TMI Blog1991 (11) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding licit origin of the goods, the same were seized on a reasonable belief that the same were smuggled into India. The said Shri S.J. Kothari in his statement dated 28-7-1987 before the Customs officers stated that he was helping his father who is a partner in M/s. Diamond Engineering Co., Madras and in the year 1980, he started a new firm under the name and style of M/s. Jayanand Kothari Co. dealing in cut diamonds and that he had gone to Bombay along with his father-in-law in connection with a marriage of his relation and that he had Rs. 50,000/- with him to buy loose cut diamonds at Bombay through a broker. He further stated that he had borrowed some money from his father-in-law and purchased loose cut diamonds and diamond studded jewellery and he did not get any bills or documents from the broker. Search of the residential premises of S.J. Kothari did not result in seizure of any incriminating documents or contraband on 29-7-1987. On the same day Shri P.C. Kothari, Counsel for S.J. Kothari in a letter to the Additional Collector stated categorically that the seized diamonds were of Indian origin and there was no case under the Customs Act, 1962 and requested for release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the appellants at the very outset pleaded that the statement recorded from S.J. Kothari was not voluntary and this plea was taken on 30th August, 1987 before the Court. In this connection he drew our attention to page 15 of the paper book filed with the appeal. In this connection he also referred to the Bail application which was allowed to be filed along with the miscellaneous application filed the Advocate. He pleaded that in any case the statement was retracted and the very fact that the appellant s later version was accepted by the authorities and major portion of goods were released would go to show that the appellant s statement was not at all voluntary and did not reflect the truth. He pleaded that out of the goods valued at about Rs. 5 lakhs goods valued at Rs. 4.30 lakhs were released. He pleaded that the reason given for confiscation of the remaining goods by the lower authority in the Order-in-Original is as under : Shri Jayanand Kothari, Partner of M/s. Jayanand Kothari Co, 137 Nainiappa Naicken Street, Madras 3, father of Shri Shrenik J. Kothari had submitted that he has been in the diamond trade for the past 40 years. These diamonds were carried from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 70 stones were found to be 3.58 carats both by Shri Ramachandran, the Jeweller from the trade and the Jewellery Expert of the Customs House. For the above reasons, although the weight of the diamonds contained in other packets tally, in view of the discrepancies pointed out above, I am not convinced that the same is relatable to the diamonds supposed to have been carried by Shri S.J. Kothari from his shop in Madras. The diamonds under seizure being notified under Section 123 of the Customs Act, 1962. The burden to prove the legal acquisition/importation of the same is on the person from whom they were seized. In this particular case I am not convinced with the documents produced for the reasons already stated. Accordingly, I hold the diamonds contained in these 5 packets as liable for confiscation under Section 111(d) of the Customs Act, 1962. He pleaded that the only reason for which the learned Additional Collector has not accepted the evidence produced by the appellant is that there was some minor discrepancy in the weight of the diamonds compared to that reflected in the stock books of the appellants and as ascertained by the authorities and for that reason the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He pleaded that the Counsel for the appellant wrote to the authorities that the diamonds under seizure were stock in trade of the appellant and the authorities had also searched the business and the residential premises of the appellants and did not recover any incriminating documents or contraband. He pleaded that the appellant s records were available in the business premises and the authorities should have taken note of the same. In any case he pleaded that the diamonds formed part of the stock in trade and the authorities should have called for the records of stock register and verified the veracity of the appellant s plea. He pleaded that the appellant s Counsel had been writing to the authorities and also given a letter personally on 31-7-1987 clearly stating that the goods under confiscation were the business stock of the appellant. He pleaded that the evidence given by the appellant was verified by the authorities and accepted for major portion of the goods and therefore the evidence in regard to the goods under seizure produced should also have been taken note of and accepted. He pleaded that in regard to the loose diamonds the officers have clearly stated in the cross-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant after cutting some of the stones, weighment ascertained at the time of seizure and those ascertained as per the direction of the Bench are tabulated below : Packet No. No. of diamonds Weight as entered in stock register Weight as explained after cutting Weighment at the time of seizure Weight ascertained as per direction of Bench I II 24 17 5.39 - 3.34 3.340 III 70 3.90 3.60 3.58 3.583 IV 4 0.95 0.92 0.91 0.912 VIII 56 4.39 - 4.39 4.393 The learned Counsel submitted that there is bound to be some minor variation in the weighments done on different scales and by different people and pleaded that the appellants had entered the weight after weighing in some hand-scale and not on any precision weighing scale. He urged again that the evidence adduced by the appellant should not have been rejected because there was some minor variation in weights. He pleaded that the appellant had lead the evidence to explain the weights as entered in their stock register and the weights w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief to effect the seizure in this case. He pleaded that the learned lower authority has dealt with this aspect at length in page 15 of his order. He pleaded that the learned lower authority has relied upon the judgment of the Hon ble Supreme Court reported in 1993 (67) E.L.T. 17 (S.C.) = AIR 1967 SC 737 and 1983 (13) E.L.T. 1558 (S.C.) = AIR 1975 SC 2083 and has held that the officers had reasonable belief and pleaded that in this case after seeing the goods the officers formed reasonable belief and effected seizure of the diamonds. He pleaded that though the officers called it as white stones, in the mahazar, the appellant himself admitted that