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TMI Blog1978 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment. They were immediately opened and these parcels were found to contain bangles, kadas, kangan, gokuru and rings, in all 66 items all of gold weighing 4577.450 gms. The said officials held a panchanama, put the articles in a box and sealed the same. That panchanama was signed by Sarvasri Vinayachand Jain, Mokirey Narayan and Chintalacharuvu Brahmaiah and the officials of the Customs Department. In the panchanama it was stated that there was suspicion as to their source and hence they were sealed and left with the petitioner firm for safe custody till the completion of the investigation. In the panchanama were listed 66 items. On 13-12-1966 the said parcels were opened and inspected in the presence of panchas and after drawing up a mahazar were seized by the Customs and Central Excise Department. In the mahazar that was drawn up it was stated as follows : "As the officers felt that the above said gold ornaments were not finished ornaments and also as they had reason to believe that the said gold ornaments were made out of foreign gold the said gold ornaments described above 66 in number weighing 4577-450 gms. were seized to the Government............ The seizure was effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended rendering the gold liable for confiscation to the Central Government under Sec. 111(d) of the Customs Act, 1962 and rendering them personally liable for imposition of penalty. Upon the representation of the petitioners that the Collector, Customs and Central Excise, Hyderabad had already formed an opinion and that the enquiry should be done by another officer, the case was transferred to the Collector, Customs and Central Excise, Bangalore who was constituted as Collector, Customs and Central Excise, Hyderabad for the purpose of these cases. It may be noticed at this stage that the Gold (Control) Rules framed under the Defence of India Rules were repealed by the Gold (Control) Ordinance No. 6/68 which came into force on 29-6-1978. The Gold (Control) Ordinance itself was repealed by the Gold (Control) Act 45 of 1968 with effect from 1-9-1968. The Collector, Customs and Central Excise, Hyderabad (of Bangalore) now for the first time in supersession of the two earlier notices referred to above issued a notice No. VIII/10/19/68/Cus. (O.R. 16/68) Bangalore, dated 24-12-1968 calling upon the petitioners and the aforesaid four firms who had purchased these "gold ornaments" and sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules. The petitioners were called upon to show cause why penalty should not be imposed on them under Rule 126-L(16) of the Defence of India (4th Amendment) Rules, 1966 and why for the contravention of the above Rules the said 16 items should not be confiscated under Rule 126-M(1) of the Defence of India (4th Amendment) Rules, 1966. The petitioners were called upon to submit their written statement and produce evidence in support of their defence, if any, within fifteen days. In their defence the petitioners pleaded that the issue of show cause notice under Gold (Control) Rules, 1962 was misconceived as no seizure had taken place under these Rules. The proceedings so far conducted were purely under the Customs Act, 1962 and the essential requirements of Rule 126-M viz., "reasonable belief", not being existent, no further action could be taken under the Gold Control Rules. They also pleaded that what was seized were ornaments and not gold. They requested for personal hearing and cross-examination of the officer who had effected the seizure. The four Bombay firms also submitted their written explanation and appeared through their Counsel. A personal hearing was also granted. At the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... censed dealers in Secunderabad under proper bills. These transactions were entered in the statutory registers maintained by the petitioners. On 21-11-1966 the Central Excise Officers visited the premises of the petitioner-firm at 7.30 P.M. and enquired about the balance of stock of the jewels received in the said three parcels. The petitioner-firm produced the said jewellery consisting of one bungdi weighing 40.350 gms and four bangles popularly known as 'Almash Kadiayalu' and two bangles with 'Nakash' and two rings popularly known as 'Kamraki' rings in all weighing 688.1 gms as also the statutory registers showing the entries relating to these items. The customs officials put the said gold ornaments in a box and sealed them. On 13-12-1966 these gold ornaments were seized under two mahazars prepared and signed in the presence of some of the dealers in jewellery who were brought by the customs officials themselves. A show cause notice was issued by the Asstt. Collector, Central Excise, Hyderabad II Division on 10-5-1968 which was served on the petitioners on 6-6-1968 proposing to confiscate the jewellery .seized under Rule 126 H for the alleged contravention of Rules 126-H (2)(b) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cials insist that they constitute primary gold. The four panchas who were called by the officials at the time of seizure and who witnessed the proceedings and examined the fineness of the articles were of the opinion that "they were fully finished ornaments and that they are old ornaments". The initial suspicion was that these articles were made of smuggled gold. The fineness of the gold was tested by the Mint Master who opined that on assay they were found to be 987.4 fineness. Simultaneously show cause notices were issued, one for the contravention of the provisions of the Customs Act and the other for the contravention of the Gold Control Rules. The proceedings under the Customs Act were dropped after enquiry upon a finding that there was no evidence that the gold was smuggled or that the articles under seizure were manufactured from smuggled gold. The proceedings initiated for the alleged contravention of Rules 126-H (2) (b) of the Defence of India (4th Amendment) Rules, 1966 [which will for the sake of brevity hereinafter be referred to as Gold (Control) Rules] were pursued on the basis of the opinion recorded with regard to the articles by the panchas as well as the Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 2(8) shows that nothing made of gold which resembles an ornament will be deemed to be an ornament unless the thing (having regard to its purity, size, weight, description or workmanship) is such as is commonly used as ornament in any state. Clearly it is a question of proof as to whether the thing passes as an article or as ornament in a particular state and the difference is the treatment of these two substances in certain provisions of the Act does not fall to be considered." 