BASDEO SHAW v. COLLECTOR OF C. EX. — 1988 DIGILAW 415 (CAL)

AJIT K. SENGUPTA, J. ( 1 ) IN this application under Article 226 of the Constitution of India the petitioner has challenged the order dated 25th March; 1987 passed by Customs, Excise and Gold (Control) Appellate Tribunal refusing to release the seized and confiscated gold to the petitioner upon payment of redemption fine. ( 2 ) THE brief facts leading to this application are that the petitioner carried on money lending business against deposits of gold and silver ornaments. The petitioner, it is alleged, is virtually an illiterate person and knows only to sign his name in Hindi. He is 87 years old. The petitioner possesses a money lending licence. According to the petitioner, he handed over some old ornaments belonging to the family and forfeited ornaments to one goldsmith, Panchamlal Shaw for melting and for preparing new ornaments out of the same in view of marriage of a boy and a girl in his family. Accordingly, he had made over 111 tollas 11 annas of gold to the said Panchamlal Shaw who melted the said gold and kept the same with the petitioner for safety. According to the petitioner, the said Panchamlal Shaw would take the melted gold for making ornaments as and when required. The Customs Authorities searched the shop and residential premises of the petitioner and recovered the said 111 tollas 11 annas of primary gold as well as some gold ornaments and sovereigns. In one of the gold bars, there was alleged a fictitious marking of foreign gold. The said foreign marking was a fictitious one and the same was proved in the Customs proceedings and accordingly the Customs proceedings against the petitioner was dropped. The Collector of Central Excise however, confiscated the said 111 tollas 11 annas of gold under Section 71 (1) of the Gold Control Act, 1968 and released gold sovereigns and imposed a fine of Rs. 1,000/- on the petitioner and his son, Gopal Shaw. The Gold Control Administrator held that contravention of Section 8 (1) of the said Act was established. The revisional application preferred by the petitioner was rejected by the Special Secretary, Government of India. Thereafter, the petitioner moved an application under Article 226 of the Constitution challenging the said order of the Special Secretary of the Govt. of India. The said application was numbered as C. R. No. 5969 of 1981. By the judgment dt. The revisional application preferred by the petitioner was rejected by the Special Secretary, Government of India. Thereafter, the petitioner moved an application under Article 226 of the Constitution challenging the said order of the Special Secretary of the Govt. of India. The said application was numbered as C. R. No. 5969 of 1981. By the judgment dt. 24th June, 1986 this court directed the Appellate Tribunal which was the revisional authority at the material time to consider as to whether the petitioner should be given option to pay fine in lieu of confiscation of gold. The Court set aside the order of the revisional authority and directed that the Tribunal shall not take into account any of the findings of the revisional authority and the Tribunal should decide the case on merits. Pursuant to the said order of this Court, the Tribunal granted personal hearing to the petitioner. The Appellate Tribunal in its order held that contravention of Section 8 (1) of the Act is of a serious nature. The Tribunal affirmed the finding of the Collector for absolute confiscation and held on the facts of this case, the gold should not be released on payment of redemption fine. This order of the Appellate Tribunal has been challenged in this proceeding. ( 3 ) THE finding of the Tribunal has been assailed as erroneous. The question relating to payment of redemption fine in lieu of confiscation of gold was not before the Collector. This Court by the order dated 24th June, 1986 directed the Tribunal to decide the case on merits. Accordingly, the Tribunal ought not to have taken into account the finding of the Collector in rejecting, the prayer of the petitioner upon payment of redemption fine. The ground which weighed with the Tribunal is that contravention of Section 8 (1) of the Act is of a serious nature. The petitioner, admittedly, did not take my declaration in respect of the primary gold as enjoined in Section 8 (1) of the Act. It is because of the failure of the petitioner: to make the declaration, the goods are liable to be confiscated. Although there might be contravention of Section 8 (1) of the Act, but it does not necessarily follow that the confiscation should be absolute and redemption should not be allowed even upon payment of fine. It is because of the failure of the petitioner: to make the declaration, the goods are liable to be confiscated. Although there might be contravention of Section 8 (1) of the