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TMI Blog1987 (3) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing excess quantity of unaccounted gold: (1) New gold ornaments 1849.700 gms. Rs.92,000/- (2) Primary gold in the form of lagdi. 207.100 gms. Rs.9,500/- (3) Gold ornaments of Cts. purity weighing said to have been received for repairs. 22 619.250 gms. Rs. 30,900/- (4) One half gold sovereign of 22 Cts. weighing 4.000 gms. Rs. 175/- (5) Gold ornaments 22 Cts. 103.700 gms. Rs.5,000/- The officers seized the above gold and also eight documents containing transactions in gold on the reasonable belief that there had been contravention of the provision of the Gold Control Act. 3. On further investigation, it was found that two of the partners, viz., Shri Lalitkumar J. Patni and Smt. Kasturben Patni had failed to declare the personal jewellery and further the partner by name Shri Maganlal Vallabhdas Patni had not filed further declaration after disposal of some of the geld .wins of his personal jewellery. The officers, therefore, seized 629.000 gms valued at Rs. 26,000/- produced by Smt. Kasturben Vallabhdas Patni on the reasonable belief that there was contravention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided in the said Sections and Rules. (b) Sections 55(1) (2) and (3) of the said Act read with Rules 11 and 12 of the said Rules inasmuch as they failed to maintain a true and complete account and also failed to make entries in respect of gold and gold ornaments as mentioned in the annexure. (c) Section 16(7) of the said Act, inasmuch as S/Shri Maganlal V. Patni and Lalitkumar J.Patni and Smt. Kasturben V. Patni partners of the said firm failed to file his/her declaration/further declaration in relation to gold ornaments owned possessed held or controlled or parted with by him/her in his/her capacity other than a licensed dealer. Shri Jain further submitted that it was the firm M/s. Patni Jewellers that were called upon to show cause as to why penalty should not be imposed on them under Section 74 of the Gold (Control) Act and why the gold and gold ornaments under seizure should not be confiscated under Section 71 of the said Act. No show cause notice was issued to any of the partners alleging contravention of any of the provisions of the Act or the rules or calling all or any of the partners to show cause as to why penalty should not be imposed on them or why confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Jain submitted that the panchnama also does not disclose from what all places or from whose possession 1497.150 gms. were seized. (7) What had been seized is not the offended gold. Unless and until it is established that there had been contravention of the Act or the Rule in respect of the seized gold no order of confiscation can be made. Elaborating his arguments, Shri Jain contended that no efforts were made to co-relate the excess gold with the registers. The seizure was effected because the physical quantity exceeded the quantity found in the statutory accounts. And as such the seizure is illegal and the order of confiscation based on such a seizure is also illegal. (8) The Collector s finding that there had been a contravention of Sections 31 and 36 is erroneous. There is no evidence that the seized gold were acquired in contravention of Section 31. The burden of establishing that there had been contravention of Section 31 is on the Department and the Deptt. had not discharged that burden. Section 36 only provides for procedure and by itself it does not make an act an offence. Therefore, the invoking of that section simplicitor has no relevance. (9) The registers pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dequate to maintain true and proper account is also not correct. Shri Pattekar further submitted that, in law, the partners are required to make declaration not only with regard to the stock in trade but also with regard to the personal properties. And, therefore, the order of the Collector was not only just but also correct in law. Shri Pattekar further submitted that cogent reasons had been given by the Collector and the Gold Control Administrator in support of their orders and he would adopt those reasons. Finally, Shri Pattekar submitted that no leniency is called for in the matter of fine or penalty. The show cause notice was issued not only to the firm but also to the partners. 9. We have carefully considered the submissions made on both the sides. The points that arise for consideration are : (1) Whether the Collector and the Gold Control Administrator (GCA) committed an error of law in the matter of imposition of penalties on the partners of the partnership firm who was the licensed dealer. (2) Whether the Collector and the GCA committed an error of law in the matter of confiscation of 619.250 gms. of gold ornaments received for repairs. (3) Whether the Collector a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled upon to show cause in respect of the charges. The Advocate s contention therefore is not tenable. The Gold Control Administrator however justified the penalty on the partners by invoking Section 91 of the Act. 11. We have carefully looked into the copy of the show cause notice issued in this case. From the contents of the show cause notice, we are satisfied that the show cause notice, was issued to the licensed dealer, namely, M/s. Patni Jewellers. The contravention of the various provisions of the Gold (Control) Act and the Rules are alleged to have been made by the firm M/s. Patni Jewellers. It is not only useful but makes the matter clear if you refer to certain portions of the show cause notice. It starts with the words: WHEREAS, it appears M/s. Patni Jewellers of Bombay-2, holding Gold Dealer s licence No. 9/Gold/68, conducting their business at 314 Sk. Memon Street, Bombay-2, have contravened the provisions of (in the subsequent paragraphs the Sections contravened are set out), and thereafter the show cause notice reads: Now therefore, the said M/s. Patni Jewellers are hereby required to show cause to the Collector of Customs (Preventive) Bombay....... as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently contended that the order of confiscation of 619.250 gms. of gold ornaments which were admittedly received for repairs is wholly illegal since the owners of the ornaments were not issued with the show cause notice, as required under Section 79 and since there was no evidence that the owners have had the knowledge or connived with the licensee in the contravention of the provisions of the Gold Control Act. In this connection, Shri Jain relied on the provisions of Section 71 which prohibited confiscation of gold ornaments belonging to the persons other than the licensed dealer. 