1. This is an appeal by the State against an order of acquittal. Respondents 1 to 3, hereinafter referred to as accused Nos. 1 to 3, were tried by the Presidency Magistrate, 23rd Court, Esplanade, Bombay, for offences under Section 135(a), read with Section 135(i), and Section 135(b), read with Section 135(i) of the Customs Act, 1962, but they were acquitted.

2. Briefly stated, the facts are these. On 17th May, 1968, one M. S. Patil attached to Matunga Police Station as Sub-Inspector and who is now dead, received information before 8 a.m. that the three accused were in possession of stolen property or smuggled property and there about to transport the same. He along with S. G. S. I. Kulkarni and Mokashi, the then Inspector Police, went in a police jeep to Sion Circle and kept a watch. At about 9 a.m., they noticed a car bearing registration No. MRW-7631 proceeding from the north to south. The car was being driven by accused No. 1 and accused Nos. 2 and 3 were sitting on the rear seat. The police officers chased the car and intercepted it near Gandhi Market which is opposite Matunga Police Station. The car was taken to the Police station. Some packages and trunks were found in the car, on the opening of which 2,937 brand new wrist watches of foreign make and 46 watch straps were found. These articles were seized under a panchanama.

3. It appears that during the course of the seizure the police officers thought that the wrist watches and watch straps might after all be smuggled goods. Mokashi, therefore, contacted officers of the Central Excise and Customs Department on telephone and informed them that watches and watch straps suspected to be smuggled goods were at the police station. These officers came to the police station. The police officers handed over the wrist watches and the watch straps to the officers of the Central Excise and Customs Department and they again formally seized the articles. They also took search of the house of accused No. 1 and seized some empty tins and cloth bags found therein. The officers of the Central Excise and Customs Department also recorded statements of the three accused. In due course of time, a complaint was filed against the accused and they were prosecuted.

4. The defence of the accused was one of denial. According to accused No. 1, his daughter was receiving treatment in Sion Hospital and as he wanted to stay near the hospital, he had taken the premises in question on 26th February, 1968. He knew one Chhogalal Gamaji whom he had met at his native place and subsequently at Sion Hospital. Chhogalal was dealing in ghee and was looking out for some space for storing ghee tins. At his request, accused No. 1 spared one of the rooms in his premises to Chhogalal for storing ghee tins. The car bearing No. MRW-7631 belongs to accused No. 3, who is his friend. On 16th May, 1968, accused No. 1 requested accused No. 3 to lend his car to him to enable him to take his daughter to the hospital. Accordingly, accused No. 3 had lent his car to accused No. 1. It was to be returned to accused No. 3 on the morning of 17th May, 1968. On that day, early in the morning, accused No. 1 noticed that Chhogalal was putting some empty tins on the loft of his room. There were also some cloth bags lying near the entrance of the premises. Accused No. 1 questioned Chhogalal about the contents of these bags. Chhogalal told him that there were wrist watches in those bags. Accused No. 1 asked Chhogalal to remove them immediately and not to keep any such articles in the premises. Chhogalal accordingly took away those bags. Chhogalal also told accused No. 1 that there were two trunks kept in the bathroom. Accused No. 1 asked Chhogalal to remove these also. Chhogalal promised to return and remove the trunks, but till 8 a.m. he did not turn up. Accused No. 1 got upset and removed the trunks and whatever other articles of Chhogalal were in the premises and brought them down on the footpath. He was just standing thinking what to do with these articles since Chhogalal had not turned up to remove them, when the police officers approached him and asked him about the contents of the trunks. Accused No. 1 told them the circumstances under which he had kept those trunks on the footpath. The police officers said that these articles will have to be taken to the police station and asked accused No. 1 to take them in the car. As accused No. 1 had no concern with the articles, he agreed to do this. In the meantime, accused Nos. 2 and 3 also came there and they were also asked to accompany the Police Officers to the police station in the same car. The articles were accordingly taken in the car. Accused No. 1 drove the car to the Police station with accused Nos. 2 and 3 in the car. Accused No. 1 thus denied his possession of the wrist watches and watch straps and the prosecution story that while these articles were being carried in the car the police officers chased the car and intercepted it.

