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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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8have 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, ::: Downloaded on - 09/06/2013 14:32:39 ::: AJN 17 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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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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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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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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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 characterof the goods, beyond doubt, then also, in our opinion
that was not a good ground to justify interferencewith the Collectors order in the exercise of the writ
jurisdiction under Article 226 of the Constitution.
The function of weighing the evidence or consideringits 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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