LexINDRU RAMCHAND BHARVANI AND OTHERS versus UNION OF INDIA & OTHERS
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A !NDRU RAMCHAND BHARVANJ AND OTHERS v. UNION OF !NOIA & OTHERS JULY 22, 1988 6 [SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.J c Customs Act, 1962: Sections I JO, 112 and 123-Seizure of goods on reasonable belief that they are smuggled-Whether reasonable belief could be based on presumptions-Diamonds have great potential for smuggling. Administrative Law-Statutory authorities and tribunals-Find- ing on fer:ts based on no evidence-;--Question of law arises2-Courts to interfere-Whether a person has had a fair hearing-Conscience of Court to be satisfied. D On receiving secret information that smuggled diamonds had been kept by petitioners Nos. 1 and 2 in the premises of M/s Gems Impex Corporation, Bombay, petitioner No. 3, which firm was being managed by Petitioners N11s. 1 and 2, the Customs Officers searched the premises and found large quantities of unaccounted diamonds, precious stones, pearls, gold manufactures, Indian currency etc. The petitioners E showed their inability to produce evidence of legal acquisition of the goods except to state that they had purchased these locally on cash payment. The cash books however revealed no such payment. Various incriminating documents were also found. On these facts, the Customs Officers formed a prima facie belief under section llO read with section 123 of the Customs Act, 1962 that the unaccounted diamonds were F smuggled goods, and seized them. In his statement recorded under section 108 of the Act, petitioner No. 2 produced certain notes issued by four dealers saying that some quantity of diamonds had been given to the petitioners on approval basis. The said dealers when questioned under section 108 stated that they had issued anti-dated and fake notes in order to help the petitioners. The explanation given by the petitioners G having been found unacceptable, a show cause notice was issued to the petitioners who were called npon to explain as to why the goods be not confiscated and penalty imposed. In reply, the petitioners stated that the goods were lying with them on approval basis and relied on affidavits of other diamond merchants and persons. These transactions were however not entered in the books of accounts of the dealers and H persons who filed the affidavits. 544 ':1.··.··. ii i I, J<. ,_,_, 'l t ,~·- ' ·-· ;'. t J.R. BHARVANI v. U.0.1. .545 The Collector of Customs by his order directed release of jewel- lery but ordered absolute confiscation of various other goods including the diamonds and also imposed heavy penalties under section 112 of the Act. An appeal to the Collector of Customs under 128 oftbe Act failed. The Customs, Excise & Gold (Control) Appellate Tribunal confirmed the order of confiscation in respect Of diamonds. The Tribunal held. that seizure of diamonds was in the reasonable belief that these are smuggled goods and consequently the onus of proof, according to section 123 of the Act, was on the petitioners which they had failed to discharge. The Tribunal however reduced the penalties imposed under section 112. The petitioners challenged the Tribunal's order before the High Court of Delhi under Article 226. Moreover, on an application filed by the petitioners under section 130 of the Act, the Tribunal referred two questions to the Bombay High Court. The reference pending in the Bombay High Court was transferred by the Supreme Court to the Delhi High Court, and both the Writ Petition and the reference were heard and disposed of together. The contentions raised before the High Court and reiterated before this Court were (1) that there was no material before the Customs Officer to form the reasonable belief that seized goods were smuggled goods, and the seizure was bad in law, and therefore the provisions of section 123 of the Act did not apply, (2) that assuming that A B c D the onus was upon the petitioners, they had amply discharged the said E burden by tendering affidavits; (3) that there was no profit element in smuggling the diamonds and, lience, no presumption should be inferred against the petitioners; and ( 4) that the conclusions of the fact-finding body or statutory authority must be arrived at after giving fair opportunity to the party. Dismissing the Special !,eave Petition, it was, HELD: (1) Section 123 of the Act itself recognises that diamonds have great potential for smuggling into India and that is why it is mentioned in sub-section (2) of sect
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