Indru Ramchand Bharvani And Ors. vs Union Of India And Ors.
1988 Latest Caselaw 126 Del

JUDGMENT

Y.K. Sabharwal, J.

(1) M/S. Gems Impex Corporation, Bombay-Petitioner No. 3 is a firm carrying on business in diamonds and precious stones etc. Ramchand Udhavdas Bharvani-Petitioner No. 2 was a partner of the said firm. Indru Ramchand Bharvani, Petitioner No. 1 is his son. Both father and son were managing the business of the firm. The Customs Officers received a secret information that smuggled diamonds have been kept by Indru Ramchand Bharvani and Ramchand Udhavdas Bharvani in their business premises (M/s. Gems Impex Corporation). After obtaining necessary search warrant the Customs Officer searched the premises of the firm on 16 November 1979. They found over 2800 carats of rough diamonds and over 400 carats of cut and polished diamonds in addition to number of other items of precious stones, pearls, gold manufactures etc., in the business premises of the firm. However, the books of account of the firm, though claimed to be written up to date, showed a stock of 11.96 carats of cut and polished diamonds and the stock of rough diamonds and other articles was shown as nil. When the Officers asked S/Shri Indru Ramchand Bharvani and Ramchand Udhavdas Bharvani to produce evidence of legal acquisition, import and possession of diamonds they showed their inability to produce any documents. They stated that they had purchased the goods locally through brokers and that they had already made 50 per cent of the payment in cash. The Cash Book, however, showed no such payment entries nor were any purchase vouchers produced before the officers. When asked to name the brokers so that the explanation of purchase given by them could be verified, the Petitioners No. 1 and 2 stated that the brokers would not come forward to confirm the deal. The Customs Officers also found various documents which have been described in the initial Panchnama as to various incriminating documents". Considering the totality of the circumstances in the background of the secret information the officer had received, the Customs Officer in charge of the search party formed the reasonable belief under section 110 read with Section 123 of the Customs Act 1962 (the Act) that the unaccounted diamonds etc were smuggled goods. The Customs Officer seized various goods including cut and polished diamonds and rough diamonds in all valued at Rs. 54,42,882.02 under Section 110 of the Act in the reasonable belief that the goods had been smuggled into India. The Customs Officer also seized Indian currency of Rs. 1.40 laksh. Certain incriminating documents found in the premises were also seized. In this petition we are only concerned with cut and polished diamonds and rough diamonds.

(2) On 16th November 1979 a warning bad been issued by the Weather Office, Bombay, about a possible sea storm that night. The entire activities including the offices markets had been closed and public had been advised to rush back to their house early. In view of these circumstances only an initial panchnama was drawn on 16th November 1979. The goods and the documents seized were put in two cartons in the presence of the Panchas and the cartons were sealed with the Customs' seal and also with the seal provided by Petitioners No. 1 and 2 of M/s. Gems Impex Corporation and the signatures of the Panchas were also put on the label of the cartons. A detailed item wise inventory of the seized goods and documents was prepared in the Customs House later on 20th, 21st and 22nd November 1979. Petitioners No. 1 and 2 were also asked by the department to attend preparation of the detailed item wise inventories but they did not attend. Petitioner No. 1 even sent a letter saying that the work of preparing detailed inventories could go in his absence. It is not necessary to give further details about the Panchnamas prepared on 20th, 21st and 22nd November 1979 as no grievance has been made on that account by the learned counsel for the petitioners.

(3) During the course of investigation, besides others, the statements of the petitioners 1 and 2 were also recorded towards the end of November 1979 under Section 108 of the Act. In his statement recorded on 29th November 1979 Ramchand Udhavdas Bharvani gave names of the following four dealers: 1. M/s. H.Kritikumar and Co. 2. M/s. Asohka Gems, 3. M/s. Naeva Exports, 4. M/s. Bikash Deep Enterprises.

