1991 (11) TMI 222 - AT - Customs

Tribunal Overturns Confiscation Order, Emphasizes Burden of Proof

The Tribunal set aside the order of confiscation and penalty, allowing the appeals. It emphasized that the minor discrepancies in weights did not justify ... Confiscation - Smuggling - Foreign origin - Burden of proof - De-notification Issues Involved:1. Voluntariness and Retraction of Statement2. Reasonable Belief for Seizure3. Application of Section 123 of the Customs Act, 19624. Discrepancy in Weights of Diamonds5. Burden of Proof and Evidence of Legal Acquisition6. De-notification of Diamonds under Section 123Issue-wise Detailed Analysis:1. Voluntariness and Retraction of Statement:The appellant argued that the statement recorded from S.J. Kothari was not voluntary and was retracted immediately after seizure. The authorities contended that the statement was given voluntarily and the retraction was an afterthought. The Tribunal noted that the appellant had retracted the statement at the earliest opportunity and provided consistent explanations through counsel regarding the source and acquisition of the diamonds.2. Reasonable Belief for Seizure:The appellant contended that the officers did not have a reasonable belief to effect the seizure as they initially described the goods as 'white stones' and not diamonds. The Tribunal observed that the seizure was based on suspicion and the officers did not have prior knowledge or expertise to identify the stones as diamonds. The Tribunal held that the seizure was not based on reasonable belief, as required under Section 123 of the Customs Act.3. Application of Section 123 of the Customs Act, 1962:The Tribunal examined whether Section 123, which shifts the burden of proof to the person from whom goods are seized, could be invoked. It was noted that the officers did not form a reasonable belief that the goods were smuggled diamonds. Additionally, the Tribunal considered the Supreme Court's decision in Balumal v. State of Maharashtra and subsequent de-notification of diamonds from Section 123, concluding that the burden of proof lay on the Department, not the appellant.4. Discrepancy in Weights of Diamonds:The lower authority had confiscated certain diamonds due to minor discrepancies in weights compared to the stock register. The Tribunal directed a re-weighment on a precision scale, which revealed negligible discrepancies. The Tribunal accepted the appellant's explanation that such minor variations are expected when using different weighing scales and held that the evidence regarding the diamonds' weights should have been accepted.5. Burden of Proof and Evidence of Legal Acquisition:The Tribunal noted that the appellant consistently claimed that the diamonds were part of his stock-in-trade and provided supporting documents and affidavits. The lower authority had accepted the evidence for a major portion of the goods but rejected it for certain packets due to minor weight discrepancies. The Tribunal held that the appellant had provided acceptable evidence of legal acquisition and that the Department failed to prove the diamonds were of foreign origin.6. De-notification of Diamonds under Section 123:The Tribunal considered the amendment de-notifying diamonds from Section 123 and the Supreme Court's decision in Balumal v. State of Maharashtra. It concluded that the procedural law applied retrospectively, and the appellant was not required to discharge the burden of proof under the unamended Section 123. The Tribunal held that the Department had not discharged its burden to prove the diamonds were smuggled.Conclusion:The Tribunal set aside the order of confiscation and penalty, allowing the appeals. It emphasized that the minor discrepancies in weights did not justify rejecting the appellant's evidence and that the Department failed to prove the diamonds were smuggled. The Tribunal also noted that the procedural amendment to Section 123 applied retrospectively, shifting the burden of proof to the Department.