5. The defence of accused No. 2 was that on the day in question at about 3-30 a.m., he was moving near Sion Circle to meet one Vanechand Jain. Noticing a crowd in a lane near Sion Circle, he went there and found accused No. 3 in the crowd. Accused No. 3 is the uncle of accused No. 2. The police officers questioned him and made him sit in the car. He was accordingly taken to the Police Station. He thus denied possession of the contraband articles.

6. The defence of accused No. 3 was that the car in question belongs to him and he had given it to accused No. 1 on 16th May, 1968 as he is his friend and he wanted it to take his daughter to Sion Hospital for treatment. He was expecting the car back at 8 a.m. on the following morning. As he did not get his car back, he went to accused No. 1. He found his car parked near the residence of accused No. 1. It was surrounded by policemen. He noticed that the police were keeping some packages in the car. He was interrogated by the police and taken to the police station in the car. Accused No. 3 thus denied his connection whatsoever with the goods in question.

7. The material evidence adduced by the prosecution to prove its case that the three accused were going in a car with the goods in question, that the car was chased and intercepted and was taken to be police station and that on search 2,937 brand new wrist watches of foreign make and 46 watch straps were found in the car, was of two police officers, S. G. S. I. Kulkarni (P.W. 1) and the then Inspector of Police, Mokashi (P.W. 6) the two panchas. Bardiwala (P.W. 8), and Multani (P.W. 10); and the panchanama (Ex. 'H') of the seizure of the goods from the car at the Police station. In order to prove that the watches and watch straps in question were smuggled goods, the prosecution tried to rely upon the presumption under section 123 of the Customs Act, 1962, which runs thus :-

"123(1) 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 on the person from possession the goods were seized.

(2) This section shall apply to gold, diamonds, manufacturers of gold or diamonds, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify".

8. The prosecution also relied upon certain circumstances appearing in the evidence of Hebbar (P.W. 3), Inspector, Central Excise and Customs, Bombay, and other officers of that department who were examined. Those circumstances were that the articles were of foreign origin the import of which was restricted, if not prohibited and they were found in huge quantity. The prosecution also examined Nello (P.W. 11), an Inspector of Central Excise and Customs, Bombay, who produced an extract from the monthly statistics of the foreign trade of India published by Government of India, Department of Commerce, Intelligence and Statistics, Calcutta, for the period 1st April, 1964 to 31st March, 1970. According to the prosecution, this extract showed all the watches imported in India under an import licence and the present consignment of watches was not to be found in that extract. From this extract, the prosecution wanted to show that the watches straps in question were smuggled articles. In order to prove that the accused had knowledge that the goods in question were smuggled, the prosecution relied upon the statement of accused No. 1 that he asked Chhogalal as to the contents of the bags which were kept by Chhogalal and of his being told that they contained wrist watches. In order to fasten similar knowledge to accused Nos. 2 and 3, the prosecution relied upon their conduct that they were in the car in which the goods were transported.

9. In regard to the first point, whether the three accused were found in possession of the wrist watches straps, in as much as they were seen to carry these articles in the car in which they were travelling, Kulkarni and Mokashi no doubt supported the version of the prosecution, but the two panchas, Pardiwala and Multani, did not support that version. On the other hand, they supported the defence version. According to them, they were at Sion Circle. They saw goods lying on footpath in one lane where a crowd had collected. They went there. The police officers asked them to act as panchas. A car was parked about 75 feet away from the goods. At that time, nobody was sitting in the car. Accused No. 1 was with the police. Accused No. 2 also came near the car. Accused No. 3 reached the spot about the same time. The police questioned the accused and told them that the goods in question would be put in the car and taken to the Police station. The police then kept the goods in the car and also took all the three accused. The two panchas followed them in another car.