(4) The petitioners also produced certain notes issued by the aforesaid dealers showing that some quantity of diamonds have been given by the said dealers to M/s. Gems Impex Corporation on approval basis. The approval basis is known in the business circle, according to the learned counsel for the petitioners, as 'Jangad'. Some of these notes bore dates earlier than 16th November 1979 but neither these notes nor any packets of diamonds covered thereby had been found with the firm on the date of search and seizure. The dealers named by the petitioners were also questioned under Section 108 of the Act to check the veracity of the said notes. In the course of their statements it came out that these dealers had prepared anti dated and fake notes in order to help the petitioners. The diamonds covered by these 'jangad notes' were not found in possession of the firm on 16th November 1979 and were not seized. The petitioners tried to explain the absence of these notes by saying that they had further passed on these diamonds to other dealers on jangad basis and as such the said diamonds were in circulation and hence not seized. The jangad notes issued by the four dealers or the jangad notes issued further by the petitioners to other dealers or even copies thereof were also not found.

(5) A show cause notice dated 9th May 1980 was served upon the petitioners and few others. We are only concerned with the petitioners as other parties who were served with the show cause notices have from one forum or the other, got the necessary reliefs. In the show cause notice the petitioners were called upon to explain and show cause to the Collector of Customs (Preventive) Bombay, as to why goods mentioned in the said show cause and the Indian currency of Rs. 1.40 lakhs be not confiscated and why penalty should not be imposed upon them under section 112 of the Act. The petitioners submitted their reply dated 5th March 1981 In reply the petitioners, inter-alia, took the stand that the goods seized from their custody by the Customs department were goods which were lying with them on approval basis or jangad basis and belonged to various dealers in the diamond trade. The petitioners relied upon affidavits of seven other diamond merchants, jewellers, customers etc which they filed for the first time Along with their reply to show cause notice after about 15 months of the serzure, these affidavits, among themselves, covered the entire quantity of the goods seized on 16th November 1979. In substance, the stand taken in these affidavits was that the goods seized by the Customs Officer belonged to other dealers and customers who had left them with the petitioners for approval. In so far as the diamonds are concerned, the affidavits of following three persons were filed : 1. Shailain Hirachand Jhaveri, Sole proprietor of M/s. Shail Pradhan. 2. Dalip Shantilal Jhaveri, Sole proprietor of M/s. Swastik Diamonds. 3. Kirtilal Jeshinglal Jhaveri, Sole proprietor of M/s. Ashoh Gems.

(6) The affidavits of the aforesaid three persons are on Pages 221, 123 & 134 of Volume I of the Paper Book. Shailain Hirachand Jhaveri and Dalip Shantilal Jhaveri have stated in their affidavits that they are owners of the diamonds mentioned in their respective affidavits. However, further details such as (1) whether the diamonds are entered in their books of account or not; (2) when and from whom they acquired the possession of the said diamonds and (3) whether any jangad notes were issued and if so, when, are not mentioned in their affidavits. In short, in affidavits only a bald statement about the- ownership of diamonds is made and nothing more. Shailain Hirachand Jhaveri in his affidavit states that on or about 30th November 1979 he learnt about the seizure of diamonds. Dalip Shantilal Jhaveri in the affidavit says that he learnt about the seizure of diamonds on or about 29th November 1979. Both these affidavits are identical in all other respects. The third affidavit of Kirtilal Jeshinglal Jhaveri of M/s. Ashok Gems states that he learnt about the seizure of diamonds on or about 20th November 1979. Kirtilal Jhaveri is the same dealer whose statement under Section 108 of the Act had been recorded within about two weeks of the seizure as he was one of the dealers named by the petitioners. He bad then disowned the diamonds. The other two Shailain Hirachand Jhaveri were not named by the petitioners when their statements were recorded under Section 108 of the Act. The statement of Kirtilal Jeshinglal Jhaveri and Dilip Shantilal Jhaveri under Section 108 of the Act was recorded on 1st December 1979 which was retracted by him for the first time by filing the affidavit through the petitioners with their reply dated 5th March 1981 to the show cause notice. In his affidavit Kirtilal Jeshinglal Jhaveri stated that statement made by him on 1st December, 1979 was under threat and coercion exercised by the Customs Officers and was not voluntary one. This grievance was neither made by him nor by the petitioners to any higher authorities for about 15 months. This stand was taken for the first time in the affidavit referred to above.

