By TIOL News Service

MUMBAI, FEB 04, 2013: ON 17th February 1989 the Collector of Customs (Preventive) Mumbai passed an order by which gold ornaments seized from the Petitioner were confiscated under Section 71 of the Gold (Control) Act, 1968. The Collector permitted redemption on the payment of a redemption fine of Rs.75,000/- and also imposed a personal penalty of Rs.40,000/-.

The order passed by the Collector was challenged by the Petitioner in appeal before the CEGAT. By an order dated 7 April 1993 the Tribunal, while noting that the order of confiscation of the gold and gold ornaments weighing 1522.150 gms had not been seriously challenged, reduced the redemption fine to Rs.40,000/- and the personal penalty to Rs.20,000/-.

After nearly eighteen years, on 23 rd August, 2011, the petitioner made a representation to the department for return of the sale proceeds of the gold after adjusting the government dues.

The Assistant Commissioner while rejecting the representation noted that the Petitioner was given an option to redeem the gold on the payment of the redemption fine as directed by the CEGAT on numerous occasions. Upon the failure of the Petitioner to do so, the gold and ornaments were disposed of. Since the ownership of the gold and ornaments upon confiscation vested with the government, the request made by the Petitioner for the payment of the sale proceeds with interest was rejected.

The petitioner is, therefore, before the Bombay High Court challenging the communication dated 16 December 2011 and praying for a direction for the return of the gold ornaments or in the alternative, the payment of the sale proceeds together with interest.

In his affidavit-in-reply, the Assistant Commissioner of Customs submitted that the Petitioner failed to pay the redemption fine despite the option granted by the Tribunal in its order dated 7 April 1993 for nearly 15 years since the passing of the order of the Tribunal; that the gold which had been confiscated vested absolutely in the Union of India and upon the failure of the Petitioner to pay the redemption fine within a reasonable period the Revenue sold the confiscated gold on 22 March 2006. It is also informed that in the meantime, communications were addressed to the Petitioner on 28 October 1991, 28 May 1993, 29 April 1997 and 28 July 1997 inspite of which the Petitioner did not pay the redemption fine. Besides it was stated that the Petitioner was informed on 26 May 2003 that as a result of the failure of the Petitioner to pay the redemption fine, the Commissioner of Customs had passed an order for the disposal of the ornaments as a result of which the release of the gold ornaments could not be allowed. Despite this, no steps were taken by the Petitioner. Once again on 3 April 2006, 23 February 2010 and 30 March 2010 communications were addressed to the Petitioner.

The petitioner submitted that upon the passing of the order of the Tribunal they addressed a communication to the Superintendent, Gold Control on 14 October 2002 seeking permission to redeem the gold ornaments and expressing a readiness to pay the requisite amount. Prior thereto, according to the Petitioner, they had addressed a letter dated 28 April 1993.

In the affidavit in reply it has been stated by the Revenue that Exhibits D and G to the Petition which are respectively the letters dated 28 April 1993 and 14 October 2002 are typed copies of alleged letters which have not been acknowledged by the Respondents and of which copies are not available on the record. This defence of the Revenue gains credence on the basis of the correspondence addressed by the Petitioner in 2009. Inasmuch as by his letters dated 18 February 2009 and 8 December 2009 the Petitioner referred to the "enormous delay" on his part in paying the redemption fine and penalty and admitted that due to a severe financial crunch, he was unable to pay the fine and penalty.

The High Court observed -

"...The contents of these letters dated 18 February 2009 and 8 December 2009 clearly belie what is sought to be stated in the alleged letters dated 28 April 1993 and 14 October 2002 (Exhibits D and G) that the Petitioner was ready and willing to pay the redemption fine and penalty. After the final order of the Tribunal, the Petitioner took no steps whatsoever until 2009 when he addressed a communication to the Respondents. As stated in the affidavit in reply, the Petitioner was put on notice by the Superintendent of Customs (Preventive), Gold Control, Mumbai by letters dated 28 May 1993, 29 April 1997, 28 July 1997, 26 May 2003, 3 April 2006 and 23 February 2010. The contents of the affidavit in reply have not been traversed in rejoinder. On this state of the record, it is apparent that the Petitioner was himself to blame in not paying the redemption fine within a reasonable period. A period of nearly 18 years elapsed before the Petition was filed and this can by no stretch of imagination be regarded as a reasonable period. The Petitioner, it appears from the record, was facing proceedings under the Income Tax Act 1961, but the order of the Commissioner of Income Tax (Appeals) II, Mumbai was passed on 16 September 2002 (Exhibit E). Even thereafter no steps were taken by the Petitioner. The gold was ordered to be confiscated. The option of redemption was granted to the Petitioner which he failed to exercise. The gold having vested absolutely in the Union Government, no fault can be found in the action that was pursued of selling the confiscated property. In these circumstances, the prayer for the return of the gold ornaments or in the alternative, for the payment of the sale proceeds cannot be acceded to."

Holding that there is no merit in the Petition, the same was dismissed.

In passing: Gold prices 10 gms - 1989 - Rs.3140/- ; 2011 - Rs.26400/- ; 2012 - Rs.30000/-.

There is no calamity greater than lavish desires. There is no greater guilt than discontentment. And there is no greater disaster than greed. - Lao-Tzu.

(See 2013-TIOL-79-HC-MUM-CUS)