1992 (2) TMI 222 - AT - Customs

Summary

Issues Involved:
1. Shifting of burden of proof under Section 123 of the Customs Act.
2. Reasonable belief of the seizing officers.
3. Discharge of burden by appellants.
4. Justification of penalties under Section 112 of the Customs Act.

Issue-wise Detailed Analysis:

1. Shifting of Burden of Proof under Section 123 of the Customs Act:
The first issue was whether the adjudicating authority could consider the question of shifting the burden of proof in terms of Section 123 of the Customs Act, given the findings in the Remand Order dated 7-9-1982. The court held that the adjudicating authority must consider the burden of proof under Section 123 of the Customs Act. The Central Board of Excise & Customs had remanded the entire matter for de novo adjudication without any specific findings that would preclude the adjudicating authority from considering the burden of proof. Therefore, the adjudicating authority was within its rights to address this issue.

2. Reasonable Belief of the Seizing Officers:
The second issue was whether the seizing officers had a reasonable belief that the diamonds were smuggled, thereby shifting the burden of proof to the appellants. The court found that the officers had sufficient prima facie material to form a reasonable belief. The materials included information received about contraband gold, diamonds, and precious stones in specific lockers, the fictitious nature of the locker hirers, and the large quantities of diamonds and precious stones found. The court referenced the Supreme Court's ruling in Indru Ramchand Bharvani & Others v. Union of India & Others, which emphasized that the reasonable belief must be judged from the experienced eye of the officer, and if prima facie grounds exist, the Tribunal must accept the officer's belief.

3. Discharge of Burden by Appellants:
The third issue was whether the appellants had discharged the burden of proving that the diamonds were not smuggled. The court examined the conflicting expert opinions. The government expert, Shri J.M. Auddy, opined that some diamonds were of foreign origin, while the appellants' expert, Shri Rujni Bhai Mehta, opined that all diamonds were of Indian origin. The court found that the appellants had successfully discharged the burden for diamonds classified under categories "B" and "C," where the government expert was not definitive. However, for diamonds in category "A," where the government expert was clear about their foreign origin, the court held that the appellants had not discharged their burden. The court emphasized that the burden on the appellants was to establish a preponderance of probability, not beyond a reasonable doubt.

4. Justification of Penalties under Section 112 of the Customs Act:
The fourth issue was whether the penalties imposed under Section 112 of the Customs Act were justified. The court found that the penalties were justified based on the evidence and circumstances. The appellant Jayantilal Mehta had admitted to hiring lockers in fictitious names and possessing unaccounted diamonds and jewelry. The court noted that the penalties were not excessive given the facts of the case.

Conclusion:
The court ordered the return of diamonds classified under categories "B" and "C" to the appellant Jayantilal T. Mehta, while confirming the confiscation of diamonds in category "A" and the penalties imposed on the appellants. The appeals succeeded partly, with the court providing a detailed analysis of each issue based on the evidence and legal principles involved.