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Kirtilal Gagaldas Shah Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Calcutta
Decided On
Reported in(1983)LC1396DTri(Kol.)kata
AppellantKirtilal Gagaldas Shah
RespondentCollector of Customs
Excerpt:
.....diamonds cannot have any reasonable belief that the goods are not liable for confiscation.10. the goods seized in this case are diamonds. therefore section 123 is attracted. under that section, the burden of proof that the diamonds are not smuggled goods is on the person from whose possession the goods were seized, or on the owner of the goods, if the seizure is made from a person other than the owner. now, in the instant case, the appellant by reason of his purchase has become the owner of the diamonds. it is from his possession the diamonds were seized. therefore, the burden is on the appellant to establish that the diamond seized from him are not smuggled goods. the asstt. collector as well as the appellate collector recorded a finding that appellant had discharged the burden under.....
Judgment:
1. This appeal arises out of Order-in-Appeal No. 1375/1978 dated 30-6-1978 passed by the Appellate Collector of Customs, Calcutta by which he confirmed the Order (Original) No. S. 12 (1V/T) 528/76P dated 25-2-1977 passed by the Asstt. Collector of Customs for Preventive (Adjudication) by which, the Asstt. Collector ordered absolute confiscation of 24.23 cts. of diamonds valued at Rs. 14,634/- seized from the person of the appellant.

2. The brief facts of the case are : pursuant to an information, the residential premises of the appellant was searched by the Customs officers and by reason of the suspicious movement of the appellant, this person was also searched and the Customs officers recovered loose diamonds from the pockets of the trouser worn by him. As the appellant could not produce any documentary evidence in support of the licit acquisition/possession and/ or importation of the diamonds so recovered, the Customs officers on the reasonable belief that the diamonds in question were smuggled and liable for confiscation, seized the diamonds. Subsequently, a show cause notice was also issued to the appellant and three others as to why the seized diamonds should not be confiscated under Section 111(d) of the Customs Act, 1962, and why a penalty should not be levied under Section 112 of the Customs Act.

3. In his reply to the Show Cause Notice, the appellant contended among other things that the Show Cause Notice did not disclose that the seized diamonds are of foreign origin and therefore, no proceedings could be initiated under the Customs Act. He further contended that the seized diamonds are of Indian origin and have not been illegally imported and that he has purchased the diamonds from M/s. Lalchand D.Mehta of Bombay and M/s. Lalbhai Laxmichand Shah of Bombay under proper purchase receipts. In the circumstances, the diamonds are not liable for confiscation and he requested for the release of the seized diamonds.

4. The Asstt. Collector for Preventive Adjudication, though accepted the plea of the appellant that the diamonds in question were purchased from two persons of Bombay and that the appellant had discharged the onus under Section 123 of the Customs Act, 1962, he, however, held that the persons who have sold the diamonds have not discharged the onus cast on them as they could not prove their licit acquisition or legal importation. In that view of the matter, he ordered absolute confiscation of the seized diamonds under Section 111 (d) of the Customs Act.

5. Feeling aggrieved by the order of the Asstt. Collector, the appellant preferred an appeal before the Appellate Collector unsuccessfully. Thereafter, he filed an Application for Revision before the Central Government and the said Revision Petition stood statutorily transferred to this Tribunal. Hence this appeal.

6. In this appeal, for the appellant, Shri S.K. Roy, Bar-at-Law, urged the following grounds : (1) The seizure is illegal inasmuch as it is not even stated that the diamonds in question are of foreign origin.

(2) The Customs officers cannot entertain any reasonable belief that ; the diamonds in question are smuggled and, therefore, the seizure is illegal and even though diamond is a notified goods, no burden is cast on the appellants to establish that they are licitly imported.

(3) The Asstt. Collector as well as the Appellate Collector have recorded a finding that the appellants has discharged the burden under Section 123 and having held so, they committed a legal error in confiscating the diamonds.

(4) The Asstt. Collector and the Appellate Collector mis-construed the provisions of Section 123 and that section did not require the sellers of the diamonds to establish that the diamonds were licitly imported.

