Dhobiwad vs House on 23 April, 2009

Bombay High Court
Dhobiwad vs House on 23 April, 2009
Bench: Ranjana Desai, J.P. Devadhar
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          IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                          
             ORDINARY ORIGINAL CIVIL JURISDICTION




                                                 
                  WRIT PETITION NO.2152 OF 1996

     1 Sailash Amulakh Jogani of           )




                                                
       Gujarat,     Indian   Inhabitant,   )
       residing at 402, Vasuphara Asha     )
       Nagar, Navsari, Dist. Valsad,       )
       Gujarat.                            )




                                      
     2 Pankaj K. Jogani of Gujarat,        )
       Indian Inhabitant, residing at      )

       Dhobiwad,
                        
       Room No.2, Ganesh Niwas,
                     Navsari,   District
                                           )
                                           )
       Valsad Gujarat.                     )   ....    Petitioners
                       
              Versus
        

     1 Union of India                      )
     



     2 Customs Excise and Gold             )
       (Control) Appellate Tribunal,       )
       WRB, P.N.B. House, Sir P.M.         )
       Road, Fort, Mumbai - 400 001.       )





     3 Shri R. Jayaraman, Member           )
       (Technical) of the Customs          )
       Excise and Gold (Control)           )
       Appellate Tribunal, having his      )
       office at PNB House, Sir P.M.       )





       Road, Fort, Mumbai - 400 001.       )
     4 Mr. P.K. Desai, Member (Judicial)   )
       of the Customs, Excise and Gold     )
       (Control)   Appellate   Tribunal,   )
       having his office at PNB House,     )
       Sir P.M. Road, Fort, Mumbai -       )
       400 001.                            )




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     5 Collector of Customs (Preventive)     )
       having his office at Customs          )




                                                   
       House, Ballard Estate, Mumbai -       )
       400 038.                              )   ..... Respondents




                                                  
    Mr. S.P. Kanuga with Ms. Nisha Valani for the petitioners.

    Mr. R.V. Desai with Mr. H.V. Mehta for the respondents.




                                         
                       CORAM  :  SMT. RANJANA DESAI &
                          
                                    J.P. DEVADHAR, JJ.

DATE ON WHICH THE JUDGMENT IS

RESERVED : 4TH MARCH, 2009.

DATE ON WHICH THE JUDGMEMT IS
PRONOUNCED : 23RD APRIL, 2009.

JUDGMENT :- (Per Smt. Ranjana Desai, J.)

1. In this writ petition filed under Article 226 of the Constitution

of India, the petitioners have prayed for quashing of Order dated

3/12/1992 passed by respondent 5 i.e. the Collector of Customs

(Preventive), Bombay (for short, “the Collector of Customs”) being

Order No.48/92 and Order dated 29/12/1995 passed by the

Customs Excise and Gold (Control) Appellate Tribunal (for short,

“the CEGAT”) in appeals arising therefrom.

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2. It is necessary to begin with the facts. Petitioner 1 claims to

be a broker and dealer in diamonds. He is also a partner of M/s.

Sudit Gems, a firm carrying on business at Navsari. Petitioner 2 is

also a broker and a dealer in diamonds.

3. Pursuant to specific information, the officers of M & P Wing of

Customs visited, on 21/3/1991, the business premises of M/s. M.

Ambalal & Co. at S.V. Road, Bombay, and apprehended one

Rajendra @ Raju, who was standing outside the premises with a

cloth bag in his hand, which, on subsequent examination was

found to contain 7390.82 carats of diamonds valued at

Rs.79,40,506.25. They were claimed by the firm, but no accounts

were found to have been maintained for the same. Inside the

premises, one Dayabhai Patel, partner in the firm as also, Ukabhai

Patel and Himatbhai Thedi were present, and while search was in

progress, Dharmendra Shah, Shailesh Jogani i.e. petitioner 1 and

Pankaj Jogani i.e. petitioner 2 entered the premises. The search of

the premises resulted in recovery of 410.18 carats of diamonds

valued at Rs.4,20,324.50 not duly accounted for and also of some

loose papers, suspected to be the accounts of diamonds not

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recorded in the account registers of the firm. Personal search of

