ORDER
S. Kalyanam, Member (J)
1. Since the above appeals arise out of a common order and arc inter-connected and relate to a single transaction, they are taken up together and disposed of by a common order.
2. The appeals are directed against the Order of the Collector of Central Excise, Cochin, dated 4.4.1986 imposing a fine of Rs. 25,000/- on appellants M/s. Swaminathan & Sons in lieu of confiscation of gold coins and ornaments weighing 367 grms. under Section 73 besides a penalty of Rs. 15,000/- on appellant M/s. Swaminathan & Sons, Rs. 10,000 each on appellants Selvarajan and Ramanujam under Section 74 of the Gold (Control) Act, 1968, hereinafter referred to as the Act.
3. Appellant Nos. 4 to 13 [Appeal Nos. G/93/86 (MAS) to G/l02/86 (MAS)] are the claimants of the gold under seizure. On 20.9.1982 at about 3.00 P.M., the Supreintendent of Central Excise, Quilon and party visited M/s. Swaminathan & Sons, Main Road, Quilon and inspected the accounts of the shop. The authorities found that accounts were written only upto 18.9.1982. The authorities also found two paper packets in a secret cavity below the bottom of the show case adjacent to the cash counter, hidden by a wooden lid and the paper packets were found to contain gold ornaments and gold coins totally weighing 367 grms. Since the gold coins and ornaments were not accounted for in the statutory accounts, they were seized by the authorities under mahazar as per law. Appellants Selvarajan and Ramanujam gave a statement before the authorities on 20.9.1982 that the gold coins and ornaments were not accounted for. It is in these circumstances after further investigations, proceedings were instituted against the appellants which ultimately culminated in the present impugned order, now appealed against.
4. Shri Santhanagopalan, the learned counsel for the appellants submits that no licence has been granted under the Act in favour of any firm under the name and style M/s. Swaminathan & Sons and merely because a licence was issued in the joint names of appellants Selvarajan and Ramanujam and the said two persons are jointly doing business, that would not under law create a firm within the meaning of Section 2(h) of the Act. It was further urged that the main charge against the licensed dealer namely, appellants Selvarajan and Ramanujam is in respect of contravention of Section 55. The learned counsel contended that the gold coins and ornaments under seizure were indisputably entrusted with the licensed gold dealer only for the purpose of repair and not for the purpose of re-making and so the question of making any entry in Form GS 11 or GS 12 in terms of Rule 11 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968 would not arise. Dilating on this plea, the learned counsel further submitted that Section 55 enjoins on a dealer to maintain true and complete accounts of the gold owned, possessed, held or controlled by him and such a licensed dealer shall keep the same only in such form and in such manner prescribed under Section 55 of the Act. It was urged that under Rule 11, the accounts of gold referred to in Section 55 shall be kept by a licensed dealer in Form GS 11 or GS 12. In respect of the gold coins and ornaments under seizure, it was urged that there is no column at all either in GS 11 or GS 12 form for a licensed dealer to make any entry therein and so the charge of contravention of Section 55 is not legally sustainable in the facts and circumstances of this case.
5. The learned Counsel further contended that at the worst a contravention can be said to be made out in respect of Rule 12 which enjoins on the dealer an obligation to maintain the Register of Repairs containing particulars in respect of ornaments entrusted with the licensed dealer for the purpose of repair. Even in respect of violation of Rule 12, the learned counsel urged that inasmuch as this has not been specifically set out either in the show cause notice or considered in the impugned order appealed against, the licensed dealers, the appellants herein cannot be mulcted with penalty for such a contravention in the circumstances of this case. In any event, the learned Counsel contended that the accounts contemplated by Section 55 would only refer to accounts specified and prescribed under Rule 11 and would not relate to the Register of Repairs prescribed under Rule 12. It was, therefore, contended that even if the contravention is held, established or proved, the penal consequence that would be applicable would be only under Section 75 and not under Section 74 of the Act.
