IMPORTANT POINT
To form a reasonable belief under Sections 110 & 123 of the Customs Act. 1962, that the goods are liable to confiscation the existence of the material is justiciable but not the sufficiency of the material.

JUDGMENT

Sabyasachi Mukharji, J. - This is an application under Article 136 of the Constitution for leave to appeal against the judgment and order of the Division Bench of the High Court of Delhi, dated 16th May, 1988. In order to appreciate the contentions urged before us, it is imperative to state a few facts.

2. M/s. Gems Impex Corporation, Bombay, petitioner No.3, herein, is a firm engaged in the business of diamonds and precious stones. Ramchand Udhavdas Bharvani, petitioner No.2 herein, is a partner in the said firm. Indru Ramchand Bharvani, petitioner No.1, herein, is his son. It is stated that both the father and the son were managing the business of the firm. The Customs Officers received a secret information that smuggled diamonds have been kept by the petitioner Nos. 1 and 2 in the said premises. After obtaining necessary search warrant the Customs Officers searched the business premises on 16th November, 1979. It may be mentioned that the day was not very auspicious for the firm as well as for the people of Bombay. On that day a warning had been issued by the Weather Officer, Bombay, about a possible sea storm that night. The entire activities came to a halt and the public had been advised to rush back to their houses early. On searching the premises of the petitioner No.3, the Customs Officers found over 2800 carats of rough diamonds and over 400 carats of cut a polished diamonds in addition to a lot of other items of precious stones, pearls, gold manufactures etc. The books of account of the firm, claimed to be written up-to-date, however, showed a stock of 11.96 carats of out and polished daimonds and the stock of brought diamonds and other articles, was shown as nil. On being asked to produce evidence of legal acquisition, import and possession of diamonds, the petitioners Nos. 1 and 2 showed their inability to produce any such documents. They replied that they had purchased the goods locally through brokers and had already made 500 cash payment. The cash book, however, revealed to such payment nor were any purchase voucers produced before the Officers. When asked to name the brokers, petitioners. One and two stated that the brokers would not come forward to confirm the deal. The Customs Officers also found various documents which had been described in the initial panchanama as "various incriminating documents". In the back-ground of the secret information and the facts and the circumstances aforesaid, the Customs Officers formed a prima facie belief under Section 110 read with Section 123 of the Customs Act, 1962, (hereinafter called the Act), that the unaccounted diamonds were smuggled goods. They seized various goods including cut and polished diamonds and rough diamonds in an. valued at Rs. 54,42,882.02 under Section, 110 of the Act on the reasonable belief that the goods had been smuggled into India. They also Seized Indian currency of Rs. 1.40 lakhs and some other incriminating documents found in the premises. The only question agitated before the High Court was regarding cut and polished diamonds and rough diamonds. In view of the climatic conditions the goods and the documents seized were put in two cartons in the presence of witnesses and the cartons were sealed with the Customs seal and also with the seal provided by petitioners Nos. 1 and 2 and the signatures 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, Bombay, later on 20th, 21st and 22nd November, 1979. The petitioner Nos. 1 and 2 were asked by the Department to attend preparation of the detailed item wise inventories but they did not attend, rather the petitioner No.1 replied that the job could be carried out even in his absence. They petitioners Nos. 1 and 2 were examined and their statements recorded under Section 108 of the Act.

3. In his statement recorded on 29th Nov, 1979 Ramchand Udhavdas Bharvani gave names of the 4 dealers. The petiti