the other persons in the premises resulted in recovery of 127.17

carats of diamonds valued at Rs.61,854/- from Ukabhai J. Patel,

66.64 carats of diamonds valued at Rs.1,53,272/- from Himatbhai

Thedi, 27.87 carats of diamonds valued at Rs.97,545/- from

Dharmendra Shah, 2.57 carats of diamonds valued of Rs.4,455/-

from petitioner 2, 223.75 carats valued at Rs.4,56,618/- from

petitioner 1. In addition, the officers also recovered 83.01 carats of

diamonds from petitioner 1, but released the same on his providing

due explanation. The officers also recovered unaccounted

diamonds weighing 866.49 carats valued at Rs.12,997/- from

Locker No.303 in the name of Maganbhai Dayabhai and diamonds

weighing 6681.01 carats valued at Rs.4,11,294.66 from Locker

No.1073 of Ravjibhai Ambalal. Another business premises of M/s.

M. Ambalal at Parekh Market were also searched and 4206.56

carats of unaccounted diamonds valued at Rs.3,93,386.87 were

recovered. The diamonds recovered were seized and statements

of the persons concerned were recorded and on completion of the

investigation, show cause notice dated 12/9/1991 followed by the

corrigendum dated 28/8/1992, notifying the change in the

adjudicating authority, were issued.

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4. The petitioners contested the show cause notice. On behalf

of the petitioners, the investigating officer and the jewelery

appraiser were cross-examined. It was urged that by mere

physical examination even the experts cannot say with certainty

that the diamonds are of foreign origin; that the goods are not

notified under Chapter IVA; that there is no statutory requirement of

maintaining documents/records; that non availability of documents

like Jhangad, etc. is at best an irregularity but not an illegality; that

the petitioners are not concerned with M/s. M. Ambalal & Co.; that

their presence in the premises was a mere coincidence and

therefore, there is no reasonable belief for effecting the seizure of

diamonds from them; that the Superintendent although physically

present could not have supervised the recording of seven different

statements; that identical language has been used in the

statements and these statements should have more appropriately

been recorded under Section 107 of the Customs Act, 1962 and

the provisions of Section 123 of the Customs Act, 1962 are not

applicable to the case and that there is no evidence to justify the

confiscation of diamonds and imposition of penalty.

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5. The Collector of Customs upon considering the relevant

material and the submissions advanced on behalf of the noticees

ordered confiscation of seized diamonds from Rajendra Bhamra

and M/s. M. Ambalal & Co. He gave option to redeem the said

diamonds. He ordered payment of appropriate duty on the said

diamonds. So far as petitioner 1 is concerned, he ordered

confiscation of 223.75 carats of diamonds valued at Rs.4,50,618/-.

He gave option for redemption of the said diamonds on payment of

fine of Rs.3 lakhs. He ordered confiscation of 2.57 carats of

diamonds valued at Rs.4,955/- from petitioner 2. He gave him an

option to redeem the said diamonds on payment of Rs.2,500/-. He

imposed penalty under Section 112 (b)(i) of the Customs Act, 1962

on petitioner 1 and ordered him to pay Rs.40,000/-. He also

imposed penalty on petitioner 2 under the same provision and

ordered him to pay Rs.1,000/-.

6. The said order was challenged by the petitioners along with

M/s. M. Ambalal & Co. before the CEGAT. The CEGAT by order

dated 29/12/1995 allowed the appeal filed by Rajendra Bhamra

and Dharmendra Shah. The CEGAT partly allowed the appeal

filed by Himatbhai Thedi so far as the personal penalty is

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concerned. The CEGAT, however, rejected the appeals of the

petitioners and confirmed the order of the Collector of Customs

(Preventive) Bombay. Being aggrieved by the said orders, the

petitioners have preferred this appeal.

7. We have heard Mr. Kanuga, learned counsel appearing for

the petitioners. We have also carefully perused the written

submissions filed on behalf of the petitioners.

8. Gist of the arguments of Mr. Kanuga, learned counsel for the

petitioners :

a) There is an error apparent on the face of order of the

Collector of Customs and the order of the CEGAT as

they have proceeded on the footing that the burden of

proving that the diamonds were not smuggled into India

was on the petitioners. The proceedings under the

Customs Act being penal in nature, the burden of

proving its case is always on the Department except

where the goods are notified under Chapter IV-A or

Section 123 of the Customs Act, 1962 which is not the

case here. Sections 106 and 114 of the Evidence Act

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have no application as the onus is on the Department

to prove that the goods are tainted.

b) The Collector of Customs as well as the CEGAT have

misread the judgment of the Supreme Court in

Collector of Customs, Madras & Ors. v. D.