10. The learned Presidency Magistrate preferred the evidence of the panchas to that on the police officers and accepted the version of the accused which did not prove possession of the goods in question on the part of any of the three accused. The learned Presidency Magistrate further held that even if possession of the part of the accused of the goods in question had been proved, there was nothing to show that they were smuggled goods. It was conceded by the learned Prosecutor, who was in charge of the prosecution in the trial court, that as the goods were seized by the police, it was a case of police seizure and the prosecution was not entitled to the benefit of the presumption under section 123 of the Customs Act, 1962. If that presumption was not available to the prosecution, naturally, the prosecution had to prove that the goods were smuggled. There was no direct evidence on the point. In regard to the evidence of Nello and the extract from the monthly statistics of the foreign trade of India produced by him, the learned Presidency Magistrate held that that document was not admissible in evidence. In the first place, it was not a public document. Secondly, the extract produced by the witness was not admissible in evidence, because the procedure prescribed in sections 76 to 78 of the Evidence Act had not been followed. Alternatively, the evidence contained in the extract led one nowhere. The extract is supposed to include all the watches of foreign make imported during the period mentioned in the extract under an import licence. But form the evidence of Nello it could not be said that this list is exhaustive of all the watches imported in India during the period covered by the extract, because he had admitted that he did not know if imports from countries like Nepal, Bhutan and Sikkim were included in the above statistics. Similarly, he did not know whether watches imported as part of a passenger's baggage were included in the statistics. The learned Presidency Magistrate accordingly held that this piece of evidence adduced by the prosecution to prove that the goods in question were smuggled, was not of a conclusive nature. In regard to the evidence of Hebbar and other Officers of the Customs Department that the watches were brand new of foreign make and in huge quantity, the learned Presidency Magistrate held that these circumstances alone were not sufficient to lead to the inference that they were smuggled. The learned Presidency Magistrate accordingly held that the prosecution had failed to prove that the goods in question were smuggled. Finally, the learned Presidency Magistrate held that, even if possession of the goods by the accused had been proved and further that they were smuggled goods, there was no evidence to show that the accused had knowledge that they were smuggled goods.

11. In short, the learned Presidency Magistrate held that the prosecution had failed to prove possession of the wrist watches and watch straps by the accused. The prosecution had further failed to prove that these goods were smuggled. Finally, the prosecution had failed to prove that the accused had knowledge that they were smuggled goods. Consistent with these findings, he made an order of acquittal in favour of the accused. Being aggrieved, the State has filed this appeal.

12. Mr. B. D. Kamble, the learned Assistant Government Pleader, on behalf of the State challenges all the three findings of the trial Court which were against him, and in consequence of the acquittal of the accused. In regard to the Question of possession, he has argued that despite the fact that the two panchas had turned hostile and did not support the prosecution version, there was still the evidence of the two police officers, Kulkarni and Mokashi, to prove that the accused were going in a car with the goods in question, that the car was chased and intercepted and on a search being carried out, the goods were found inside the car, and this proves the possession of the goods by the accused. In regard to the second point, whether the goods were smuggled, Mr. Kamble argued that he was not prepared to concede that the benefit of the presumption under section 123 of the Customs Act, 1962 was not available to the prosecution and he wanted to rely upon that presumption. Alternatively, he relied on the evidence of Hebbar and Nello to prove the circumstances from which, according to him, the only inference that could be drawn was that the goods in question were smuggled. In regard to the third point, viz. whether the accused had knowledge that the goods in question were smuggled, Mr. Kamble relied upon the statement of accused No. 1 that he had asked Chhogalal about the contents of the packages and was told that they contained wrist watches, and the conduct of accused Nos. 2 and 3 in accompanying accused No. 1 in the car in which the goods were carried.

