Section 123 Customs presumption fails without reasonable belief that seized goods are smuggled, defeating confiscation and penalty.

Section 123 of the Customs Act applies only when the seizing authority has a reasonable belief, based on relevant material, that the goods are smuggled; without that foundational basis, the burden does not shift to the person from whom the goods are seized. On the facts, mere search, inconsistencies in statements, and absence of foreign markings were insufficient to establish smuggled origin. The earlier finding under the Gold (Control) Act, which did not clearly connect the gold and jewellery to contraband, was treated as relevant. The presumption under Section 123 was therefore not attracted, and confiscation and penalty under the Customs Act could not be sustained.

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Issues: Whether the seized gold, diamonds and diamond jewellery were liable to confiscation as smuggled goods and whether the presumption under Section 123 of the Customs Act could be invoked.

Analysis: The goods were seized on the basis of intelligence and were proceeded against under both the Customs Act and the Gold (Control) Act. The revision order under the Gold (Control) Act had already held that although contraventions of that Act were established, there was no clear involvement of contraband gold, and the confiscated gold and jewellery were allowed redemption on payment of fine. The Court treated that finding as relevant to the nature of the goods and examined whether the Customs authorities had shown a reasonable belief that the goods were smuggled. It held that mere search, inconsistencies in the appellant's statements, and absence of foreign markings were insufficient by themselves to establish smuggled origin. Since the foundational requirement for applying Section 123 was not satisfied, the burden did not shift to the appellant in the manner urged by the revenue.

Conclusion: The presumption under Section 123 of the Customs Act was not validly attracted and the appellant was entitled to the benefit of doubt.

Final Conclusion: The confiscation and penalty imposed under the Customs Act could not be sustained, and the appeal succeeded.

Ratio Decidendi: Section 123 of the Customs Act can be invoked only when the seizing authority can show a reasonable belief, based on relevant material, that the goods are smuggled; failing that foundational requirement, the burden does not shift to the person from whom the goods were seized.

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