ORDER
M. Gouri Shankar Murthy, Member (J)
1. These are three appeals against the order of adjudication by the Collector of Central Excise, New Delhi, by which he ordered and directed :
(a) the release of 2217.550 gms of jewellery duly accounted for by the appellant through the statutory records;
(b) levy of a penalty in a sum of Rs. 7,500/- on each of the two appellants in Appeal 3/84 and 4/84 (partners of the appellant herein);
(c) the confiscation of –
(i) 874.50 gms of ornaments and 67 gms of Rawa and Wire under S.71 of the Gold (Control) Act, 1968 – subject to redemption on payment of Rs. 45,000/- within two months of the order; and
(ii) the Ambassador Car (No.DHD-3283) under S.74 of the Act, subject to redemption on payment of a fine of Rs. 7,500/-.
2. The facts, in so far as they are material, in these appeals are as follows –
(a) the appellant in Appeal No. 2/84 is a partnership concern of which the appellants in Appeal Nos. 3 & 4/84 are the partners;
(b) their business largely consists in the purchase of old gold ornaments in Delhi and their conversion into standard gold bars in the refineries at Bombay;
(c) a notice alleging, inter alia, that –
(i) intelligence was received on 11.1.82 that the appellant (in Appeal No. 2/84) was actually engaged in the conversion of illicit gold into crude ornaments initially and their conversion in Bombay refineries into standard gold bars. Supporting entries ostensibly for the purchase of old gold ornaments together with vouchers were made out in the names of fictitious persons;
(ii) accordingly, when the appellant in Appeal No. 4/84 (hereinafter referred to as Kamlesh) drove to the air port in the Ambassador Car No. DHD-3283, on 22.1.82 he was stopped and searched in the presence of two witnesses just as he was about to board the air craft;
(iii) on such search, crude gold ornaments weighing 3092.400 gms. were recovered from his box and a sale voucher No. 188 and a slip bearing certain hand written entries, amongst other things, were recovered from his person. All the articles were seized under the reasonable belief that the gold, in question, was smuggled into India and was liable to be confiscated under the provisions of the Customs Act (1962) and the Gold (Control) Act, 1968;
(iv) in a statement made that very day, Kamlesh, while denying that the gold was smuggled, stated that about 1000 gms. were in the form of chains, bangles and broken ornaments purchased as such and about 2000 gms. remaining were bangles in crude form and pendents with persian marks which were got manufactured out of gold purchased in the form of vitur from various customers (names undisclosed) on payment of cash through a goldsmith in Kucha Mahajani, after the admixture of a small quantity of copper. He also offered to separate the two quantities;
(v) at night on the same day, at about 3.00 A.M., his father and brother (the Appellant in Appeal No. 3/84 – hereinafter, Bishen) were apprehended when they came to their shop in Chandni Chowk and their car and -shop searched in the presence of witnesses. A set of dies with persian inscriptions, one ring and some account books were seized apart from 67 gms. of primary gold in the shape of “Rawa”, “Wires” recovered from a suit case in the car;
(vi) the seized wires weighing 67 gms. were not duly accounted in any of the books maintained by the appellant. Nor could Bishen and his father produce any evidence of their lawful acquisition and possession. They were accordingly seized under S. 110 of the Customs Act, 1962 and S. 66 of the Gold (Control) Act, in the reasonable belief that they were smuggled and hence, liable for confiscation. Bishen did not turn up at the Customs House the next day, although he offered to do so. He came, however, on 25.1.82 when his statement was recorded;
(vii) Kamlesh, as admitted in his further statement recorded on 23.1.82, segregated 552.300 gms only (of the quantity seized at the air port) as the alleged genuine ornaments. He further admitted in the statement that the inscriptions on the pendents were made by him, with a die which probably, was the one recovered from their shop. He also added that the balance of 2544.700 gms of the gold (in the form of ornaments) seized at the air port was made by him from vitur purchased from various persons;