13. The first point that I am required to determine in this appeal is whether the possession of the goods in question by the accused has been proved. As I have said, the evidence on this point is of the two police Officers, Kulkarni and Mokashi, and the two panchas, Pardiwala and Multani. Of course, the two Police Officers have supported the prosecution version that while they were waiting at Sion circle a car bearing registration No. MRW-7631 going from north to south was seen. It was being driven by accused No. 1 and accused Nos. 2 and 3 were sitting on the rear seat. The Police Officers chased the car and intercepted it near Gandhi Market. The car was taken to the Police station and searched. If this evidence is believed, it would undoubtedly show that the three accused were in possession of the goods in question. However, the evidence of the two panchas is that some goods were lying on the footpath in a lane near Sion Circle and the Police Officers put these goods in the car in question and made the accused sit in the car and drive it to the Police Station. If this version, which is consistent with the defence, is believed then it would not prove the possession by the accused of the goods in question. It may be noted that in the panchanama (Ex. 'H') of the seizure of the goods at the Police Station all that has been mentioned is that the panchas were called by Mokashi, Kulkarni and Patil of Matunga Police station in the compound of the Police station; the panchas saw motor car No. MRW-7631 and the three accused were inside the car. The story has not been given out there that the police were waiting at Sion Circle and on seeing the car, they chased it and intercepted it near Gandhi Market. It may be noted that the panchas are respectable persons. Pardiwala is a chemist and is running a chemist's shop. He has studied upto matriculation. He pays income-tax. As he did not support the prosecution version of the car having been chased and intercepted when the three accused were going with the goods in question in the car and maintained that the goods were lying on the footpath and were put inside the car by the police and the accused along with the goods were brought to the police station in the car, the prosecution declared the witness hostile and put questions to him in the nature of cross examination, but he stood the cross-examination well and nothing was brought on record to show that he was speaking falsehood or had any motive in falsely supporting the accused. The other panch, Multani, runs a hotel and pays income-tax. He also gave evidence similar to that given by Pardiwala. He was also declared hostile and questions were put to him in the nature of cross-examination. The prosecution was not able to show from his cross-examination that either he was speaking falsehood or had a motive to falsely support the accused.

14. The learned Presidency Magistrate has considered the evidence of the two panchas and his assessment of their evidence is that they are witnesses of truth and he saw no reason to disbelieve their evidence.

15. Mr. Kamble argued that the story give out by the panchas was unnatural and could not be believed. According to them, accused Nos. 2 and 3 had come to the spot seeing the crowd and it was improbable that the police would ask them to sit in the car and rope them in when there was nothing incriminating against them. Secondly, if the incident had taken place as per the version of the panchas, it was difficult to believe that they would sign a panchanama which did not contain that story. Now, it is the prosecution case that the police had information that accused No. 1 was in possession of stolen or smuggled goods. The fact that the house of accused No. 1 was later searched would show that they had a suspicion that some stolen or smuggled goods were kept in his house. If, therefore, some articles were found lying on the footpath near the residence of accused No. 1 and accused No. 1 was seen standing near the articles, there was nothing unnatural in the police officers accosting accused No. 1 and asked him in regard to those articles. There would be nothing unnatural in their further taking accused No. 1 to the Police Station along with the goods. The car was parked near the house of accused No. 3 and accused No. 2 is his nephew. As the car in which the goods were expected to be transported belonged to accused No. 3 and accused No. 2 is his relative, there was nothing unnatural if the police officers had taken accused Nos. 2 and 3 also in the car to the Police Station. There is thus nothing unnatural in the story given out by the two panchas. In regard to the absence of the recitals in the panchanama of the story that the goods were found lying on the footpath near the house of accused No. 1 and were placed by the Police Officers in the car, that omission is neither here nor there, because even the version of the prosecution is not to be found there, viz. that the police party was waiting at Sion Circle and had chased and intercepted the car near the Gandhi market. All that was stated in the panchanama was that the panchas were called to the police station and when they saw the car, the three accused sitting inside the car and further that on a search being taken of the car, watches and watch straps were found. There was nothing in these recitals to which the panchas could take any objection and merely because they had put their signature on the panchanama, it will not mean that the prosecution version of the incident must be true and the version given by the panchas could not be true. Mr. Kamble had relied upon the decision of the Supreme Court in Girdhari Lal Gupta v. Asstt. Collector of Customs, , which is to the effect that there is no rule of law that the evidence of the Investigating Officer conducting a search cannot be relied upon unless it is corroborated, and he has argued that even if the evidence of the two panchas is excluded, the evidence of the two police officers should be accepted to hold that possession of the goods on the part of the accused has been proved. Now, the present is not a the panchas has been adduced so that a question could arise whether the evidence of the Police Officers in the absence of corroboration from the panchas should be accepted. The case here is that there is the evidence of two independent panchas who have deposed to another version of the incident and the question is whether the version given out by the Police Officers is true or that given out by the panchas is true. The learned Presidency Magistrate, who had the benefit of watching the demeanour of the panchas, has accepted their evidence.