(7) The Collector of Customs by his order dated 17th April 1982 directed release of some articles but ordered absolute confiscation of various other goods including the diamonds question and also imposed a penalty of Rs. 65 lakhs on the petitioners under Section 112 of the Act. A penalty of Rs. 25 lakhs each was imposed on the firm and petitioner No. I and a penalty of Rs. 15 lakhs was imposed on petitioner No. 2.

(8) Aggrieved from the order of the Collector of Customs (Preventive) Bombay, the petitioners filed an appeal under Section 128 of the Act. The said appeal, in so far as the order of confiscation in respect of diamonds is concerned, was dismissed Customs Excise and Gold (Control) Appellate Tribunal by the impugned order dated 17th January 1984 confirmed the order of confiscation in respect of diamonds (both cut and polished diamonds and rough diamonds). The Tribunal held that seizure of diamonds was in the reasonable belief that they were smuggled goods and consequently the burden of proof, according to section 123 of the Act, was on the petitioners and they bad failed to discharge that burden in respect of the seized diamonds. The Tribunal also held that department's case in respect of seized articles other than diamonds was not proved. The Tribunal ordered the release of Indian currency of Rs. 1. 40 lakhs and of all the confiscated goods except the diamonds. The penalty on Indru Ramchand Bharvani was reduced to Rs. 10 lakhs and on Shri Ramchand Bharvani and the firm it was reduced to Rs. 5 lakhs each. The result was that the penalty imposed on the petitioners under Section 112 of the Act was reduced from Rs. 65 lakhs to Rs. 20 lakhs. The petitioners have challenged in this petition under Article 226 of the Constitution of India the correctness and legality of the order of the Tribunal dated 17th January 1984.

(9) On an application filed by the petitioners under section 130 of the Act, the Tribunal by order dated 8th January 1985 referred to Bombay High Court the following two questions :-    (1)Whether, in the facts and circumstances of the case, the Tribunal was justified in holding that the Seizing Customs Officer had adequate material to form the reasonable belief as contemplated in Section 110 read with Section 123 of the Act, that the diamonds found in the business premises of M/s. Gems Impex Corporation were smuggled goods. (2) Assuming that Section 123 applied and burden of proof was on the appellants, whether the Tribunal should have held that the appellants had discharged this burden by tendering affidavits of persons claiming ownership of the seized diamonds."  

(10) The Supreme Court by order dated 15th July 1987 directed that reference application No. C.S. (SB) 28/84-D pending in the Bombay High Court shall stand transferred to this court and be heard Along with this writ petition. So. this judgment will dispose of the writ petition and would also answer the aforesaid reference.   

(11) In support of the petition, the learned counsel for the petitioners has made two submissions : (I) there was no material before the Customs Officer to form the reasonable belief that seized goods were smuggled goods and hence the seizure itself was bad in law and, therefore, the provisions of Section 123 of the Act cannot be applied and it is for the Customs department to prove that the diamonds were smuggled. The Customs department having failed to prove that the seized diamonds were smuggled the impugned order cannot be sustained and (2) assuming that the burden was upon the petitioners to prove that the seized diamonds were not smuggled, they had amply discharged the said burden by tendering affidavits of three parties who claimed to be the owners of diamonds in question.   

(12) Learned counsel for the petitioners in support of the contention that there was no material for forming an opinion as to reasonable belief under Section 110 read with Section 123 of the Act has taken us through the initial panchnama prepared on 16th November 1979. He submits that no reasons have been given in the panchnama as to how the reasonable belief was formed by the Customs Officers. Further, the submission is that as stated in the panchnama dated 16th November 1979 the documents were not examined and, therefore, there was no material for forming the reasonable belief that the seized goods were smuggled goods.   

