N PALANISAMY Vs. COLLECTOR OF CENTRAL EXCISE
LAWS(CE)-1986-7-2
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 31,1986

Appellant
VERSUS
Respondents

JUDGEMENT

S. Kalyanam, Member (J) - (1.)APPEAL Nos. 225 to 227/85(MAS) arise out of a common order and relate to single transaction. Since a common question of law would arise for consideration in Customs A.Nos. 223 and 224/85, all the appeals are taken up together and disposed of by a single order. For the purpose of convenience, we set out the facts in Customs APPEAL Nos. 225 to 227/85 (MAS).
(2.)On 14-6-1984 at 6.00 AM, the Superintendent of Central Excise, Hqrs. Preventive, Coimbatore alongwith his officers visited the residential premises of appellant Smt. Kannammal on the basis, of information and recovered therefrom 7 gold slabs kept under a cover of paper packet in a trunk box alongwith ten paper chits. The total quantity of gold was found to be 1046.200 gms. Since the gold in rectangular and square shapes were believed to be in a changed form from out of smuggled gold and since no acceptable explanation was offered by the persons concerned for the licit acquisition of the same, the gold was seized by the authorities as per law, under mahazar, attested by witnesses. Appellant Kannammal gave a statement before the authorities on 14-6-1984 that the seven gold bars under seizure were kept in her house by appellant Ravi who was the nephew of appellant Thirumoorthy, a certified goldsmith and that Ravi informed her that the gold slabs were meant' for unaccounted sales. Appellant Ravi also gave a statement that the seven gold slabs under seizure belonged to his uncle, appellant Thirumoorthy and were kept in the residence of Kannammal for purposes of safety and that his uncle was doing gold business un-accountedly. Appellant Thirumoorthy also gave a statement on 14-6-1984 to the effect that the gold slabs under seizure as well as the 10 paper chits related to his illegal gold business. The purity of the gold slabs was also ascertained through the officers of the Mint and the report of the Mint Officer was to the effect that the gold slabs were foreign origin. It is in these circumstances proceedings were instituted after further investigations, against the appellants which ultimately resulted in the impugned order, now appealed against.
Shri Suganchand Jain, the learned counsel for the appellants assailed the validity of the impugned order on the ground that inasmuch as the allegation in the show cause notice against the appellants is that the gold under seizure was manufactured out of foreign gold, neither the presumption under Section 123 of the Customs Act, 1962 nor confiscation of the same in terms of Section 111(d) of the Act is permissible. It was further urged that the adjudicating authority has not invoked the presumption against the appellants in terms of Section 123 in the show cause notice and so the same cannot be relied upon in the order of adjudication against the appellants. The learned counsel further contended that notwithstanding the fact that the report of the Mint Officer dated 31-8-1984 contains a finding that the gold concerned in the case is of foreign origin, no reasons have been given by the authority for reaching that finding. It was therefore, contended that no reliance could be placed on the report of the Mint Officer. It was further urged that the Mint Officer has also remarked that "to the best of his knowledge and belief, no bullion dealer, refiner etc., in India, is known to manufacture gold of this purity on commercial basis". The learned counsel argued that this observation of the Mint Officer would clearly prove that gold of this purity out of Indian gold is possible, if not on commercial scale at-least in a small way. The report of the Mint Officer was also assailed by the learned counsel on the ground that it contained the signature of the General Manager who would not have conducted the test and therefore, the report itself is not acceptable in law. The learned counsel placed reliance on the judgments of the Delhi High Court reported in 1983 ELT(D) 1715 in the case of Shantilal Mehta v. Union of India and Anr. judgment reported in the same volume at page 2142 in the case of Dadha Commercial Corporation v. Union of India and contended that notwithstanding the fact that the purity of the gold concerned in those cases was found to be of the order of, 999.1 and 998.5 as per the Mint report, the Delhi High Court rejected the case of the Department that the gold could be said to be of foreign origin merely on the basis of such purity without any foreign markings.

(3.)SHRI K.K. Bhatia, the learned Senior Departmental Representative submitted that the report of the Mint Officer dated 31-8-1984 clearly contains an endorsement that the gold under seizure is of foreign origin. This copy of the report of the Mint Officer was admittedly sent to the appellants and an opportunity was also given to the appellants to challenge the same and since appellants have neither rebutted nor challenged the correctness of the same, the finding under the report is conclusive to establish that the gold under seizure is of foreign origin. The learned SDR further urged that once the gold under seizure is proved to be of foreign origin, the presumption under Section 123 of the Act would become automatically applicable and in the instant case, the appellants have not rebutted the presumption arising against them under Section 123 of the Act. The learned SDR further submitted that gold of foreign origin would be confiscable in terms of Section 11 l(d) of the Act and the mere fact that, the contraband gold has been given a different shape or form making it liable for confiscation under Section 120(1) of the Act also would not in any way render the same anytheless confiscable in terms of Section 111(d) of the Act. The learned SDR further urged that notwithstanding the fact that the presumption invoked against the 'appellant in terms of Section 123 of the Act has not been specifically set out in the show cause notice, this being a statutory presumption, that would ipso facto follow the moment the gold under seizure is established to be of foreign origin.


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