Reasonable belief of smuggling can shift the Section 123 burden, and an irregular search need not nullify recovery evidence.

Foreign markings, intact seals, large quantity and unexplained possession of whisky bottles were treated as enough to create a reasonable belief that the goods were smuggled, so the burden under Section 123 of the Customs Act shifted to the possessor, who failed to prove lawful origin. The note also states that Section 123 was treated as procedural and could apply despite the seizure predating the notification, because the adjudicatory stage occurred later. An irregular or unauthorized search did not by itself invalidate the seizure or prosecution where recovery was otherwise proved. Conscious possession and knowledge were shown only against one accused, leaving the co-accused without liability under Section 135.

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Issues: (i) Whether the seizure of the whisky bottles was made in a reasonable belief that they were smuggled goods so as to attract the burden of proof under Section 123 of the Customs Act, 1962; (ii) Whether the notification making whisky subject to Section 123 could be applied where the seizure preceded that notification; (iii) Whether the alleged illegality or want of authority in the search invalidated the seizure and the prosecution; (iv) Whether the acquittal of A2 could stand while A1 was liable for conviction under Section 135 of the Customs Act, 1962.

Issue (i): Whether the seizure of the whisky bottles was made in a reasonable belief that they were smuggled goods so as to attract the burden of proof under Section 123 of the Customs Act, 1962.

Analysis: The bottles were found in large quantity, bore foreign markings and intact seals, and the accused failed to produce bills or vouchers. The chemical examination supported foreign origin. The surrounding circumstances were held sufficient to constitute a reasonable belief on the part of the seizing officer. Once Section 123 applied, the burden shifted to the accused to prove lawful origin, which they failed to discharge.

Conclusion: The burden under Section 123 was validly attracted, and the accused failed to rebut it.

Issue (ii): Whether the notification making whisky subject to Section 123 could be applied where the seizure preceded that notification.

Analysis: Section 123 was treated as procedural in nature, relating to burden of proof rather than substantive liability. The notification issued later was held not to bar application of the statutory presumption, particularly because the confiscation proceedings and the operative adjudicatory stage occurred after the notification.

Conclusion: The contention based on the date of the notification was rejected, and Section 123 was held applicable.

Issue (iii): Whether the alleged illegality or want of authority in the search invalidated the seizure and the prosecution.

Analysis: The objection to the search was not raised at the earliest stage, no prejudice was shown, and the evidence of seizure was corroborated by the panch witness and the accused's own admissions. It was further held that even an irregular or illegal search does not by itself vitiate the seizure or the subsequent proceedings where the evidence otherwise establishes the recovery.

Conclusion: The challenge to the search and seizure failed.

Issue (iv): Whether the acquittal of A2 could stand while A1 was liable for conviction under Section 135 of the Customs Act, 1962.

Analysis: The record did not show that A2 had conscious possession of, or involvement in, the foreign whisky bottles. As regards A1, his possession, admissions, and the circumstances showed knowledge that the goods were smuggled and that he dealt with them for profit. The ingredients of the offence were therefore established only against A1.

Conclusion: The acquittal of A2 was sustained, while A1 was held liable under Section 135 of the Customs Act, 1962.

Final Conclusion: The decision upheld the acquittal of one accused but sustained the criminal liability of the other, with the appellate court granting relief only to the extent of reversing the acquittal of A1 and maintaining the exoneration of A2.

Ratio Decidendi: In proceedings concerning notified goods under the Customs Act, circumstances such as foreign markings, intact seals, quantity, and unexplained possession may be sufficient to raise a reasonable belief of smuggling and shift the burden to the possessor under Section 123; an irregular search does not by itself invalidate seizure or prosecution where the recovery is otherwise proved.

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