TaxTMI 
TaxTMI 
2004 (4) TMI 474
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....i Prakash J. Modi. (b) and (c) above are not the appellants before us. 2. Briefly the facts are that on information the officers of the Customs (Preventive) Collectorate Bombay searched the office/business premises of M/s. Yogesh Diamonds. There are two partners in this firm, Shri Rajeev K. Patel and Shri Karsan K. Patel are the main partners. During the search Rajeev K. Patel and some other persons including their employees S/Shri Dipak B. Upadhaya and Ashok Bendabe were present. A stock taking of the diamonds was done and the Registers maintained in office were verified. The stock of diamonds as appearing in the sock register as on 17-1-91 were as follows : (a) Rough Diamonds     Nil (b) Rejected         161.86 cts. (c) Polished         358.40 cts. The actual stock of diamonds was found to be far in excess of these quantities (5,445.08 Cts.). During the search Shri Rajeev K. Patel (RKP) admitted that all entries for transactions up to 17-1-91 were entered in the stock register and no transactions of ....
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....l the appellants denied the allegations made in the show cause notice. The Commissioner adjudicate the case. He confiscated the diamonds and imposed penalties on all the noticees. 5. Heard both the parties. 6. In the appeals before us M/s. Y.D. and others (the appellants) have taken more or less the same pleas which they have taken before the Collector. The main contentions of M/s. Y.D. and its partners are : (a) Seizure is illegal as there was no cause for entertaining a reasonable belief that the diamonds in question are smuggled. (b) There is no evidence excepting retracted statements of the persons in particular one Kamal to establish that the seized diamonds were smuggled into India. (c) Section 123 of the Customs Act does not apply to diamonds. The department failed to produce any reasonable evidence to establish that the diamonds are smuggled and thus failed to discharge the onus cast on them. (d) The respondent seriously erred in stating that the burden under Section 106 of the Evidence Act, is on the appellant to show that the diamonds in questi....
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.... initial stage to find out as to whether the same are smuggled or contraband goods and at that stage a detailed inquiry is neither permissible nor practicable nor possible. The meaning of the expression "reasonable belief" is well settled. The question as to whether in a particular case the grounds exists to form a reasonable belief that the goods are smuggled depends upon the facts of each case. For example the factum of information itself may not be a piece of evidence against the appellants, but the factum of actual recovery of the goods based on that information corroborates the factum of information. In Indru Ramchand Bharwani v. UOI [1992 (59) E.L.T. 201 (S.C.)] the Hon'ble Supreme Court held that the circumstances under which the officers concerned entertained a reasonable belief have to be judged from his experienced eyes who is well equipped to interpret the circumstances and to form a reasonable belief. The Hon'ble Court also held that once it is found that there was material relevant and germane, the sufficiency of material is not open to judicial review. In the present case the officers found that M/s. Y.D. conducts its business from the premises under search. He mainta....
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....of Maharashtra [1983 (13) E.L.T. 1603 (S.C.) = 1975 (3) SCC 385], State of Maharashtra v. Natwarlal Damodardas Sons [1983 (13) E.L.T. 1620 (S.C.)] and Vira Ibrahim v. State of Maharashtra [1976 SCC (CRI) 278]. Further the power to seize the goods under Section 110 is distinct and separate from the power of confiscation and the imposition of penalty as provided in Sections 111 and 112 of the Act. These provisions are not absolutely dependent on the provisions of Section 110. A High Court decision in this regard was upheld by the Hon'ble Supreme Court in J.K. Bardolia Mills v. Collector [1994 (72) E.L.T. 813]. 12. In the instant case the diamonds are not notified under Section 123 of the Customs Act, and as such the burden of proving that the seized diamonds are not smuggled shall not be on the appellants. According to the appellants the department has not discharged the burden cast on them. Their main contentions have been that there is no evidence excepting retracted statements of some of the persons. The Collector reliance on such statements is illegal. Further the provisions of Section 106 of the Evidence Act, are not applicable as held by Hon'ble S.C. in Ambalal's case. ....
