YAHYA F. ZAVERI Vs. J. DATTA AND ORS.

JUDGEMENT

(1.) At present, the petitioner carries on business of exporting diamonds (with which this Petition is not concerned) in the name and style of M/s. Y.S. Fazlehusen as the sole proprietor thereof. In 1944, the petitioner was carrying on the business of manufacturing jewellery. From 1953, the petitioner carried on gold import and jewellery export business. The petitioner ceased doing this business in about July 1972. Since 30th April 1963, the petitioner carried on in a bonded warehouse, business of manufacture of gold jewellery using the imported gold belonging to his foreign customers. During the period 1963 to 1972, in connection with this gold jewellery business, the petitioner held the requisite Customs licence renewable from year to year and last renewed till 1972. He also held the requisite licence issued by the Superintendent, Central Excise, Gold Circle, Bombay. The petitioner imported the gold belonging to his various customers, melted it with copper and silver, manufactured the jewellery and after setting the stones and polishing the jewellery, re -exported it to his various foreign customers (to whom the gold belonged) under the requisite permit issued by the Reserve Bank of India. The gold was received by the petitioner without making any payment of duty payable for the same. The petitioner also executed the requisite Bonds he was required to do from time to time.

(2.) The imported gold consignments were brought into the Bonded Warehouse by a Customs escort and were handed over to the Proper Officer In -charge of the Bonded premises, who entered the consignments in an Import/Export Register. The entries were verified and signed by the Customs escort and the Proper Officer In -charge of the Bonded premises. The quantity of gold thus imported by the petitioner was also immediately entered upon its receipt in the Bonded premises in a Register known as "the Gold Register". All the withdrawals required for alloying into different carats according to the requirements of the petitioner's foreign customers for making the different pieces of jewellery and ornaments and all the remnants left after the alloying work was done, were also entered in the Gold Register. The balance of gold remaining in stock after taking the melting loss arising out of alloying was also entered in the Gold Register Simultaneously, entries were made of the items of gold issued for manufacture of the jewellery, of the receipt of the finished jewellery, for the loss of gold at the end of the process and after the work of recovery was done. All the entries, including the ones pertaining to loss of gold in the process of manufacture of the jewellery, were checked and after weighment and verification by the Proper Officer under whose surveillance the entire manufacturing work was done and the bonded warehouse maintained, the Proper Officer initialled the entries in token of his being satisfied as to the correctness thereof. The Proper Officer also maintained his own Register and records wherein was noted the items of gold imported by the petitioner, the ornaments manufactured by the petitioner out of that imported gold and the net loss of gold resulting from the process of manufacturing. These records of the Proper Officer were maintained at the bonded licence warehouse and at the closure thereof the same were taken away by the Proper Officer.

(3.) From time to time, the petitioner submitted the periodical returns of import, export, quantity of manufacturing loss incurred and the stock position to the Customs authorities as also to the Exchange Controller, Reserve Bank of India, showing the imports, exports, loss of gold in the process and foreign exchange earned. From time to time, the petitioner also submitted to the respondents the detailed particulars of the bonds executed for imported consignments for the relevant period, the consignments exported under bond shipping bills, the net loss of gold taken place in the process of manufacture, the percentage of the loss and the allotment of the loss to the different bonds.