PARASMAL SHARMA Vs. COLLECTOR OF CENTRAL EXCISE
LAWS(CE)-1986-8-4
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on August 19,1986

Appellant
VERSUS
Respondents

JUDGEMENT

S.Kalyanam, - (1.)THIS appeal is directed against the order of Collector of Central Excise (Appeals), Madras dated 7-3-86 confirming the order of Deputy Collector of Central Excise, Madras dated 30-9-85 in respect of charge of contravention under Section 6(2) of the Gold Control Act, 1968 (hereinafter referred to as the Act) against the appellant and modifying the fine of Rs. 18,000/- imposed by the original adjudicating authority and reducing it to Rs. 10,000/- and the penalty from Rs. 8,000/- to Rs. 5,000/-. On 21-11-82 the Officers attached to the Hqrs. Preventive Unit, Madras visited the appellant's pawn broking premises at Bazaar Street, Pattabiram, Madras-72 and verified pawned gold items with relevant pawn tickets, ledger and connected records of the appellant. At that time the authorities found that a total of 495.500 gms of gold ornaments of 20 to 22 ct. purity was not accounted for in the pawn brokers register. Since the gold ornaments were not accounted for as per law, they were seized by the authorities under a mahazar attested by witnesses. The appellant gave a statement before the authorities on 21-11-82 to the effect that the ornaments under seizure were purchased by him for purposes of sale as the appellants pawn broking business became dull. It is in these circumstances proceedings were instituted against the appellant resulting in the present impugned order now appealed against. Shri Suganchand Jain, the learned counsel for the appellant submitted that the ornaments under seizure were seized not from the appellant's business premises but from the appellant's residence and this fact has been clearly established from the cross examination of the mahazar witnesses. It was further urged that the statement of the appellant that he was keeping the ornaments for sale was retracted by him the very next day that is on 22-11-82. The learned counsel further contended that the ornaments under seizure are the private property of the appellant and had been disclosed in the wealth tax return of the appellant for the assessment year 1973-74. The learned counsel dilating on this point further urged that this plea of the appellant has also been originally accepted by the adjudicating authority. Finally it was urged that since the ornaments are the private property of the appellant the question of the appellant making any entry in any registers in terms of Section 6(2) of the Act would not arise.
(2.)Shri Vadivelu, the learned DR submitted that the original statement of the appellant is voluntary and true and would merit acceptance. The learned DR further urged that on the basis of the appellant's statement the charge under Section 27 of the Act is clearly made out.
I have considered the submissions of the parties herein. Without going into the various pleas urged by the learned counsel for appellant in my opinion the appeal can be disposed of on a short question of law. The adjudicating authority namely the Deputy Collector of Central Excise found the appellant guilty of contravention of Section 6(2) and of the Gold Control Act and on the appeal preferred by the appellant as against the same, the appellate authority namely Collector of Central Excise (Appeals) under the impugned order exonerated the appellant in respect of the charge under Section 27. It would not be out of place to extract the observations at this place of the lower appellate authority under the impugned order. The Collector of Central Excise. (Appeals) has observed :

"In the present case though circumstances indicate that gold under seizure was kept in the business premises and appellant admitted that he wanted to do business, yet there is no evidence quoted by department that he had sold any number of such items prior to the seizure. At most, he is guilty of intention to carry on business or an attempt to commence business, but actual commencement has not taken place as per the evidence recorded. Therefore, it will not be correct to hold that he has contravened Section 27 of the Gold Control Act."

The appellant having been exonerated of the charge under Section 27, preferred an appeal before this Tribunal in respect of the finding of the lower appellate authority under the impugned order in respect of the charge under Section 6(2). Section 6(2) of the Act reads as under :-

"6(2) The Administrator may, by order, authorise any gold control officer to examine the accounts relating to the receipt, delivery or sale of any gold, of any person who advances any money on the hypothecation, pledge, mortgage or charge of any article or ornament, and, if any gold is found in the possession of such person which is not entered in such accounts, or which is in excess of the quantity shown in such accounts, and which is not otherwise accounted for to the satisfaction of such officer, such gold shall be deemed to be in the possession of such person in contravention of the provisions to this Act."

A plain reading of Section 6(2) would clearly bear out that it is intended to regulate the transactions relating to receipt, delivery or sale of any gold of any person who advances any money on the hypothecation, pledge, mortgage or charge of any article or ornament by means of proper accounting. In the instant case, the case of the department is that the ornaments under seizure were kept for the purpose of sale by the appellant. It is not the case of the department that the ornaments are pledged ornaments with the appellant coming within the mischief of Section 6(2). The statement recorded from the appellant immediately on seizure on 21-11-82 which the learned DR contended to be voluntary and true meriting acceptance categorically says that the ornaments were kept by the appellant for the purposes of sale. When a person keeps ornaments for the purposes of sale the person concerned can be proceeded against for a charge under Section 27 of the Act if the evidence warrants it. So far as the scope of Section 6(2) is concerned a plain reading of the Section extracted above would clearly indicate that Section 6(2) would come into operation and apply only in a situation where the gold ornaments are pledged with the pawn broker who advances money on hypothecation, pledge or mortgage. In the instant case it is nobody's case that the ornaments were pledged or hypothecated with the appellant. In such a situation the question of the appellant conforming to the statutory formalities enjoined on him in terms of Section 6(2) just would not arise. Therefore accepting the case of the department as such in my opinion the charge under Section 6(2) would fail and unfortunately for the department the appellant has been exonerated of the charge under Section 27(1) of the Act under the impugned order. To a query from the Bench the learned DR submitted that the impugned order was received by the Department on 15-4-86. Therefore it is obvious that the department did not think it expedient to prefer an appeal as is open to them under law against the finding of the lower appellate authority exonerating the appellant of the charge under Section 27(1) of the Act. Even after the filing of this appeal by the present appellant as against the charge of contravention under Section 6(2) under the impugned order a notice has been given to the department in the last week of July and the department has not considered it expedient to file any cross objection as per law. In such a situation I have no other alternative except to proceed with the appeal and determine the only question that falls for consideration namely whether the charge of contravention under Section 6(2) of the Act has been made out or not. In my opinion in the context of the evidence available on record in this case the charge under Section 6(2) and Section 27(1) would not co-exist for the simple reason that it is nobody's case that the ornaments under seizure were pledged with the appellant so as to fasten on him any statutory obligation to account for it in his account in terms of Section 6(2) of the Act. If the statement of the appellant referred to supra is taken as voluntary and true it would only spell out that the appellant was dealing with the ornaments as a dealer in contravention of Section 27(1). of the Act. As I observed earlier in-as-much as the appellant has been clearly exonerated of the charge under Section 27(1) of the Act by the lower appellate authority and since the department, has not chosen to question the correctness of the same in a manner known to law till date, it is not open to the department now before me during the course of the appeal to putforth any plea contending that the charge under Section 27(1) is made out against the appellant. Therefore in conclusion I hold that the charges under Section 6(2) is not legally tenable in the context of the factual evidence available on record and inasmuch as the appellant has been exonerated of the charges under Section 27(1), the impugned order appealed against is set aside and the appeal is allowed.



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