(viii) the goldsmith named in the first statement of Kamlesh confirmed that he was visiting the shop with vitur and got the same converted into crude ornaments as per Kamalesh’s choice. He was, however, not making the requisite entries in his book as directed by Kamalesh. During the previous fortnight, Kamalesh got converted 2 – 2-1/2 Kgs of vitur gold into crude ornaments. While corroborating this, Kamalesh stated that the vitur had to be converted into ornaments since the Bombay Mint accepted only ornaments for conversion into standard gold bars;
(ix) in his statement recorded on 25.1.82, Bishen admitted the ownership and recovery of 67 gms of primary gold, one ring, dies and accounts from the car and shop on 23.1.82. He further stated that on hearing of the seizure of the gold at the air port, he drove to the shop carrying with him 67 gms. of primary gold (Rawa), etc. seized;
(x) since the car was used for transport of gold seized on both the occasions, it was liable to confiscation and accordingly, also seized under S.66 of the Gold (Control) Act, 1968. Various goldsmiths’ tools were recovered from the car in the presence of witnesses;
(xi) scrutiny of the entries in seized account books for the period between 8.1.82 and 22.1.82 and enquiries made of the 37 persons whose names figured therein as sellers of gold to the appellant revealed that while 12 persons admitted having sold gold aggregating to 2217.550 gms. to the appellant, 22 persons accounting for sale of 884.700 gms. were non-existent and 3 denied having sold any gold whatsoever, much less 96.200 gms. as per the account books;
(xii) Kamalesh and Bishen failed to attend a proposed critical examination of the seized gold on diverse dates for frivolous reasons;
(xiii) it appeared, therefore, that the entries seized gold was smuggled into India in contravention of the prohibitions upon import thereof and is hence liable for confiscation under S. 111 of the Customs Act, 1962, as well as for contravention of Sections 31 & 32 read with clauses (r) and (p) of Section 2 under S.71 of the Gold (Control) Act, 1968, all the three appellants are concerned in acquiring purchasing etc. of the gold and hence liable to penalties under S. 112 of the Customs Act, 1962, as well as S.74 of the Gold (Control) Act, 1968, and the car is liable to confiscation in terms of S. 115 of the Customs Act, 1962 and S.72 of the Gold (Control) Act, 1968; and requiring the appellants to show cause why the gold and the car should not be so confiscated and the penalties levied, was issued to the appellants on 13.7.82;
(d) in a reply dated 9.2.83, while denying all the allegations in the aforesaid notice, it was specifically averred that –
(i) the seized gold ornaments were all gold ornaments within the definition in S.2(p) of the Gold (Control) Act, 1968;
(ii) the Mint at Bombay, supervised as it is by Gold control officers, do not accept any gold for conversion unless the acquisition thereof is duly supported by vouchers which are examined prior to the grant of any permission for conversion. It was only in accordance with law and procedure that the appellants were purchasing old gold ornaments and getting them converted.
(iii) the seized records fully accounted for the gold seized. Of the 22 customers alleged to be non-existent, affidavits of three accounting for the sale and purchase of 382 gms were enclosed and petty transactions account for the remaining 184.500 gms. The denial by certain customers might have been induced by fear;
(iv) statements of Kamalesh, Bishen and the goldsmith were, in fact extracted under coercion. Certain documents pertaining to the case were seized from Bishen on 25.1.82 and a complaint of this mala fide action was made;
(v) at the material time vitur was costlier than gold and it could not be that vitur was purchased for conversion into standard gold;
(vi) the inscriptions on the pendants were not made with the dies that were recovered,
(vii) the seized gold was lawfully acquired in the normal course of business duly covered by vouchers and there could be no grounds for any belief that the gold was liable to confiscation;
(viii) 67 gms. of the gold seized was returned to Kamalesh on the way to the air port, by one goldsmith and was to be issued to another. It was the custom to provide the tools as well as to the goldsmith. Accordingly, Kamalesh kept them in an attache kept in the car, intending to issue the necessary vouchers on his return from Bombay early in the morning the next day and Bishen did not know of it;
(ix) neither the seized gold, nor the car are liable for confiscation. Nor the appellants liable to any penalty;
(e) the instant appeals were directed against the adjudication order referred to in para (1) supra.
