BANAMALI DATTA Vs. COLLECTOR OF CENTRAL EXCISE, CALCUTTA

JUDGEMENT

(1.) The applicant Sri Banamali Datta carries on business of manufacturing and selling of gold ornaments and silver ornaments and articles at his shop. He possesses a gold dealers licence. On 22nd of Nov., 1978, the Central Excise Officers visited the gold dealers shop of the appellant and seized therefrom 1028.750 grams of gold ornaments including bronze based booties and churies on the ground that the quantities of gold ornaments were in excess of the recorded balance in the statutory book of accounts in Form G.S. 12 maintained by Banamali Datta, the applicant herein. The Central Excise Officers also seized certain books of accounts including G.S. 11 and G.S. 12 registers of the applicant. They also obtained a statement from the applicant. An adjudication order was passed by the Collector of Central Excise, Calcutta on 1st of Oct., 1980 in which the Collector of Central Excise, Calcutta directed confiscation of the aforesaid assorted gold ornaments with an option to redeem the same on payment of a fine of Rs. 80,000.00. He also imposed a penalty of Rs. 5 lacs on the applicant for the contravention of the various provisions of the Gold Control Act (hereinafter referred to as'the Act'). The applicant came up in appeal against the aforesaid order of the Collector of Central Excise, Calcutta. The Appellate Tribunal reduced the penalty to Rs. 2 lacs from Rs. 5 lacs and had set aside the order of confiscation and the fine awarded by the Collector by holding that the seized ornaments could not be confiscated. Accordingly, the confiscation order was set aside and the ornaments were ordered to be released. Against the aforesaid order of the Appellate Tribunal, a reference application was filed by the applicant under Sec. 82B of the Gold Control Act, 1968 which was rejected by the Customs, Excise and Gold (Control) Appellate Tribunal, Calcutta, on a finding that the questions of law formulated in the said reference application were not fit to be referred before this Court for decision. Feeling aggrieved By this order of rejection the applicant came to this Court and by an order dated 25th of Jan., 1988, a Division Bench of this Court made the rule absolute and ordered that ..for the Appellant for the Respondent the Customs, Excise and Gold (Control) Appellate Tribunal, East Regional Bench, Calcutta, to submit a statement of case relating to the following questions of law for its consideration:-

(2.) Let us now deal with the first question as posed here in above. This bring us to the consideration of Notification No. S.O. 3155 dated 1st Sept., 1968 as noted in the question posed here in above. This notification was issued by the Ministry of Finance (Department of Revenue and Insurance) on 1st Sept., 1968 and was published in the Gazette of India Extraordinary Part II, at page 923. This says that in exercise of the powers conferred by sub-section (2) of Sec. 4 of the Gold (Control) Act, 1968, the Central Government hereby appoints all Officers of the Central Excise of and above the rank of Sub-Inspectors and all Officers of the Customs of and above to rank of preventive Officers as Gold (Control; Officers for the purpose of enforcing the provisions of the said Act. Sec. 4(2) of the Act lays down that the Central Government may by notification appoint as many persons as it thinks tit to be Gold (Control) Officers for the purpose of enforcing the provisions of this Act. From the above, it is pellucid that in terms of Sec. 4(2) of the Act, the Central Government was authorised to appoint as many persons as it thought fit to be Gold Control Officers by issuing suitable notifications. In the present, case, it is not in dispute that a notification to this effect has been issued by the Central Government. It was also not disputed that the Officers, covered under this notification and appointed as Gold Control Officers, had raised the premises of the appellant and had effected the search, seizure etc. The applicant, however, had challenged this power of the Gold Control Officers to effect search and seizure in the shop room of the applicant on the ground that since the notification was issued under the Ministry of Finance, Department of Revenue and Insurance, it was a nullity because of the Government of India (Allocation of Business) Rules, 1961 framed under Clause III of Art. 77 of the Constitution. Part-C of these rules relates to Department of Revenue under the Ministry of Finance. According to Rule 10 of Part-C of this rule, all matters relating to Central Excise Gold Control administration were to be under the Department of Revenue. On behalf of the appellant, it was submitted that this notification was issued on 2nd July, 1997 before which the Gold Control Administration was not placed under the Department of Revenue. According to the applicant, prior to 2nd July, 1997, the Ministry of Finance had no concern with the Gold Control Administration and that being the position at that stage, the Ministry of Finance had no competence to issue the notification in issue. Accordingly, Mr. Guha, the learned Advocate for the appellant submitted that the entire search and seizure effected on 22nd Nov., 1978 was a nullity and not sustainable in law.