Act, but it does not necessarily follow that the confiscation should be absolute and redemption should not be allowed even upon payment of fine. Although the Tribunal rejecting the prayer of the petitioner relied on the order of the Collector, but the Collector did not decide in his order as to whether the petitioner should be allowed to redeem the gold upon payment of fine. The order of the Collector was, therefore, not of any relevance in deciding as to whether redemption fine should be granted or not. The Tribunal should have decided the case without taking into account the order of the Collector. ( 4 ) IT has not been established nor was it the case of the respondents that the said gold was smuggled or of foreign origin. The admitted position is that the confiscated gold was neither smuggled nor of foreign origin. The proceedings initiated under the Customs Act, relating to the said gold were dismissed by the Special Secretary. There was, if at all a technical violation for not making the declaration for the gold under the Gold Control Act. It appears that there is a prevailing practice in the department while ordering confiscation to allow invariably to redeem the gold upon payment of redemption fine. It appears to me that the Tribunal did not take into account the prevalent practice on the circular of the Govt. in this regard. The circular of the Gold Control Administrator issued under Sub-section (4) of Section 4 of the Gold Control Act is as follows :-"the Administrator hereby authorise every adjudicating officer under Section 78, and every Appellate authority under Section 80, of the said Act, to exercise the powers exercisable by me under Sub-section (6) of Section 8 of the said Act, in so far they relate to authorising a person, from when primary gold or articles was seized gold or articles into fine his possession, custody or control consequent on its release with or without fine in lieu of confiscation in pursuance of an order under the said Section 78 or Section 80 as the case may be. Provided that where the release relates to primary gold: (a) such primary gold shall be sold to a licensed dealer or got converted into ornaments, (b) The person concerned shall, within one month of taking back into his possession, custody or control officer, a certificate from the licensed dealer that such primary gold has been converted into ornaments a certificate from the licensed dealer or the certified goldsmith, as the case may be that such primary gold has been so converted. "my attention has been drawn to the view taken by the Delhi Tribunal in an identical case Ramesh Chand and Anr. v. Collector of Customs, New Delhi where the Tribunal after considering the prevailing practice of the department allowed the release of the confiscated goods on payment of redemption fine. It appears that the practice prevalent in the Department in such cases is while ordering confiscation redemption is invariably allowed on payment of fine. The Department cannot take a contrary stand in the instant case. It may be mentioned that the said circular of the Gold Control Administrator although relied on by the petitioners at the time of hearing before the Tribunal, the Tribunal however, did not deal with that contention at all. It has been stated before me that the petitioners undertook to convert the primary gold into ornaments and furnished certificate of the licensed dealer. An undertaking has been given to this court that the petitioner will convert the said primary gold into ornaments and would furnish a certificate of the licence dealer. The Tribunal as it appears, for rejecting the prayer of the petitioner did not reject the said circular of the Gold Control Amendment. ( 5 ) IN the premises aforesaid, I am of the view that the Tribunal fell in error in not giving option to the petitioners to redeem the confiscated gold on payment of redemption fine. This power to give option to release the goods on payment of fine is a power coupled with duty and should be exercised reasonably and not arbitrarily or capriciously. Reliance may be placed on the decision of this Court in S. S. Kothari's case- ( 6 ) IN this case the Tribunal did not act farily or reasonably in rejecting the prayer of the petitioners for redemption of confiscation gold on payment of fine. Reliance may be placed on the decision of this Court in S. S. Kothari's case- ( 6 ) IN this case the Tribunal did not act farily or reasonably in rejecting the prayer of the petitioners for redemption of confiscation gold on payment of fine. In my view, the reasons given by the Tribunal in not allowing the option cannot be sustained. In this case the Tribunal proceeded erroneously in relying the order of the Collector which did not at all consider whether redemption fine should be given or not. It was on the basis of the direction of this