ORDER
P.C. Jain, Member (T)
1. Three subject reference applications are identically worded and have been filed against three different orders of the tribunal. Main order of the Tribunal is No. A/226/88-NRB dated 26-7-1988 ii appeal No. G/37/88-NRB. This main order has been relied upon in the other two orders passed in the other two appeals. When the reference applications were called the learned Advocate for the applicants was told that his applications did not formulate any questions of law. Infact the applicants state: “the order of the Hon’ble Tribunal suffers from serious legal lacunae and infirmities…”. No questions have been formulated in the applications which, according to him, are required to be referred to the Supreme Court. The following two questions were then formulated by the learned Advocate which are as follows :-
(i) Can an appellant be placed, on the point of his guilt, in a position worse than before he came in appeals
(ii) Did the Appellate Tribunal go outside its functioning by trying to find reasons for the failure of the adjudicating authority in giving certain explicit judgements based on facts and records and hold that such judgment should be deemed as implied or by reference?
2. In order to appreciate the above questions, facts of the case, in brief in appeal G/37/88-NRB are set out below :-
2.1 On 7-8-1985 Gold Preventive Officers of the Central Excise Collectorate checked the stock/accounts of gold and gold ornaments of the appellant firm herein. As a result thereof, 4 pcs. of new gold ornaments of 22 cts. purity weighing 67.400 gms. valued at Rs. 13,615/- were found short on actual physical verification, when compared to the entries made in the statutory accounts and records maintained by the appellant firm. Shri Ashwani Kumar Mehra, brother of Shri Yashpal Mehra, Proprietor of the above firm present in the shop could not produce any evidence documentary or otherwise to explain the above shortage.
2.2 In his statement dated 6- 9-1985 recorded under Section 63 of the Gold (Control) Act (GCA), 1968, Shri Yashpal, Proprietor of the appellant firm while admitting the shortage of 67.400 gms. of gold ornaments, stated that the shortage was negligible when compared to the big stock of gold ornaments available in their shop. He further stated that there might have been some misplacement of gold ornaments in the shop being managed by the staff.
2.3 It was, therefore, alleged that Shri Yashpal Mehra, Proprietor of the appellant firm, inter alia, has contravened the provisions of Sections 36 and 55 of the GCA, 1968 read with Rules 11 and 13 of the Gold Control (Forms, Fees and Misc. Matters) Rules, 1968 inasmuch as the gold ornaments found short appear to have been parted with unauthorisedly.
3. The learned Advocate has now highlighted two of his pleas before the Tribunal and the findings thereon. He has stated that the charge in the Show Cause Notice was that the gold found short had been “unauthorisedly parted with”, and the charge was not that the entries in account had not been properly made. No evidence was brought forth to bring home the aforesaid charge made in the Show Cause Notice regarding unauthorised parting with of the gold ornaments.
3.1 Considering this plea and the opposing submission .of the learned Departmental Representative the Tribunal gave the following finding :-
“I have carefully considered the pleas advanced on both sides. In the facts and circumstances of the case, there is no doubt whatsoever that a shortage of 67.400 gms. in the gold ornaments has been established. The charge of the department regarding unauthorised parting with the gold ornaments is an inference from the main charge of non-accountal of the aforesaid gold to the extent of 67.400 gms. Since the shortage has not been accounted for by the appellant vis-a-vis the records maintained by him a necessary inference follows that the gold ornaments have been unauthorisedly parted with by the appellant. Since the records are being maintained by the appellant the onus is on the appellant to explain the shortage in a satisfactory manner. If this is not explained, the gold ornaments, even though not available for confiscation, have become liable to confiscation in terms of Section 71 of the GCA which states, inter alia, that any gold in respect of which any provision of the GCA, 1968 or any rule or order made thereunder is contravened the gold shall be liable to confiscation. Obviously, the quantity of gold found short in the instant case is not explained by any issued vouchers or there is no explanation as to why the entries of such gold having been short has not been entered in the relevant GS-12 register. Contravention of Section 55 read with Rules 11 and 13, therefore, has taken place in the instant case and therefore, the gold, though not available for actual confiscation has become liable to confiscation. Hence the penalty under Section 74 of the Act is justified. Even though there is no positive finding of the liability to confiscation of the gold in question, yet such a finding is necessarily implied in the finding of shortage of the 67.400 gms. of gold by the learned Adjudicating Authority.”