Bhoormall, (1974) 2 SCC 544. The CEGAT has

observed that it is held in that judgment that since it is

exceedingly difficult, if not impossible for the

prosecution agency to prove the facts which are

specifically within the knowledge of the opponent, the

prosecution is not obliged to prove them as a part of its

primary burden. On the contrary, in that case, the

Supreme Court has held that even if a person who is to

be proceeded against has a special or peculiar

knowledge of facts, the Department is not relieved of its

burden to establish that the goods have entered into

the country illegally and the said goods were smuggled.

This view is followed by the Division Bench of this

Court in Commissioner of Customs v. Shri Ganesh

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Enterprises, 2006 (73) RRT 320 and the

Commissioner of Customs v. M/s. Akash Enterprises

in Customs Appeal No.11 of 2006 decided by Division

Bench of this court [R.M. Lodha & J.P. Devadhar, JJ.]

on 8/3/2006.

c) The CEGAT has wrongly observed that petitioner 1 had

no documentary evidence to substantiate his case that

he had purchased the seized diamonds from a trader in

Navsari. In fact, by letters dated 2/4/1991 and

24/4/1991, he retracted his statements dated 22/3/1991

and 23/3/1991 and explicitly stated that the diamonds

were not smuggled and that he was willing to produce

and give accounts and information. He gave names of

suppliers – Ramesh T. Shah and Mayank Diamonds

Private Limited and others. He addressed several

letters to the Customs praying for release of the

diamonds.

d) The finding of the CEGAT that only after issuance of

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show cause notice, names of the parties were

specifically furnished for part quantity of diamonds and

no details were furnished for the balance quantity is

wrong. Letters dated 2/4/1991 and 24/4/1991 establish

this. Besides the petitioners made personal visits

seeking opportunity to produce documents. Letter

dated 3/9/1991 was addressed to the Department

expressing readiness to show all original documents.

The petitioners addressed letters forwarding

documents and ledger accounts showing that polished

and cut diamonds are not of foreign origin. The

Department did not verify the documents. The

Department did not obtain any expert’s opinion. The

finding recorded by the Collector of Customs that

incorrect and improper details claimed by the

petitioners have not been specified in the letter and that

the petitioners have not denied that the diamonds were

of illicit nature is wrong because in letter dated

2/4/1991 and in subsequent letters the petitioners have

specifically stated that the diamonds are not

contraband. The CEGAT committed an error when it

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stated that the documents were not produced when in

fact they were produced.

e) Both the petitioners are carrying on business in

diamonds at Navsari. They had given their addresses.

Petitioner 1 has a workshop. Diamond business is his

ancestral business. He had given names of suppliers.

Petitioner 2 is a broker and goods found with him were

hardly worth Rs.4,000/- and were freely available. Both

the petitioners have nothing to do with M/s. Ambalal &

Co. They are not it’s employees. When they entered

the premises of M/s. Ambalal & Co., their search was

conducted and diamonds were recovered. The officers

of the Customs could never have had reasons to

believe that they were carrying smuggled goods. The

seizure is therefore illegal as reasons to believe were

not based on any cogent material. Buying of rough

diamonds, getting them polished and selling them is not

prohibited in law.

f) The alleged confessional statements of the petitioners

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were recorded when they were detained for three days

and three nights. They are involuntary and false

statements. They are hit by Section 24 of the Indian

Evidence Act. Initial burden of proving that the

confession is voluntary is on the Department. Alleged

confessional statements and retractions have not been

considered in their proper perspective. Judgment of

the Supreme Court in Vinod Solanki v. Union of

India 2009 (233) E.L.T. 157 (SC) completely supports

the petitioners.

g) In the circumstances, the impugned orders deserve to

be set aside.

9. Gist of the arguments of Mr. Desai, learned counsel for the

respondents.

a) The petitioners have not been able to produce any

documents to prove the legitimate origin of the

diamonds.

