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TMI Blog2013 (8) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... se are as follows. A show-cause notice was issued by the Air Intelligence Unit of CST Airport, Mumbai to show-cause why : (a) 5877 carats of Cut & polished diamonds and 97 grams of Gold jewellery recovered from the baggage/person of Shri Manish H. Kalvadiya, a passenger who arrived from Dubai on 22-4-2003 should not be confiscated. (b) 34147.66 carats of Cut & polished diamonds detained/seized on a follow up action from the office premises of M/s. I.P. Patel & Co. on 22-4-2003/24-4-2003/18-6-2003 should not be confiscated, (c) Penalty should not be imposed on M/s. I.P. Patel & Co., Shri Manish H. Kalvadiya, Shri Bharat K. Bodra and Shri Girish K. Bodra. The matter relating to (a) above, and consequently (c) above partly, has reached finality pursuant to the Final Order of Settlement Commission No. 46/Final Order/Cus/MGR/2008 dated 8-2-2008. The Hon'ble Settlement Commission has settled the case on the following terms and conditions : (i) Customs duty settled at Rs. 83,11,724/- and same is already paid. (ii) Redemption fine in excess of Rs. 7,50,000 is waived. (iii) Penalty in excess of Rs. 10,00,000/- was waived on the applicant (Shri Manish Kalvadiya). Full immunity from pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Patel & Co. A total of 34147.66 carats of diamonds collectively valued at Rs. 36,46,66,620.25 were seized under the provisions of Customs Act, 1962 and subsequently 31,155.77 carats of diamonds released to M/s. I.P. Patel & Co. after retaining 2991.89 carats of diamonds valued at Rs. 3,52,60,258.80 and a bond equal to the total seizure value of the diamonds as security; and the subject show-cause notice was issued making allegations as above. 6. The allegation against the assessee is that, the pax Shri Manish Kalvadiya had brought on 21/22-4-2003 the 5877 carats of Cut & polished diamonds to be handed over to Shri Bharat K. Bodra, who in turn was to hand over the same to Shri Mahesh Savani, partner, M/s. I.P. Patel & Co. The evidences relied upon for the same are the statements recorded from Shri Manish Kalvadiya who stated that the diamonds are to be handed over to Shri Bharat K. Bodra, read with statement of Shri Bharat K. Bodra dated 22-4-2003 in which he stated that the said Cut & polished diamonds brought by Shri Manish Kalvadiya were meant for Shri Mahesh Savani of M/s. I.P. Patel & Co. 7. In the follow up action, premises of M/s. I.P. Patel & Co. was searched by the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities in 1987 had raised certain queries about the accounting procedures followed by them and had accepted the explanation provided and have been assessing their returns subsequently too. 9. In view of the decision of the Settlement Commission referred above, the issue to be decided now is only about 34147.66 carats of Cut & polished diamonds seized from the premises of M/s. I.P. Patel & Co. The department has alleged that the diamonds recovered from the premises of M/s. I.P. Patel & Co. are smuggled into India and hence are liable for confiscation under Section 111(d) & 111(j) of Customs Act, 1962. 10. Adjudication took place and the adjudicating authority passed the following order : "Order (i) The proposal in the subject show-cause notice, to confiscate 34147.66 carats Cut & polished diamonds valued at Rs. 36,46,620.25 seized from the office premises of M/s. I.P. Patel & Co. under provisions of Section 111(d) and (j) of the Customs Act, 1962 is hereby dropped. (ii) Penalty of Rs. 1,00,000 (Rupees One lakh only) is imposed on M/s. I.P. Patel & Co. under the provisions of Section 112 read with Section 117 of the Customs Act, 1962 (iii) Penalty of Rs. 25,000 (Rupees Twenty Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not disputed. Further, the brokers have confirmed the receipts of the diamonds from M/s. I.P. Patel & Co. which were subsequently seized by the department. 15. He further submitted that the case has been made out by the assessees that they have not maintained proper accounts at Mumbai office. He further submitted that the shortage of diamonds found in the stock only on the ground that diamonds were given to the Jangads for approval in the market and after the stocks given to the Jangads for approval to the market same was given to the Surat office, so it was not taken in the stock by their Mumbai office. He further explained that as per the trade practice diamonds are to be given to Jangads for approval in the market and when the goods were returned from the Jangads they are to be entered in the books of accounts. He also submitted that during the investigation, the jangads were called for statement, who were found physically having the stock of diamond with them and same was also seized during the course of investigation. If the diamonds given to the Jangads are to be taken in the stock, there will be no shortage of stock. He further submitted that the assessee are maintaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts recorded and also by Shri Mahesh Savani. It is stated that the system of accounting of stock by them is being followed by them since long and that even income tax authorities did not take any objection against this procedure during an enquiry conducted by them in 1987. Further it is submitted by the assessees that though the diamonds forwarded to Mumbai office from Surat are reflected in the stock register maintained in their head office at Surat on the day of dispatch, the same are not entered in the stock register immediately at Mumbai office. The same are reflected in the paper packets in which the diamonds are packed after their sorting at Mumbai office and the same are tallied in the stock statements prepared at the end of the day, the stock book maintained at Surat and that at Mumbai reflected the same figures though on different dates. The jangads issued are numbered according to the date but are not serially numbered. 19. We further find that the allegation that they are having possession of unaccounted diamond is based on method of accounting adopted by them. This system is recognised in Gem & Jewellery trade. We further find that the Income Tax authorities which are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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