(13) In my opinion, there is no substance in the contention of the learned counsel. The facts and circumstances of the case show that a large quantity of diamonds was found in possession of the petitioners. The petitioners could not produce any documentary evidence as to its legal acquisition/importation/possession. The various incriminating documents were also seized. It is no doubt true that for reasons recorded in the initial panchnama a detailed examination of documents could not be done because of the warning by the Weather Office but the very use of the word 'incriminating documents' in the panchnama shows that the Customs Officer did have a cursory look at the documents to ascertain their nature and usefulness and to judge whether to seize them or not before actually seizing them. This cursory look was adequate to show the transactions of sale and purchase of diamonds in foreign currencies. The stock in the books maintained by the petitioners showed a balance of 11.96 carats of cut and polished diamonds and nil stock of rough diamonds whereas the stock found in their possession was much more. The non-weighment of this stock is also of no consequence. It was not necessary to weigh the stock to find out as to whether the stock seized was more than 11.96 carats particularly when quantity was much more. It is also not necessary to record reasons as to how the reasonable belief was formed in the panchnama although the Customs Officer has indicated in the panchnama the huge stock of unaccounted diamonds and other factors existing at that time, which all led him to form the reasonable belief coupled with definite secret information. It is also not possible to agree with the contention of the learned counsel that there was no material for arriving at the reasonable belief that the goods were smuggled. The conclusions of the Customs Officer as to reasonable belief in the facts and circumstances of the case cannot be said to be perverse.

(14) Learned counsel for the petitioners further contends that there is no profit element in smuggling of diamonds and, therefore, no presumption should be drawn against them. I do not agree. Firstly, there is nothing on record to support the contention that profit element was lacking. Secondly, Section 123 of the Act itself recognises that diamonds have great potential for smuggling into India and that is why diamonds are one of the few articles specified in sub-section 2 of Section 123 of the Act, the burden of which has been placed on the person from whose possession such articles are acquired.

(15) Normally, it is very difficult to have direct or positive evidence for actual commission or violation of the Customs Laws. One has to depend upon on circumstantial evidence in large number of cases. It is a matter of inference to be drawn from the surrounding circumstances and the conduct of the parties concerned. However, the learned counsel relies upon a single bench decision of this Court in the case of Shanti Lal Mehta vs. Union of India and Others, 19&3 E. L.T, 1715 and submits that the reasonable belief cannot be based on presumptions. Support is sought to be drawn from this judgment for the contention that in the present case also the seizure was based on suspicion or speculation. In Shanti Lal Mehta's case the Customs Officer had 'some' information as against definite secret information in the present case. The petitioners in Shanti Lal Mehta's case told the Customs Officer that the goods were not smuggled and a positive stand was taken that the goods belonged to Queen Mother of Nepal and that they were duly entered in account books but the accountant had gone to the Income Tax Department. The Customs Officer did not wait for the accountant to arrive to explain the entries in the books of account to him and seized the goods which in the search list were described as "appearing to be diamonds". It was because of these facts the learned single Judge held that it was not a case of reasonable belief but only a case of suspicion. In the present case the Customs Department had definite secret information. The gist of the information was communicated to the petitioners in the following words :- "ON receipt of secret information that smuggled goods have been kept by S/Shri Indru Ramchand Bharvani and Ramchand Udhavdas Bharvani in their business premises at I-A, Court Chambers, 35, New Marine Lines. Bombay-400020..........."

(16) Besides the aforesaid secret information the Officers found that books of account of the Petitioner No. 3 though claimed to be written up to date showed a stock of only 1 1.96 carats of cut and polished diamond and that of rough diamonds and other articles as nil but the diamonds actually found were over 2800 carats of rough diamonds and over 400 carats of cut and polished diamonds in addition to various other precious stones etc. When the petitioners were asked to produce evidence of legal acquisition they showed their inability. The petitioners stated that they had purchased the goods locally through brokers and had made 50 per cent of the payment in cash. The cash book, however, showed no such payment. The petitioners when asked to name the brokers did not give the names of the brokers as they stated that the brokers would not come forward to confirm the deal. Besides various incriminating documents were also found of which even superficial examination showed that the transactions of diamonds were in foreign currencies. In view of the over-whelming circumstantial evidence and attending circumstances it is not possible to hold that sufficient material was not available before the Customs Officer to form the reasonable belief under section 110 read with section 123 of the Act. The circumstances existing at the time of seizure were adequate to form the reasonable belief in the mind of the Seizing Officer that the diamonds were smuggled.