the stones were diamonds and in that view of the matter therefore, the officers formed a reasonable belief before seizing the same that the same were liable to confiscation. He pleaded that the learned lower authority had been very and about 80% of the goods have been released and only the goods where discrepancies were found the evidence produced was not accepted. He pleaded that the learned lower authority may not have gone in detail into the account books produced and that could be at best, be a reason for de novo adjudication. He adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the mahazar we find that after describing how Shri Shrenik J. Kothari was intercepted it has been recorded that the jewellery studded with white stones and loose stones we recovered from the suitcase carried by the appellant and after the appellant described them as diamonds it has been recorded in the mahazar as under : As there is no valid documents available with the passenger Mr. S.J. Kothari to prove licit origin and legal acquisition. Studded jewellery and white stones (stated by the passenger as diamonds as detailed in the Annexure A to this mahazar) were therefore seized as a reasonable belief that they were smuggled into India for further action under Customs Law . It is seen that in spite of the appellant stating that these were diamonds the seizure made as per mahazar was on the understanding by the officers that the stones were white stones. The officers apparently at this stage had not formed their own opinion as to the nature of the stones in spite of their having been described by the passenger as Diamonds . In a similar case decided by the East Regional Bench of the Tribunal reported in 1983 (14) E.L.T. 1966 (para 11) where white stones were seized suspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1975 SC 2083 followed by this Tribunal in the case of Surendra Kumar Jain v. Collector of Central Excise - reported in 1990 (45) E.L.T. 127, the burden of proof under Section 123 cannot be cast on the appellant, but lies on the Department. We respectfully following the ratio of the Hon ble Supreme Court judgment, accept this plea of the appellant in the light of the amendment to Section 123 that the appellant is no longer required to discharge the burden of proof in the proceedings before us. We, further observe that, no doubt, the appellant did not give any satisfactory explanation as to how he came in possession of the goods, but the circumstances as to how he came in possession of the goods were explained to the authorities by the Counsel for the appellant. Taking into consideration this evidence regarding acquisition of the goods produced later, the lower authority has ordered release of major portion of the seized goods. The evidence produced in respect of the confiscated goods should have been considered in the proper perspective. The appellant right from the beginning has been stating that the goods were his stock-in-trade but the authorities did not choose to verify the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jayanand Kothari and Co. and they were taken by his son for repairing and re-cutting at Bombay and in support of this plea he produced the voucher dated 22-7-1987 of M/s. Kanthilal L. Patel, diamond cutter and polisher, Bombay to the effect that they received the diamonds in question on 11-7-1987 and after due cutting an repairing they were returned to appellant S.J. Kothari after the labour charges were taken. This plea of the appellant was negatived by the ld. Collector on the ground that on physical weighment in carat there were discrepancies and in view of this difference of 0.01 carats I am convinced that the 4 diamonds under seizure have not been accounted for. Since a plea was urged that the discrepancy in the weight is negligible and weight is bound to differ depending upon the weighing machine used namely whether it is an electrical machine or a hand operated scale and in the context of such plea we directed the Custom House to weigh the diamonds on a carat balance and submit the report. The Bench observed in this connection on 29-4-1991 as under :- The Bench directed that the diamonds in question should be weighed in the presence of the appellants by a jewellery expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the diamond packets were sealed again. The statement made in the above affidavit are true and correct to the best of my knowledge and belief. Shri C.V. Pandurangam, Secretary of the Madras Jewellers and Diamonds Merchants Association also has sworn to an affidavit on 8th May, 1991 in this regard and for purpose of convenience of the issue involved I am extracting below the relevant paragraph therein. - I am the Secretary of Madras Jewellers and Diamond Merchants Association. 2. On 27-3-1991 Shri Jayaramamurthy, Prev. Officer and Sri Jagannathan, Appraiser of Customs, Madras had come to our Association for weighment of five diamond packets. They wanted to have accurate weighment of each diamond packet done. Accordingly diamonds found in each respective diamond packet were weighed in Association s Mettler Electronic Balance by Smt. B. Vijayalakshmi, Asstt. of our Association and weighment slips were prepared by her. It was done in the presence of above referred Customs officials, party Shri S.J. Kothari and Advocate Shri P.C. Kothari. 3. Details of the precise weighment of five diamond packets is as follows : Packet No. 1 3.34 (-) i.e. 3.340 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.58 (+ 3) 4. 0.182 0.91 0.92 0.91 (+ 2) 5. 0.878 4.39 4.39 4.39 (+ 3) Total 14.27 14.30 14.286 The above would clearly bear out that the discrepancy is negligible and is bound to arise depending upon the scale in which the diamonds are weighed namely by electronic machine or by hand-operated scale. 9. The appellant has been contending that the goods formed part of his stock-in-trade and the authorities did not choose to verify the accounts. Since the accounts produced by the appellant and receipts etc. were not considered by the adjudicating authority and since a finding against the appellant has been given solely on ground of weight discrepancy and since as indicated above the discrepancy in weight is not much and is bound to arise depending upon the machine in which the diamonds are weighed and keeping in mind the fact that the proceedings are penal in nature, I am inclined to hold that the appellants would be entitled to the benefit of doubt arising in the facts and circumstances of the case. In this view of the matter I set aside the order of the Collector in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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