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....sue. The Court held that the department need not adduce direct evidence of illicit importation. The Court further held that if a full opportunity is given to the accused to establish that the goods were acquired in the normal course of business and there was no violation of the rules of natural justice, it cannot be said that the department was throwing the burden of proving on the accused, what department has to establish. The Court observed that the department was simply giving an opportunity to the accused to rebut the first and the foremost presumption that arises out of the tell-tell circumstances in which the goods were found. 15. In para 6 of the Tribunal's decision in Narendra Kumar H. Patel v. CC, Jaipur [1986 (26) E.L.T. 108] the single member observed that in AIR 1966 11 S.C. 1967 (Iswardas case) even though there was no direct evidence of illicit imports as contended for the appellant, there was no material to support the conclusion that the gold was smuggled after restriction on its import had been imposed it was held that it could still be deduced that the goods are smuggled from the credibility of the story of acquisition, the price alleged to have been paid,....
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....o them by Jt. CCI & E on 15-3-88 and 28-7-88. The Collector in Para 63/64 of the impugned order says that he has gone through the co-relation statement filed by the appellant and is not in agreement with the entries cooked up therein. We reproduce paras 64 and 65 of the impugned order where the issue has been dealt with. "Shri Karsanbhai K. Patel, one of the partners of M/s. Yogey Diamonds in his statement dated 15-3-91 admitted that the records/documents of the firm were manipulated subsequent to the raid. These manipulations are related to the entries referred to in the co-relation statement submitted. The statement of Shri Karsanbhai K. Patel dated 15-3-91 has not been retracted. This fact has been corroborated by Shri Vipul C. Shah, Rajesh N. Shah, Vallabhabhai Patel, Hasmukhbhai Mehta and Ashwin S. Shah in their respective statements. Further, I notice that the opening balance and the quantity of rough diamonds in the co-relation chart submitted is different from the opening balance in Stock Register and entries in the record seized. Further the admission of Karsanbhai K. Patel regarding manipulation of the records and documents of Yogey Diamonds in after the submission of ....
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.... given detailed reasoning for rejecting the appellant's contention in this regard. We do not find any infirmity in his finding. Besides the appellant have not succeeded in rebutting the findings of the Collector either in the appeal memorandum or during the hearing. 20. We have gone through the statements of the various persons. Some of them retracted their statements at an early stage of investigation, some retracted after issue of show cause notice and some have not retracted at all. Dealing with the contention that the retracted statement should not be relied upon the Commissioner in para 67 of the impugned order observed as follows : "I would sustain my above findings for the seizures made from the possession of Prakash J. Modi as well as from Natwar M. Mendapara as well as from Dinesh M. Shah. In fact, Natwar M. Mendapara had admitted in his statement that he could not produce any legal document or jhangad for the diamond seized as these were of smuggled origin. There is no retraction letter from him in respect of this admission on record. Similarly, Shri Dinesh M. Shah has also stated at the time of drawal of panchanama that he is unable to produce any documents or....
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....Hon'ble Supreme Court in para 44 of the judgment in Bhoormul's case held as follows : "These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle underlying Section 106, Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient, to raise a presumption in its favour with regard to the existence of the fact sought to be proved. Amba Lal's case, (1961) 1 SCR 933 = 1983 (13) E.L.T. 1321, was a case of no evidence. The only circumstantial evidence viz. the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given an opportunity to explain the alleged discrepancies. The status of Ambalal viz. that he was an immigrant from Pakistan and had come to India in 1947 - before the customs barrier was raised - bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his fa....
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.... firm. The Commissioner has based his finding on the evidence gathered during the investigation. We find that a penalty of Rs. 45 lakhs (on the firm and the partners put together) is harsh and calls for reduction. 24. Insofar as penalty on Shri Deepak D. Upadhaya is concerned the Commissioner observes that he held the key of the locker where the smuggled diamonds were stored and that he was managing the business in the absence of his employers. He dealt with the carriers both for receipt of smuggled diamonds as well as sending out the cut and polished diamonds. The Commissioner held that he was a willing accomplice in the activities of M/s. Y.D. He held him liable for penalty under Section 112(b) of the Customs Act, the appellant in his defence contended that he was only an employee and have dealt with the diamonds and so no penalty should be imposed on him. We observe that even though he was aware of the smuggling activities and dealt with the smuggled goods he was only an employee acting on the directions of his employers. A penalty of Rs. 1 lakh imposed on him by the Commissioner. We find it to be harsh. 25. Insofar as Shri Prakash J. Modi on whom a penalty of Rs....