(17) This Court is not sitting as a Court of appeal and cannot substitute its own finding on the question of reasonable belief. Whether or not the Officer concerned had seized the articles in the "reasonable belief" that the goods were smuggled goods is not a question on which the court can sit in appeal. If prima facie there are grounds to justify the belief the court has to accept the Officer's belief regardless of the fact whether the court of its own might or might not have entertained the same belief. Whether or not the Officer concerned had entertained reasonable belief under the circumstances is not a matter which can be placed under legal microscope, with an over indulgent eye which sees no evil anywhere within the range of its eyesight. The circumstances have to be viewed from the experienced eye of the Officer who is well equipped to interpret the suspicious circumstances and to form a reasonable belief in the light of the circumstances (See : State of Gujrat vs. Jitamalji Porwal and another , Pukhraj vs. D.R. Kohli, . In this view of the matter also it is not for this Court to substitute its finding as to reasonable belief. Although as stated above, in my opinion, also the circumstances as the time of seizure, in the background of secret information, facts and circumstances of the case and the conduct of the petitioners provided adequate material to form the belief in the Seizing Officer's mind that the goods had been smuggled into India.

(18) This now takes me to the second contention of the learned counsel for the petitioners. Once it has been held that there was a valid seizure of diamonds in the reasonable belief that they are smuggled, the burden of proving that they are not smuggled is on the petitioners from whose possession the diamonds were seized. This is the import of Section 123 of the Act which reads as under : "133.Burden of proof in certain cases '. 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, diamonds, manufactures of gold or diamonds, watches, aad any other class of goods which the Central Government may by nonfiction in the official gazette specify."

(19) Section 123 of the Act is a departure from the ordinary criminal jurisprudence.In the criminal jurisprudence the onus to prove the guilt of the accused lies on the prosecution. There is no doubt that nature of proceedings under the Act are quasi criminal. In criminal or quasi criminal proceedings the burden of proving everything essential to the establishment of the charge against the accused always rests upon the prosecution as everyone is presumed to be innocent until the contrary is proved. The criminology is never to be presumed subject, however, to statutory exceptions. Section 123 is in the nature of a statutory exception made by the Legislature as regards the presumption of smuggled goods covered therein. The Legislature in its wisdom has placed the burden of proof on the person from whose possession the goods are seized in the reasonable belief of their being smuggled goods, to prove to the contrary. Section 123 in a way incorporates the principles underlying section 106 of the Evidence Act which provides that when any fact is within the knowledge of any person the burden of proving that fact is upon him. In fact section 123 goes a step forward and presumes a fact to exist unless the burden is discharged. It is for the person from whose possession the goods enumerated in subsection 2 of section 123 are found in the reasonable belief that they are smuggled goods to prove to ihe contrary. If any person other than the person from whose possession the goods were seized claims to be the owner thereof, it also places burden on such person as well. Undoubtedly the presumption is rebuttable. A party can, by leading such evidence as he may be advised, always show that the goods are not smuggled and thereby discharge the burden and/or shift the burden on the Customs department to prove to the contrary.