16. Mr. Porus Mehta on behalf of accused Nos. 2 and 3 has invited my attention to two decisions of the Supreme Court. In Khedu Mohton v. State of Bihar, , a view was expressed that in an appeal against acquittal, the High Court should be reluctant to interfere with the conclusions of the lower Court and if two conclusions can be reached on the basis of the evidence on record, then the view in support of the acquittal of the accused should be preferred. The fact that the High Court is inclined to take a different view of the evidence on record is not sufficient to interfere with the order of acquittal. The other decision is Ramabhupala Reddy v. State of A.P. - . In that case also, Their Lordships of the Supreme Court were considering the scope of an appeal against acquittal. The view expressed there was that although the appellate Court has full powers to review the evidence upon which the order of acquittal is founded, yet the appellate Court should bear in mind the fact that the trial Court had the benefit of seeing the witnesses in the witness box and the presumption of innocence is not weakend by the order of acquittal. If two reasonable conclusions can be reached on the basis of the evidence of record, the appellate Court should not disturb the finding of the trial Court. Having regard to these decisions and the fact that trial Court has given cogent reasons for preferring the evidence of the panch witnesses to that of the police officers, this Court would be slow to depart from the conclusion arrived at by the learned Presidency Magistrate that the version of the prosecution cannot be accepted and the version of the defence must be true, and, therefore, the possession of the goods by the accused cannot be said to have been proved.

17. There are also present in the case a few circumstances which lend support to the above conclusion of the trial Court. As I have said, the panchanama, Ex. 'H', does not recite the story that the police officers were waiting at Sion Circle and as soon as they saw the car, which was driven by accused No. 1 and in which accused Nos. 2 and 3 were sitting at the back, going from north to south, they chased it and intercepted it near Gandhi Market. No entry from the police diary has also been produced in evidence to show that information was received by the Police Officers and how they had acted in pursuance of that information. It may be noted that the statements of the three accused were recorded by the recorded by the officers of the Customs Department on the three accused were recorded by the officers of the Customs Department on the same day. Each of them was separately tackled by an officer of the Customs Department, who recorded the statement. Before giving their statements, the accused had thus no opportunity to consult one another or anybody else as to what statements they should make and yet the statement of each of the three accused was the same as is the defence and also the evidence of the panchas, viz. the goods were found lying on the footpath and an unoccupied car was parked closely. Accused No. 1 was standing at some distance away from the goods and the Police Officers interrogated him. Accused Nos. 2 and 3 also came there. The Police Officers put the goods inside the car, asked accused No. 1 to drive it along with accused Nos. 2 and 3 and the goods therein to the Police Station. This is an important circumstance to show that what the panchas and the accused in their defence have stated must be the true version of the incident and not the one given out by the two Police Officers. Hebbar has admitted in his evidence that they had come to know about the police version of the incident before the statements of the accused were recorded by the Officers of the Customs Department and he noticed that the story given out by the accused was at variance with the version of the Police Officers and yet the officers of the Customs Department did not try to ascertain which of the two rival versions of the incident was true. They did not even try to collect more evidence as to how the incident had taken place. Even the statements of the Police Officers do not seem to have been recorded by the Officers of the Customs Department. It is true that the officers of the Customs Department did not at that time know what stand would be taken by the panchas, but they could at least see from the panchanama Ex. 'H' that the version of the incident as given out by the Police Officers was not to be found in that panchanama. There was, therefore, the necessity to collect more evidence as to what was the true version of the incident. Police Officers Kulkarni and Mokashi do not also appear to be truthful witnesses, because their evidence is that they had contacted the officers of the Customs Department at about 10 a.m. and these officers arrived at the Police Station at about 11 a.m. Hebbar, has stated that it was at about 2 p.m. that he received information from Matunga Police Station and he had reached the Police Station at 2.15 p.m. This also appears to be natural, because the Police, in the meantime, had seized the goods and prepared a panchanama of the seizure. If they had, immediately after opening the packages and seeing brand new wrist watches contained therein thought that these were smuggled goods. It was not necessary for them to do anything in the matter such as preparing a detailed panchanama of the seizure of the goods and they could have straightway handed over the matter to the Officers of the Customs Department, because Kulkarni has admitted in his cross-examination that he knows that the police do not register offences under the Customs Act and do not investigate them. It must, therefore be, after the Police Officers had gone ahead with preparing a detailed panchanama of the seizure of the goods that they had contacted the officers of the Customs Department and, therefore, the evidence of Hebbar is the more probable that it was at about 2 p.m. that he had received information from Matunga Police Station about the event. But the Police Officers would have us believe that it was at about 11 a.m. that the officers of the Customs Department had come to the Police Station. This would be an additional ground for not believing the Police Officers, Kulkarni and Mokashi, in regard to the prosecution version of the incident.