3.2 Next plea of the learned Advocate before the Tribunal at the time of hearing of the appeal was that imposition of penalty was an action in personam; therefore, unless any mala fides of the person concerned were positively found no case for penalty can be sustained. He relied in particular on a decision of the Supreme Court, for this -proposition, in the case of Hindustan Steel Ltd. v. State of Orissa (1978 ELT J 159). He contended that “a finding of 10 mala fides on the part of the appellant has already been made by the learned Adjudicating Authority”. In view of this finding by the adjudicating authority itself, imposition of penalty was contrary to the well-settled legal position.
3.3 The finding of the Tribunal in the aforesaid plea was as follows :-
“I have carefully considered this plea of the appellant’s learned Advocate but I do not find any merit in it on a deeper consideration. I do not agree with the adjudicating authority’s finding that there are no mala fides on the part of the appellant, after having found the shortage to the extent of 67.400 gms. This finding of the adjudicating authority, I observe is based on no evidence. There is no explanation from the appellant as to how the shortage occurred except the plea of generalities and possibilities referred to above. In the absence of any satisfactory explanation from the appellant regarding the shortage-and this explanation, I must repeat, can be given only by the appellant – it has to be inferred that the shortage is on account of lack of bona fides of the appellant. Contravention of Section 55 read with Rules 11 and 13 is therefore, apparent in this case. Hence this plea of the appellant’s learned Advocate fails. Supreme Court’s ruling has no application here.”
3.4 Now he urges with reference to the first question of law formulated by him that while the learned Adjudicating Authority had found no mala fides on the part of the appellant/applicant the Hon’ble Tribunal had found that the shortage was on account of lack of bona fides of the appellant. The finding according to the learned Advocate places the appellant/applicant in a position worse than what he was before he came in appeal to the Tribunal. This is patently illegal according to the learned Advocate and he, therefore, submits that it is a question of law whether the Tribunal can do so. For this proposition he relies on Shri Ram Jut e Mills Ltd., Calcutta v. Collector of Central Excise, Calcutta 1986 (23) ELT 446.
4. Learned Departmental Representative opposing the reference applications submits that the question before the Tribunal was whether a penalty was sustainable or not on the facts and circumstances o’ the case. The Tribunal has not imposed a penalty higher than what it was when the appellant came in appeal before the Tribunal. In these facts, therefore, there is no question of placing the applicant in a position worse than before he came in appeal.
5. I have carefully considered the aforesaid submission with reference to the first question. I have serious doubts In accepting the plea of the learned Advocate. The findings of the Tribunal as already extracted above are based on appreciation of evidence on a question raised before the Tribunal, i.e. sustainability of penalty imposed on the applicant, as the Tribunal has clearly observed that the finding of the adjudicating authority was based on no evidence at all. In this connection Tribunal’s finding in Para 2(iii) in order No. A/228/88-NRB, dated !’6-7-1988 in appeal No. E/1079/88-NRB is also reproduced below :-
“(iii) I, also, feel that the learned Adjudicating Authority’s observation to the effect “keeping in view the human factors and also the accuracies of equipments and scales for the weighment used over a period of time of 4-5 years or even in relation to physical stock of about 42,000 gms found on the date of check, the variation of about 2% found in the form of shortage should not be treated as any major variation”, is, to say the least, without any evidence on record. There is no evidence on record about the inaccuracy of the scales and about their use for the past 4-5 years. There is no indication as to what are the human factors involved.”
5.1 The well known concert, referred to by the learned Advocate, that an appellant should not be placed in a position worse than before he came in appeal, in any decision on appeal essentially relates to the quantum of liability or of punishment. This is apparent from the citation relied upon by the learned Advocate himself in the case of Shri Ram Jute Mills Ltd. Extracts of Para 6 from 1986 (23) ELT 446 would make it abundantly clear.