(20) The learned counsel for the petitioners contends that assuming burden was upon the petitioners to prove that diamonds were not smuggled, the said burden upon them was not higher than the one which rests upon a party to civil proceedings. The standard of proof required for discharging presumption under Section 123 of the Act is that of preponderence of probabilities. He submits that it is not required of the petitioners to prove their case beyond doubt. The submission is that the type of burden required to be discharged under Section 123 is different than the one required to be discharged by the prosecution in criminal cases. In criminal cases, the prosecution is required to prove the guilt of an accused beyond reasonable doubt. Unlike that the petitioners, it is contended, would succeed even if they show by preponderence of probabilities that the smuggled diamonds may not be smuggled. He says that the petitioners are not required to prove their case to the hilt and the petitioners are only required to create a reasonable doubt as to the goods being smuggled. Reliance is placed on the judgment of the Supreme Court in Rabrndra Kumar Dey vs. State of Orissa, . In this case the Supreme Court while considering the case under Prevention of Corruption Act and the nature and standard of proof required from the accused under Section 105 of the Evidence Act held that the Evidence Act does not contemplate that the accused should prove the case with same strictness and rigour as the prosecution is required to prove a criminal charge. It is sufficient if the accused is able to prove his case by standard of preponderence of probabilities.

(21) As regards the proposition about nature and standard of proof required from the petitioners, in my opinion, the test required is that of a prudent man. The burden on the petitioners is not as high as on prosecution in a criminal trial to prove guilt of the accused beyond reasonable doubt. The petitioners can rebut the presumption drawn against them by section 133 of the Act be bringing on record evidential material before the authorities which should be sufficient for a prudent man to believe their version or making it reasonably probable. However, within that standard also there are degrees of probabilities. The nature of burden on the Petitioners is not as onerous as is on prosecution in criminal trial but is of the type which rests upon a party in civil proceedings. The petitioners have to satisfy the standard of a prudent man. While applying ihe lest of a prudent man the court has to consider the total cumulative effect of all the facts and circumstances. Even fact individually by itself may not be sufficient or decisive but when seen Along with other facts may tend to strengthen the conclusions. It is the combined effect which is conclusive and which has to be kept in mind from the practical stand point of a prudent man.

(22) Keeping in view the aforesaid principles now let me examine and analyze the main contention of learned counsel, Mr. Jagtiani, that the presumptions stood discharged by filing the three affidavits of S/Shri Shailain H. Jhaveri, Dilip S. Jhaveri and Kirtilal J. Jhaveri who claimed themselves to be the owners of the diamonds in question. The learned counsel laid great stress on the fact that Customs department did not call these deponents for cross-examination and, therefore, counsel argues that whatever the deponents deposed in their affidavits should be accepted and in any case should be treated as sufficient to dispel the presumption drawn against them by virtue of section 123 of the Act. The argument looks attractive on the first look but does not stand close scrutiny. The Tribunal also, at one stage of the proceedings was impressed by this argument but on deeper consideration it came to the same conclusion as I do. In earlier part of the judgment I have dealt with the contents of the affidavit of these deponents. In sum and substance the affidavits of Shailain H- Jhaveri and Dilip S. Jhaveri are of one line simply slating that they are owners of diamonds and nothing more. No more facts are given in the affidavits. This is the type of affidavits for which 15 months were taken by the petitioners. It is highly improbable, almost touching impossibility, that Shailain H. Jhaveri and Dilip S. Jhaveri would remain quiet for nearly 15 months after knowing that their diamonds worth lakhs of rupees have been seized by the Customs department. Even when they wake up after 15 months they do not go to the department but handover their affidavits to petitioners and consult Petitioners' advocate or sister of petitioner No. 1. Even when at last affidavits are filed all material particulars are withheld. With the gap of 15 months it is not at all difficult to procure such affidavits. The petitioners never gave their names during course of the investigation and when their statements were recorded under section 198 of the Act. The third affidavit of Kirtilal J. Jbaveri is also no better. M/s. Ashok Gems was named by the petitioners in their statements under Section 108 of the Act recorded within two weeks of the seizure. Kirtilal J. Jhaveri is the sole proprietor of the said M/s Ashok Gems. On 1st December 1979 statement of Kirtilal J. Jhaveri was also recorded under section 108 of the Act. He had then denied ownership of diamonds. He retracted his statement after nearly 15 months by handing over his affidavit to the petitioners which they filed Along with their reply to the show cause. In 15 months no protest is made that statement in December 1979 was the result of duress and coercion. Even now in the affidavit Kirtilal J. Jhaveri does not say whether any documents or jangad slips were issued or not, nor does he file any such document. All the three affidavits are contrary to normal human behavior.