18. The learned trial Magistrate was, therefore, right in his conclusion that, from the evidence on record, no possession of the goods by the accused has been proved and I uphold that finding.

19. The second point to be determined by me, which will now be only in the alternative in view of my finding on the first point, is whether the goods were smuggled. In order to prove this, the prosecution wants to rely upon the presumption under section 123 of the Customs Act, 1962 and on the evidence of Hebbar (P.W. 11). In regard to the presumption under section 123 of the Customs Act, 1962, as I have said, the learned Prosecutor in the trial court had conceded that the benefit of the presumption under Section 123 was not available to the prosecution because it was a case of seizure by the police and was not a seizure under the Customs Act. But Mr. Kamble contended before me that the benefit of the presumption under section 123 would be still available to the prosecution, because in effect it was a seizure by the officers of the Customs Department under the Customs Act, inasmuch as no sooner the nature of the goods was revealed, the police officers had contacted the Customs Department and it was they who had seized the goods. This argument is neither factually correct nor it is sound in law. As I have pointed out, the Police Officers had seized the goods believed that they were stolen and they had proceeded to make a detailed panchanama of the seizure of the goods. It was only after a lapse of 4 or 5 hours that they had contacted the Officers of the Customs Department when they thought that they may, after all, be smuggled goods and the matter should be proceeded with by the Customs Department. But initially, as the evidence shows, the seizure was effected by the Police Officers under the impression that the goods were stolen. In Gian Chand v. State of Punjab, , the meaning of the words "seized under this Act" was explained. It is true that was a case under the Sea Customs Act (1878) but Section 178A in that Act is in similar terms as section 123 of the Customs Act, 1962. In that case the police had seized gold from the accused, who were later prosecuted under Sections 411 and 414 of the Indian Penal Code. This charge of receiving stolen preferred against the accused was not proceeded with and the case was dropped. In the meanwhile, the Assistant Collector of Customs made an application to the Court of the Magistrate for delivery of the gold bars to the Customs Authorities and they were delivered to those authorities accordingly. The question was whether the goods handed over to the Customs Authorities under section 180 of the Sea Customs Act were goods seized under the Act within the meaning of Section 178A of the Sea Customs Act. Their Lordships of the Supreme Court held that when the goods were seized by the Police they ceased to be in possession of the accused and passed into the possession of the accused and passed into the possession of the police and when that possession was transferred by virtue of the provisions of section 180 of the Sea Customs Act to the Customs authorities, there was no fresh seizure under the Customs Act. It would, therefore, follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of Section 178A, which requires a seizure under the Act, were not satisfied and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused. In view of the this legal position, since the goods in this case also were initially seized by the police, who had apparently proceeded on the basis that they were stolen goods and also had prepared a detailed panchanama, the goods ceased to be in the possession of the accused and when subsequently they were made over to the Customs Authorities and they again prepared a seizure memo, it could not be said that they were goods seized under the Act within the meaning of section 123 of the Customs Act, 1962. Consequently, the benefit of the presumption under section 123 of the Customs Act, 1962 is not available to the prosecution.