14. In his other, the Collector had not separately dealt with the seizure of the gold ornaments received by the licensee for repairs. The Collector held that the licenced dealer had contravened the provisions of Sections 31,32 and 36 read with Rule 13 of the Rules. The G.C.A. also had not separately dealt with the liability of the gold received for repairs for confiscation. 15. From the finding of the Collector, it is clear that the order of confiscation was made for the reason that the licensed dealer had contravened the provisions of Sections 31,36 and Rule 13 of the Rules and not because the owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledge of the contravention of the Rules by the licensed dealer or that they connived in the contravention of the Act or Rules by the licensed dealer. In the circumstances, Shri Jain is right in contending that the order of confiscation passed by the Collector and confirmed by the Gold Control Administrator of the gold ornaments admittedly received for repairs is bad in law. Since the Collector as well as the G.C.A. committed a grave error in the matter of confiscation of the gold ornaments admittedly received for repairs, we set aside that part of the order of the Collector by which he ordered confiscation of the gold ornaments weighing 619.250 gms. which were admittedly received for repairs. 18. Point No. 3: It was the contention of Shri Jain that the husband of Smt. Kasturben was originally the partner of the firm M/s. Patni Jewellers. After his death, his wife was inducted into the partnership mainly with a view to safeguard her interest and she did not take part in the business of the firm and she was only a sleeping partner. There was no obligation on her to make any declaration. On the other hand, the gold ornaments in respect of which the alleged failure on her part to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement was recorded during Emergency. But then just because the statement was recorded during Emergency there is no presumption that it was not voluntary. The contention of Shri Jain that the statement of Shri Jayantilal was recorded after he was arrested is firstly not borne out from the records. And secondly, even if it is so there is nothing on record to show that it was obtained by promise threat or inducement. In short, it was not a voluntary statement. 21. Shri Jayantilal himself did not allege any threat or inducement or promise. The statement was also not retracted till a reply was sent to the show cause notice. The statement of Jayantilal in material particulars, finds corroboration by the statement of his brother Maganlal. Further, if really the gold ornaments seized from the residence were the family ornaments and in respect of which Vallabhdas Patni had earlier made declaration the copies of the declaration would have been with the appellants or any of them or even they could have obtained a copy and in that event, easy verification was possible. The very fact that the appellants or any one of them have not thought fit to produce a copy of the declaration filed by Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eighing 207.100 gms. to confiscation. 25. The provisions regarding possession of primary gold by a licensed dealer is found in Section 32 of the Act. As per the provisions of that Section, a licensed dealer can possess or keep in custody of primary gold in the form of standard gold bars. If the licensed dealer does not employ any artisan he can also be in possession or custody of primary gold weighing 400 gms. which is obtained in the process of, in connection with, the making, manufacturing preparing or repairing of one or more articles or ornaments. From the description of the primary gold, it is seen that it is in the form of lagdies, wire and strips. But then, there is no precise evidence as to the weight of lagdies or wires, or strips separately. In his statement, Shri Jayantilal stated that primary gold weighing 207.100 gms. recovered from the premises were obtained by me.l.t.ing old gold ornaments purchased from customers. No vouchers in respect of old gold ornaments purchased were prepared. Having regard to the said statement is difficult to accept Shri Jain s contention that there was no contravention of Section 32.400 gms. of primary gold which a licensed dealer could p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we reject the present contention of Shri Jain. 28. Point No. 7: Shri Jain contended that there is nothing on record to show that there had been contravention of provisions of Gold (Control) Act or Rules in respect of the seized gold. All that had been done by the Gold Control Officers was to total up of the quantity of gold ornaments in the two statutory registers and total up of the quantity found in the premises and the excess gold ornaments were seized. But then under law, only offended gold can be seized and ordered to be confiscated. Shri Pattekar on the other hand, had contended that there was clear evidence in the form of admission by a partner that seized gold are the offended gold. We have perused the statement of Shri Jayantilal. He has stated that he had produced the gold ornaments which were not accounted in the registers. Having regard to the said statement, the contention of Shri Jain must necessarily fail. We therefore reject this contention. 29. Point No. 8 : It was the contention of Shri Jain that the register prescribed, namely G.S. 11 and 12 are inadequate to keep complete accounts of the gold owned, possessed, held or controlled by a dealer. The said registe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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