Judgment:
1. These appeals are against the order of the Additional Collector of Customs, Madras. Brief facts are that diamonds and diamond studded jewellery valued at Rs. 1,56,114/-c.i.f. were seized from S.J. Kothari at the domestic terminal of the Madras Airport on 28-7-1987 after he was intercepted by the officers of the intelligence Unit of the Madras Customs. The officers enquired from him whether he was carrying any diamonds/gold in his luggage to which he replied in the negative and stated that he was dealing in engineering goods. Search of his suitcase led to the recovery of diamonds and diamond studded jewellery. As seen from the narration of facts in the Order-in-Original, in the absence of any evidence or documents regarding licit origin of the goods, the same were seized on a reasonable belief that the same were smuggled into India. The said Shri S.J. Kothari in his statement dated 28-7-1987 before the Customs officers stated that he was helping his father who is a partner in M/s. Diamond Engineering Co., Madras and in the year 1980, he started a new firm under the name and style of M/s. Jayanand Kothari & Co. dealing in cut diamonds and that he had gone to Bombay along with his father-in-law in connection with a marriage of his relation and that he had Rs. 50,000/- with him to buy loose cut diamonds at Bombay through a broker. He further stated that he had borrowed some money from his father-in-law and purchased loose cut diamonds and diamond studded jewellery and he did not get any bills or documents from the broker. Search of the residential premises of S.J.Kothari did not result in seizure of any incriminating documents or contraband on 29-7-1987. On the same day Shri P.C. Kothari, Counsel for SJ. Kothari in a letter to the Additional Collector stated categorically that the seized diamonds were of Indian origin and there was no case under the Customs Act, 1962 and requested for release of Shri SJ. Kothari without arrest. Shri SJ, Kothari through his Counsel P.C. Kothari by his letter dated 31-7-1987 retracted the statement given on 28-7-1987 immediately after seizure. The Customs Office vide letter dated 13-8-1987 informed Shri P.C. Kothari, Counsel for S.J.Kothari that Shri SJ. Kothari was a graduate and had given the statement voluntarily and that his client (S.J. Kothari) was reporting at the Customs House from 31-7-1987 for seven days and he did not bring the matter to the notice of any officials at the Customs House.
Therefore, the retraction of the original statement dated 28-7-1987 was only an afterthought. By his letter dated 10-8-1987 the Counsel for S.J. Kothari informed the authorities that part of the diamonds seized were stock of his client's business and the rest were obtained from Mahendra Kumar M. Doshi, a broker at Bombay. Shri P.C. Kothari, Counsel for SJ. Kothari by his letter dated 11-8-1987 reiterated that the diamonds were of Indian origin and he filed two affidavits from Shri Mahendra Doshi and other by Shri D.Z. Zhaveri and it was stated that Shri Zhaveri had handed over the diamonds to Mahendra Kumar M. Doshi who further handed over the diamonds to SJ. Kothari. A letter was received in the Customs House from SJ. Kothari, dated 18-8-1987 stating that the statement was recorded from him under compulsion and that his Counsel vide his letter dated 31-7-1987 had explained the bona fide source from which the diamonds in dispute had been received. Certain documents, bills and affidavits were also filed. It was also stated that the diamonds were taken to Bombay for repairing and recutting and details were also furnished and name and address of the firm which did the recutting was also given. Bills were also produced in this regard.
Certain diamonds covered vide Serial Nos. 1, 2, 3, 4 and 8 of Annexure to the mahazar were stated to be stock in trade of the firm.
Verification was caused to be made by the authorities in respect of the evidence produced. After taking into consideration the pleas made and the evidence produced the learned Additional Collector out of the total lot of diamonds and diamond studded jewellery seized, released all the items except packets at Serial Nos. 1, 2, 3 and 8 of the Annexure to the mahazar. The market value of these diamonds is shown as Rs. 76,500/-.
