By TIOL News Service

MUMBAI, MAY 06, 2013: THE appellant's deceased husband Shri Prakash J. Modi was engaged in the business of the purchase and sale of cut and polished diamonds in the name and style of M/s. Koshin Gems as a sole proprietor. The said proprietary firm was registered with the Sales Tax department and was also allotted RBI code and Import Export code. The case of the department against Shri Prakash J Modi was that he had smuggled diamonds into India and it is these smuggled diamonds that were seized from him on 18.01.1991 in the office premises of M/s. Yogey Diamonds. Show-cause notice was issued and the seized diamonds were absolutely confiscated and penalty was imposed. Aggrieved, Shri Prakash J Modi challenged the order before the CESTAT and the Bench had remanded the matter for fresh adjudication. In remand, the Commissioner of Customs again confirmed absolute confiscation of diamonds but penalty was dropped as Shri Prakash J Modi died during the course of proceedings.

The appeal filed by Smt. Neeta Prakash Modi, wife of deceased Shri Prakash J Modi was allowed by the CESTAT but the department took the matter to the Bombay High Court and when it was ordered thus -

"3. In the present case, the Tribunal has set aside the confiscation order passed by the Commissioner, by recording a finding in paragraph 6 to the effect that the assessee had produced purchase vouchers in relation to the diamonds in question, but the Commissioner has failed to verify the genuineness of those vouchers. However, perusal of paragraph Nos. 36 & 37 of the order in original clearly shows that the Commissioner had in fact considered the materials placed before him and also recorded a finding on those materials. Since the order of the Tribunal is contrary to the facts on record, the order of the CESTAT is quashed and set aside and the matter is remanded back to the Tribunal for denovo considerations."

In the remand proceedings, the CESTAT observed thus -

"9. On analysing the contents of paragraph 36 and 37 of the impugned order it is clear cut finding of the Commissioner that the documents have been produced for the first time on 19/02/2008 which is factually incorrect in view of the remand order dated 06/09/2007 of this Tribunal. Therefore, the contents of paragraphs 36 and 37 have no evidential value and cannot be relied upon. Further, we find that the purchase documents have been produced by Shri Prakash Modi in reply to the show cause notice, no effort was made by the adjudicating authority to verify the correctness of the said documents and no enquiry was made from Shri Prakash Modi with regard to documents, which otherwise prove that the adjudicating authority has found those documents as correct. Therefore, the appellant have been able to prove the bona fide purchase of the seized diamonds. Further, except from the statements of the appellant, no other corroborative evidence has been brought out by the Revenue to prove illicit purchase of the seized documents."

Relying on the decision in Rang Birangi Sarees (P) Ltd. vs. Commissioner of Customs, Kolkata (2007-TIOL-1455-CESTAT-KOL) the Bench concluded that the appellant has been able to produce the documents with regard to bona fide purchases of the seized diamonds and the department has failed to discharge their burden to prove that these documents are fabricated and diamonds in question are illicitly purchased. Holding that the benefit of doubt goes in favour of the appellant, the order of confiscation passed by the Commissioner was set aside and the appeal was allowed with consequential relief.

This was on 14th February, 2012. See order - (2012-TIOL-906-CESTAT-MUM)

One would have expected Smt. Neeta Prakash Modi to get back the seized diamonds after 21 years.

But that was not to be.

Even after a year, the diamonds were nowhere in sight and so Smt. Neeta Prakash Modi is before the CESTAT with a Miscellaneous application pleading that justice be done.

When the Revenue representative was asked by the Bench about the alleged ‘non-compliance' of its order, he was not able to thrown any light on the same.

So, the Bench passed the following order -

"3. The Ld. DR is not able to clarify the position about the action taken by the department pursuant to the order passed by this Tribunal. Accordingly, we direct the Commissioner of Customs (Preventive), Mumbai to file a written affidavit intimating the action taken by the department in pursuance of the order dated 14/02/2012 passed by this Tribunal and report the matter on 29/04/2013.

4. In case, no action has been taken, the Commissioner has to explain why no action has been initiated in pursuance of the said order. Non-compliance of the order passed by this Tribunal will attract consequence of contempt.

5. Order be given dasti."

In passing: It is said ‘diamonds are forever'. Hopefully, the sparkle has not been lost. Incidentally, it is observed that nowadays the ten-rupee note has become a powerful weapon in getting information under the RTI Act, 2005.

Nonetheless we will keep you posted.

(See 2013-TIOL-690-CESTAT-MUM)