[align=center][font=""trebuchet ms""]Offences & Penal Provisions[/font][/align]
[align=justify][font=""trebuchet ms""]Persons involved in smuggling and other modus operandi of imports and exports, in violation of prohibitions/ restrictions in vogue or with intent to evade duties or fraudulently claim export incentives are liable to serious penal action under the Customs Act. The offending goods can be confiscated and heavy fines and penalties imposed. There are also provisions for arrests and prosecution to deter them from smuggling and commercial frauds-which seriously affect the economy and even society at large when it comes to sensitive goods like drugs, arms and ammunition. The following paras briefly indicate the provisions in law for seizure, confiscation of goods, imposition of penalties by adjudication. Later paras indicate the arrests and prosecution provisions.[/font][/align]
[align=justify][font=""trebuchet ms""]Seizure[/font][/align]
[align=justify][font=""trebuchet ms""]2. An officer of Customs can seize any goods, if he has reason to believe that the same are liable to confiscation, under the Customs Act. The proper officer may also seize any document or things that may be relevant to any proceedings under the Custom Act. However, the person from whom these documents are seized is entitled to make copies of the same.[/font][/align]
[align=justify][font=""trebuchet ms""]3. The person from whom the goods are seized is issued a show cause notice, usually within six months. However, the Commissioner of Customs, on sufficient cause being shown, can extend the time period for issue of Show cause notice, by a further six months.[/font][/align]
[align=justify][font=""trebuchet ms""]4. In case the seized goods are perishable or hazardous in nature or is prone to depreciate in value over time or for reasons of constraints in space, the government can notify these goods and these goods can be disposed off before the conclusion of the proceedings eg. All electronic goods, Currency, Liquors, P&P medicine, Gold, Silver etc.[/font][/align]
[align=justify][font=""trebuchet ms""]Confiscation[/font][/align]
[align=justify][font=""trebuchet ms""]5. The word ΓÇÿconfiscationΓÇÖ implies appropriation consequential to seizure. The essence and the concept of confiscation is that after confiscation, the property of the confiscated goods vests with the Central Government.[/font][/align]
[align=justify][font=""trebuchet ms""]6. The adjudicating authority makes the decision regarding confiscation of goods. The specific/ different categories of violations under which the import or export goods are liable to confiscation, are enumerated in Section 111 and 113 of the Customs Act. In general, the goods that are attempted to be smuggled into or out of the country, by route other than land routes or is attempted to be cleared by way of misdeclaration in quantity, description or value etc are liable to be confiscated. The import or exported goods are also liable to confiscation if there is an intention to evade Customs duty or to fraudulently avail the benefits available under various export promotion schemes, such as duty drawback, DEPB, 100% EOU etc.[/font][/align]
[align=justify][font=""trebuchet ms""]Confiscation of Conveyances/ Packages & Their Contents[/font][/align]
[align=justify][font=""trebuchet ms""]7. In additon to confiscation of Goods, the conveyances, i.e., vessels, aircrafts or vehicles, or animals that are used in the smuggling activities or in connection with fraudulent availment of drawback are liable to confiscation as per specific provisions in section 115 of the Customs Act. ( Tt is worth noting that the term "" Smuggling"", in Customs Act has vast connotations and it means "" any act or omission which will render such goods liable for confiscation under section 111 or 113 of the Customs Act.)[/font][/align]
[align=justify][font=""trebuchet ms""]8. In case the goods liable to confiscation are imported in a package, the package and its other contents, if any, are also liable to confiscation as per specific provisions in section 118 of the Customs Act.[/font][/align]
[align=justify][font=""trebuchet ms""]Confiscation of goods used for concealing smuggled goods[/font]
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[align=justify][font=""trebuchet ms""]9. The goods used for concealing smuggled goods are also liable to confiscation as per specific provisions in section 119 of the Customs Act.[/font]
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[align=justify][font=""trebuchet ms""]Confiscation of smuggled goods notwithstanding any change in form, etc.[/font]
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[align=justify][font=""trebuchet ms""]10. Smuggled goods may be confiscated even if its form has been changed. In case the smuggled goods with other goods in such a manner that the goods cannot be separated then the whole of goods are liable to be confiscated as per specific provisions in section 120 of the Customs Act.[/font]
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[align=justify][font=""trebuchet ms""]Confiscation of sale proceeds of smuggled goods[/font]
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[align=justify][font=""trebuchet ms""]11. There may be situations when the smuggled goods are sold off. In such a situation, the sale-proceeds thereof are also liable to confiscation as per specific provisions in section 121 of the Customs Act.[/font]
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[align=justify][font=""trebuchet ms""]Penal Provisions under the Customs Act:[/font]
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[align=justify][font=""trebuchet ms""]12. The word ΓÇÿpenaltyΓÇÖ means punishment under the law, i.e., such punishment as is provided in penal laws. It also means the sum payable as a punishment for a default.[/font]
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[align=justify][font=""trebuchet ms""]Penalties in respect of improper importation of goods:[/font]
