Shri Charanjit Lal Mehra vs Customs, Excise and Gold (Control) Appellate Tribunal and Another

Rajiv Shakdher, J.—This is a reference filed seeking a direction from this Court to call upon the Customs, Excise & Gold (Control) Appellate Tribunal (as it was known at the relevant point in time) (hereinafter, referred to as the ''Tribunal'') to refer the following questions of law for adjudication by this Court. For the sake of convenience, the questions of law set out in the captioned reference are extracted hereinbelow:

Whether the seizure of goods and consequential proceedings were not bad in law in as much as goods were found after re-examination and adjudication, to be different, in purity from goods allegedly seized at the time of seizure, specially when the statutory record is desired to be maintained purity wise and was so maintained.

(a). Whether an order based on grounds facts other than those alleged in the seizure memo / show cause notice is sustainable in law especially when no show cause notice has been given for the excess 142.350 gms found in the adjudication order?

b). Whether the entire proceedings are not vitiated in the absence of a show cause notice for the excess of 1370.00 gms of ornaments of 22 cts. purity found in the panchnama No. 2 dated 23.07.1987 on the re-examination gold ornaments at the time of the personal hearing instead of 14 cts. and 18 cts. ornaments seized as per the panchnama No. 1 dated 04.02.1985.

Whether, in view of the fact that the Appellant is a reputed dealer carrying on transactions on a very large scale, a technical omission to mention a negligible quantity in the records would be enough to attract imposition of penalty?

At the outset, it may be noticed that there has been no appearance on behalf of the Petitioner. On behalf of the Revenue, we have requested Mr. Mukesh Anand, senior Standing Counsel to assist the court; since the nominated counsel of the revenue is not present in court. The matter has been listed as Item No. 2 in the category of ''Regular'' for quite some time.

2.1. With this preface, let us briefly note the background circumstances, as culled out from the judgment of the authorities below, which led to the instant reference.

2.2. It appears that the Central Excise Officers had conducted a raid on the premises of the Petitioner. During the course of raid, certain gold ornaments were seized. The officers concerned also conducted an exercise of weighing the gold ornaments as well as ascertaining the purity of the ornaments seized. A panchnama was drawn of the gold items seized.

2.3. Consequent thereto, a show cause notice dated 31.07.1985 was served upon the Petitioner. After granting due opportunity to the Petitioner, the Collector, Central Excise passed an adjudication order dated 12.04.1988. By this order, the Collector repelled all defences raised by the Petitioner. In the operative portion of the order, the Collector directed confiscation of excess gold found to the extent of 142.350 gms. The Collector, however, by the very same order granted an option to the Petitioner to redeem the confiscated gold ornaments on payment of Rs. 10,000/-. In addition to this, the Collector imposed a penalty of Rs. 5,000/- on the Petitioner u/s 74 of the Gold Control Act (hereinafter referred in short, as the G.C. Act) for contravention of provisions of Sections 33 and 55 of the said Act read with Rules 11 and 13 of the Gold Control (Forms, Fees & Misc. Matters) Rules, 1968 (in short, the ''Rules'').

2.4. The Petitioner being aggrieved by the order in original passed by the Collector preferred appeal to the Tribunal. The Tribunal affirmed the view taken by the Collector vide its judgment dated 30.08.1989.

2.5. Being dissatisfied, the Petitioner moved the Tribunal to refer the same very question of law which we have culled out hereinabove to this Court. By a detailed order dated 28.03.1990, the Tribunal rejected the application of the Petitioner.

2.6. The Petitioner being aggrieved, as noticed hereinabove by us, has preferred the captioned reference u/s 82B(3) of the G.C. Act.

Since we have not had the benefit of a representation on behalf of the Petitioner, Mr. Anand, learned senior standing counsel appearing for the revenue has assisted us in the matter.

3.1. Mr. Anand has largely relied upon the orders of the authorities below in support of his case, in particular, the order of the Tribunal whereby reference was rejected. Mr. Anand laid stress on the fact that the questions of law proposed were relatable to pure findings of fact and hence, did not require this Court to call for a reference as prayed.

We have heard Mr. Anand and also perused the record as well as the orders of the authorities below.

4.1. On a perusal of the record, we find that the proposed questions of law are pivoted on two broad pleas: (i). that the purity of the gold ornaments seized as shown in the panchnama was different from that which was reflected in the show cause notice; and (ii). the imposition of penalty was bad in law as the discrepancy was of a small order and hence, being only a technical breach of the law, penalty ought not to have been imposed.

4.2. We have examined both issues. We find that the Tribunal in the order dated 30.08.1989 as well as in the subsequent order dated 28.03.1990 (whereby the Petitioner''s application for seeking a reference by the Tribunal was dismissed) has adequately dealt with both pleas. In particular, in the subsequent order of the Tribunal i.e., order dated 28.03.1990, the Tribunal has rightly come to the conclusion that in so far as the first two questions of law are concerned, these are pure questions of fact and hence, need not be referred. In so far as, third question of law is concerned, the Tribunal rightly relied upon the judgment of the Allahabad High Court passed in L. Kashi Nath Vs. The Collector, Central Excise, Allahabad and Others, (which was in fact relied upon by the Petitioner) which answered the second issue raised by the Petitioner.

4.3. We may profitably note the view of the Tribunal in regard to both the first and the second issues. In so far as the first plea is concerned, the Tribunal records in our view correctly, that the discrepancy in purity was not material as the Collector had, on 23.07.1987, ordered a re-examination of the gold ornaments seized when, it was found that while the number of pieces and the total weight of the ornaments remained the same, there was a slight difference in so far as purity was concerned. This aspect as noticed by the Tribunal, found a mention in the order of the Collector. Having noticed it, the Tribunal correctly put down the difference in purity to the fact that the method employed by the officers who conducted the search for ascertaining the purity of the gold ornaments was the "touch stone" method. The method employed according to the authorities below is not accurate and therefore, there was a variation in the purity. Resultantly, the Tribunal accepted the view taken by the Collector in the order-in-original that in the circumstances, the fact that the total pieces of ornaments seized as also the total weight having remained the same; a mere discrepancy in purity did not vitiate the proceedings. We are in agreement with the reasoning adopted by the Tribunal.

4.4. We are also therefore, in agreement with the view of the Tribunal that question Nos. 1, 2(a) and 2(b) were pure questions of fact.

4.5. In so far as the second plea is concerned which relates to question No. 3, i.e. with regard to the issue that penalty ought not to have been imposed as the infraction committed involved only a technical breach, has also in our view been correctly decided by the Tribunal by following the judgment of the Allahabad High Court in the case of L. Kashi Nath Vs. The Collector, Central Excise, Allahabad and Others, .

4.6. We are agree with the reasoning in so far as the said aspect of the matter is concerned. 5. For the aforementioned reasons, in our view, the reference deserves to be dismissed. It is ordered accordingly.