6. The learned Senior Departmental Representative Shri K.K. Bhatia, urged that even though there is no licensed partnership firm under the name and style of M/s. Swaminathan & Sons, inasmuchas the partners are the licensed dealers and have responded to the show cause notice issued against the firm M/s. Swaminathan & Sons, the firm must be construed to be in existence in the eye of law and the impugned order visiting the firm with the penalty is in order. The learned Senior Departmental Representative further urged that Section 55 is general in nature and comprehensive in its scope and would certainly take within its ambit all kinds of situations wherein gold or ornaments, old or new and received by a gold dealer either for the purpose of remaking or for the purpose of repairs. In elaborating on this, the learned Senior Departmental Representative contended that notwithstanding the fact that Rule 12, which refers to the register of repairs, does not specifically mention Section 55 “Register of Repairs” would come within the mischief and ambit of the accounts contemplated by Section 55 of the Act. The learned SDR urged that in the instant case, when admittedly the licensed gold dealers have not accounted for the gold coins and ornaments under seizure in any registers much less in the register of repairs, a contravention of Section 55 is clearly established. The learned SDR also faintly contended that the other appellants, namely appellants in Appeal Nos. 93 to 102, though claimed the gold coins and ornaments under seizure, their claims have not been accepted or conceded by the adjudicating authority under the impugned order and the adjudicating authority has merely exonerated the claimants of a charge of abetment and so the matter may be remitted back for re-consideration with a direction to give a specific finding with reference to the correctness or genuineness of the claims of the various claimants.
7. I have carefully considered the submissions of the parties herein. I also went through the licence copy issued in favour of the appellants Selvarajan and Ramanujam. It is not the case of the Department that Selvarajan and Ramanujam have created among themselves any association or formed any partnership firm within the meaning of Section 2(h) of the Act. Merely because a licence has been granted in the names of two individuals who joined together and did business in gold, that would not ipso facto convert such a transaction or the business into partnership firm within the meaning of Section 2(h) clause (ii) of the Act. I therefore, hold that the proceedings instituted on the basis that a partnership firm was in existence and the partnership firm was the holder of a gold dealer licence are not legally tenable as against the firm and in this view of the matter, I set aside the penalty imposed on the firm. The adjudicating authority, as rightly contended by the learned counsel for the appellants has accepted the claim of the various claimants to the ornaments under seizure and therefore, the order of confiscation of the ornaments and release of the same on payment of fine in lieu of confiscation is not legally correct. I agree with the submission of the learned Counsel for the appellants that when it has been established to the satisfaction of the officer adjudging the confiscation of the ornaments under seizure that they belong to various claimants, the ornaments should not have been ordered to be confiscated in view of the proviso to Section 71 of the Act. The plea of the learned counsel for the appellants that contravention of Section 55 of the Act would not come into operation in the facts and circumstances of this case and that under Section 55, a licensed dealer will have to maintain a true and complete account of the gold under his possession or custody only in terms of Rule 11 and in conformity with GS 11 and GS 12 forms, referred to supra, is not well founded. In my opinion, GS 11 and GS 12 forms prescribed by Rule 11 for maintenance of true accounts as enjoined on a licensed dealer under Section 55 would govern a different situation. GS 11 will come into play in respect of maintenance of accounts of gold and old ornaments or articles for melting and GS 12 will come into play in respect of ornaments or articles for sale. Rule 12 deals with the Register of Repairs and in terms of Rule 12, every licensed dealer who receives any articles or ornaments for effecting any repairs thereto shall maintain accounts in a register containing particulars such as date of receipt of the article or ornaments, name and address of the persons from whom received or to whom returned, number and description of the articles or ornaments etc. When Section 55 enjoins on a dealer to maintain a true and complete account of the gold owned, possessed, held, controlled or otherwise acquired or accepted or received, the old ornaments received by a licensed dealer, as in the instant case, for purpose of repairs, would certainly be covered by the scope of Section 55 attracting the maintenance of Register of Repairs in terms of Rule 12. The plea of the learned Counsel that Rule 12 has to be read in isolation of Section 55 does not appeal to me. The learned Counsel urged that inasmuch as Rule 11 would particularly refer to Section 55, the omission of any such reference to Section 55 in Rule 12 is conspicuous and significant and would only mean that Rule 12 is not contemplated by Section 55 at all. I am afraid I cannot countenance this plea. The wording of Section 55 is very wide and comprehensive and would embrace and cover all situations by enjoining on a licensed dealer, a statutory obligation to maintain a true and complete account of all the gold owned, possessed, controlled or acquired by him. In the instant case, when admittedly the licensed dealers possessed and held gold ornaments for purposes of