Third-party gold cannot be confiscated without owner knowledge or connivance, though primary-gold and register breaches still justify proportionate relief.

Confiscation of seized gold and gold ornaments could not extend to property proved or plausibly shown to belong to customers, because third-party goods cannot be confiscated absent evidence that the owners knew of, or connived in, the contravention; the confiscation was therefore confined to the appellants' own liable gold. The appellants were, however, found to have breached the restrictions on possession of primary gold and the duty to maintain the prescribed register, since they admitted holding excess primary gold and had not kept the GS-13 accounts as required. Relief was correspondingly reduced by limiting the redemption fine to the appellants' own contravening goods, while the penalty remained undisturbed.

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Issues: (i) Whether confiscation of the entire seized gold and gold ornaments was legally sustainable when part of the goods was claimed to belong to customers. (ii) Whether the appellants had contravened the statutory restrictions on possession of primary gold and the requirement to maintain accounts in the prescribed register, and what relief should follow.

Issue (i): Whether confiscation of the entire seized gold and gold ornaments was legally sustainable when part of the goods was claimed to belong to customers.

Analysis: The evidence showed that the seized articles were not wholly the appellants' property. The packets bore customers' names, affidavits of owners had been produced, and the seizing officer accepted in cross-examination that the names of customers were found on the packets. The record also indicated that the department did not verify the customers' claims or establish that the owners had knowledge of, or connived in, the alleged contraventions. Under the confiscation provision, property belonging to third parties could not be confiscated merely because it was in the appellants' custody.

Conclusion: Confiscation of the entire seized quantity was not sustainable; only the appellants' own liable gold could be proceeded against.

Issue (ii): Whether the appellants had contravened the statutory restrictions on possession of primary gold and the requirement to maintain accounts in the prescribed register, and what relief should follow.

Analysis: One appellant admitted that about 1 kg of the seized material belonged to the appellants and represented primary gold, which exceeded the permissible limit for certified goldsmiths. The prescribed GS-13 form did contain a column for description of articles manufactured and primary gold left over, and the appellants had not maintained the register as required. The explanation that the entries could be deferred until completion of manufacture was rejected. At the same time, the Collector's figure of confiscation was excessive because the seized goods were not entirely attributable to the appellants.

Conclusion: Contravention of the restrictions on primary gold and the account-keeping requirement was established, but the fine in lieu of confiscation had to be reduced. The penalty imposed on each appellant was upheld.

Final Conclusion: The order was sustained only to the extent of the appellants' own contraventions, while the confiscation and redemption fine were modified to confine liability to the appellants' own primary gold and the penalty remained undisturbed.

Ratio Decidendi: Goods belonging to third parties cannot be confiscated unless it is shown that the owner had knowledge of, or connived in, the contravention, and where the violation is established only in respect of the assessee's own goods, relief must be proportionately confined to that liability.

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