(3.) In our view, this submission of Mr. Guha although was attractive but on consideration of the dispute in detail, it is difficult for us to accept the submission of Mr. Guha. On 26th Oct., 1962, the President of India issued a proclamation of Emergency. On the same date, the President of India also promulgated the Defence of India Ordinance. Pursuant to the powers conferred by the said Ordinance, the Defence of India Rules, 1962 was framed on 26th Oct., 1962. This Ordinance was replaced by the Defence of India Act, 1962. Which came into force on 12th Dec., 1962. The Rules framed under the Ordinance were, however, directed to be continued. These Rules were amended by a notification dated 9th Jan., 1963 published in the Gazette of India. By this amendment, Part X1IA under the heading "Gold Control Rules" was inserted in these Rules comprising of Rules 126A to 126Z. Only under these rules, various restrictions were imposed on the possession of gold, gold ornaments, their manufacturing business including the licencing, control etc. on the persons concerned with trade or business thereof. On 10th Jan., 1968, the proclamation of Emergency was withdrawn and, thereafter, the Gold Control Ordinance, 1968 was issued. Subsequently, on 24th Aug., 1968, the Gold Control Act, 1968 was passed and in fact, it came into force on 1st of Sept., 1968. In this Act, the earlier provisions of Gold Control Rules, 1963 were incorporated as modified under the Defence of India (4th amendment) Rules, 1966 with certain alterations and modifications. Even after coming into force of the Gold Control Act, 1968, the provisions of Part XIIA of the Defence of India Rules known as Gold (Control) Rules, 1963 were continued notwithstanding the repeal of Part XUA by the Gold Control Ordinance, 1968. Therefore, from this, it cannot be disputed that the legislature thought it fit to continue with respect to Gold Control ever since Part XIIA was inserted in 1963 in Defence of India Rules, 1962. Three lists in Schedule VII of the Constitution have fallen exclusively under the jurisdiction of the Union of India, State Government or Concurrently within the jurisdiction of both. It cannot be doubted that attempt was made to make these lists exclusive to avoid future complications. At** that stage, it was not expected to foresee all those subjects not existent at the time of framing of these lists which may arise subsequently and, therefore, these lists cannot be said to be exclusive covering all the subjects and the various activities of the Government since thereafter. Therefore, in our view, considering the above aspect of the matter, these lists could not be considered to be I exclusive so as to cover all the future contingencies. Extending this principle to the allocation of business by the President or the Governor under the Constitution of India, it was not necessary for the Government to make allocation of business either under Art. 77(3) of the Constitution or under Art. 166(3) of the Constitution after every new legislation was passed by the Parliament. The allocation of business under Art. 166(3) of the Constitution is made with reference to the time, the allocation is made. It is always made with reference to the three lists of the Seventh Schedule to the Constitution. The executive power of the Centre and the State together extends to matters with respect to such allocations which are made even in advance of the legislation. Similarly, Art. 77(3) of the Constitution confers executive powers of the Centres and the future legislation to be passed by the Parliament. In the case of Godavari Vs. State of Maharashtra, AIR 1964 Supreme Court 1128, the Supreme Court in Paragraph 8 ; observed as follows:- "Allocation of business under Art. 166(3) of the Constitution is not made with reference to particular laws which may be in force at the time, the allocation is made ; it is made with reference to the three lists of the Seventh Schedule to the Constitution, for the executive power of the Centre and the State together extends to matters with respect to which Parliament and the Legislature of a State may make laws. Therefore, when allocation of business is made it is made with reference to the three lists in the Seventh Schedule and, thus, the allocation in the Rules of Business provides for all contingencies which may arise for the exercise of the executive power. Such allocation may be made even in advance of legislation made by Parliament to be available whenever Parliament makes legislation conferring power on a State Government with respect to matters in list 1 of the Seventh Schedule. It was, therefore, in our opinion, not necessary that there should have been an allocation made by the Governor under Art. 166(3) of the power to detain under the Defence of India Ordinance Act and Rules after they were passed; it will be enough if the allocation of the subject to which the Defence of India Ordinance Act and Rules refer has been made with reference to the three lists in the Seventh Schedule and if such allocation already exists, it may be taken advantage of if and when laws are passed. Preventive detention is provided for in List 1, Item 9, for reasons connected with defence, foreign affairs and the security of India, and in Item 3 of List III for reasons connected with the security of a State, the maintenance of public order, or the maintenance of supplies and services essential to the community. The allocation of business made under Art. 166 is in pursuance of these entries in the three lists in the Seventh Schedule and would be available to be used whenever any law relating to these entries is made and power is conferred on the State Government to act under that law. The contention of the appellants that fresh allocation should have been made under Art. 166(3) by the Governor after the passing of the Defence of India Ordinance, Act and Rules must, therefore, fail".