 15 minutes early morning; otherwise also, these transactions also lack statutory proof because, under the rules as pointed out, they also had to be issued vouchers and, in case Prem Narain Gupta had received different pieces of gold ornaments in due course for repairs while sitting at the shop, there was no reason for him not to have issued signed vouchers to them as enjoined upon him by the rules. These ladies except for handing over affidavits of stereotype nature to the appellants, too did not come forward to lodge any claim in respect to these ornaments before the authorities. It is, thus manifest that this version also stands disproved from the facts patent on record. 45. Point No. 3(b). Does not arise in view of the above finding as to the plea of third party ownership being not credible or proved. 46. Point No. 4. In view of the discussion on points No. 1, 2 3, the order of confiscation of the seized gold ornaments is fully sustainable. This point is answered accordingly. 47. Point No. 5. It is true that under Section 24 of the Sales of Goods Act, the title to the goods brough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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