Inherited gold coins escape confiscation, while clandestine gold dealing without a licence justifies confiscation and penalty relief limits.

Inherited gold coins described as ancestral property were held outside Section 8(5) of the Gold (Control) Act, because that restriction was treated as applying to coins received by gift or transfer, and there was no charge of non-declaration; their confiscation was therefore set aside. By contrast, the quantity and form of the primary gold, together with surrounding circumstances, supported a finding of repeated clandestine gold dealings and contravention of the licensing provisions, so confiscation of the primary gold and ornaments, with redemption fine, was sustained. The penalty on the mother was also set aside because the materials did not show her involvement in the business.

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Issues: (i) Whether 15 gold coins described as ancestral gold were liable to confiscation under Section 8(5) of the Gold (Control) Act; (ii) whether the primary gold and gold ornaments were liable to confiscation for carrying on gold business without a dealer's licence and for contravention of the Act; (iii) whether the penalty imposed on the mother was sustainable.

Issue (i): Whether 15 gold coins described as ancestral gold were liable to confiscation under Section 8(5) of the Gold (Control) Act.

Analysis: The coins were described in the seizure panchnama as ancestral coins. The prohibition in Section 8(5) was held to relate to receipt of coins by way of gift or transfer, and not to inherited gold coins. There was also no charge or finding of non-declaration in the show cause notice or the order.

Conclusion: The 15 gold coins were not liable to confiscation and were directed to be returned to the assessee.

Issue (ii): Whether the primary gold and gold ornaments were liable to confiscation for carrying on gold business without a dealer's licence and for contravention of the Act.

Analysis: The quantity and form of the primary gold, consisting of rava, foils, patyas and wires, together with the surrounding circumstances, indicated repeated manufacturing activity and clandestine dealings in gold. The evidence did not support the claim that the primary gold and ornaments were merely ancestral family property. The gold ornaments were found from different places, and the surrounding facts supported a finding of contravention of Section 27(1) of the Act. In these circumstances, absolute confiscation of the primary gold and confiscation of the ornaments, with redemption fine, were upheld.

Conclusion: The confiscation of the primary gold and gold ornaments, and the redemption fine, were sustained.

Issue (iii): Whether the penalty imposed on the mother was sustainable.

Analysis: The materials did not show that the old lady was engaged in the clandestine gold business. The admission and conduct relied on by the department related to the son, not the mother. Penalty on her was therefore unwarranted.

Conclusion: The penalty imposed on the mother was set aside.

Final Conclusion: The appeal succeeded only to the limited extent of setting aside confiscation of the 15 gold coins and the penalty on the mother, while the confiscation of the primary gold and gold ornaments, the redemption fine, and the son's penalty were maintained.

Ratio Decidendi: Inherited gold coins are not hit by the restriction on possession under Section 8(5), whereas repeated dealing in gold without a dealer's licence can justify absolute confiscation of primary gold and confiscation of ornaments found to be connected with such clandestine business.

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