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Issues:
1. Seizure and confiscation of diamonds under the Customs Act, 1962. 2. Burden of proof under Section 123 of the Customs Act. 3. Legal acquisition and possession of seized diamonds. 4. Interpretation of provisions by Asstt. Collector and Appellate Collector. 5. Appeal against orders of confiscation. Analysis: The case involved the seizure and subsequent confiscation of diamonds valued at Rs. 14,634 from the appellant by Customs officers under suspicion of smuggling. The appellant failed to provide documentary evidence for the licit acquisition of the diamonds, leading to the confiscation order by the Asstt. Collector of Customs for Preventive Adjudication. The appellant contended that the seized diamonds were of Indian origin and legally purchased from specific sellers in Bombay, thus not liable for confiscation under Section 111(d) of the Customs Act, 1962. The appellant appealed the confiscation order, arguing various grounds including the legality of seizure, burden of proof under Section 123, and misinterpretation of provisions by the authorities. The respondent supported the orders of confiscation passed by the Asstt. Collector and the Appellate Collector. The central issue for consideration was whether the confiscation orders required interference. The Tribunal rejected the contention that the seizure was illegal, emphasizing that the officers had a reasonable belief that the diamonds were smuggled goods. It analyzed the burden of proof under Section 123, stating that the appellant, as the owner of the seized diamonds, had to establish that they were not smuggled goods. The Tribunal found that the appellant had satisfactorily discharged this burden by providing purchase receipts and other evidence. The Tribunal criticized the authorities for misinterpreting Section 123 and held that the burden was on the appellant to prove legal possession, not on the sellers to prove licit importation. It noted discrepancies in the description of the seized diamonds and the lack of expert testing, casting doubt on their nature. The Tribunal concluded that the appellant had explained his possession satisfactorily, shifting the burden to the Customs authorities to prove smuggling, which they failed to do. Ultimately, the Tribunal allowed the appeal, setting aside the confiscation orders and directing the authorities to return the seized diamonds to the appellant within two months. The judgment highlighted the importance of fulfilling the burden of proof under the Customs Act and the necessity for Customs authorities to establish smuggling allegations conclusively before confiscation.
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