(23) The learned counsel, further submits that there is denial of opportunity to the petitioners as the deponents were not called for cross examination I do not agree. It is not a case where petitioners wanted an opportunity to cross examine any witness which was refused. The case of the petitioners is also not that these deponents were not permitted to file any documents or place any additional material before the Collector. In iny opinion, no useful purpose would have been served even''-by woes The Delhi Law Times examination of the deponents by the Customs department. At the most they would have struck to the contents of their affidavits but in view of the facts and circumstances enumerated above no prudent man would believe their version. The judgment in the case of Sita Ram v. Union of India, quashing the order of confiscation in the said case, because the petitioners had not been afforded the reasonable opportunity to summon the material, which was admittedly relevant to the enquiry, does not advance the case of the petitioners any further. The same is the position of judgment in Bal Kishan Kejriwal v. Collector of Customs and others, , holding that even if no injustice bad resulted, the proceedings did not exclude the possibility of denial of opportunity of fair hearing to the petitioners and quashing the order of attachment. In the present case there is neither any denial of opportunity nor can it be said that the proceedings did not exclude the possibility of opportunity as in the case before Calcutta High Court.

(24) There is no dispute with the general proposition that normally affidavits should not be rejected without testing the varacity of the deponents by cross examination or by some other means. To press home the argument that the affidavits could not be rejected without testing the varacity of the deponents by cross-examination, the learned counsel strongly places reliance on the case of Subhash Chandarnishat v. Union of India and another, l9"9 E L.T 212. in this case the question was whether the two products viz, Vasmol Emulsified Hair Oil and Vasmol Pomade, should be regarded as hair lotions or Pomades, on the one hand, or, on the other hand, these products should be regarded as hair dyes. There being no specific item in the First Schedule of the Central Excise & Salt Act, 1944 in respect of hair dyes as such, and, hence the question before the Bombay High Court was whether these products could be fairly regarded as hair lotions or hair pomades. If they could be so regarded, they were exigible under item 14F of the First Schedule, but if they could not be so regarded, they would not be held liable for payment of excise duty under that item. On the question as to how these products were known in the trade or commerce parlance, the court held that the most important evidence is furnished by the affidavits produced by the petitioners before the authorities. The judgment then makes a reference to these affidavits which are described as 'most important evidence' in the judgment. The necessity of these affidavits bad not been considered by the authorities. There was no discussion in the order regarding affidavits. There was no finding that the correctness of these affidavits had not been accepted by the authorities. In this background the Bombay High Court held that "it appears very doubtful as to whether respondent No 2 could have rejected these affidavits without calling upon the petitioners to produce the deponents for being cross examined or without the correctness of the affidavits being tested in some other manner. Reference was also made to the case of M.Parekh & Co.v. Income Tax Commissioner for the proposition that normally speaking, if the officer desires to challenge the correctness of affidavits he should call the deponents for being cross examined or test the averments by any other means open to him. The use of the word 'normal' in the judgment itself shows that there is no hard and fast rule and every case depends upon its own peculiar facts. Eventually each case would turn upon its own facts and circumstances and the conduct of the parties. If the facts are so revealing or improbable as in this case, no useful purpose would be served by cross examination. The facts are to be analysed in the light of the totality of circumstances and the conduct of the parties. Now let us, once again, see these affidvits in the light of the conduct of the petitioners and facts and circumstances of this case.