20. The burden was, therefore, on the prosecution to prove that the goods were smuggled. For this the prosecution relied upon the evidence of Hebbar who stated that he believed the goods to be smuggled, because watches and watch straps were of foreign origin the import of which was heavily restricted and prohibited and they were found in huge quantity. The foreign origin of the watches is tried to be shown from the foreign markings on the watches. The question whether the foreign markings of goods can be treated as admissible in evidence was considered by Naik J. in Criminal Appeal No. 3 of 1966, decided on 22nd December, 1966. Among the property involved in that case were some gold slabs. The slabs bore the marking "Johnson Mathey 9990 London". Naik J. observed in his judgment that the markings do not speak for themselves and that evidence would be hearsay evidence. There was nothing to indicate that the markings were really done by Johnson Mathey in London. No presumption can arise in regard to the markings, unless there is evidence to show that those markings were made by a particular company in the ordinary course of business. A Division Bench of the Gujarat High Court has also taken a similar view in Asstt. Collector of Customs, Baroda, v. M. Ibrahim Pirjada, 1970 Criminal Law Journal, 1305. There, the Gujarat High Court has held that mere markings cannot be taken as proof of the fact of foreign origin of the goods as such markings and labels would be hearsay evidence. With respect, I agree with the above view.

21. Another circumstance deposed to by Hebbar is that the import of foreign watches and watch straps is heavily restricted and prohibited and because the watches were found in huge quantity, they must be smuggled goods. Although there was restriction on the import of watches, their import was not totally prohibited, because 3 of Import (Control) Order, 1955 watches could be imported under a licence. Mr. Kamble relied upon a stray observation in Jamatraj v. State of Maharashtra, , that in view of the gap of time between the Promulgation of the Import (Control) Order, 1955 and the date of seizure, the necessary inference in this case has to be drawn that the watches and watch straps were smuggled. But it is not even the prosecution case that after the Import (Control) Order, 1955 was promulgated, there was a total ban on the import of watches and watch straps. It is its own case that import of these articles was allowed even after 1955, though under a licence. In fact, the prosecution has tried to adduce in evidence the extract from the monthly statistics of the foreign trade of India published by Government of India to show that watches were imported into India right upto the end of March, 1970. No inference can, therefore, be drawn from the gap of time between the promulgation of the Import (Control) Order of the 1955 and the seizure of the watches, that they were smuggled goods. The only circumstance then left is that the watches found were in huge quantity, but from this circumstance alone it is not possible to draw the inference that they were smuggled. It is true that this circumstance may raise a suspicion or even a grave suspicion that the goods might be smuggled but suspicion can never substitute evidence. Again, although that circumstance is capable of an Inference that the goods were smuggled, yet that is not she only and exclusive inference deducible from the circumstance. And it is a welt settled rule of law that if a circumstance is capable of any other inference and that inference is consistent with the hypothesis of innocence, then the inference which would be favourable to the accused should be drawn. In the instant case, there was no total ban on the import of watches, because they could be imported under a licence. A person could collect these validly imported watches in order to sell them at a future date. Again, they might have been legally imported and might have been stolen. Mr. Kamble argued that if the watches had been legally imported and later on stolen, the real owner would come forward to claim them but in the instant case no owner has come forward to claim them. Now, the answer to this argument is that the real owner may not be knowing that his watches which were stolen had been traced out. That owner may be in any distant part of India. Merely because the real owner has not come forward to claim the watches, the possibility cannot be ruled out that they were stolen watches which were legally imported. As his inference cannot be ruled out, the circumstance that the watches in huge quantity were found cannot lead to the only conclusion that they were smuggled.

22. The evidence of Hebber is, therefore, of no assistance to the prosecution to establish that the goods in question were smuggled.

23. Turning to the evidence of Nello, he produced an extract prepared by him of the monthly statistics of the foreign trade of India published by Government of India, Department of Commerce, Intelligence and Statistics, Calcutta, for the period from 1st April 1964 to 31st March, 1970. According to the witness, this extract contained an exhaustive list of all the watches imported into India under an import licence during the above period and the consignment of the watches in question is not included in this extract. The prosecution wants the Courts to draw an inference from this circumstance that the watches in question were smuggled goods. The learned Presidency Magistrate has held that this document is not admissible in evidence and it has not been admitted.

