Stock-in-trade presumption rebutted by ownership evidence; confiscation and penalty also failed for lack of statutory notice.

A presumption that gold ornaments found in a licensed dealer's premises form part of stock-in-trade can be rebutted by credible evidence of third-party ownership or lawful custody. Here, contemporaneous correspondence, register entries, statements of the claimed owners, and an engraving on one ring sufficiently supported the explanation that the ornaments were samples or items left for repair and polishing, so confiscation and personal penalty were not sustainable on the merits. The proceedings were also invalid because no statutory written notice was issued to the persons claiming ownership, depriving them of the required opportunity to be heard. The confiscation and penalty were therefore set aside.

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Issues: (i) Whether the seized gold ornaments were liable to confiscation and penalty despite the explanations and supporting material produced regarding their ownership and custody; (ii) Whether the adjudication was vitiated for want of notice under the statutory notice requirement to the persons claiming ownership of the gold.

Issue (i): Whether the seized gold ornaments were liable to confiscation and penalty despite the explanations and supporting material produced regarding their ownership and custody.

Analysis: The statutory presumption that ornaments found in a licensed dealer's premises form part of stock-in-trade operates only where there is no acceptable explanation. Here, the appellant consistently explained that the new ornaments belonged to a certified goldsmith and were left as samples, while the old ornaments had been left for repair and polishing. The explanations were supported by contemporaneous correspondence, register entries of the alleged owner, statements of the persons claiming the articles, and an engraving on one of the rings corroborating the claimed ownership of the old ornaments. On that material, the presumption was displaced and the department's case was not sustainable.

Conclusion: The confiscation and personal penalty could not be sustained on the merits and were against the appellant.

Issue (ii): Whether the adjudication was vitiated for want of notice under the statutory notice requirement to the persons claiming ownership of the gold.

Analysis: The notice provision required written notice and an opportunity to represent before confiscation or penalty. No notice had been issued to the persons who claimed ownership of the seized ornaments. That defect struck at the validity of the adjudication because the affected owners were denied the statutory opportunity contemplated by law. The omission was treated as a substantial infirmity, not a mere irregularity.

Conclusion: The proceedings were vitiated for non-compliance with the notice requirement.

Final Conclusion: The lower orders were unsustainable, the confiscation and penalty were set aside, and the appellant obtained consequential relief.

Ratio Decidendi: A presumption that goods found in a dealer's premises form part of stock-in-trade can be rebutted by credible evidence of third-party ownership or lawful custody, and confiscation or penalty cannot be sustained where the statutory notice and hearing requirement to the owner has not been complied with.

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