Court that the Tribunal was to consider whether the petitioner should be allowed to redeem the gold upon payment of redemption fine. Accordingly, the Tribunal has taken into consideration irrelevant matter in arriving at its finding. The mere IPSE dirit of the Tribunal cannot deprive the petitioner his right of having his gold redeemed upon payment of fine. Secondly the-Tribunal did not take into account the circular at all which permits the release of the gold upon the undertaking given by the assessee regarding the conversion of the primary gold through a licensed dealer. Thirdly the prevalent practice of the department as noted by the Delhi Tribunal was not also considered by the Tribunal at all. In my view, the finding of the Tri. cannot be sustained. ( 7 ) BEFORE I part with this case, I must also dispose of one of the points taken by the respondents. It is contended that this writ petition cannot be entertained inasmuch as a reference application filed by the petitioners against the impugned order of the Tribunal is pending in this Court. However, it appears, that the said reference application was filed in the early part of 1987 and the same has not yet appeared in the list as application for Rule. As indicated earlier, the reference application was rejected by the Tribunal. Reference application under Section 83b (3) is pending. If this Court is of the view that a question of law does arise out of the impugned order of the Tribunal, in that event the Court would direct the Tribunal to submit a statement of case and thereafter the matter would be heard. It may take, a few years before the matter would be heard and finally dispose of. If this Court is of the view that a question of law does arise out of the impugned order of the Tribunal, in that event the Court would direct the Tribunal to submit a statement of case and thereafter the matter would be heard. It may take, a few years before the matter would be heard and finally dispose of. In that view, even if there is alternative remedy, such remedy is expensive and is not an efficacious alternative remedy. It will only delay justice. The petitioners have given an undertaking to this Court that they would not proceed with the reference application if this Court sets aside the order of the Tribunal. As a matter of fact, if the order of the Tribunal is set aside, there would be no question of reference application being pursued any further. ( 8 ) IT may be mentioned that in the case of Union of India v. Sambhunath Karmakar reported in 1986. (2) CLJ Page 253 the Division Bench upheld the order of the Court of the first instance for a direction for payment of the price of gold prevalent on the date of the order of the Collector setting aside the order of seizure as the primary gold and ornaments seized did not longer exist in excise. ( 9 ) FOR the reasons aforesaid this application is allowed. The order dated 25th March, 1987 passed by the Customs, Excise and Gold (Control) Appellate Tribunal is set aside. All the order passed by the concerned authorities are set aside and quashed in so far as the said orders directed absolute confiscation impliedly or expressly rejecting the prayer of the petitioner for an option being given to the petitioner to redeem the confiscated gold weighing 1302. 700 grams on payment of redemption fine. Inasmuch as, the orders of the Collector and Appellate Authorities including the Tribunal are set aside to the extent indicated above,. the Collector of Central Excise (Gold) Cell shall pass appropriate order allowing the petitioner to redeem the seized gold upon payment of redemption fine. In determining the quantum of redemption fine, the Collector shall take into account the value of the gold as of the date of the seizure made on 31st May, 1975. Let the Collector pass an appropriate order within six weeks from the date of communication of this order. In determining the quantum of redemption fine, the Collector shall take into account the value of the gold as of the date of the seizure made on 31st May, 1975. Let the Collector pass an appropriate order within six weeks from the date of communication of this order. After the Collector passes the order allowing the petitioner to edeem the seized gold the petitioner shall deposit such redemption fine and thereupon he respondents shall release the equivalent quantity of gold to the petitioners. The petitioners undertake to this Court to produce the certificate from the certified goldsmith as the licensed dealer in terms of the circular of the Gold Control Administrator as referred to in the judgment within three weeks from the date of release of the said gold to the petitioners. In the event such certificate is not produced by the petitioners, the respondents will be at liberty to take appropriate steps against the petitioners in accordance with law.