ORDER
K. Gopal Hegde, Member (J)
1. The Gola (Control) Officers of Headquarters (Preventive) Branch Pune on 1-11-77 visited the gold dealer’s licensed premises. They verified the physical stock with reference to the statutory records. They found excess stock of gold and gold ornaments weighing 933.500 gms. of old gold ornaments. They also found excess stock of new gold ornaments weighing 571.850 gms. and therefore they seized gold ornaments – equivalent to the weight of the excess noticed.
2. It appears assay Panchanama was carried out on 7-1-78. The seizure was on 1-11-77. During that Panchanama the total weight of seized gold found to be 1405 gms. instead of 1505.05 gms. said to be seized in the panchanama dated 1-11-77. It appears thereafter the entire stock of the gold was weighed and it was found that 105.05 gms. was excess.
3. During the course of investigation the statement of G.G. Parmar, Partner of the gold dealer was recorded. He inter alia stated that in his absence some gold ornaments must have been received for repairs and polishing hence there was an excess of 930.550 gms. of old gold ornaments. As regards excess of old gold ornaments weighing 571.850 gms. he explained that what was weighed during seizure was gold ornaments including stones, pearls, and plastic materials. On 7.11.77, Shri. G.G. Parmar addressed a letter explaining the discrepancies as to the new ornaments. He explained that in G.S. 11 registers only net weight was entered whereas while weighing the gold ornaments during seizure gross weight had been taken into consideration
4. The Deputy Collector of Central Excise & Customs who held the enquiry did not accept both the explanations of the appellant firm. He ordered confiscation of the seized gold but allowed redemption on payment of fine of Rs. 10,000/-. He did not issue any order in respect of 103.500 gms. of gold and gold ornaments which was the difference found between the seizure panchanama and assay panchanama. He, however, imposed a personal penalty of Rs. 5000/- on the partner Shri. G.G. Parmar.
5. Feeling aggrieved by the order, the firm as well as the partner filed an appeal before the Collector of Customs (Appeals), Bombay. The Collector (Appeals) after consideration of the material on record, allowed the appeal and set aside the fine and penalty.
6. The Govt. of India in exercise of their review power under Section 82(2) of the Gold (Control) Act, as it then stood, issued show cause notice to the Appellants as to why the order of the Collector (Appeals) should not be set aside and why the order-in-original should not be restored and any other order deemed fit be not passed? It is this proceeding which was pending before the Government of India that stood – statutorily transferred to the Tribunal for being heard as appeal.
7. Shri. Prabhu appearing for the Collector supported the order of the adjudicating authority and contended that the defence of the gold dealer that in G.S. 12 only net weight is entered cannot be believed. G.S. 12 provided for entering both gross and net weight. What was entered in G.S. 12 was gross weight and therefore the Deputy Collector was justified in rejecting the defence. Shri. Parmar further submitted that in respect of the old gold ornaments the defence was that they were given by customers to the servant during the absence of the dealer. Shri. Prabhu submitted that this defence has been rightly rejected firstly because if it had been received by the servant he would have informed the master if not on the date of seizure but atleast on the next day, namely on 2.11.77 but there is no evidence to show that the servant did not inform.
8. The Collector (Appeals) has considered the order of the adjudicating authority. He accepted both the defence of the gold dealer. For accepting the gold dealer’s defence in so far as the new ornaments are concerned, the Collector (Appeals) referred to the panchanama prepared at the time of seizure. According to the order of the Collector (Appeals) that every single entry in weighment panchanama show that all gold – ornaments had beads and pearls but difference of gross and net is shown only against one entry out of total 13 entries. For remaining 12 entries gross had been taken as net (conflicting). Therefore, the Collector (Appeals) came to the conclusion the very finding that there was excess is not based on any evidence. In any case, according to the Collector (Appeals), the panchanama prepared by the Department itself was sufficient to throw overboard the Department’s case. As regards the gold ornaments, the Collector (Appeals) accepted the defence since the persons who had given the old ornaments have admitted this. He had referred to the cross-examination of those witnesses. He had observed no worthwhile questions had been put to the witness by way of re-examination.
9. Apart from the above two reasons, the Collector (Appeals) had found that the seizure itself was bad-in-law. The Collector (Appeals) had observed in his order: “What has been seized is just equivalent to quantity and not unaccounted goods. At the time of examination of goods during . personal hearing, seized goods could not at all be tallied with the things weighed and checked. There is no re-examination to contradict this. It only proves further in slip shod way of making seizure panchanama”
10. In his order, the Deputy Collector had referred to the statement of the gold dealer. He had stated among other things that at the time of seizure he requested the officer to seize the old ornaments but then they have seized the new gold ornaments. The Dy. Collector did not advert his attention as to whether the seizure was in accordance with the law. What could be seized is the gold in respect of which had been contravention of the provisions of the Gold (Control) Act or Rules. All gold or any gold cannot be seized for the contravention of the provisions of the Gold (Control) Act or Rules. It is only those gold in respect of which there had been contravention, that becomes liable for seizure and confiscation. Since the seizure in the instant case was not the gold in respect of which there was contravention the order of confiscation passed by the Deputy Collector requires to be set aside and the Collector (Appeals) was justified in setting aside the same. Having regard to the above finding, it will not even be necessary to go into the question whether the discrepancy had taken place due to the difference between gross weight and net weight or because the old gold ornaments were given by the customers. However, the Collector (Appeals) had given cogent reasons for rejecting the Department’s case both in regard to discrepancy and the receipt of old gold ornaments. Having regard to the evidence on record, the said findings of the Collector (Appeals) are correct.
11. The only other aspect that remains for consideration is about the penalty. The Collector (Appeals) has set aside the panalty. The setting aside of the penalty flows from the order which he had passed. The two charges made against the appellant were not satisfactorily proved. When that being the case, penalty cannot stand. The Collector (Appeals) was therefore justified in setting aside the penalty also.
12. In the result, this appeal fails and the same is rejected.