1981 (9) TMI 136 - HC - Customs

Court upholds confiscation and penalty in gold bangles seizure case, dismissing petition disputing transactions.

The court upheld the orders of confiscation and penalty imposition in a case involving the seizure of gold bangles by Customs and Central Excise Officers ... Gold (Control) - Acquisition of gold by the dealer Issues:1. Seizure of gold bangles by Customs and Central Excise Officers.2. Show cause notice for confiscation and penalty imposition.3. Confiscation order by Deputy Collector and appeal before Collector of Customs.4. Challenge of orders under Article 226 of the Constitution.5. Allegation of authorities exceeding grounds of show cause notice.6. Claim of seized material being ornaments, not primary gold.7. Compliance with Section 31 of the Gold Control Act.8. Application of Section 100 of the Act on precautionary measures.9. Consideration of findings by criminal Court in the case.Analysis:1. The case involves the seizure of gold bangles by Customs and Central Excise Officers from a partnership firm engaged in the gold business. The officers alleged that the ornaments tendered were actually primary gold, leading to a show cause notice for confiscation and penalty imposition.2. The petitioners claimed that the seized gold was ornaments purchased from various customers, disputing the allegation of primary gold acquisition. The Deputy Collector ordered confiscation and imposed a penalty, which was partially overturned by the Collector of Customs in an appeal, reducing the penalty amount.3. The petitioners challenged the orders through a petition under Article 226 of the Constitution, arguing that the authorities went beyond the grounds of the show cause notice. The court examined the provisions of Section 31 of the Act, which regulate the acquisition of gold by licensed dealers, emphasizing the need for compliance with the law.4. The court addressed the discrepancy between the description of the seized material as primary gold in the notice and the petitioners' claim of ornaments acquisition. It emphasized that if the acquisition of ornaments was lawful, the orders could be challenged. However, the authorities found the transactions to be fictitious, leading to a conclusion of non-compliance with Section 31.5. The court also analyzed the application of Section 100 of the Act, which requires precautionary measures by licensed dealers. The petitioners argued that this section did not apply to petty transactions, but the court rejected this argument due to the fraudulent nature of the transactions.6. Additionally, the petitioners sought to rely on the findings of the criminal Court in their favor, but the court clarified that only the conclusions, not the reasoning, of the criminal Court are admissible in such cases. Ultimately, the court upheld the orders of confiscation and penalty imposition, dismissing the petition with costs.7. As a result, the petitioners failed in their challenge, and the court ordered the return of the released gold to the Department. The Department was permitted to pursue penalty recovery proceedings without retaining the released goods during the petition's pendency.