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2023 (2) TMI 104 - AT - CustomsClandestine Removal - 997.09 carats of diamonds and 98.34 carats of diamonds - processing loss - whether allegation of substitution of diamonds was established through the evidence? - HELD THAT:- On perusal of the Order-in-Original particularly para 11.2.1, wherein the original authority has held that the diamonds did not have marking and serial number unlike products namely, Televisions, Motor Vehicles etc. and therefore, it is not possible to identify whether diamonds available in the stock were same as imported. The same argument also applies to the goods which were seized under reasonable belief that they were substituted. Applying the observation by the original authority that it is not possible to identify diamonds whether the same are imported or substituted, we come to a conclusion that the seizure of diamonds under the allegation that they were substituted, was on a erroneous belief that they were substituted as such a belief cannot be established for the same reason which is given by the original authority. There are no merit in the seizure of 1095.43 carats of diamonds and subsequent proceedings in respect of the same including confiscation, imposition of redemption fine, demand of differential customs duty and imposition of penalty on the appellants - Insofar as shortage of 89.15 carats of diamonds is concerned, the same is argued to be treated as processing loss. The prosecution has failed to establish any clandestine removal of the same and could identify the person to whom the same were allegedly sold or transferred. In view of the failure of the prosecution to establish any clandestine removal of 89.15 carats of diamonds, it is held to be processing loss and since the same are not taken out of SEEPZ, i.e. out of Bond customs duty cannot be demanded on the same. Appeal allowed.
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