Contemporaneous gold account entries breach can attract penalty even without confiscation, though the sanction may be reduced as disproportionate.

Penalty under Section 74 of the Gold Control Act, 1968 remains sustainable where a licensed dealer fails to make contemporaneous entries in statutory records under Section 55 and Rule 13, even if the seized gold ornaments are not ultimately confiscated. The statutory liability arises from the contravention itself, because confiscation is not a precondition to penalty when the act or omission renders the gold liable to confiscation. The Tribunal also accepted that the sanction should be proportionate to the facts and reduced the penalty from Rs. 5,000 to Rs. 1,000.

---

---

Issues: (i) Whether a penalty under Section 74 of the Gold Control Act, 1968 could be sustained where the seized gold ornaments were not ultimately confiscated but the dealer had contravened Section 55 by failing to make contemporaneous entries in the statutory records. (ii) Whether the penalty of Rs. 5,000 was excessive in the facts of the case.

Issue (i): Whether a penalty under Section 74 of the Gold Control Act, 1968 could be sustained where the seized gold ornaments were not ultimately confiscated but the dealer had contravened Section 55 by failing to make contemporaneous entries in the statutory records.

Analysis: The statutory scheme required licensed dealers to maintain accounts contemporaneously under Section 55 and Rule 13 of the Gold Control Rules, 1968. Failure to record the transaction in the prescribed manner amounted to contravention of the Act, even if the authority chose, in the circumstances, not to order confiscation under Section 71. Section 74 fastened liability to penalty on any person whose act or omission rendered the gold liable to confiscation; it did not make confiscation a necessary precondition for penalty. The circular relied upon by the respondent was treated only as a guideline on extenuating circumstances and could not override the statutory mandate.

Conclusion: The penalty was legally sustainable notwithstanding the non-confiscation of the gold ornaments.

Issue (ii): Whether the penalty of Rs. 5,000 was excessive in the facts of the case.

Analysis: The Tribunal accepted that the contravention did not call for the higher amount imposed and followed its consistent approach in similar cases that a proper, lower penalty would meet the ends of justice and ensure future compliance.

Conclusion: The penalty was reduced from Rs. 5,000 to Rs. 1,000.

Final Conclusion: The departmental appeal succeeded on the legality of penalty under Section 74, but the penalty amount was moderated in view of the facts and the need for a proportionate sanction.

Ratio Decidendi: Where a dealer fails to make contemporaneous statutory entries for gold transactions, penalty under Section 74 of the Gold Control Act, 1968 is maintainable even if confiscation is not ordered, though the quantum of penalty remains subject to proportional reduction on the facts.

---