3. It would appear to us on hearing the counsel on either side, the perusal of the papers and otherwise that –
(a) the appellants had been completely exonerated of the charges made under the Customs Act, 1962 and they do not any longer survive for consideration;
(b) in the order of adjudication, the learned Collector, after holding that although alleged to be primary gold in the notice to show cause, the gold seized at the air port including the pendants was entirely consisting of crude ornaments, observes –
“Indeed, the original panchnama or the subsequent panchnama where the so called genuine jewellery and that manufactured out of vitur was segregated, does not list or disclose the individual items of jewellery, its defects and deficiencies, weight, length or marks to establish the same as primary gold.”
He, thus, exonerates the appellants of the charge of violation of 5.8(1) of the Gold (Control) Act. He also finds that out of 3092.400 gms. seized at the air port, 2217.550 gms. were fully accounted for and accordingly not liable for confiscation. The balance of 874.850 gms. remaining unaccounted, according to him was ordered to be confiscated along with 67 gms. seized in the course of the search of the car and the shop;
(c) it was laid down in 1984 (18) ELT 396 (Dedhia Jewellers v. Collector of Customs, Bombay) that “the gold control authorities are empowered to seize only those ornaments or articles of gold in respect of which they have reason to believe that contravention of the Gold Control Law had taken place. This position of law has been very clearly enunciated by the Allahabad High Court in AIR (All) 16 – obviously an error for AIR 1972 Allhd. 16 – in which the High Court held that contravention of the provisions of the Act in respect of a particular item of gold or gold ornaments is a condition precedent for the exercise of the power of seizure. The Act does not authorise seizure or confiscation of any other articles or ornaments except those in respect of which the provisions of the Act are contravened. No substitute ornaments can legally be seized if the authorities fail to ascertain the particular ornaments in respect of which provisions of the Act are contravened. On an appeal being filed by the Government, the Division Bench of the Court upheld the above judgment and rejected the appeal, (presumably the reference is to the. decision reported in AIR 1972 Allhd. 231 – Collector of Central Excise, Allahabad v. L. Kashinath Jewellers).
(d) this being so, there is no knowing – no indication whatsoever – as to which exactly are the articles of gold or gold ornaments in respect of which any of the provisions of the Act had been contravened from out of the entire quantity of 3092.400 gms. of gold seized at the air port, there being admittedly no description whatsoever of the said articles or ornaments in the panchnama prepared at that time. Admittedly, the panchnama gave no sufficient description of the articles or gold ornaments seized at the air port. It is not hence possible to identify any of the articles seized as those in respect of which the provisions of the Act had been contravened. It is just not possible to confiscate a portion thereof on the ground that it is not properly accounted for unless it can be so identifiable by weight, form, description, length or marks which are altogether absent in the panchnama. It is, therefore, to be held that the confiscation even of 874.850 gms. out of the aforesaid quantity was illegal and unsustainable.
(e) the confiscation of 67 gms. gold seized in the course mid-night search cannot even be impugned on the aforesaid ground. These 67 gms. consisted of primary gold in the shape of small “Rawa” and “Wires” etc. Admittedly, there was no account for these wires or rawa. The story putforth by the appellants is hardly believable for the reasons set-forth by the learned Collector.
(f) while the panchnama dated 23.1.82 decides (describes ?) that the aforesaid 67 gms. of gold was discovered on a search of the car on 23.1.82, the car itself was not seized on that occasion. It was again searched on 25.1.82 and in the course of that search it is only a few implements that were discovered in the car and not any gold whatsoever. Still, in the circumstances of the case, it cannot be said that the confiscation of the car is illegal or contrary to law seeing that, after all, the aforesaid 67 gms. of gold were discovered in the car. It is not as if the car should have been seized the moment the gold was discovered in it. Nor is it as if the owner of the car had proved that it was used without his knowledge or connivance for transport of gold discovered in it.
4. In the premises we allow the appeal partly, direct the release of 874.850 gms. of gold from confiscation and its return forthwith to the appellants. The confiscation of 67 gms. of gold and the car and the fines in redemption thereof are sustained. The penalties in a sum of Rs. 7,500/- on each of the appellants in Appeal No. 3/84 and 4/84 is consequently reduced to Rs. 2,000/- each. The balance of the penalties if recovered, may be refunded forthwith.
5. Order accordingly.