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[align=justify][font=""trebuchet ms""]13. The person involved in omission or commission under the Customs Act, in relation to any goods which renders such goods liable to confiscation under section 111, or abets the same, or acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable to penalties as follows :-[/font]
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[align=justify][font=""trebuchet ms""](a) [/font][font=""trebuchet ms""]in the case of goods in respect of which any prohibition is in force under the Customs Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;[/font][/align][font=""trebuchet ms""](b) [/font][font=""trebuchet ms""]in the case of dutiable goods, other than prohibited goods, the person shall be liable to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;[/font]
[font=""trebuchet ms""](c) [/font][font=""trebuchet ms""]in the case of goods or baggage in respect of which misdeclaration of value has been done, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater;[/font]
[font=""trebuchet ms""](d) [/font][font=""trebuchet ms""]in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;[/font]
[font=""trebuchet ms""](e) [/font][font=""trebuchet ms""]in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.[/font]
[font=""trebuchet ms""]Penalties in respect of improper exportation of goods[/font]
[align=justify][font=""trebuchet ms""]14. The person involved in commission or omission, in relation to any goods, which renders such goods liable to confiscation under section 113, or abets the same, shall be liable to penalties in different types of cases as follows:-[/font]
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[align=justify][font=""trebuchet ms""](i) [/font][font=""trebuchet ms""]in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding * the value of the goods or five thousand rupees, whichever is the greater; [/font]
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[align=justify][font=""trebuchet ms""](ii) [/font][font=""trebuchet ms""]in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;[/font][/align]
[align=justify][font=""trebuchet ms""](iii) [/font][font=""trebuchet ms""]in the case of goods under claim for drawback, to a penalty not exceeding the amount of drawback claimed or five thousand rupees, whichever is the greater.[/font]
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[align=justify][font=""trebuchet ms""]Mandatory Penalty for Short-levy or Non-levy of duty in certain cases ( Section 114 A)[/font][/align]
[align=justify][font=""trebuchet ms""]15. In cases of non-levy or short levy of duty or where the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined. However, where such duty or interest, as the case may be, and the interest payable thereon, is paid within thirty days from the date of the communication of the order, the amount of penalty to be paid shall be reduced to 25% of the duty or interest.[/font][/align]
[align=justify][font=""trebuchet ms""]16. If the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the duty or interest as reduced or increased, as the case may be, shall be taken into account. Also, in a case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the benefit of reduced penalty shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon, and 25% of the consequential increase in penalty have also been paid within thirty days of the communication of the order. Where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114.[/font]
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[align=justify][font=""trebuchet ms""]Penalty for not Accounting for Goods ( Section 116)[/font][/align]
[align=justify][font=""trebuchet ms""]17. If any goods loaded in a conveyance for importation into India, or any goods transhipped under the provisions of this Act or coastal goods carried in a conveyance, are not unloaded at their place of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs, the person-in-charge of the conveyance shall be liable to: -[/font][/align]
[align=justify][font=""trebuchet ms""](a) [/font][font=""trebuchet ms""]in the case of goods loaded in a conveyance for importation into India or goods transhipped under the provisions of this Act, to a penalty not exceeding twice the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported; [/font]
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[align=justify][font=""trebuchet ms""](b) [/font][font=""trebuchet ms""]in the case of coastal goods, to a penalty not exceeding twice the amount of export duty that would have been chargeable on the goods not unloaded or the deficient goods, as the case may be, had such goods been exported.[/font][/align][font=""trebuchet ms""]Penalties for contravention, etc., not expressly mentioned[/font]
[align=justify][font=""trebuchet ms""]18. Any person who contravenes any provision of this Act or abets any such contravention or who fails to comply with any provision of this Act with which it was his duty to comply, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding ten thousand rupees.[/font][/align][font=""trebuchet ms""]Adjudication of confiscations and penalties[/font]
[align=justify][font=""trebuchet ms""]19. The Customs Act enjoins quasi-judicial proceedings to be followed before any penalties are imposed and any confiscation action etc. initiated against any offending goods. Apart from issuing proper show cause notice under section 124, the persons concerned are also required to be given opportunity of representation in writing and personal hearing in the matter. The proper adjudication authority is then to pass final order taking due note of all evidences brought on record. As per Section 122 of the Customs Act, adjudication powers have been given to different class of officers as follows:-[/font][/align]
[align=justify][font=""trebuchet ms""](a) [/font][font=""trebuchet ms""]without limit, by a Commissioner of Customs or a Joint Commissioner of Customs;[/font]
[font=""trebuchet ms""](b) [/font][font=""trebuchet ms""]where the value of the goods liable to confiscation does not exceed fifty thousand rupees, by an Assistant Commissioner of Customs or Deputy Commissioner of Customs;[/font]