repair, the particulars of those ornaments should have been duly accounted for and it is only in this context, a register styled as Register of Repairs under Rule 12, containing relevant particulars is contemplated and advisedly, if I may say so, provided for. Therefore, the mention or non-mention of Section 55 in Rule 12 would not be the determinative factor with reference to the applicability or non-applicability of the statutory obligation cast on a licensed dealer under Section 55 of the Act. One of the well accepted canons of interpretation of a Statute or Rule is that the interpretation that would subserve the purpose for which the rule has been incorporated and the interpretation that would provide for the mischief to be averted will have to be adopted. If for the purpose of argument, the interpretation put on Rule 12 by the learned Counsel were to be accepted and Rule 12 were to be construed in isolation of Section 55, it would lead to an anamolous situation of a licensed gold dealer keeping ornaments in the guise of repair, totally unaccounted, with only an eventual liability if at all, to pay a penalty of Rs. 1000/- in terms of residuary Section 75 of the Act. I am afraid, the scope of the Gold (Control) Act cannot be construed in such a narrow fashion so as to put it in a straight jacket leading to an anamolus situation as the one illustrated above, paving the way for infraction of the provisions of the Act. I therefore, hold that the appellant has been clearly proved to have contravened Section 55 of the Act read with Rule 12 of the Gold (Control) Act, 1968. The plea of the learned SDR that the adjudicating authority has not accepted the claims of the various claimants but has merely chosen to exonerate them of a charge of abetment is not acceptable in the face of the very impugned order itself. In the instant case, immediately on seizure, the licensed dealers have come forward with the version that the ornaments under seizure belonged to the various claimants, (the various appellants herein) giving their names and relevant- particulars and the same has also been verified and found to be true. The show cause notice issued to the various claimants would also traverse only these averments and in the impugned order also, the case of the claimants has been construed only in the context of their claim of ownership besides the charge of abetment. The adjudicating authority has nowhere held nor even adverted to indirectly in any way that the claim of the various claimants is not acceptable. Therefore, in summing up, I hold not only on the basis of admission of the appellants themselves before the adjudicating authority as well as in the Grounds of Appeal before me but also on the other facts and circumstances of this case, the charge of contravention of Section 55 has been clearly made out. I therefore, uphold the finding of adjudicating authority in respect of the charge of contravention under Section 55 as against licensed gold dealers, namely, Selvarajan and Ramanujam, the appellants herein. So far as the other appellants who are merely claimants are concerned, I do not think that any specific order is called for since the claims of the various claimants has been accepted by the adjudicating authority under the impugned order.
8. The learned Counsel at this stage pleaded that the licensed gold dealers, the appellants Selvarajan and Ramanujam are in the gold business for the past about 25 years and have never been found guilty of any contravention at any time in the past. It was further urged that even in respect of the ornaments under seizure, the said appellants, immediately on seizure, came forward with the version that they belonged to various claimants, giving the particulars of their names and the quantity of each of the claimants. The further fact remains that the purity of the ornaments is only 18 to 20 ct. The licensed gold dealer’s have already offered an explanation immediately on seizure that the entries could not be made in respect of the gold ornaments under seizure by reason of the fact that the concerned clerk was on leave for couple of days and this fact has not been disputed or controverted in any way in the impugned order. I also further find that even though the ornaments under seizure have not been specifically accounted for in the Repair Register, the licensed dealers have issued necessary vouchers to the parties for receipt of the same and this fact has been verified by the authorities during investigations. Taking the cumulative effect of all the aforesaid circumstances, I am inclined to hold in the facts and circumstances of this case, that the breach committed by the appellants in not making entry of the ornaments in the repair register is venial in nature and technical in character warranting a sympathetic consideration. The learned Counsel for the appellants at* this stage made a fervent plea that the venial breach of the appellant in the facts and circumstances of this case should not be construed to be a penalty dis-entitling them in respect of their renewal of a licence and in the circumstances of this case, I hold that this contravention which is of a technical nature is not a dis-qualification.
9. In this view of the matter, I modify the impugned order appealed against in respect of the quantum of penalty and reduce the penalty imposed on the appellants Selvarajan and Ramanujam from Rs. 10,000/- to Rs. 2500/- each.
10. In the result, Gold (Control) Appeal Nos. 90/86 (MAS) is allowed and 91 and 92 of 1986 are dismissed with modifications indicated above. Since the case of the appellants in Appeal Nos. 93 to 102/86 has already been accepted by the adjudicating authority under the impugned order, the appeals are dismissed as mis-conceived in law.
11. Except for the above modifications all the appeals except A.No. 90/86 are otherwise dismissed.