2. Shri P.C. Kothari, the learned Counsel for the appellants at the very outset pleaded that the statement recorded from SJ. Kothari was not voluntary and this plea was taken on 30th August, 1987 before the Court. In this connection he drew our attention to page 15 of the paper book filed with the appeal. In this connection he also referred to the Bail application which was allowed to be filed along with the miscellaneous application filed the Advocate. He pleaded that in any case the statement was retracted and the very fact that the appellant's later version was accepted by the authorities and major portion of goods were released would go to show that the appellant's statement was not at all voluntary and did not reflect the truth. He pleaded that out of the goods valued at about Rs. 5 lakhs goods valued at Rs. 4.30 lakhs were released. He pleaded that the reason given for confiscation of the remaining goods by the lower authority in the Order-in-Original is as under: "Shri Jayanand Kothari, Partner of M/s. Jayanand Kothari & Co, 137 Nainiappa Naicken Street, Madras 3, father of Shri Shrenik J. Kothari had submitted that he has been in the diamond trade for the past 40 years. These diamonds were carried from the stock of his shop premises from Madras by his son Shri Shrenik J. Kothari for repairing and re-cutting of these diamonds. In his letter dated 18-8-1987 he had stated that 4 packets each containing diamonds as under were taken : The main submissions of the advocate is that these diamonds were the property of shop M/s. Jayanand Kothari & Co and the same were taken by the son of Shri Jayanand Kothari for repairing and re-cutting at Bombay. In support of this contention they have also produced a voucher dated 22-7-1987 from M/s. Kanthibhai L. Patel, Diamond cutter and polisher, Bombay to the effect that they received the following diamonds on 11-7-1987 and after due cutting/repairing they were returned to Shri S.J. Kothari after their labour charges for the same.
They have further explained that these 52 stones weighing 2.91 carats were part of the packet containing 70 diamonds wg 3.90 carats. I am not convinced that the diamonds under seizure is relatable to the diamonds carried by S.J. Kothari from M/s. Jayanand Kothari & Co., Madras for the following reasons: (1) The 4 diamonds carried by Shri S.J. Kothari which were re-cut by M/s. Kantibhai L. Patel is to weigh after re-cutting 0.92 carats, whereas on physical weighment in Customs the same were found to be 0.91 carats by both Shri Ramachandran a jeweller from the trade as well as the jewellery Expert of Customs House. In view of this difference of 0.91 carats I am convinced that the 4 diamonds under seizure have not been accounted for.
(2) As regards the 70 diamonds supposed to weigh 3.90 carats, out of which 52 stones were cut, as per the calculation the total weight of the 70 Stones under seizure should be as under: Weight of 70 stones :: 3.90 carats Weight of 52 stones before cutting :: 2.91 carats Weight of 18 stones :: .99 carats Weight of 52 stones after re-cutting :: 2.61 carats(+) 18 stones which were not re-cut :: .99 carats Total weight :: 3.60 carats whereas the weight of the 70 stones were found to be 3.58 carats both by Shri Ramachandran, the Jeweller from the trade and the Jewellery Expert of the Customs House. For the above reasons, although the weight of the diamonds contained in other packets tally, in view of the discrepancies pointed out above, I am not convinced that the same is relatable to the diamonds supposed to have been carried by Shri S.J. Kothari from his shop in Madras.
The diamonds under seizure being notified under Section 123 of the Customs Act, 1962. The burden to prove the legal acquisition/importation of the same is on the person from whom they were seized. In this particular case I am not convinced with the documents produced for the reasons already stated. Accordingly, I hold the diamonds contained in these 5 packets as liable for confiscation under Section 111(d) of the Customs Act, 1962." He pleaded that the only reason for which the learned Additional Collector has not accepted the evidence produced by the appellant is that there was some minor discrepancy in the weight of the diamonds compared to that reflected in the stock books of the appellants and as ascertained by the authorities and for that reason the adjudicating authority has held that the burden of proof that the goods are not of foreign origin as required to be discharged by Section 123 of the Customs Act 1962 has not been discharged and the diamonds are therefore liable to be confiscated under Section lll(d) of the Customs Act, 1962.
