SIVASANKARAN CHETTIAR Vs. COLLECTOR OF CENTRAL EXCISE MADURAI

JUDGEMENT

(1.) In this appeal directed against the concurrent orders below of the Additional Collector and the Appellate Collector of Central Excise refusing the grant of a dealer's licence, on an application in the prescribed form, to the Appellant in partnership with his son, the material facts, in a brief compass, are - (a) consequent upon a check carried out on 21-1-1967 in the licensed business premises of M/s Muthuswamy Chettiar & Sons, Madurai, of which the Appellant and his son were, amongst others, partners, two bags containing 307.00 gms. of primary gold, 2583.200 gms. of gold ornaments unaccounted in the prescribed registers of the firm along with some amount in cash and 368 chits containing identifying particulars were seized (b) the Appellant was found to have contravened Rules 126F(1), 126C(1) and 126H(2) of the Defence of India Rules, 1962 and was penalised by (i) confiscation of the entire gold weighing 2890.200 gms. in all, subject to redemption by the Appellant himself, or by the firm of which he was a partner on payment of a sum of Rs. 25.000.00 and (ii) penalty of Rs.5, 000.00 under Rule 126L(16) of the said Rules (c) the penalty imposed on the Appellant had been confirmed by the Gold Control Administrator in Appeal as well as the Government of India in Revision (on 24-7-1978) and had now become conclusive (d) on an application by the Appellant and his son for grant of a dealer's licence in the prescribed form sometime towards the end of 1980 or the beginning of 1981, a notice was issued on 7-7-1981 requiring the Appellant to show cause as to why the application 'should not be rejected", inasmuch as, (i) "he was involved in an offence during the year 1967 for being in possession of ornamental gold without proper entry in the Gold Control account"and a penalty had been imposed on him, and(ii)" Rule 2(e)(l) of the Gold Control (Licensing of Dealers) Rule", 1969, prescribes that a Gold Dealer Licence should be given only to a person who had not been convicted of an offence or otherwise penalised under the Gold Control Act, 1968." (e) on cause being shown, the Additional Collector of Central Excise, Madurai, was not satisfied that the Appellant was qualified under Rule 2(e)(i) of the aforesaid Rules to be granted a licence and consequently rejected the application (f) the aforesaid rejection was confirmed in appeal by the Appellate Collector of Customs by her order No. C.24 GC/23/1981, dated 21-1-1982 and communicated to the Appellant on 4-5-1982.

(2.) In the present appeal, the Appellant impugns the rejection on the grounds, inter aliaof the failure of the afore said authorities to - (a) furnish a reasoned order in appeal (b) appreciate that - (i) the offence in question was committed not in his individual capacity by the Appellant but as partner of M/s Muthuswamy Chettiar & Sons (ii) nevertheless, the licence was renewed year after year in favour of the aforesaid firm (iii) the Appellant's conduct after the check and seizure had been so much above board that he is entitled to a licence in his own name (iv) the revision petition in the penalty proceedings was preferred on behalf of the firm only in respect of proceedings, which, in essence, were initiated against it and the Appellant cannot be vicariously held liable for the act of the firm (c) notice the true purport and effect of Rule 2(e) which merely enumerates the matters to which regard shall be had before the issue of a licence and (d) consider that, once the Appellant had been convicted, he is not permanently debarred in terms of the Rules from the grant of a licence, notwithstanding his unimpeachable conduct ever since.

(3.) (a) In the course of arguments, the learned counsel for the Appellant, while traversing the same ground, however, fairly conceded that it is no longer open to him to contend against - (i) the culpability of the Appellant in his individual capacity and not on behalf of the firm in view of the finality of a finding to that effect in the proceedings relating to the levy of penalty or (ii) the grant of licence to the firm and not to the Appellant in his individual capacity during the intervening years between the seizure and the instant application for licence, so that the periodical renewal of the licence in favour of the firm is not of any relevance in the matter of the grant of licence to the Appellant either solely or in partnership with his son. (b) He, however, urged that - (i) the order-in-appeal of the Appellate Collector was vitiated being unreasoned (ii) it was not a mandatory requirement of Rule 2(e) of the Gold Control (Licensing of Dealer's Rules) that an application by a person on whom any penalty was imposed should be straightaway rejected for that reason alone, without more (iii) on the language of the aforesaid Rule 2(e), the previous penalisation of the applicant for licence can be only one of the factors, amongst others, which "the Administrator shall have regard to" and not the sole criterion (iv) accordingly, it has to be cumulatively considered along with the other criteria and, in particular, these specified in clauses (a), (b) and (c) of Rule 2 of the Licensing Rules, relevant to the instant case (v) it is only after such consideration of the totality of the relevant criteria that an application for licence could be either rejected or granted (vi) there is nothing on record to show that all the aforesaid criteria relevant to the instant case had been duly considered and weighed against the penalisation of the Appellant specified in Rule 2(e) of the Licensing Rules (vii) both the authorities below had been obsessed with the penalisation of the Appellant previously to the exclusion of all other relevant criteria in rejecting the application for licence (viii) notwithstanding that the refusal of a licence was discretionary, it could still be interfered with in appeal, if there was no due regard to factors that are relevant for the grant of licence or the refusal thereof.