TMI Blog1987 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, 291 Boman Behran Marg, Bombay. Further inquiries from the telephone department revealed that from this telephone number some overseas calls had been made in October, 1983. In view of these circumstances, the premises at 55 Embassy Apartments, 291, Boman Behran Marg, Bombay were searched by the Customs Officers on 27-2-1984. The search party was not permitted to come inside the house by Smt. Khatoon wife of Shri Mg. Farooq and Police had to be called to get entry to the house. During the search of the house, the Customs officers seized a brown coloured Echolac brief case and the same was found to contain semi precious stones of various sizes and weight: Some typed papers were also recovered from the residence. On the following day on 28-2-1984 Shri Md. Farooq appeared before the Customs Officers and his statement was recorded under Sec. 108 of the Customs Act. Further investigations were also made and after holding due enquiry, the Addl. Collector of Customs (P) Bombay passed the impugned order dated 2-8-1984 confiscating absolutely the diamonds and levying a penalty of Rs.1,00,000/- on Shri Md. Farooq U. Memon under Section 112 of the Customs Act. In addition, the briefcase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements Shri Md. Farooq had deposed that he had obtained the diamonds from the brokers on approval basis. On 20-3-1984, he produced the brokers S/Shri Bhansali and Ravindral Solanki before the Customs Officers. Shri Md. Farooq had further deposed that he had obtained diamonds for being shown to the representative of a firm named M/s Rehmat Co., Singapore. He had further stated in his statement that he was a member of the Diamond Merchants Association and of Gems Jewellery Export Promotion Council. He had also stated that the diamonds were received for being shown to the representatives of foreign buyers. In his statement dated 20-3-1984 Shri Md. Farooq gave the names of the foreign buyers as well as the two brokers from whom he had received the diamonds on approval. However, he had not produced the approval memo for the diamonds in question. The advocate submitted that the diamonds were received on trust from the brokers Shri Bansali and Ravindral Solanki, these two brokers had also come up in appeal to the Tribunal. In reply to the query from the Bench as to why they had filed appeals to the Tribunal when no penalties were levied on them, the advocate submitted that this was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the copy of letter dated 31-7-1984 in the Paper Book. Thereafter, correspondence ensued between the Addl. Collector and the appellants and finally the Addl. Collector passed the impugned order on 2-8-1984 which was issued on 19-11-1984. 3. The advocate submitted that Shri Md. Farooq U. Memon s appeal was for released the diamonds recovered from him and setting aside the penalty of Rs. 1,00,000/- levied on him. So far as the appeals of Shri Rajesh K Bhansali, Shri Ravindra Laxmidas Solanki and M/s. Gemstar Company were concerned, they were only parties to the proceedings held by the Addl. Collector and their prayer in appeals was for the release of the diamonds. No penalties had been levied on any of the appellants. 4. The advocate contended that in the panchanamas dated 272-2-1984 and 3-3-1984 the seized articles had been described as semi precious stones. Semi precious stones were not covered under Section 123 of the Customs Act though earlier Section 171-A of the Sea Customs Act covered other stones in addition to the diamonds. But under Section 123 of the Customs Act only diamonds were included. The Addl. Collector had not led any evidence regarding the origin of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding the Collector had held that the recovery of the diamonds was made on 27-2-1984 but the seizure of diamonds in the reasonable belief that they were smuggled took place on 3-3-1984. The advocate submitted that this finding was not correct. Apart from this, the Collector was biased on account of the seizure of 1000 tolas of gold from Shri Fischer at Airport on 5-2-1984 and also the resistance by Smt. Khatoon in permitting the Customs officers to come inside her residence. Shri Kothari submitted that Smt Khatoon did not tender any explanation about the diamonds as she was not aware of the same. The Customs officers were not expert in diamonds and, the panch witnesses who were present from the localities were also not from the diamonds trade. The Collector advanced three reasons for holding that there was reasonable belief that the diamonds were smuggled. These three reasons were sufficient time available to Shri Md. Farooq to satisfy the customs authorities about his source of acquisition, two statements of Shri Md. Farooq dated 20-3-1984 and 3-3-1984 without leading the customs officers anywhere to the source of acquisition/importation and his inability to produce any documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panchanama