(5) Lastly, the value and the description of the diamond and absence of any allegation that they are of foreign origin proves beyond doubt that they are not smuggled goods and, therefore, not liable to be confiscated.

7. Shri A.K. Chatterjee, J.D.R. on the other hand supported the orders passed by the Asstt. Collector and confirmed by the Appellate Collector.

8. Having regard to the rival contentions, the one and the only point that falls for consideration is whether the orders passed by the Asst.

Collector and confirmed by the Appellate Collector requires to be interfered with.

9. From the allegations contained in the Show Cause Notice it is seen that the search of the person of the appellant was conducted as his movements were found to be suspicious and on search, loose diamonds were found in the trouser pockets of the appellant. In the circumstances, the seizure of the diamonds cannot be considered as made without reasonable belief that they are sumggled goods. We, therefore, reject the contention of Shri Roy that the seizure is illegal or that the officers who seized the diamonds cannot have any reasonable belief that the goods are not liable for confiscation.

10. The goods seized in this case are diamonds. Therefore Section 123 is attracted. Under that section, the burden of proof that the diamonds are not smuggled goods is on the person from whose possession the goods were seized, or on the owner of the goods, if the seizure is made from a person other than the owner. Now, in the instant case, the appellant by reason of his purchase has become the owner of the diamonds. It is from his possession the diamonds were seized. Therefore, the burden is on the appellant to establish that the diamond seized from him are not smuggled goods. The Asstt. Collector as well as the Appellate Collector recorded a finding that appellant had discharged the burden under Section 123. If the appellant had discharged the burden under Section 123, the authorities below were not justified in ordering confiscation of the diamonds. The reason given by them for cofiscating the diamonds, is that the sellers did not establish the licit import of the diamonds.

Section 123 would require a person from Whose possession the goods were seized, or a person who claims to be the owner of the goods so seized, if the seizure is made from a person other than the owner, to prove that the seized diamonds are not smuggled goods. It does not cast any burden on the person other than the owner or the person from whose possession the seizure was effected. In the said circumstances, the view taken by the Ass>U. Collector and the Appellate Collector is erroneous and not in accordance with law. Apparently, the Asstt.

Collector and the Appellate Collector meant that the appellant has only established his legal possession but he has not established that the goods are not smuggled goods. Instead of saying so, they have recorded a finding that the sellers did not discharge the burden under Section 11. Now the question for consideration is whether the appellant had discharged the burden cast upon him under Section 123 of the Customs Act. The appellant has produced receipts for the purchase of the diamonds. The Customs Authorities were satisfied as to the genuineness of the receipts and they were also satisfied as to the genuineness of the persons from whom the said diamonds were purchased. In the Show Cause Notice, there is not even an allegation that the diamonds in question are of foreign origin. In the seizure list, the description is given as "white stone, suspected to be diamonds". Thus the Customs authorities themselves were not very sure whether the goods seized are diamonds or not. The seized diamonds were not tested by any expert. One of the sellers had made a statement that the diamonds were removed from old ornaments. In the Show Cause Notice, the description of the diamonds seized from the appellant was given. The description reads as under : So, the description given by the department, to a certain extent corroborates the plea of one of the sellers that old diamonds were removed from his ornaments. These circumstances in our opinion are sufficient to hold that the appellants has satisfactorily discharged the burden cast upon him under Section 123 of the Customs Act. The onus imposed on the appellant under Section 123 is not. that onerous as requiring him to establish to the hilt or to prove beyond all reasonable doubt as in the criminal cases.

12. We have found that the appellant has satisfactorily explained his possession of the seized diamonds. The Customs authorities were satisfied that he was a bona fide purchaser. In the circumstances, the burden shifts to the Customs authorities to establish that these goods are smuggled goods and the appellant knowingly or otherwise concerned with the smuggled goods, In the instant case, the Customs department made no efforts to establish that the diamonds found in the possession of the appellant are smuggled goods. In the circumstances, the diamonds could not have been confiscated. We, therefore, set aside the orders of confiscation.

13. In the result, for the reasons stated above, we allow this appeal and set aside the orders passed by the Asstt. Collector and confirmed by the Appellate Collector and direct the authorities below to return the diamonds seized from the appellant to him within two months from this date.


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