24. The learned Presidency Magistrate has held that the extract neither falls within the definition of "public document" under Section 74 of the Evidence Act, nor, if it does so, the procedure prescribed in sections 76 to 78 of the Evidence Act for producing a public document has been resorted to Mr. Kamble was not able to show me how this view of the learned Presidency Magistrate was incorrect. The Statistics were merely the publication of the Government and one does not know who had prepared the statistics and how. Nello has no personal knowledge in this behalf. The extract has, therefore to be left out of consideration. In the alternative, the extract leads us nowhere, all the watches imported into India during the period for which the statistics have been prepared. Nello has admitted that he does not know if the import of watches from Nepal, Bhutan and Sikkim are included in the Statistics. He does not even know how the statistics are gathered and tabulated. The mere circumstance, therefore, that the consignment of the present watches is not included in the statistics of which the extract has been produced, will not go to show that the watches in question were smuggled.

25. To sum up, the benefit of the presumption under section 123 of the Customs Act, 1962 is not available to the prosecution and the burden lies entirely on the prosecution to prove that the watch straps in question are smuggled. There is no direct evidence on this point. The circumstances brought on record do not conclusively prove that the goods were smuggled. I, therefore, hold that the prosecution has failed to prove that the goods in question were smuggled.

26. Turning to the last point, which again will be only in the alternative in view of my findings on the first two points, whether the accused had knowledge that the goods in their possession were smuggled, the learned Presidency Magistrate has observed that since that since the goods were wrapped, the accused had no means to know that they contained watches and watch straps, much less that they were smuggled goods. Mr. Kamble argued that in order to prove knowledge on the part of the accused in respect of the goods, the statement of accused No. 1 has to be taken into account. His statement is that he had asked Chhogalal as to the contents of the packages and Chhogalal had told him that there were watches in the packages. Accused No. 1 had thus knowledge that the packages contained watches and as Chhogalal was dealing in ghee not in watches, he could also know that those must be smuggled watches.

27. Mr. Desai, the learned Counsel for accused No. 1 argued that the prosecution is not entitled to rely on a part of the statement of accused No. 1 which is favourable to it. Either it has to rely upon the whole statement of accused No. 1 or not to rely on it at all. In this connection, he referred me to two decisions of the Supreme Court in Hanumant v. State of M.P., , and Palvinder Kaur v. State of Punjab, . With respect, I hold that the prosecution is not entitled to rely upon only a part of the statement or accused No. 1 which is favourable to it. If it wants to rely upon that statement, it has to rely upon the whole of that statement and if the whole statement is relied upon, no possession of accused No. 1 of the goods in question can be said to have been proved. Again, the most that accused No. 1 knew was that there were wrist watches in the packages, but there is nothing in his statement to show that he also knew that they were smuggled goods. From the mere fact that Chhogalal was dealing in ghee and not in watches, knowledge could not be attributed to accused No. 1 that he knew that they were smuggled watches, because they could even be stolen watches.

28. In regard to accused Nos. 2 and 3, there is absolutely no evidence that they had knowledge that the packages contained watches and watch straps much less that they were smuggled. The evidence of Police Officers Kulkarni and Mokashi is to the effect that the goods were wrapped in covers. Accused Nos. 2 and 3 were sitting on the rear seat where no packages or goods of any kind were found. Even if, therefore, possession of the goods by the accused had been proved and also that the goods were smuggled, no knowledge on their part could be said to have been proved of the goods being smuggled.

29. The prosecution had thus failed to prove that the accused were found in possession of the goods, that the goods were smuggled and that the accused had knowledge that they were smuggled. In the result, the charges could not be held to have been established against any of the accused and they were entitled to an acquittal. They were, therefore, rightly acquitted by the trial Court and this appeal by the State must fail.

30. The appeal filed by the State accordingly fails and is dismissed. The order of acquittal passed in favour of all the three accused by the learned Presidency Magistrate is confirmed.