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b) Identity of the sellers is not established. There is no

account of the seized diamonds. There are no

vouchers to establish that they are not smuggled

diamonds. Only after show cause notice was issued,

some particulars were supplied but they were not

satisfactory. The documents subsequently produced

could not be linked to seized diamonds.

c) In this connection, judgment of the Supreme Court in

Shah Guman Mal v. State of A.P., 1980 SCC (Cri.)

432 is important. In that case, it is held by the

Supreme Court that if the accused failed to disclose

identity of the person who gave him the smuggled gold

it was open for the court to presume under Sections

106 and 114 of the Evidence Act that the gold in his

possession was smuggled and imported without

permission.

d) Judgment of the Supreme Court in Bhoormall’
s case

(supra) supports the respondents. In that case, it is

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held that on the principles underlying Section 106 of the

Evidence Act, the burden to establish facts relating to

smuggling which remain in the special knowledge of the

person concerned in smuggling, is on him and if he fails

to explain those facts, adverse inference of fact may

arise against him.

e)

The judgment of the Supreme Court in Vinod Solanki’s

case (supra) has no application to this case because

there the Supreme Court was dealing with FERA. That

judgment must be restricted to it’s peculiar facts.

f) Apart from the judgment in Bhoormall’
s case, the

respondents are relying on the following judgments :

i) State of Maharashtra v. Natwarlal

Damodar Soni, AIR 1980 SC 593.

ii) Union of India v. Harshad Doshi, 2006 206
ELT 04.

iii) KTMS Mohammad & Another v. Union of
India, (1992) 3 SCC 178.

iv) K. Pavunny v. Asstt. Collector of Central

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Excise, (1997) 3 SCC 721.

g) In view of the above, the concurrent view of the

authorities below does not deserve to be disturbed.

10. Before we deal with the rival contentions it is necessary to

have a look at the Supreme Court’s judgments in Bhoormall’
s case

and in Vinod Solanki’s

case because while the respondents are

heavily relying on Bhoormalls’
case, the petitioners’ case rests on

Vinod Solanki’
s case.

In Bhoormalls’s
case, according to the Customs Department

11.

smuggled goods were recovered from the premises of M/s. Shah

Rupaji on a search conducted by the officers on the basis of

information. One Baboothmull, who was present replied that

he was not the owner of those goods and somebody next door

had left the goods there. Later one Bhoormall turned up to claim

the goods. Adjudication proceedings were held in which

Bhoormall’s solicitor participated. The Collector while

conceding that the burden of proving the goods to be smuggled

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goods rested on the Department, held that such burden prima

facie stood discharged, as the circumstances irresistibly led to

the conclusion that the goods had been illicitly imported. Appeal

filed against the said order was dismissed by the Central

Board of Revenue. Learned Single Judge dismissed the writ

petition filed challenging the said order. In Letters Patent

Appeal, the Division Bench of the High Court held that the

onus to

prove that the goods had been smuggled was on the

department and that it had not shifted on Bhoormall. The

Supreme Court referred to Section 178-A of The Sea Customs

Act, 1878 which is similar to Section 123 of the Customs Act with

which we are concerned here. We will quote Section 178-A as well

as Section 123 of the Customs Act because that will show that the

ratio of Bhoormall’
s case is applicable to the present case also.

Section 178-A reads thus:

“178-A. (1) Where any goods to which
this section applies are seized under this Act in
the reasonable belief that they are smuggled goods,
the burden of proving that they are not smuggled
goods shall be on the person from whose possession
the goods were seized.

                        (2)         This   section   shall   apply   to   gold,




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          gold manufactures,         diamonds   and   other




                                                                             
          precious stones, cigarettes    and   cosmetics and any

other goods which the Central Government may, by
notification in the Official Gazette, specify in

this behalf.

(3) Every notification issued under sub-

section (2) shall be laid before both Houses of
Parliament, as soon as may be after it is issued.”

Section 123 of the Customs Act reads thus:

“123. Burden of proof in certain
cases. – (1) Where any goods to which this section
applies are seized under this Act in the reasonable
belief that they are smuggled goods, the burden of

proving that they are not smuggled goods shall be –

(a) in a case where such seizure is made from the
possession of any person, –

(i) on the person from whose possession the

goods were seized; and

(ii) if any person, other than the person from
whose possession the goods were seized,

claims to be the owner thereof, also on such
other person;

(b) in any other case, on the person, if any, who
claims to be the owner of the goods so seized.]