dated 3-3-1964 did not amount to second seizure. There were 3 factors which caused reasonable belief in the mind of the customs officers to hold that the diamonds were smuggled: Firstly, Shri Md. Farooq had telephonic conversation with an Iranian National from Hotel Oberoi Towers. Secondly, Smt. Md. Farooq obstructed the entry of the Customs officers for the purpose of searching her residence. Thirdly there was no satisfactory account for the diamonds available on the spot. Hence the diamonds had been seized correctly in the reasonable belief they were smuggled. In support of his contention Shri Prabhu relied on Government of India s order contained in 1981 ELT 173. He also relied on the decision reported in 1983 ELT 1966 to show that the burden of proof had not been discharged by the appellant Shri Md. Farooq as he had failed to give the names of the owner of the diamonds or the brokers. Accordingly, the Collector had not accepted the jangad voucher which had been produced subsequently and no accounts had been kept by Shri Md. Farooq in respect of the diamonds. On 3-3-1984 Shri Md. Farooq had stated that he would come again on 5-3-1984 but he failed to turn up. He wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the seizure of diamonds and hence the burden of proof is not on the appellants and therefore the Collector s order of confiscation of diamonds and levy of penalty on Shri Md. Farooq is bad. The learned advocate has further contended that the Collector has no positive evidence to hold that the diamonds are smuggled. Therefore, the main points which fall for consideration in this appeal are: (1) whether Section 123 in applicable; and (2) if not whether there is sufficient evidence to hold that the diamonds are smuggled. Since both these points are inter-related they are being examined simultaneously. The diamonds were seized from Shri Md. Farooq s residence on 27-2-1984. In the panchanama relating to the seizure, the diamonds were described as semi precious stones. The learned advocate of the appellants has therefore contended that it cannot be said that the diamonds were seized in the reasonable belief that the same were smuggled. On the other hand, the Collector has contended that the diamonds were not seized actually on 27-2-1984 and that they were detained on that date only: He has held that the diamonds were actually seized on 3-3-1984 when they were examined by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods in question were detained on 27-2-1984 and seized only on 3-3-1984. The appellant Shri Md. Farooq was physically deprived of the possession of the diamonds on 27-2-1984. Since that date the diamonds remained in the custody and possession of the customs authorities. It cannot therefore be said that the diamonds were seized by the Customs officers from their own possession on 3-3-1984. As contended by the appellant the panchanama dated 3-3-1984 was only for the purpose of appraising the value of the seized diamonds by the jewellery appraiser of the Custom House. This cannot therefore tantamount to the seizure of diamonds. Though therefore, the learned SDR has contended that the seizure was made only on 27-2-1984 in the reasonable belief that the diamonds were smuggled, the Collector s findings extracted above are to the contrary and it is not possible for the Tribunal to improve on the Collector s findings. It would have been perfectly legitimate for the Collector to hold that the seizure took place on 27-2-1984 but for the reasons best known to him he held that the seizure took place on 3-3-1984. In the circumstances, of the case as discussed above, we are unable to support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He repeated his statement that the diamonds were received by him from the brokers S/Shri Raju and Ravindra on oral jangad for being shown to the representatives of M/s Rehmat Co. Singapore. However, on this date also he could not furnish the exact addresses of the two brokers. He promised to come again on 5-3-1984 but according to his statement he fell ill and he had to be hospitalised on 7-3-1984. He was discharged from the hospital on 19-3-1984. He again contacted the Customs officers for the return of the diamonds seized from him. The Additional Collector held that during the interval he was able to manipulate the records and ascribe the stock of diamonds ultimately, to the imports made by the appellants M/s Gemstar Company. The Collector therefore disbelieved his version and held that the diamonds were smuggled. Scrutinising the Collector s findings it is seen that Shri Farooq mentioned the names of the two brokers Shri Rajesh K. Bhansall and Ravindra L. Solanki immediately in his first statement dated 28-2-1984. He repeated these facts in his second statement dated 3-3-1984. However, he could not produce these two brokers immediately before the Customs Officers. But for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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