In this connection he referred us to the weight recorded in respect of packet Nos. 3 and 4 and pointed out that the weight of this packet is 3.58 carat while the weight recorded by the appellant is 3.60 carat. In case of packet IV the same is .91 and .92. He pleaded that so far as 41 stones are concerned, there is no allegation that there was any discrepancy. He pleaded that the weighment was done in the laboratory in the weighing balance available there and a second weighment was also done and the opinion of the experts also differed in this regard to the value and pleaded that minor discrepancy in weight would not be reason enough to hold that the goods were not accounted for. In any case he pleaded that Section 123 could not be invoked in the case of the appellant inasmuch as the appellant was intercepted only on suspicion and seizure was made describing the stones as white stones. He pleaded that at the time of seizure the officers apparently did not know that the goods were diamonds and in this connection he referred us to the cross-examination of the Supdt. Shri R.F. Rodrigues and also Shri Srinivasan, Customs Officer. He pleaded that the cross-examination clearly reveals that interception of the appellant was only on suspicion and was based on doubt about the nature of the goods. He pleaded that seizure was made not based on any information as such and the officers had no knowledge about diamonds much less whether the stones were of foreign origin. He pleaded that the circumstances of the seizure clearly shows that the seizure had not been made on reasonable belief and in that view of the matter therefore, provisions of Section 123 of the Customs Act, 1962 could not be invoked in the case of the appellant. He pleaded that the appellant had retracted the statement at the earliest point of time and the Counsel for the appellant had also written to the authorities about the source of acquisition of the diamonds and also how the appellant came in possession of the diamonds and jewellery and pleaded that evidence adduced for major portion of the goods had also been accepted. He pleaded that the Counsel for the appellant wrote to the authorities that the diamonds under seizure were stock in trade of the appellant and the authorities had also searched the business and the residential premises of the appellants and did not recover any incriminating documents or contraband. He pleaded that the appellant's records were available in the business premises and the authorities should have taken note of the same. In any case he pleaded that the diamonds formed part of the stock in trade and the authorities should have called for the records of stock register and verified the veracity of the appellant's plea. He pleaded that the appellant's Counsel had been writing to the authorities and also given a letter personally on 31-7-1987 clearly stating that the goods under confiscation were the business stock of the appellant. He pleaded that the evidence given by the appellant was verified by the authorities and accepted for major portion of the goods and therefore the evidence in regard to the goods under seizure produced should also have been taken note of and accepted. He pleaded that in regard to the loose diamonds the officers have clearly stated in the cross-examination that they cannot categorically state whether the diamonds are of Indian origin or foreign origin. He pleaded that he had even cross-examined the experts from the trade. He pleaded that no evidence regarding origin of the diamonds has been brought on record. He pleaded that as it is diamonds were de-notified on 26-10-1989 by Act 40 of 1989 and since Section 123 is a procedural law dealing with retrospective effect, in the light of the judgment of the Supreme Court in the case of Balumal v. State of Maharashtra reported in 1983 (13) E.L.T. 1558 (S.C.) - AIR 1975 SC 2083 which has been followed by the Tribunal in the case of Surendra Kumar Jain v. Collector of Central Excise reported in 1990 (45) E.L.T. 127, Section 123 could not be invoked. He pleaded that the appellants are eligible for the benefit of this amending provision and therefore since the proceedings are not finally concluded the appellants could not be called upon to discharge the burden of proof as required under the unamended Section 123 applicable at the time of seizure. He pleaded that as mentioned by him earlier inasmuch as the lower authority had accepted the evidence adduced in respect of the major portion of the jewellery the veracity of the evidence produced regarding diamonds under seizure should also have been accepted unless there was some strong reason for not accepting the same. He pleaded that the lower authority has merely stated that as there was difference in weight in respect of two packets the whole evidence produced regarding the diamonds forming part of stock in trade could not be accepted. He pleaded that the difference in the weight between that recorded in the appellant's register and as ascertained in the Custom's laboratory was minor. Weight recorded by the appellant was based on the hand-scale weighment and the weight as ascertained by the authorities was on a more sensitive scale and this could not be a reason enough for not accepting the evidence adduced by the appellant. He pleaded that as it is, the difference in weight depended upon the method adopted for weighment. To ascertain the position in this regard, we directed the departmental authorities to weigh the diamonds on a precision scale in the presence of the representative of the appellant. This weighment was done. Weighments as shown in the stock register of the appellant, weighment as explained by the appellant after cutting some of the stones, weighment ascertained at the time of seizure and those ascertained as per the direction of the Bench are tabulated below: The learned Counsel submitted that there is bound to be some minor variation in the weighments done on different scales and by different people and pleaded that the appellants had entered the weight after weighing in some hand-scale and not on any precision weighing scale. He urged again that the evidence adduced by the appellant should not have been rejected because there was some minor variation in weights. He pleaded that the appellant had lead the evidence to explain the weights as entered in their stock register and the weights which were actually found. He pleaded that in respect of 70 diamonds (Packet No. III) weight as entered in the stock register came to be reduced to 3.60 from 3.90 carats after 52 numbers of these stones were got cut. In respect of 4 diamonds, these were subjected to cutting and thus the original weight of 0.95 came down to 0.92. He pleaded that the evidence regarding re-cutting adduced by the appellants has not been found fault with by the learned lower authority and in the absence of any adverse comments regarding that should be taken to have been found acceptable.
The learned lower authority in view of the minor difference in weights has held that these lots were not relatable to the stock entered in the register without putting the appellant on notice that this aspect of weight difference was required to be explained. He pleaded that this minor difference in weights would have been explained by them in case they had been asked to explain. He pleaded that taking into consideration the circumstances of the seizure, explanation given by the appellant and also the fact that the lower authority has not gone by the original statement but has accepted the evidence produced later and also the fact that the appellant right from the beginning has been stating that these diamonds in five packets were part of his stock in trade and the fact that Section 123 of the Customs Act, 1962 was not applicable, confiscation of the diamonds and levy of penalty was not maintainable in law. In support of his plea, he cited the following case laws : (k) CEGAT East Regional Bench Calcutta Order No. 14/Cal/198844 dated 16-12-1987.
(l) Judgment dated 13th March, 1969 in Cr. Rev. Appln. No. 1046 of 1967, pronounced by Bombay High Court.
(m) Order-in-Original S/14-7-3/88, dated 30-1-1991 of the Deputy Collector of Customs (P), Customs House, Bombay.
3. Shri Namasivayam, the learned D.R. for the Department pleaded that the appellants have made a grievance that the officers had no reasonable belief to effect the seizure in this case. He pleaded that the learned lower authority has dealt with this aspect at length in page 15 of his order. He pleaded that the learned lower authority has relied upon the judgment of the Hon'ble Supreme Court reported in 1993 (67) E.L.T. 17 (S.C) = AIR 1967 SC 737 and 1983 (13) E.L.T. 1558 (S.C.) - AIR 1975 SC 2083 and has held that the officers had reasonable belief and pleaded that in this case after seeing the goods the officers formed reasonable belief and effected seizure of the diamonds. He pleaded that though the officers called it as white stones, in the mahazar, the appellant himself admitted that the stones were diamonds and in that view of the matter therefore, the officers formed a reasonable belief before seizing the same that the same were liable to confiscation. He pleaded that the learned lower authority had been very......and about 80% of the goods have been released and only the goods where discrepancies were found the evidence produced was not accepted. He pleaded that the learned lower authority may not have gone in detail into the account books produced and that could be at best, be a reason for de novo adjudication. He adopted the reasoning of the learned adjudicating authority in support of his plea for confiscation of the goods.
4. We observe that seizure in the present case was made consequent on the interception of the passenger by the officers of the Intelligence Unit of the Preventive Department of the Customs. Appellant Shrenik J.Kothari was questioned whether he was carrying any gold or diamond and his reply was in the negative. On suspicion the suitcase he was carrying was opened and diamonds and diamond studded jewellery was recovered from him. It is the passenger, as seen from the mahazar, on enquiry informed the officers that white stones he was carrying were diamonds. The appellant could give any satisfactory explanation how he came in possession of the diamonds and diamond studded jewellery and the officers formed a reasonable belief that the goods were smuggled and proceeded to seize the same. The plea of the learned Counsel is inasmuch as the officers had described the goods at. white stones and did not form any opinion that the goods were diamonds, they could not have formed a reasonable belief that what the appellant was carrying was diamonds and that they are smuggled goods. His plea is that the seizure was made without any information and merely on suspicion and he elicited this fact from the officers on cross-examination and has referred to the cross-examination of Shri M.V. Srinivasan, Prev.Officer and Shri R.F. Rodrigues, Supdt. of Customs and we find that Shri Srinivasan stated that the seizure made had nothing to do with the intelligence on which they were working at the time when the seizure was made and appellant Shrenik J. Kothari was detained only on suspicion. We also find that Shri Srinivasan also during cross-examination stated that there was no concealment and that he does not have knowledge about diamonds. During cross-examination Shri R.F.Rodrigues also stated that the seizure was made based on suspicion and that he cannot differentiate between Indian diamonds and foreign diamonds and further stated that in the absence of any documentary evidence he presumed that the stones were foreign diamonds. The learned Counsel also pleaded that the officers could not distinguish between foreign diamonds and Indian diamonds. He also led evidence from the trade that it is not possible to differentiate between the foreign diamonds and Indian diamonds, in the mahazar we find that after describing how Shri Shrenik J. Kothari was intercepted it has been recorded that the jewellery studded with white stones and loose stones we recovered from the suitcase carried by the appellant and after the appellant described them as diamonds it has been recorded in the mahazar as under: "As there is no valid documents available with the passenger Mr.
S.J. Kothari to prove licit origin and legal acquisition. Studded jewellery and white stones (stated by the passenger as diamonds as detailed in the Annexure 'A' to this mahazar) were therefore seized as a reasonable belief that they were smuggled into India for further action under Customs Law".
It is seen that in spite of the appellant stating that these were diamonds the seizure made as per mahazar was on the understanding by the officers that the stones were white stones. The officers apparently at this stage had not formed their own opinion as to the nature of the stones in spite of their having been described by the passenger as "Diamonds". In a similar case decided by the East Regional Bench of the Tribunal reported in 1983 (14) E.L.T. 1966 (para 11) where white stones were seized suspecting them to be diamonds, the Tribunal observed that the Customs Officers themselves were not very sure whether the goods were diamonds or not. Here again we find that the Department did not bring in any expert before effecting seizure to form an opinion whether the goods were diamonds or not. Apparently they also did not believe that the white stones the appellant was carrying were diamonds as they refrained from describing the same as diamonds in the mahazar and merely stated "white stones stated to be diamonds". In this connection, the question that arises is whether non-accountal by the appellant of the goods carried by him at the time of seizure can be reason enough to consider the goods to be of foreign origin smuggled into India for the purpose of Section 123 of the Customs Act, 1962. We observe that the condition precedent for invoking Section 123 is that seizure should be on the reasonable belief that these notified goods were smuggled into India and before effecting seizure the officers have to form a reasonable belief whether the goods are diamonds. The officers did not have any knowledge about the origin of the goods in the present case i.e. whether they were of Indian origin or foreign origin. The officers also did not determine the nature of the goods before effecting seizure of the goods. The belief, therefore, that these were diamonds smuggled into India could not have been there. We observe that it is a well known fact that India has a big diamond Industry and cut diamonds out of the roughs imported are being manufactured in India and diamonds worth hundred of crores are being exported. The appellant from whom the diamonds and diamond studded jewellery have been recovered was coming from Bombay and not from a place outside India and there is nothing on record to suggest that the goods as it is could have originated from a foreign country. We, therefore, hold that the provisions of Section 123 could not have been invoked in the present case.
5. Alternatively, the appellant has also pleaded that in view of the amendment made de-notifying the diamonds from Section 123 of the Customs Act, 1962, with effect from 26th October, 1989 by Act 40 of 1989, Section 123 of the Customs Act, 1962 being procedural law, in the light of the Hon'ble Supreme Court decision in the case of Balumal v.State of Maharashtra reported in 1983 (13) E.L.T. 1558 (S.C.) = AIR 1975 SC 2083 followed by this Tribunal in the case of Surendra Kumar Jain v. Collector of Central Excise - reported in 1990 (45) E.L.T. 127, the burden of proof under Section 123 cannot be cast on the appellant, but lies on the Department. We respectfully following the ratio of the Hon'ble Supreme Court judgment, accept this plea of the appellant in the light of the amendment to Section 123 that the appellant is no longer required to discharge the burden of proof in the proceedings before us. We, further observe that, no doubt, the appellant did not give any satisfactory explanation as to how he came in possession of the goods, but the circumstances as to how he came in possession of the goods were explained to the authorities by the Counsel for the appellant. Taking into consideration this evidence regarding acquisition of the goods produced later, the lower authority has ordered release of major portion of the seized goods. The evidence produced in respect of the confiscated goods should have been considered in the proper perspective. The appellant right from the beginning has been stating that the goods were his stock-in-trade but the authorities did not choose to verify the accounts. In any case the lower authority has taken into consideration the evidence in the stock register but has not accepted for the reason of small variation in weights. The appellant has explained the reason for variation by stating that variation is bound to be there when the subject goods are weighed in a hand-scale and in a precision scale. We had ordered the weighment to be done on a precision balance and the weight ascertained has differed from the weight ascertained by the authorities after seizure was effected. Taking into consideration the explanation given and the actual difference in weight being there on weighment ordered by us, possibility of weights of diamonds being different when weighed on different type of scales therefore cannot be discounted. We, therefore, hold that small difference in weight of the two different packets can be taken to have been explained. We would like to note that the learned lower authority has also not rejected the evidence regarding cutting of the stones and the weight after cutting as entered in the stock register. No evidence has been brought on record that the diamonds were of foreign origin.
6. We have held that the provisions of Section 123 cannot be invoked in the facts and circumstances of this case. In this view of the matter, therefore, the burden to prove that the goods were smuggled lies on the Department. This burden has not been discharged by the authorities as the Department has not adduced any evidence to show that the diamonds are smuggled and are of foreign origin. The appellant on the other hand in our view, has given acceptable evidence that the diamonds were his stock-in-trade. In view of the above we set aside the impugned order confiscating the diamonds and also levy of penalty on both the appellants and allow the appeals.
7. [Assent per : S. Kalyanam, Member (J)]. - I have had the privilege of perusal of the order of my learned Brother circulated to me today.
While agreeing with the findings of my ld. Brother that the appeals are to be allowed, I am of the view that such findings have been reached on the following grounds :- 8. Diamonds in Packets 1,2, 3, 4 and 8 have been absolutely confiscated under the impugned order and the main issue is with reference to the confiscability of the same under law. The appellant mainly contended that the diamonds are the property of the shop of M/s. Jayanand Kothari and Co. and they were taken by his son for repairing and re-cutting at Bombay and in support of this plea he produced the voucher dated 22-7-1987 of M/s. Kanthilal L. Patel, diamond cutter and polisher, Bombay to the effect that they received the diamonds in question on 11-7-1987 and after due cutting an repairing they were returned to appellant S.J. Kothari after the labour charges were taken. This plea of the appellant was negatived by the ld. Collector on the ground that on physical weighment in carat there were discrepancies and in view of this difference of 0.01 carats I am convinced that the 4 diamonds under seizure have not been accounted for. Since a plea was urged that the discrepancy in the weight is negligible and weight is bound to differ depending upon the weighing machine used namely whether it is an electrical machine or a hand operated scale and in the context of such plea we directed the Custom House to weigh the diamonds on a carat balance and submit the report. The Bench observed in this connection on 29-4-1991 as under :- "The Bench directed that the diamonds in question should be weighed in the presence of the appellants by a jewellery expert of the Custom House on a carat balance and a report submitted so as to enable us to appreciate the submissions made with reference to the weight of the diamonds.
2. Shri Vedantham, ld. DR submits that the diamonds were weighed in the presence of Shri Jagannathan, Appraiser, Custom House, Madras and Shri Jayaramamurthy, Prev. Officer at the premises of the Madras Jewellers and Diamond Merchants' Association, NSC Bose Road, Madras and weighment was done in Mettler Electronic Balance. Unfortunately instead of indicating the total weight of the diamonds in each packet in the report submitted indications like '+3', '+2' are mentioned in respect of four packets and the ld. DR is not able to explain the significance of these '+3' or '+2' against each packet and how much is to be added to the total weight. We expected the diamonds to be weighed and the exact weight of the same in each packet to be indicated and unfortunately that has not been done as directed. Both the parties are not able to explain as to what '+3' or '+2' mean. Therefore, in the interest of justice, as desired by both the parties, the Department is directed to file an affidavit from the Jewellers' Association and also a supporting evidence by Shri Jagannathan, Appraiser clarifying as to what is the exact weight of the diamonds in each packet. The matter is accordingly adjourned to 10th May 1991".
Subsequently Shri Jagannathan, Appraiser in the Madras Custom House has sworn to an affidavit as under :- "I, R. Jagannathan, s/o Shri S. Rathinam, aged 34, working as Appraiser in the Madras Custom House do hereby sincerely state and solemnly affirm that: I, along with S/Shri A.K. Jayaramamurthy, Prev. Officer, S.J. Kolhari (Appellant) and P.L. Kothari (Advocate) went to the Madras Jewellers and Diamond Merchants Association, 10 Car St., N.S.C. Bose Road, Madras-79, for weighment of the diamond packets as directed by the Hon'ble Tribunal.
The diamond packets were opened and the diamonds contained in the individual packets were weighed in the mettler electronic balance.
The weighment particulars of each packet is as follows : The statement made in the above affidavit are true and correct to the best of my knowledge and belief." Shri C.V. Pandurangam, Secretary of the Madras Jewellers and Diamonds Merchants Association also has sworn to an affidavit on 8th May, 1991 in this regard and for purpose of convenience of the issue involved I am extracting below the relevant paragraph therein, - "I am the Secretary of Madras Jewellers and Diamond Merchants Association.
2. On 27-3-1991 Shri Jayaramamurthy, Prev. Officer and Sri Jagannathan, Appraiser of Customs, Madras had come to our Association for weighment of five diamond packets. They wanted to have accurate weighment of each diamond packet done. Accordingly diamonds found in each respective diamond packet were weighed in Association's Mettler Electronic Balance by Smt. B. Vijayalakshmi, Asstt. of our Association and weighment slips were prepared by her.
It was done in the presence of above referred Customs officials, party Shri S.J. Kothari and Advocate Shri P.C. Kothari.
3. Details of the precise weighment of five diamond packets is as follows : In this regard on behalf of our Association, I have signed and given a letter addressed to Supdt. of Customs, Madras dated 27-3-1991.
4. On 7-5-1991 Shri Jagannathan, Jewellery Appraiser of Customs, Madras, had come to our Association and informed me that Hon'ble Tribunal wants due clarification as to what does this +3 and +2 as indicated in bracket in the weighing slips mean. For the same I have to explain, that on precise weighment weight as indicated in the slips is found. Diamonds are weighed in carats and cents. 100 cents make one carat. The weight +3 and +2 are fraction of Cents i.e. 3/10 and 2/10, In normal trade practice, such fraction of cents of weights, (which is negligible and very much within tolerance range) is not indicated. Procedure followed, is on weighment, such fraction is above, .5 cents it is taken as one and if it is within .5 cents it is rounded off to weight found.
It may kindly be noted that such precise/minute accuracy in fraction of cents, is possible to be secured only in up-to-date latest Mettler Electronic Balance (which we have got it in our Association about 5 years back).
I submit that above particulars will clarify the matter especially about +3 and +2 and total weight of 5 packets. If required as duty bound, I on behalf of the Association, humbly state we are ready to provide any further particulars required of us." Wt. As given by Sri Ramachandran, Jewellery Expert and as furnished to Sri Manjunath, Jewellery Appraiser, Cus. Madras, (according to impugned order) Wt. Ascertained according to the directions of the Tribunal.
(Fur-nished by the Association) The above would clearly bear out that the discrepancy is negligible and is bound to arise depending upon the scale in which the diamonds are weighed namely by electronic machine or by hand-operated scale.
9. The appellant has been contending that the goods formed part of his stock-in-trade and the authorities did not choose to verify the accounts. Since the accounts produced by the appellant and receipts etc. were not considered by the adjudicating authority and since a finding against the appellant has been given solely on ground of weight discrepancy and since as indicated above the discrepancy in weight is not much and is bound to arise depending upon the machine in which the diamonds are weighed and keeping in mind the fact that the proceedings are penal in nature, I am inclined to hold that the appellants would be entitled to the benefit of doubt arising in the facts and circumstances of the case. In this view of the matter I set aside the order of the Collector in regard to the confiscation of the diamonds in question. In the light of the view I have taken in appreciation of the evidence on facts, I do not consider it necessary to pronounce upon the legal questions argued by the learned Counsel. I, therefore, hold that the appeals would stand allowed for the above reasons.