(2) This section shall apply to gold
[and manufactures thereof] watches, and any other
class of goods which the Central Government may by

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notification in the Official Gazette, specify.”

12. The Supreme Court observed that Section 178-A applies

to goods specified in sub-section 2. With regard to those

goods, if they are seized in the reasonable belief that they are

smuggled goods, the burden of proof that they are not such

goods shall be on the person from whose possession they were

seized; but with regard to any other goods the rule in sub-section

(1) of Section 178-A would not apply unless the Central

Government had applied the same by notification in the Official

Gazette. Since no such notification was issued in the case before

it, the Supreme Court observed that in respect of such goods the

basic canons of criminal jurisprudence and natural justice would

apply. The Supreme Court observed that in proceedings for

imposing penalties under Section 167(8) of the Sea Customs Act

to which Section 178-A does not apply the burden of proving that

the goods are smuggled goods is on the Department. However,

the law does not require the prosecution to prove the impossible.

The Department has to establish its case with such a degree of

probability that a prudent man may on its basis believe in the

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existence of the fact in issue. The Supreme Court further observed

that since it is difficult for the prosecution to prove facts which are

especially within the knowledge of the accused it is not obliged

to prove them as part of its primary burden. Paragraph 32 of

the judgment is material. It reads as under:

“32. Smuggling is clandestine
conveying of goods to avoid legal duties. Secrecy

and stealth being its covering guards, it is
impossible for the Preventive Department to
unravel every link of the process. Many facts

relating to this illicit business remain in the
special or peculiar knowledge of the persons
concerned in it. On the principle underlying
Section 106, Evidence Act, the burden to establish

those facts is cast on the person concerned, and, if

he fails to establish or explain those facts, an
adverse inference of fact may arise against him,
which coupled with the presumptive evidence
adduced by the prosecution or the Department

would rebut the initial presumption of innocence in
favour of that person, and in the result, prove him
guilty. As pointed out by Best (in Law of Evidence’
12th Edn. Article 320. page 291), the “presumption
of innocence is, no doubt, presumptio juris; but

every day’s practice shows that it may be
successfully encountered by the presumption of guilt
arising from the recent (unexplained) possession of
stolen property, though the latter is only a
presumption of fact. Thus the burden on the
prosecution or the Department may be considerably
lightened even by such presumptions of fact arising
in their favour. However, this does not mean that

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the special or peculiar knowledge of the person

proceeded against will relieve the prosecution or the
Department altogether of the burden of producing
some evidence in respect of that fact in issue. It

will only alleviate that burden, to discharge which,
very slight evidence may suffice.”

13. Thus the Supreme Court accepted that in respect of

goods which are not specified in subsection 2 of Section 178-A and

in respect of which no notification
ig is issued by the Central

Government the burden of proving that they are not smuggled

goods lies on the Department. Referring to Section 106 of the

Indian Evidence Act, which states that when any fact is

especially within the knowledge of any person, the burden of

proving that fact is upon him, the Supreme Court observed that

failure to establish facts by a person which are within his special

knowledge will lead to an adverse inference being drawn against

him which coupled with the presumptive evidence adduced by the

Department would rebut the initial presumption of innocence in

favour of that person. But the Supreme Court clarified that the

special or peculiar knowledge of the person proceeded against

will not relieve the Department altogether of the burden of

producing some evidence in respect of that fact in issue. It will only

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alleviate that burden to discharge which very slight evidence may

suffice.

14. In Vinod Solanki’s
case, the Supreme Court affirmed its

view in Bhoormall’
s case and went on to consider what would be

the effect of a retracted confession for the purpose of levy of

penalty under FERA. It is the contention of the respondent that

since this case deals with the provisions of FERA, it is not

applicable to the present case. In our opinion, though the

provisions of FERA were involved in Vonod Solanki’
s case, the

general principles as regards evidentiary value of a retracted

confessional statement laid down therein can be considered in the

present case also. In that case the appellant’s office premises

were searched. Search resulted in the recovery of Indian Currency

of Rs.265,000/-. The appellant was detained. He made

confessional statements confirming that all the transactions in the

name of the two firms had been made by him but no import of

goods had taken place in the name of the said firms. He

confessed that he was responsible for remittances of the foreign

exchange. He was, therefore, arrested for alleged violation of

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Sections 8(3) and Section 9(1) (a) of the FERA. He retracted his

confessional statement. Show cause notice was issued to him. He

contended that no reliance should be placed on the retracted

confession unless it is corroborated substantially in material

particulars by some independent evidence. The appropriate

authority relying on the confessional statement imposed penalty

on the appellant. The Tribunal confirmed the said order. The

Tribunal placed the burden of proving that the confession was

voluntary on the appellant. On appeal the High Court concurred

with the Tribunal’s view. The Supreme Court disagreed with the

High Court. The Supreme Court referred to Section 71(2) of the

FERA and observed that the burden of proof related to use of the

foreign exchange for the purpose for which permission was

granted to acquire it and not to possession. There was no

reverse burden and no presumption of commission of an offence

under the FERA. The Supreme Court observed that the evidence

brought on record by way of confession which stood retracted must

be substantially corroborated by other independent and cogent

evidence. The Supreme Court further observed that initial burden

to prove that the confession was voluntary in nature would be on

the Department. In the context of Section 106 of the Indian

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Evidence Act, the Supreme Court restated what it had stated in

Bhoormall’
s case that the special and peculiar knowledge of the

person proceeded against would not relieve the prosecution or

the Department altogether of the burden of producing some

evidence in respect of the fact in issue. It may only alleviate the

burden to discharge and very slight evidence may suffice. The

Supreme Court further observed that to arrive at a finding as to

whether the retracted confessional statement is voluntary or not,

the court must bear in mind the attending circumstances which

would include the time of retraction, the nature thereof, the manner

in which such retraction has been made and other relevant

features. The Supreme Court further went on to say that mere

retraction of a confessional statement may not be sufficient to

make the confessional statement irrelevant, but the court is

obligated to take into consideration the pros and cons of the

confession and retraction made by the accused.

15. The principles which can be deduced from the above

judgments for the purpose of deciding the present case can be

summarised as under:

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(1) Where any goods which are specified under

subsection (2) of Section 123 of the Customs Act,

1962 are seized under the reasonable belief that

they are smuggled goods, the burden of proving

that they are not smuggled goods shall be on the

person from whose possession the goods are

seized.

Such goods would obviously include

goods which are specified by the Central

Government by notification in the Official Gazette.

(2) In case of other goods which are not covered by

subsection 2 of Section 123 and in respect of

which no notification is issued the basic cannons

of criminal jurisprudence and natural justice will

apply. The burden of proving that the goods are

smuggled will be on the Department.

(3) However, the Department has to establish its case

with such a degree of probability that a prudent

man may on its basis believe in the existence of

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the fact in issue.

(4) The Department is not obliged to prove facts

which are especially within the knowledge of the

proceedee as part of its primary burden because

under Section 106 of the Indian Evidence Act, the

burden of proving facts which are specially

within the knowledge of a person is on him.

(5) However, the special or peculiar knowledge of the

person proceeded against will not relieve the

Department altogether of the burden of producing

some evidence in respect of that fact in issue. It

will only alleviate that burden, to discharge which

very slight evidence will suffice.

(6) The evidence brought on record by way of

confession which stood retracted must be

substantially corroborated by other independent

and cogent evidence.

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(7) Initial burden to prove that the confession was

voluntary in nature is on the Department.

(8) To arrive at a finding as to whether the retracted

confessional statement is voluntary or not, the

court must bear in mind the attending

circumstances which would include the time of

retraction, the nature thereof, the manner in which

such retraction has been made and other relevant

features.

(9) The mere retraction of a confessional statement

may not be sufficient to make the confessional

statement irrelevant, but the court is obliged to

take into consideration the pros and cons of both

the confession and the retraction made by the

accused;

16. We shall examine this case in the light of the above

principles. It is true that diamonds are not notified under Chapter

IV of the Customs Act nor are they notified under Section 125

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27

thereof. Therefore, onus of proving that the diamonds are of

foreign origin and are smuggled into India is on the Department.

However, the Department has not to prove the impossible. It has

to establish it’s case with such a degree of probability that a

prudent man may on it’s basis believe in the existence of the fact in

issue (Bhoormall’
s case).

