Sumitraben Ramujilal Vyas vs Union of India

Ravani, J.—Petitioners challenged the legality and validity of the order passed by the Collector of Central Excise, Baroda, on March 16, 1974, which has been confirmed by the Gold Control Administrator on Gold Control Appeal and also by the Government of India in revision.

Officers of the Income Tax Department had searched the residential premises of petitioner No. 1 - Smt. S. R. Vyas and had also searched the locker in the Central Bank of India jointly operated by petitioners No. 1 and 2. The search was carried on from July 29 to July 31, 1972. In the search, gold weighing 8662.300 gms. was recovered. Out of this, gold ornaments weighing 536.00 gms. were returned on the spot and rest of the gold and gold ornaments, i.e., 8126.300 gms. was seized under a Panchnama. Thereafter the said gold and gold ornaments were seized by the officers of the Central Excise Department and a regular Panchnama thereof was drawn. Statements of petitioner No. 1 and petitioner No. 2 were recorded. Show cause notice dated December 30, 1972 was issued to both petitioners No. 1 and 2. Petitioner No. 1 inter alia contended that the residence was being used as a religious place by a group of people following "Moksh Margi Sampraday". That the gold in question was not that of 24 ct. purity and they were ancestral ornaments. It was also contended that the gold was in possession of their family since days of her father-in-law, i.e. Shri Vallabhram, who died somewhere in the year 1925. Petitioner No. 1 also submitted that there are other members of the family who had share and interest in the gold and gold ornaments seized by the department. Petitioner No. 2 also submitted reply but he, in short, submitted that he was the administrator, managing the affairs of the family of petitioner No. 1 and had no interest whatsoever in the gold and gold ornaments seized.

The Collector of Central Excise, Baroda heard petitioners No. 1 and 2 and considered the reply submitted by them. Thereafter he passed an order dated March 16, 1974, holding that the charge under Sections 8(1) and 16 of the Gold (Control) Act, 1968, levelled against petitioners No. 1 and 2 was proved. After considering the Panchnama and other records, the Collector of Central Excise, Baroda held that there were 5 "Kadas" of gold each one of them was weighing as follows :

295.700

383.500

394.700

375.500

116.600

He further held that those "Kadas" were in crude form and new and they were of primary gold.

There was one sheet of gold (square and plain) weighing 29.00 gms. There were five pieces of gold weighing 20.00 gms. After considering the reply filed to the show cause notice, the Collector of Central Excise, Baroda, held that five pieces of gold weighing 20 gms. could not be said to be ornament or article and hence he found that the same were primary gold. But he held in favour of the petitioners as far as 29.00 gms. sheet was concerned. He further held that one "Rawa" of gold weighing 5.700 gms. was of primary gold. He held that five Ranies of gold weighing 276.00 gms. were primary gold. In respect of certain other articles of gold also he held against the petitioners. The total weight of the gold and gold articles which was held to be primary gold was 6278 gms. Taking into consideration the gold ornaments released at the time of search on July 31, 1972, i.e., 536 gms., the total quantity of articles and ornaments of gold possessed by the petitioners No. 1 and 2 came to 6814 gms. The permissible quantity of gold which an individual can possess was 2000 gms. Petitioner No. 1 had admitted that she had not filed requisite application under the provisions of Section 16 of the Gold (Control) Act. On overall consideration of the facts and circumstances of the case, the Collector, Central Excise, Baroda, passed the order as follows :

"(a) The primary gold under seizure shown at Sr. Nos. 4, 11-B, 13 and 48 of the Panchnama dated 13-10-1972, weighing gms. 1849.700 valued at Rs. 39,055/- held, possessed or controlled by Smt. S. R. Vyas and Shri N. L. Patel is liable to confiscation and accordingly, I order its absolute confiscation u/s 71 of the Gold (Control) Act, 1968.

(b) The articles under seizure, weighing gms. 2510.00 held, possessed or controlled by Smt. S. R. Vyas, and Shri R. L. Patel and shown at Sr. Nos. 1, 2, 9, 10, 11-A, 12, 31 and 44 of the seizure Panchnama dated 13-10-1972 have also exceeded the permissible exemption limit. I, therefore, order confiscation of the aforesaid articles of gold alongwith their silver container u/s 71 of the Gold (Control) Act, 1968. I grant an option to Smt. S. R. Vyas to redeem the said articles of gold and silver container by payment of a redemption fine of Rs. 30,000/- (Rs. Thirty thousand only) in lieu of their confiscation.

(c) Since the gold ornaments under seizure listed at the remaining items of the Panchnama dated 13-10-1972, totally weighing gms. 3766.600 are found to be in excess of the permissible quantity that could be held by an individual u/s 16(5) of the Gold (Control) Act, 1968, without filing a declaration, I order confiscation of the said gold ornaments under seizure, u/s 71 of the Gold (Control) Act, 1968. However, I grant an option to Smt. S. R. Vyas, to pay a redemption fine to Rs. 40,000/ - (Rs. Forty thousand only), in lieu of confiscation and redeem the said gold ornaments.

