D MUNNALAL Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE petitioner is aggrieved by the prosecution launched against him as per Annexure -F as also by the refusal of the respondents to release 1571.500 gms of gold in the form of chains and penalty of Rs. 3,000/ -.

(2.) THE circumstances in which this matter arises are as follows : On 19 -5 -1987 certain gold articles were recovered from the possession of the petitioner. The department on finding that the gold articles were primary gold effected seizure of the same under the Gold (Control) Act, 1968 and initiated adjudicatory proceedings. The Collector of Central Excise made an order directing confiscation of the said gold articles. On the matter being carried in appeal to the Customs, Excise & Cold (Control) Appellate Tribunal, Madras, it examined the gold articles in the presence of the parties and their counsel and made the necessary observations in the course of the proceedings that they were fully polished and manufactured gold chains in running length. Only because they had to be cut to desired length and a hook attached would not cease to be gold ornaments and ipso facto become primary gold within the meaning of Section 8(1) of the Act. According to the Tribunal, the gold ornaments in question did not fit in with the definition of primary gold as provided under Section 2(r) of the Act. The Tribunal further concluded that the gold ornaments produced before it were neither unfinished nor semi -finished but were fully finished. In those circumstances, it set aside the order made by the Collector of Central Excise and exonerated the petitioner of the charge levelled against him. Prior to the passing of the order by the Tribunal, a complaint had been lodged on 6 -7 -1988 before the learned Chief Judicial Magistrate, Gulbarga, under Sections 8(i), (ii) and (iii), punishable under Section 85 of the Act. No other charge was alleged in the complaint lodged. Inasmuch as the Tribunal on an appraisal of the evidence and on inspection of the gold articles in question came to the conclusion that they were not primary gold but finished gold ornaments, it may not be expedient in the present case to continue the prosecution because the Tribunal itself as the last fact finding authority so far as the adjudicatory process is concerned and in an adjudication where findings are recorded on probabilities held that the gold articles do not constitute primary gold but only gold ornaments not attracting offences under Sections 8(i), (ii) and (iii) of the Act. When the departmental adjudicatory body itself has given a finding it would not be proper to continue the prosecution. This view is supported by the decision of the Supreme Court in Uttam Chand & Others v. ITO [ : [1982]133ITR909(SC) ].

(3.) HOWEVER , the learned Counsel for the respondents submitted that against the decision of the Tribunal a reference application is pending consideration before this Court. As observed by the Supreme Court in Jayappan's case that mere chance of success by itself will not be a ground to initiate prosecution. That may not be a ground, in the present case, to continue the prosecution. On the facts and circumstances of this case, it must be held that the prosecution is inexpedient. Accordingly, the prosecution initiated as per Annexure -F in this case, shall stand quashed. Consequently, a direction shall issue to the authorities to return the gold articles seized by them from the petitioner and also refund the penalty. The respondents shall comply with the directions contained in this order within a fortnight from today. In the result, this petition is allowed. Rule made absolute.