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TMI Blog1986 (8) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... at about 11.30 A.M., three polythene packages containing silver ingots were dug up from 3 feet below the ground level. The authorities also recovered on 24-12-1982 at about 1.00 A.M. one brass vessel containing gold coins with foreign markings, standard gold bars, gold ingots and gold ornaments, like chains, pendants, totally weighing 3186 gms. from about three feet below the ground level. Another quantity of 396 gms. of gold coins, rings, pendant etc., was also recovered on 24-12-1982 at about 4.00 A.M. from the appellant s house two feet below a Thulasithara. The appellants Chandrasekhara Pai and his son Ratnakara Pai are partners of a firm under the name and style of M/s. P.P. Chandrasekhara Pai Sons, having a gold dealer licence. The appellants were dealing in silver at Ernakulam. Since the gold and ornaments were not accounted for in the statutory registers of the firm and since the authorities had reason to believe that the gold with foreign markings were contraband gold and the silver ingots were kept stored for eventual smuggling out of India in contravention of the Customs Act, 1962, the gold ornaments and silver ingots were seized by the authorities as per law, under ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been notified as a Gold Control Officer by any notification for purposes of adjudication under Section 78 of the Gold (Control) Act, 1968, hereinafter referred to as the Act. (2) The show cause notice under Section 79 of the Act has been issued by the Additional Collector whereas the adjudication has been done by the Collector of Customs without issue of a fresh show cause notice. This is bad in law and would vitiate the impugned order. (3) The statements recorded from the appellants on 24-12-1982 were subsequently retracted on 31-12-1982 and so reliance cannot be placed on any inculpatory part of the appellant s statement against the appellants. (4) The gold and gold ornaments were not part of the stock-in-trade of the gold business of the appellant s firm but family property and since the firm is a licenced one, the appellants were merely partners of the firm and are not under any statutory obligation to make a declaration of the same unless the total quantity exceeds the permissible quantum under law. (5) Confiscation of gold and consequent imposition of penalty on appellant Chandrasekhara Pai was assailed as legally untenable since there is no evidence to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties herein. The plea of the learned Counsel that the Collector of Customs has no jurisdiction to adjudicate cases under the Gold (Control) Act as a Gold Control Officer notified under Section 78 (a) of the Act is not legally tenable. Reference may usefully be made to the Notification S.O. 130 dated 9th January, 1963. In exercise of the powers conferred by Rule 126J read with sub-rule (4) of Rule 1263 of the Defence of India Rules, 1962, the Central Government hereby authorise officers of the Central Excise Department not inferior in rank to officers specified in Column 2 of the table below as the persons who shall exercise any or all the powers of the Gold Board in relation to the matters specified in the corresponding entries in Column 3 and Column 4 of the said table. TABLE Sl.No. Officers of the Central Excise Department authorised to exercise the powers and functions. Rule of the Defence of India Rules 1962 to which the powers and functions have reference. Nature of powers and functions. 1 to 8. ... ... ... 9 Collector of Central Excise I26(M)(1) and (2) Confiscation of gold found and seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 (as amended by Notification No. 3/81-GC dated 1-8-1981) which is in exercise of the powers conferred by Clause (b) of Section 78 of the Act. Clause (a) of Section 78 empowers adjudication in respect of confiscation or penalty under the Gold Control Act by Collector of Customs as Gold Control Officer without limit. Monetary limits with reference to the power and jurisdiction relating to adjudication under the Act could be notified only in respect of officers other than Collectors as clearly envisaged by Section 78(b) of the Act. Therefore, the notification issued in terms of Section 78(b) of the Act cannot and will not control the powers exercisable by a Collector under Section 78(a) which is very evident from the conjoint reading of Section 78(a) and (b) of the Act. If as contended by the learned counsel for the appellants, Collectors of Customs will not have any jurisdiction at all to adjudicate cases under the Gold Control Act and with Additional Collector of Customs having jurisdiction only upto Rupees 1 lakh were to be accepted, it would lead to a very anomalous situation of an offence involving more than a lakh of rupees not coming within the mischief and ambit of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which holds a gold dealers licence, are not under any statutory obligation to give a declaration of the gold and ornaments is without legal basis. The appellants are admittedly partners of a firm having gold dealer s licence and cannot legally disown their responsibility in respect of the affairs and management of the firm. As a matter of fact, it is not disputed before us that the appellants are incharge of and responsible for the conduct of the business of the firm and as such the admitted non declaration of the gold and ornaments would clearly be a contravention in terms of Section 16(7) of the Act. We find that the appellants herein have been proceeded against for a contravention under the Gold (Control) Act in respect of similar non-declaration earlier and they have suffered penal consequences, as evidenced by the reported judgment of their case - M/s. P.P. Chandrasekhara Pai and Sons v. Collector of Central Excise, Cochin in 1986 (6) ECR 557 CEGAT, Madras, dated 11-7-1985. 12. Therefore, on a detailed consideration of the materials available on record, we are satisfied that the charges of contravention levelled against the appellants under the provisions of the Gold (Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to take out appropriate application before the Collector of Customs, Cochin, in this regard. 14. Taking the facts and circumstances of this case, we reduce the penalty imposed on appellant Chandrasekhara Pai under Section 74 of the Act from Rs. 1,00,000/- to Rs. 75,000/- (Rupees seventy five thousand only). We confirm the quantum of fine of Rs. 75,000/- imposed on the appellant Chandrasekhara Pai in lieu of confiscation of 864 gms. of gold ornaments under the impugned order. 15. We shall now take up the appeal arising under the provisions of the Customs Act, 1962. The question that falls for our consideration is whether confiscation of 728 gms. of gold coins with foreign markings and 1730 gms. of primary gold under the impugned order is legally sustainable in the light of the evidence available on record. 16. The learned counsel for the appellants produced before us certain literatures evidencing manufacture of coins in India with the emblem of King George in the Mint at Bombay. It is also common knowledge that a goldsmith with a dye would be able to manufacture the gold coins having the emblem of either King George or Queen Victoria, as the case may be. Therefore, on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court, the purity was in the range of 999.1 carat and 998.5 carat etc., and in the absence of foreign markings and any other conclusive evidence, the High Court held that high purity by itself would not determine the foreign nature of the gold. Respectfully adopting the ratio of the Delhi High Court, though not cited at the Bar before us, we find that in the instant case, the gold and coins under seizure have not been proved to be of foreign origin. We therefore, exonerate appellant Chandrasekhara Pai of the charge under Section 112 of the Customs Act, 1962 and consequently set aside the penalty of Rs. 1,00,000/- on him thereunder. 17. So far as the case of appellant Ratnakara Pai is concerned, we find that the silver ingots are proved to have been acquired and stored after silver bullion was specified under Section 11(1) of the Customs Act, 1962, under Government of India s Notification No. GSR 37 dated 3-1-1969. It is not disputed that Ernakulam being within 50 KM. of the coast of Kerala, is an area specified in the said notification. The explanation of the appellant Ratnakara Pai that he had obtained the silver ingots from out of his grand father s gift money and buried it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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