17.

None of the persons present at the office premises could

satisfactorily explain from whom the diamonds were purchased.

They did not give particulars of the sellers from whom the

diamonds were purchased. These facts were within their special

or peculiar knowledge, which the Department cannot prove and is

not expected to prove. In view of the non-disclosure of facts which

were within the special knowledge of the persons from whom the

diamonds were seized, the burden to prove that the diamonds

were smuggled which undoubtedly rested on the Department is

alleviated. Very slight evidence is, therefore, sufficient to discharge

it. The circumstances which the Department is relying on to

discharge this burden need to be now examined. There are

certain glaring circumstances which discharge the alleviated

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burden resting on the Department. It is pertinent to note that large

quantity of diamonds valued at Rs.79,40,506.25 was found in the

search. The diamonds were not covered by vouchers. Loose chits

were recovered by the officers. They contained accounts of

diamonds. But the seized diamonds were not reflected in the

normal books of accounts of the firm. There was a big discrepancy

in the physical stock, stock ledger and the books of accounts. Mr.

Mahendra Gandhi, the accountant of M/s. Ambalal & Co. stated

that the diamonds were recovered under REP licence. However,

no duty paying documents were forthcoming to establish the

legitimate nature of the diamonds. It is pertinent to note that even

under searching cross-examination seizing officer Shri Sanar has

maintained that he was not acting merely on the basis of

information but the attending circumstances were so overwhelming

and strong as to give rise to a reasonable belief that they were

smuggled into India. The employee of the firm, Raju, who was

standing outside the shop with huge quantity of diamonds tried to

run away. He had to be apprehended. He stated that he had

instructions to run away. All these circumstances in our opinion,

are sufficient to substantiate the case of the Department that the

diamonds were smuggled and the argument that their origin was

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29

not established by their examination, must be rejected.

18. We must now go to the confessional statements. Apart

from the above circumstances, there are confessional statements

of the proceedees in which they have admitted that the diamonds

were smuggled into India. Since the confessional statements have

been retracted the initial burden to prove that they are voluntary in

nature is on the Department. But to arrive at that finding the court

has to bear in mind the attending circumstances. The Department

can rely on the attending circumstances to show the voluntary

nature of the confessional statement. The court has to weigh the

pros and cons of the confession and retraction. It must evaluate

both. It must find out whether confessional statement is

substantially corroborated by other cogent evidence. If there is

such corroboration, it can be relied upon.

19. We have already narrated the circumstances which

substantiate the Department’s case. They provide the needed

corroboration to the confessional statements. Besides from the

order of the Collector of Customs, it is apparent that he has

considered the confessions as well as the retractions. After going

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30

through the confessional statements of Maganbhai Patel and

Ambalal Patel and their retractors, he has observed that there was

no denial of the fact that Rajesh Bhamre alias Raju, the employee

of the firm who was standing outside the premises with a bag of

diamonds had instructions to run away in case he finds the Custom

Officers approaching. It has also not been denied that the

diamonds valued at Rs.79,40,506.25 were recovered from him and

no document regarding their illicit acquisition was produced.

Ownership of these diamonds was claimed by Maganbhai Patel.

20. So far as the retraction of the appellant Shailesh is

concerned, the Collector of Customs has rightly observed that he

has stated that “Therefore the veracity of the statements are

disputed and the said statements with regard to incorrect/improper

details are duly retracted”. This is a very vague retraction. The

incorrect / improper details claimed by him have not been specified

by him in the letter. He has also not specifically denied the illicit

nature of the diamonds. In the facts and circumstances of the

case, we are not inclined to accept the submission of Mr. Kanuga

that the confessional statements were recorded while the

appellants were in detention and they are involuntary. There is

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enough corroborative evidence on record to establish that the

confessional statements are voluntary statements and that the

retractions are clearly an afterthought.

21. Mr. Kanuga contended that the CEGAT has wrongly

observed that petitioner 1 had no documentary evidence to

substantiate his case that he had purchased the seized diamonds

from a trader in Navsari. Mr. Kanuga submitted that he had given

the names of the suppliers. Both the petitioners had forwarded

letters to the Department along with documents but the Department

did not verify them.

