K. GNANAPRAKASAM, J.

The Customs Preventive Unit, Tuticorin, on information, recovered precious stones from the house of the petitioner on 27-6-1986 along with a chit containing the name of one A.C.M. Zubair. On interrogation, the appellant gave a statement, confessing that he had purchased the said stones from Zubair, who is admittedly a Sri Lankan national. As the petitioner was not having any customs duty paid receipt nor any valid document to prove the licit nature of the goods and after show cause notice, the Collector of Central Excise and Customs, Madurai, who is the assessing authority passed an order confiscating the goods and also imposed a penalty of Rs. 2500/- to the appellant and Rs. 2500/- to A.C.M. Zubair.

2.On appeal to the Tribunal, the order was modified and the appellant was permitted to redeem the stones on payment of Rs. 25, 000/- and also reduced the penalty from Rs. 2500/- to Rs. 1000/-. The petitioner applied to the Tribunal to refer the following questions to the High Court. The Tribunal, by a majority has made the reference.

3.The questions referred are :-

Whether in the facts and circumstances of the case, (1) reliance can be placed on the stateme