“Without this exemption, classification of laminated jute fabrics under Item 22B would saddle the appeal ants with heavy duty. We are conscious that this has never been the department’s case at any stage and it would be wrong for us to create a new liability for the appellants at the second appeal stage. It is the appellants who have come to us in appeal and not the department. It is a well-settled principle of law that an appellant, on his appeal, cannot be put in a worse position than what he was in earlier”.
[emphasis supplied]
Quantum of penalty has not been increased in the instant cases by the Tribunal.
5.2 Nevertheless, the lean led Advocate’s plea is that the finding on the degree of the guilt by the Appellate Tribunal could not be more unfavourable to the appellant on his appeal, than what it was before, appears to have some force. In the instant case, the lower authority while upholding contravention of Sections 36 and 55 of the Gold Control Act has found that a shortage of 67.400 gms. against a stock of over 6000 gms. cannot be treated as any major discrepancy with mala fide intention. The Tribunal, considering the nature of the commodity and the practice of the trade where the commodity is weighed and charged upto three decimal places and in the absence of any specific explanation for the shortage inferred that the “shortage is on account of lack of bona fides”. Question of law arises whether the Tribunal was legally competent, in the facts and circumstances of the cases, to give a finding about lack of bona fides. If the answer to the above question is in the negative, next question is whether the penalties on the applicants would be sustainable for contravention of Section 55 of the Gold Control Act, in the facts and circumstances of these cases.
5.3 With reference to the second question the learned Advocate has again pointed out that the charge in the Show Cause Notice was that the gold found short had been “Unauthorisedly parted with” and not that entries in accounts had not been properly made. This plea has been dealt with by the Tribunal not by any evidence on record but by implications and inferences and, therefore, it is a question of law. Learned Departmental Representative on the other hand urges that the finding of the Tribunal is again an inference of fact from findings of fact and there is no question of law arising in this finding of the Tribunal.
5.4 I have carefully considered the plea of the learned Advocate for the appellants but I am unable to agree with his plea. Finding of the Tribunal regarding non-accountal of the gold or in other words unauthorised parting with the gold flows inferentially from the finding of fact (even admitted by the appellant/applicants) regarding the shortage of gold in the absence of any positive and specific explanation regarding such shortage. Supreme Court’s judgment in the case of Meenakshi Mills Co. Ltd. v. CIT 1957 (31) ITR 28,50 (SC) considering the scope of Section 256 of the Income Tax Act, 1922, which is analogous to Section 82B of the Gold Control Act, 1968, held as follows :-
“(1) When the point for determination is a pure question of law such as construction of a statute, or document of title, the decision of the Tribunal is open to a reference.
(2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final, its decision as to the legal effect of these findings is a question of law which can be reviewed by the court.
(3) A finding on a question of fact is open to attack as erroneous in law, when there is no evidence to support it or if it is ‘perverse’.
(4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact." [emphasis supplied] 5.5 It is, therefore, apparent from the above emphasised ruling of the Supreme Court that the finding of the Tribunal which the learned Advocate seeks to attack and characterise it as a question of law is nothing but a question of fact. 5.6 In view of the foregoing discussion, following questions are referred to the Hon'ble High Court of Delhi :- (a) Whether the Tribunal was legally competent, in the facts and circumstances of the case and on the questions in appeal of the applicants before it, to give a finding of lack of bona fides of the applicants, when the original authority had given a finding of no mala fides? (b) If the answer to the question (a) above is in the negative, would the penalties on the applicants would still be sustainable on the basis of other findings for contravention of Section 55 read with Rules 11 and 13 of the Gold (Control) Act, 1968? 5.7 Following documents are enclosed :- (i) Three orders-in-original Nos. 4/88 dated 12-2-1988,10/88 dated 22-4-1988 and 1/88 dated 4-1-1988 passed by the Collector (Adjudication), Central Excise, New Delhi; (ii) Three Orders-in-appeal Nos. A-226/88-NRB, A-227/88-NRB and A-228/NRB all dated 26-1-1988 passed by the Tribunal; and (iii) Reference applications of the three applicants before the Tribunal.