9. It is these tests that have been applied by the Collector in coming to the conclusion that the 47 articles seized were primary gold and not ornaments. The mere fact that similar articles have been released in other cases is no ground for holding that the articles now in question are also ornaments and not primary gold. For one thing it is not a single factor like purity, size, rate, description or workmanship but the cumulative effect of all these factors objectively considered by the independent authority that result is arriving at a finding as to whether a particular article is a primary gold or an ornament. This finding of the Collector was closely examined by the revisional authority. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a finding of fact. That finding is arrived at after applying the tests as to purity, size, weight description and workmanship. In arriving at that finding all the contentions raised by the petitioner were taken into account by the said authorities. They took note of the fact that the panchas have found that they were old ornaments. They also took note of the fact that the gold was of 99 touch fineness. They also considered the contention that the articles which were in unfinished form were released in other cases. They also duly took into account the contention that gold ornaments were accepted by the Reserve Bank and even manufacturing charges were paid. In the light of the entire record and the contention of the parties the Collector, Customs, the appellate authority as well as the revisional authority examined the articles in question and arrived at the finding that they are not ornaments but primary gold. Although it is contended that the purity of the gold is not a factor to be taken into account in deciding an ornament or primary gold, that factor is only relevant for determining whether it is smuggled gold or indigenous gold, I do not think such a contention can be uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any of them and includes parts, pendants or broken pieces of ornaments." 'Primary gold' is defined under Rule 126-A (f) of the Gold Control Rules as follows : "'Primary gold' means gold in any unfinished form and includes all ingots, bars, blocks, slabs, billets, shots pelletes, rods, and wires." It would be seen that before any article made of gold could be passed off as ornament, it must be in a finished form and that article must be for personal adornment or for the adornment of an idol, deity or other object of religious worship. These factors after having been duly considered by all the authorities, the Authorities having jurisdiction to arrive at finding of fact rejected the petitioner's contention. They have found that these articles are in unfinished form and that they are not polished. Even if as contended by the petitioner some people prefer to wear unpolished ornaments, still such ornaments, if not in a finished form, cannot be deemed to be ornaments within the meaning of the Act. All the three authorities have unanimously held that the articles in question are not in a finished form. They have also notified that not only the edges are not joined but that they are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of six months from the date of seizure is illegal and without jurisdiction. The seizure of the articles in question in this case was effected on 13-12-1966 at a time when the Gold (Control) Rules framed under the Defence of India Rules were in force. The Gold (Control) Rules were repealed by the Gold (Control) Ordinance 6/68 on 29-6-1968. The Gold (Control) Ordinance itself was repealed by the Gold (Control) Act 45 of 1968 on 1-9-1968. Notice to show cause why the petitioners should not be held liable for the contravention of the provisions of the Gold (Control) Rules was issued for the first time on 24-12-1968. It was for the first time in this notice alleged that the petitioners have contravened Rule 126-H (2) (b) of the Defence of India (4th Amendment) Rules, 1966 and was called upon to show cause why penalty under Rule 126-L(16) of the said Rules should not be imposed and why the 66 items of gold should not be confiscated under Rule 126-M (1) of the said Rules. It is contended by Mr. D.V. Sastry, the learned Counsel for the petitioners that having regard to Sec. 79 of the Gold Control Act, no order of adjudication of confiscation or penalty could be made unless a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The extended period of four months expired on 19th January, 1964 and a further extension of two months was applied for on 3rd Jan., 1964. But the Collector passed his order granting further extention only on 20th February, 1964 i.e., about a month after the first extending period had expired. The Court in this context observed that the power conferred under the proviso is not to be exercised without an opportunity of being heard is given to the person from whom the goods are seized and one of the reasons for so holding was that : "There was a civil right involved ........ But in the present case also, the right to restoration of the seized goods is a civil right which accrues on the expiry of the initial six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure. Since the Collector has on facts to decide on the existence of a sufficient cause, although his decision as to sufficiency of materials before him may be within his exclusive jurisdiction, it is nonetheless difficult to comprehend how he can come to his determination unless, as the Division Bench of the High Court has said, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made more than six months prior to the commencement of the Gold (Control) Ordinance no action could be taken. According to him if no action was initiated under Gold (Control) Rules, then more than six months after the seizure, no action could be initiated either under the Gold (Control) Ordinance or the Gold (Control) Act which substituted the Ordinance. Section 117 of the Gold (Control) Ordinance which repealed the provisions of Part XII-A of the Defence of India Rules, 1962 which contained the Gold (Control) Rules is in the following words : "(1) As from the commencement of this Ordinance, the provisions of Part XII-A of the Defence of India Rules, 1962 shall stand repealed and upon such repeal section 6 of the General Clauses Act, 1897, shall apply as if the said Part were a Central Act. (2) Notwithstanding the repeal made by sub-section (1) but without prejudice to the application of Section 6 of the General Clauses Act, 1897 any notification, order, direction, appointment or declaration made or any notice, licence or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instituted and any penalty or forfeiture could be enforced as if the Gold (Control) Rules were still in force. The application of Section 6 of the General Clauses Act creates a fiction so as to continue the effect of the repealed Ordinance, to enable the liability incurred, to be enforced by a legal proceeding notwithstanding its express repeal under Section 117(1) of the Act. The Gold Control Act which repeals the Ordinance contains the following repeal and saving provision in Section 116 :- "The Gold (Control) Act, 1965 (18 of 1965), and the Gold (Control) Ordinance 1968 (6 of 1968), are hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken, including any notification, order or appointment made, direction given, notice, licence or certificate issued, permission, authorisation or exemption granted, confiscation adjudged, penalty or fine imposed or forfeiture ordered whether under the Gold (Control) Ordinance, 1968 (6 of 1968) or part XII-A of the Defence of India Rules 1962, shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done, taken, made, given, issued, granted, adjudged, imposed or ordered, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the repealed law must be held to continue. In this context the Supreme Court laid down the principle that for ascertaining whether there is a contrary intention, one has to look to the provisions of the Gold (Control) Act, 1968. In order to see whether the rights and liabilities under the repealed law have been put an and to by the new enactment, the proper approach is not to acquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has extinguished or taken away these rights and liabilities. The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither <|>material <|>nor <|>decisive <|>of <|>the question. It therefore held that the proceedings under the Gold (Control) Act could properly be taken and continued notwithstanding the repeal of the Gold (Control) Rules. There is no provision under the Gold (Control) Act which expressly excludes the application of Sec. 6 of the General Clauses Act. There is also no provision under the Gold (Control) Act which expressly prohibits initiation of action for the liabilities incurred under the Gold (Control) Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new statute and the mere absence of a saving clause is by itself not material." 19. Mr. D.V. Sastry, the learned Counsel for the petitioners however, relied upon a decision of the Jammu and Kashmir High Court in Romesh Chander v. Superintendent, Customs (6) : 1975 Crl. L.J. 739 : That Court held that "there is nothing in section 116 (2) of the Gold (Control) Act which can be said to have saved the liabilities incurred under the Defence of India Rules, 1962, which were repealed by the Gold (Control) Rules, 1962, which were repealed by the Gold (Control) Ordinance of 1968". The Court held that no action could be taken under the Gold (Control) Act, for, that Act was not in force when the alleged contravention was committed by the petitioners and it further held that action under the Gold (Control) Rules could not be taken because Sec. 6 of the General Clauses Act could not be invoked as the entire provisions of that section have not been incorporated under Sec. 116 (2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Gold (Control) Act, 1968, read with Section 6 of the General Clauses Act, 1897, the action taken under the Defence of India Rules, 1962, must be deemed to be continuing as none of the provisions of the Gold (Control) Act, 1968, are inconsistent with any of the provisions of the said Rules and the Collector had jurisdiction to issue the impugned notice." It however held that "the order of confiscation not having been within six months of the seizure of the gold and gold ornaments or any extended time was bad and must be set aside." It would be seen that the question whether proceedings under the Gold (Control) Rules themselves could have been taken and confiscation ordered and penalty imposed was not considered and the action taken under the Gold (Control) Act alone was held to be bad. The Court also held that the Rule absolute issued therein does not prevent the authorities from taking any action, if under the provisions of any other law these books are required. For these reasons I am unable to agree with the contention of the learned Counsel for the petitioners that the liability, if any, incurred by the petitioners for the contravention of the Gold (Control) Rules, no ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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