Shri Charanjit Lal Mehra vs Customs, Excise And Gold ...
2011 Latest Caselaw 601 Del

*                       THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Judgment delivered on: 02.02.2011

+                           Customs Act Case No.1/1990

SHRI CHARANJIT LAL MEHRA                           ..... APPELLANT

                                       Vs


CUSTOMS, EXCISE AND GOLD (CONTROL)
APPELLATE TRIBUNAL, NEW DELHI & ANR.                ..... RESPONDENTS

Advocates who appeared in this case:

For the Appellant : None For the Respondents : Mr. Mukesh Anand, Sr. Standing Counsel with Mr. R.C.S. Bhadoria & Mr. Shailesh Tiwari, Advocates

CORAM :-

HON‟BLE MR. JUSTICE SANJAY KISHAN KAUL HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ? No

2. To be referred to Reporters or not ? No

3. Whether the judgment should be reported No in the Digest ?

RAJIV SHAKDHER, J (ORAL)

1. 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 :-

"1. 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.

2. (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.

3. 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?"

2. 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 under

section 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 & 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 under section 82 B (3) of the

G.C. Act.

3. 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.

4. 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 „Kashinath Vs. CCE, Allahabad AIR 1972 Allahabad

16 SB (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 „Kashinath Vs. CCE, Allahabad AIR 1972 Allahabad 16 .

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.

SANJAY KISHAN KAUL,J

RAJIV SHAKDHER, J

FEBRUARY 02, 2011 yg