Customs burden under section 123 turns on reasonable belief that goods are smuggled, with proof shifting to claimants.

Section 123 of the Customs Act applies when the seizing officer has reasonable belief that the goods are smuggled; that belief may be drawn from the seizure memo, surrounding circumstances, prior information, and the officer's conduct, and it attracts the statutory burden. Once attracted, the persons from whose possession the diamonds were seized, and other claimants, must prove that the goods were not smuggled. On the stated material, the explanations of inheritance, acquisition, and possession were accepted as plausible and uncontroverted, so the diamonds were treated as satisfactorily explained and directed to be returned.

---

---

Issues: (i) Whether the seizure was governed by section 123 of the Customs Act, 1962 and the initial burden under that provision stood attracted. (ii) Whether the persons concerned satisfactorily explained that the diamonds were not smuggled goods.

Issue (i): Whether the seizure was governed by section 123 of the Customs Act, 1962 and the initial burden under that provision stood attracted.

Analysis: The governing requirement under section 123 is reasonable belief that the goods are smuggled goods, not a prior belief that the seizing officer must first be certain that the goods are of a class to which section 123 applies. Reasonable belief may be gathered from the seizure memo, the surrounding circumstances, the raid based on definite information, and the course of conduct of the officer. On the facts, the seizure of diamonds and gold pursuant to specific information gave rise to a reasonable belief that the goods were smuggled, and the statutory burden under section 123 was attracted.

Conclusion: The applicability of section 123 was upheld, against the assessee.

Issue (ii): Whether the persons concerned satisfactorily explained that the diamonds were not smuggled goods.

Analysis: Once section 123 applied, the burden shifted to the persons from whose possession the diamonds were seized and to other claimants of the goods to prove that they were not smuggled. On the material on record, the explanations regarding inheritance, acquisition, and possession were found plausible and were not controverted by the department. The diamonds claimed by the firm and the other claimants were therefore held to have been satisfactorily explained as not smuggled.

Conclusion: The explanation that the diamonds were not smuggled was accepted, in favour of the assessee.

Final Conclusion: The review failed to warrant annulment or modification of the Board's order, but the diamonds were directed to be returned to the persons concerned.

Ratio Decidendi: For section 123 of the Customs Act, 1962, the relevant belief is reasonable belief that the goods are smuggled goods, and once that burden is attracted, the persons concerned must prove that the goods are not smuggled.

---