LAWS(SC)-1997-2-75

TRIBHUV ANDAS BHIMJI ZAVERI TRIBHUVANDAS BHIMJI ZAVERI Vs. COLLECTOR OF CENTRAL EXCISE:COLLECTOR OF CENTRAL EXCISE

Decided On February 04, 1997
Tribhuv Andas Bhimji Zaveri Tribhuvandas Bhimji Zaveri Appellant
V/S
Collector Of Central Excise:Collector Of Central Excise Respondents

JUDGEMENT

(1.) This appeal by the assessee is directed against the order of the Customs, Excise and Gold Control Appellate tribunal (CEGAT for short) rendered in Appeal No. G/90/85-NRB dated 30/7/1986. Briefly stated the facts giving rise to this appeal are as under.

(2.) On 21/9/1982, officers of the Income Tax Department raided the business premises of the appellant around 9.30 a. m. and prepared an inventory of gold and gold ornaments found in the premises. After the weighment of the gold and gold ornaments was completed, a copy thereof was delivered to the appellant which showed that 62,190. 830 gm of gold ornaments were found in actual stock, whereas the aggregate balance of gold ornaments in their books of account maintained under the Gold (Control) Act, 1968 (hereinafter called the Act) was 67,537.100 gm on that date. The officers of the central Excise Collectorate, Delhi were called at about 1. 00 p. m. and were associated with the exercise undertaken by the Income Tax authorities. N. K. Zaveri, partner of the appellant firm who was present at the relevant point of time informed the authorities that the transactions reflected under Voucher No. 7489 to 7496 and 7507 to 7511 as well as Receipt (Purchase) Vouchers 1439, 1922 and 1923 had not been entered in the GS-11 and GS-12 accounts. The authorities took this fact into consideration and thereafter reduced the shortage which would have worked out to 5446.217gm to 5014.170 gm. The appellant contends that its partner had raised a protest during the search and had followed it up by a letter dated 6/11/1982. In the letter of protest, it was mentioned that the officers had taken down the weights on the tags to the ornaments without correlating them to entries in the books and the weights were recorded without a meticulous corelation with the relevant entries. It is not necessary to indicate in detail the nature of the protest. But suffice it to say that the weight, as mentioned, was not accurate. On 21/1/1983, the Assistant Collector of Customs and Gold,central Excise Collectorate, New Delhi served the appellant with the show-cause notice. After indicating the aforesaid facts in paras 1 to 3 of the show-cause notice, the appellant was informed that prima facie: (i) there had been a contravention of Section 55 of the Act read with Rule 13 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968 (hereinafter called the Rules) in relation to the gold ornaments weighing 5014.170 gm valued at Rs. 8,02,267. 00 found short in the stock of the said dealer and (ii) the appellants have, by their acts of omission and commission rendered themselves liable to penal action under the Act.

(3.) The appellants were, therefore, asked to show cause why penal action should not be taken against them. To the show-cause notice was appended a list of gold items found during the search. Twenty-nine items were shown in that list with quantity and weight, in some cases, gross weight and in some cases, net weight. A reply to this show-cause notice was sent by the appellants on 21/2/1985. In between the reply and the show-cause notice, it appears that this court ruled in Manick Chand Pal v. Union of India at p. 478 that the GS-11 and GS-12 Forms required to be maintained under Section 55 of the Act read with Rule 11 of the Rules brought into force with effect from 31/10/1975, were defective and did not disclose the true and complete account of the gold in the possession and custody of the licence dealers. It went on to illustrate how the said forms were defective after the omission of Form GS-10 since it also did not take care of the loss of weight (ghat) which would necessarily fall on remaking, melting, refining and polishing of new ornaments from old ornaments etc. Suffice it to say that this court felt that after the omission of GS-10, the obligation on the dealer to maintain the accounts in Forms GS-11 and GS-12 was an onerous one in that they do not provide adequate and proper columns which would reflect a true and complete account of gold owned or possessed or held or controlled by the dealer. This court, therefore, directed the administrator to look into these grievances and remedy the same by taking appropriate action and expressed the hope that in the meanwhile, no action, penal or otherwise, would be taken against the licensed dealers for failure to maintain accounts in the amended Forms GS-11 and GS-12. An attempt was made by the learned Additional Solicitor General to contend that if the account was not maintained at all in GS-11 and GS-12 Forms, the dealer could be excused but not in cases where the account is maintained in those two forms and isfound to be reflecting shortage of gold. We find it difficult to accept this contention for the simple reason that if the two forms do not reflect the true and correct account of the gold owned or possessed or held or controlled by a the dealer, the mere fact that the dealer in obedience to law maintains the accounts in those forms, cannot put him in a disadvantageous position when compared to a situation where he totally omits to maintain the accounts in those two forms. It may also be mentioned that the appellants, in reply to the show-cause notice, challenged the correctness of the shortfall worked out from the entries in GS-11 and GS-12 in the show-cause notice and contended that the account in Annx. B to the show-cause notice did not represent proper weighment at all and that it would be a travesty to rely on such a document. Proceeding further, referring to the search list prepared, it was stated that it was impossible for anyone to be assured that there was no error in working out the true quantity of gold as lying in the stock of the dealer at the relevant date. It would, thus, be seen that the appellants challenged the correctness of the very basis on which the shortage was worked out in the show-cause notice. Thereafter, without prejudice to the said contention, the appellants proceeded to state that the comparison between the stocks in GS-12 and in the inventory ought to have been on the basis of net weight whereas some of the items reflected the gross net weight only without deducting the weight of lac, beads, threads, enamel, stones etc. and if these deductions were made, the shortage would further shrink to 1400 gm only. On this premise, the appellants questioned the action proposed to be taken under the show-cause notice. The Collector of Customs and central Excise, on adjudication of the show-cause notice, found the petitioner guilty of violation of Section 55 of the Act read with the relevant rules and imposed a penalty of Rupees five lakhs. The appellant, thereupon, preferred a writ petition CWP No. 12408 of 1985 questioning the correctness of the shortfall worked out on entries in GS-11 and GS-12 and the penalty imposed on the basis thereof. This court granted an interim stay against the recovery of the penalty amount. However, on 6/12/1985, the authority suspended the appellant's licence to deal in gold which compelled the appellant to move a CMP No. 48672 of 1985 in the pending writ petition and this court granted an interim stay against the suspension of the licence also. Thereafter, by an order dated 15/1/1986, this court ordered as under: