COMMISSIONER OF CUSTOMS, MUMBAI versus M/S. B. V. JEWELS AND ORS.

Citation: [2004] SUPP. 4 S.C.R. 413 · Decided: 14-09-2004 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Case Partly allowed

Judgment (excerpt)

COMMISSIONER OF CUSTOMS, MUMBAI 
v. 
MIS. B. V. JEWELS AND ORS. 
SEPTEMBER 14, 2004 
[S.N. VARIAVA AND ARIJIT PASAYAT, JJ.J 
Customs Act, 1962-Non-levy and short levy-Capital goods-
Unaccounted diamonds-Seizure of-Goods imported by one firm utilised by 
sister concern-Common premises-Mixing of two units-Held not legally 
permissible-Duty levied on shortage of gold and diamond confirmed. 
Exim Policy-Inter-unit transfer-Held, permission necessary not only 
for transfer but also usage of imported goods-Demand confirmed-Plea 
that units can transfer without permission, rejected. 
Burden of proof-Jn respect of retention of goods in connection with 
the promotion of exports of gem and jewellery-Held, burden lies on the 
assessee to establish the satisfaction of condition. 
Exim Policy-Paras 8.34 and 8.35, 8. 78B-'-Working out details of 
quantity of imports and exports by the exporter-Held, the details to be done 
in terms of para 8. 78B. 
Show cause notice was issued to the respondents for shortage of 
gold and diamonds, capital goods and unauthorised usage of capital 
goods. On the basis of certain intelligence, regarding various provisions 
of the Customs Act, 1962 (the 'Act') and Customs Rules, 1966 (the 
'Rule'), the EXIM policy and violation of conditions of certain 
Notifications on the basis of which the respondent had availed benefits, 
in terms of Section lll(d), lll(j), lll(i), lll(o), lll(m), 112(a), 112(b), 
113(d), 113(i), 114(i) and 114(A) of the Act. The premises of the 
respondents Mis. B.V. Jewels and Mis. B.V. Star were searched. Both 
the units were situated at the same plot. Officers of Customs recorded 
statements of the Accounts Manager and stock taking was done, and 
verification continued for several days. After completing verification it 
was found that there was large scale evasion of duty, shortage of stocks 
A 
B 
c 
D 
E 
F 
G 
of certain items while excess stock was found in respect of some others 
items. In addition, it was found that there was shortage of capital goods 
H 
413 
- 414 
SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R. 
A 
and unauthorised usage of capital goods. The unaccounted diamonds, 
and capital goods were seized and show cause notice was issued to the 
respondents. 
B 
c 
D 
The Commissioner considered the show cause reply and passed the 
order imposing penalty, confiscation, etc. 
The order of the Commissioner was set aside by CEGAT holding 
that accusations were not established, that the shortage or excess as 
claimed were not substantiated and various departmental notifications 
were not properly construed by the Commissioner. 
In appeal before this Court, Appellant contended that the show 
cause notice elaborately detailed the various infractions, that CEGAT 
did not examine the materials in their proper perspective, that the 
judgment which is the result of perfunctory manner of disposal by . 
CEGAT needs to be set aside and the order of the Commissioner deserves 
to be restored. 
Respondents contended that the Commissioner had not analysed 
the show cause reply, had acted on mere surmises and conjectures without 
keeping in view the applicable provisions and the notifications and had 
E 
confirmed the demands proposed in terms of the show cause notice, that 
CEGAT ha.d analysed the issues in great detail and arrived at the correct 
conclusions, that the position of expected recovery as worked out by the 
department is artificial and hypothetical, that there was no material 
brought on record to show that the expected recovery would be the 
F 
actual, that the capital goods 
imported duty free 
by 
Mis. B.V. Star was installed in the premises allo~ted to Mis. B.V. Jewels 
and were in exclusive use of the latter, that in the present case condition 
xiv (b)(i) of Notification 196/87-Cus. dated 5.5.1987 is not applicable 
and it is a case where condition xiv (b)(ii) is applicable, that the articles 
can be retained within the Zone in connection with the promotion of 
G 
exports and that the demands raised were clearly barred by limitation 
and though the plea of limitation was specifically raised the same was 
not considered by the Commissioner and since CEGAT accepted the 
plea of the respondents on merits it did not refer to that plea. 
H 
Allowing the Appeals partly, the Court 
COMMR. OF CUSTOM v. B.V. JEWELS 
415 
HELD : 1. It was not permissible for Mis. B. V. Star to claim that 
A 
the goods imported by it were mixed up with the stock of Mis. B.V. 
Jewels. Tribunal 

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