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2018 (7) TMI 280 - AT - CustomsAbsolute Confiscation - Smuggling - Diamonds - non-notified goods - Baggage Rules - Burden to prove - Held that:- The goods in question are diamonds which are not notified goods in terms of Section 123 of the Customs Act. In these circumstances the onus to establish the smuggled nature of goods is on the Revenue. The Revenue is seeking to discharge the burden of proof regarding placed on it under Section 123 of Customs Act. The entire evidence is in the nature of appellant’s failure to explain Licit possession of diamonds recovered during the investigation. The appellant’s defense that the diamonds found in their custody were part of the diamonds imported earlier by them has been found to be deficient on account of the fact that income tax return shown nil balance as on 31/03/2011. Moreover the appellant’s claim regarding the paper sale made to M/s Aakash diamond was also found to be incorrect as the proprietor of m/s Aakash admitted to have receiving diamonds, in these circumstances the appellant’s defense that the diamonds recovered from the stock of the diamonds imported earlier totally false by relying on aforesaid evidence - It is seen that the entire investigation is in the nature where the appellants have been asked to explain the legal possession or source of the diamonds. The appellants have primarily failed to produce the necessary evidence. Similarly the Revenue has also failed to establish it’s case. While Revenue has created a doubt regarding the Licit acquisition of diamonds seized, no evidence of the same being smuggled has been produced. Section 123 of the Customs Acts puts the onus of establishing smuggled nature of goods on the Revenue, except for the notified goods. Diamonds are not notified under Section 123. In these circumstances by mere failure to explain Licit acquisition of diamonds the burden of proof under Section 123 is not discharged - It is also a fact that diamonds are freely traded in the open market. A person may acquire legally or illegally from the market. Failure to explain legal acquisition does not automatically imply that the goods are smuggled. There are no sufficient evidence has been placed to conclude that the diamonds were smuggled. The case of revenue has not been substantiated by positive evidence and hence cannot be sustained. Appeal allowed - decided in favor of appellant.
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