(25) The Customs department received definite secret information of the smuggled diamonds being kept by the petitioners at their business When premises are searched quantity far in excess than the one entered in the books is found. No proof as to how and from where these goods were acquired is given. The stand taken on 16th November 1979 is that they were purchased from brokers and 50 per cent payment has been made. There is no entry about payment in books of account. Names of brokers are also not disclosed. During interrogation soon after seizure names of certain parties are given who it is stated have kept their diamonds on approval with the petitioners. The parties when interrogated do not support the petitioners. When reply to show cause is filed after 15 months names of some others parties aie given and the three affidavits referred to above are filed. Only one is common, namely, Kirtilal J. Jhaveri of M/s. Ashok Gems. Kirtilal J. Jhaveri disowned the diamonds in 1979. In affidavits also no material particulars are forthcoming except a baled statement about the ownership of the diamonds. All the there claimed that they came to know about the seizure in November 1979 itself but they do nothing to lodge their claims. They slept for nearly 15 months. When they wake up they gave their affidavits to the petitioners which are filed Along with the reply to the show cause. The affidavits are stereotype. The petitioners go on changing their stand from time to time to suit their convenience. Sometimes it is claimed that they are owners and have purchased the diamonds from brokers. This stand is shifted. Then it is claimed that parties which are named in November 1979 had kept these diamonds with them on approval basis. Again there is a shift in the stand when reply to show cause is filed. Now different names are given. Obviously the petitioners had 15 months to manipulate. The number of diamonds seized are in thousands. They are not kept party-wise Although an attempt was made by learned counsel for the petitioners to show that diamonds were kept partywise but a reference to details given by the petitioners themselves in their reply to show cause and details of the diamonds in panchnama and comparison thereof totally demolishes the argument that diamonds were kept in separate boxes or packets according to different parties. The Tribunal rightly says that it would require a super human with a computer memory to say that as to which piece of diamonds belongs to whom. In order to meet these observations of the Tribunal a novel argument is put forth by learned counsel that as petitioners had thought of buying all these diamonds so there was nothing wrong in mixing the diamonds although in the mind of the owners the diamonds were still on approval basis with the petitioners. This novel argument is not put at any earlier stage, either in reply to show cause or before Collector or even before Tribunal and has to be rejected. If the affidavits are correct then the Petitioners' own earlier version has to be false. This is the background in which the question about correctness of the affidavits is to be seen.

(26) From the above facts it is apparent that the petitioners in their attempt to rebut the presumption have taken several stands which are self destructive. The multiplicity of these stands by itself destroys the bonafides of any of these stands. These stands are highly improbable and inadequate to rebut the presumption against the petitioners. The petitioners started with one stand and ended with altogether a different stand and in between took still a different stand. These facts only show a desperate attempt on the put of the petitioners to somehow or the other save their diamonds worth lakhs. The petitioners have, in my opinion, failed in their attempt. The totality of the circumstances including the conduct of the petitioners clearly show that they have been unsuccessful in discharging the burden cast upon them from the stand point of a prudent man.

(27) There is yet another aspect of the scope of the writ jurisdiction under Article 226 of the Constitution of India. The court is not sitting in appeal against the order of Tribunal. The order of the Tribunal cannot be said to be perverse. It is not possible to hold that no person would arrive at the conclusion arrived at by the Tribunal. When on the basis of the appreciation of the evidence, the authorities arrive at finding that the goods are smuggled and the presumption has not been rebutted, and as such the goods are liable to confiscation, so long as the authority's appreciation of the evidence before it is not illegal, perverse or devoid of commonsense or contrary to rules of natural justice, there can be no warrant for disturbing the findings under Article 226 of the Constitution. I do not find any such infirmity. In exercise of power under Article 226 of the Constitution it is not possible to substitute our opinion for that of the Tribunal even if two views were reasonably possible. There is no error which calls for interference under Article 226 of the Constitution. In this view of the matter also I do not find any substance in the challenge made by the petitioners.

(28) In the result I would confirm the order of the Tribunal. In view of the above, my answer to the questions referred by the Tribunal are as under:    (I)The Tribunal was justified in holding that the Seizing Customs Officer had adequate material to form a reasonable belief as Contemplated in Section 110 read with Section 123 of the Act that the diamonds found in business premises of M/s. Gems Impex Corporation were smuggled goods. (ii) The Tribunal rightly held that the appellants had failed to discharge the burden under section 123 by tendering affidavits of person claiming ownership of the seized diamonds.  

(29) In view of the above discussion I would dismiss the writ petition and answer the reference as above, leaving the parties to bear their own costs.