22. We have no hesitation in rejecting this submission. The

bonafides of the Department can be seen from the fact that the

Department released diamonds unconditionally where petitioner 1

submitted documents to support legal acquisition. However, where

he could not produce such documents, those diamonds were

seized. It is also pertinent to note that the Commissioner of

Customs has stated that he had gone through the documents

belatedly supplied by the petitioners. He has stated that invoices

of M/s. Mayank Diamonds Private Limited for 110.8 carats had

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reference to jhangad slip dated 14/3/1991 and a copy of jhangad

slip is also available. He has further observed that the quantity

shown under jhangad slip dated 14/3/1991 and invoice dated

30/3/1991 is covered in 5 packets whereas the corresponding

consignment under seizure was covered in 16 packets. He has

observed that segregation of diamonds is made on the basis of

quality and it is unlikely that the said documents related to

diamonds under seizure.

ig He has further observed that the

documents produced could not be linked to the consignment of

diamonds under seizure and that the said documents are not

genuine documents. These observations are not disturbed by the

CEGAT. We concur with this view. In our opinion, apart from the

fact that the documents produced by the petitioners do not bear out

the petitioners’ case, the time taken to furnish them reflects on their

authenticity.

23. Belated attempt made to reconcile the stock of diamonds

by enclosing copies of documents by M/s. Ambalal & Co. vide their

letter has also rightly been repelled by the Collector of Customs.

Mr. Kanuga’s case that the petitioners have nothing to do with M/s.

Ambalal & Co. can never stand the scrutiny of the court in view of

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the fact that they entered the premises of M/s. Ambalal & Co. with

diamonds which could not be accounted for.

24. So far as M/s. Aakash Enterprises case (supra), is

concerned in that case this court has reiterated what the Supreme

Court has said in Bhoormall’
s case that in case of non-notified

goods even if a person who is to be proceeded against, has a

special or peculiar knowledge of facts, the Department is not

relieved of its burden to establish that the goods have entered into

the country illegally and that the said goods were smuggled. The

Supreme Court has clarified that special knowledge only alleviates

that burden, to discharge which very slight evidence will suffice.

We have examined the present case in the light of this observation

and come to a conclusion that the Department has discharged the

burden. M/s. Aakash Enterprises case, therefore, does not help

the petitioners. For the same reasons, judgment of this court in

Shri Ganesh Enterprises’
case (supra) also does not help the

petitioners.

25. In the ultimate analysis we are of the view that the

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34

concurrent finding of fact recorded by the authorities below does

not call for interference. In this connection, we may again refer to

Bhoormall’
s case. In that case, the Division Bench of the High

Court felt that the circumstantial evidence was not adequate

enough to establish the smuggled character of the goods, beyond

doubt and, hence, it interfered with it in its jurisdiction under Article

226 of the Constitution of India. Disapproving the High Court’s

approach, the Supreme Court observed as under :

“37. Even if the Division Bench of the High
Court felt that this circumstantial evidence was not
adequate enough to establish the smuggled character

of the goods, beyond doubt, then also, in our opinion
that was not a good ground to justify interference

with the Collectors order in the exercise of the writ
jurisdiction under Article 226 of the Constitution.
The function of weighing the evidence or considering

its sufficiency was the business of the Collector or the
appellate authority which was the final tribunal of
fact. “For weighing evidence and drawing inferences
from it”, said Birch, J. in R. v. Madhub Chunder
(1873) 21 WR Cr. 13, 19, “there can be no canon.

Each case presents its own peculiarities and in each
common sense and shrewdness must be brought to
bear upon the facts elicited”. It follows from this
observation that so long as the Collector’s
appreciation of the circumstantial evidence before
him was not illegal, perverse or devoid of common
sense, or contrary to rules of natural justice, there
would be no warrant for disturbing his finding under

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Article 226. The Collector’s
order was not of this

kind.”

26. In this case, the Collector’s appreciation of evidence

appears to us to be unassailable. It is neither illegal, nor perverse

or devoid of common sense or contrary to rules of natural justice.

It is confirmed by the CEGAT. Concurrent finding of fact deserves

to be upheld. In our opinion, the petitioners have made out no

case warranting our interference with the impugned orders.

Hence, the petition is dismissed.

[SMT. RANJANA DESAI, J.]

[J.P. DEVADHAR, J.]

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