The options to redeem the gold articles and ornaments on payment of fine as ordered in sub-para (b) and (c) above, shall be exercised within three months from the date of receipt of this order with the condition that the provisions of Gold Control Act, 1968, in regard to declaration etc. shall be fully complied with, immediately on redemption.

Smt. S. R. Vyas, is liable to pay a personal penalty and considering all the circumstances of the case, I impose a personal penalty of Rs. 1,00,000/- (Rs. One lakh only) on Smt. S. R. Vyas u/s 74 of the Gold (Control) Act, 1968.

Shri N. L. Patel, has also rendered himself liable for a penalty. I, therefore, impose a personal penalty of Rs. 10,000/- (Rs. Ten thousand only) on Shri N. L. Patel, u/s 74 of the Gold (Control) Act, 1968".

The petitioners No. 1 & 2, preferred appeal before the Gold Control Administrator. After hearing the parties, the Gold Control Administrator has dismissed the appeal as per his order dated July 25, 1977. However, he modified the amount of redemption fine. He passed the order as follows :

"However, having regard to the facts and circumstances of the case, I hereby reduce the amounts of redemption fine imposed on articles and gold ornaments from Rs. 30,000/- to Rs. 20,000/- (Rs. Twenty thousand only) and from Rs. 40,000/- to Rs. 25,000/- (Rs. Twenty Five thousand only) respectively. I also reduce the amounts of personal penalties imposed on Smt. S. R. Vyas and Shri N. L. Patel from Rs. 1,00,000/- to Rs. 20,000/- (Rs. Twenty thousand only) and from Rs. 10,000/- to Rs. 1,000/- (Rs. One thousand only) respectively."

Thus, the order passed by the Collector was modified to the aforesaid extent.

The matter was carried by petitioners No. 1 & 2, upto Government of India by revision. Government of India considered the same and rejected the revision as per order dated September 15, 1980.

Petitioners No. 1, 2 as well as petitioners No. 5 to 7, who are relations of the petitioner No. 1, have filed this petition challenging the legality and validity of the aforesaid orders. It may be noted that petitioners No. 3 and 6 are daughters of petitioner No. 1 and Petitioners No. 4 and 5 are sons of petitioner No. 1 and petitioner No. 7 is the mother of petitioner No. 1. All these petitioners have also claimed ownership interest in the gold seized and ordered to be confiscated.

Learned Counsel for the petitioners has submitted that the petitioners relied upon a note dated February 28, 1925, written by Shri Vallabhram, late father-in-law of petitioner No. 1. Petitioner No. 1 also relied upon the will dated November 5, 1959, executed by her husband Shri Ramujilal Vyas. In his submission, amongst other, these two documents were relied upon by the department also and they are referred to the show cause notice issued on the petitioners. According to the petitioners, if these documents are properly examined, it becomes evident that the gold in question belonged to the family of late Shri Vallabhram and was ancestral property. He has taken us through the order passed by the Collector of Central Excise, Baroda as well as by the Appellate Authority and by the Government of India. There is passing reference to these documents in the narration of the events. But in the findings arrived at by the Collector, nowhere these two documents are discussed. In fact no document is referred specifically and considered. No reason is assigned why these documents are not believed. Thus, it is a case of not taking into consideration relevant material on record. It is further submitted that relying on these documents and other material, the Income Tax Department has held that the gold belonged to the entire family and other members of the family over and above petitioner No. 1. It is evident that the Collector and Appellate Authority as well as the Revisional Authority has not taken into consideration the documents which were relied upon by the department itself. After taking into consideration the said documents, if the departmental authorities had come to a different conclusion, it would have been a different matter. In the instant case, it appears that making reference to these documents in the narration of events, the Collector of Central Excise, Baroda has not referred to these documents while arriving at the findings. Thus, the order passed by the Collector and subsequently confirmed by the Appellate Authority and the Government of India cannot be sustained on the short ground that the relevant material has not been taken into consideration while passing the impugned orders. Hence, the petition is required to be allowed. But, at the same time the matter would be required to be remanded to the Collector of Central Excise to proceed further in accordance with law.

In the result, the petition is partly allowed. The impugned order dated March 16, 1974, passed by the Collector of Central Excise, Baroda, Annexure H to the petition, confirmed by the Gold Control Administrator on Gold Control Appeal by order dated July 25, 1977 (Ann. ''I'' to the petition) and the order passed by the Government of India dated September 15, 1980, produced at Annexure J to the petition, are hereby quashed and set aside and the matter is remanded to the Collector of Central Excise, Ahmedabad. (It is stated at the bar that the powers of Collector of Central Excise, Baroda, are now transferred to the Collector of Central Excise, Ahmedabad and hence the matter is remanded to the Collector of Central Excise, Ahmedabad). The Collector of Central Excise, Ahmedabad, shall proceed further with the matter in accordance with law. Rule made absolute with no order as to costs.