[font=""trebuchet ms""](c) [/font][font=""trebuchet ms""]where the value of the goods liable to confiscation does not exceed two thousand five hundred rupees, by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs or Deputy Commissioner of Customs.[/font][/align]
[align=justify][font=""trebuchet ms""]Generally, ΓÇÿmens reaΓÇÖ is not required to be proof for the imposition of penalty under the provisions of the Customs Act. The amount of penalty depends on the gravity of the offence and is to act as the deterrent for future.[/font][/align][font=""trebuchet ms""]20. Whenever the goods are confiscated by an adjudicating authority, if these are not prohibited goods, an option is to be given to the party as per Section 125 of the Customs Act, to pay a fine known as ΓÇÿredemption fineΓÇÖ of quantum as the adjudicating authority deems fit, in lieu of the confiscation. Prohibited goods can be confiscated absolutely.[/font][font=""trebuchet ms""] [/font]
[align=justify][font=""trebuchet ms""]Arrest:[/font][/align]
[align=justify][font=""trebuchet ms""]21. To tackle the menace of smuggling and other serious economic offences including commercial frauds effectively, apart from penal action in departmental adjudication, the Customs Act, also provides for criminal prosecution action. The persons involved can be arrested and prosecuted in a Court of Law. Prosecution action can also be taken for providing false documents/declarations to Customs and for obstructing Customs officers working intentionally.[/font][/align]
[align=justify][font=""trebuchet ms""]22. Any person guilty of serious offence under Customs Act, which is punishable under section 135 of the said Act, can be arrested by a customs officer authorised in this behalf, as provided under section 104 (1) of the Act. Under the law, the person being arrested is entitled to be informed about the grounds for such arrest under the law. The said section also enjoins that provides that every person arrested under the Act has to be taken without unnecessary delay to the nearest Magistrate. Since the Customs Act doesnΓÇÖt contain any provision regulating the manner in which a person arrested is to be dealt with by the Magistrate, therefore, the provisions of the Criminal Procedure Code which regulate this aspect would be applicable to the person arrested under the provisions of the Customs Act. The power to remand to judicial custody vests in the Magistrate by virtue of section 165 of the Cr.P.C.[/font][/align]
[align=justify][font=""trebuchet ms""]23. Department has issued several instructions to ensure that powers of arrest by Customs officers are exercised with care at senior level and arrest should be resorted in sufficient grave nature of officers as per laid down guidelines.[/font]
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[align=justify][font=""trebuchet ms""]Offences & Prosecution[/font][/align]
[align=justify][font=""trebuchet ms""] The offences under the Customs Act can be broadly categorised in two categories ΓÇô non-bailable or cognisable offences & bailable or non-cognisable offences[/font]
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[align=justify][font=""trebuchet ms""]Non-bailable or cognisable offences[/font]
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[align=justify][font=""trebuchet ms""]24. The offences punishable with imprisonment for a term of more than 3 years are covered in this category. As per section 135 (1) of the Customs Act if any person is involved, in relation to any goods, in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods, or acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be punishable, in the case of an offence relating to any of the goods to which section 123 applies and the market price whereof exceeds one lakh of rupees, with imprisonment for a term which may extend to seven years and with fine.[/font]
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[align=justify][font=""trebuchet ms""]25. If any person convicted of an offence under section 135(1) or of section 136 (1) (applicable to customs officers) of the Act is again convicted of an offence under the same sections, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to seven years and with fine.[/font]
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[align=justify][font=""trebuchet ms""](ii) Bailable or non-cognisable offences[/font]
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[align=justify][font=""trebuchet ms""]26. The offences punishable with imprisonment for a term of less than 3 years or only fine are covered in this category .The offences under this category are as follows:-[/font]
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[align=justify][font=""trebuchet ms""](a) [/font][font=""trebuchet ms""]If a person makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document in the transaction of any business relating to the customs, knowing or having reason to believe that such declaration, statement or document is false in any material particular, he shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both (section 132).[/font]
[font=""trebuchet ms""](b) [/font][font=""trebuchet ms""]If any person intentionally obstructs any officer of customs in the exercise of any powers conferred under this Act, such person shall be punishable with imprisonment for a term, which may extend to six months, or with fine, or with both (section 133).[/font]
[font=""trebuchet ms""](c) [/font][font=""trebuchet ms""]If any person resists or refuses to allow a radiologist to screen or to take X-ray picture of his body in accordance with an order made by a Magistrate under section 103, or resists or refuses to allow suitable action being taken on the advice and under the supervision of a registered medical practitioner for bringing out goods liable to confiscation secreted inside his body, as provided in section 103, he shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both (section 134).[/font]
[font=""trebuchet ms""](d) [/font][font=""trebuchet ms""]In all offences under the Customs Act other than those mentioned under ΓÇÿnon-bailable or cognisable offencesΓÇÖ above, the punishment for imprisonment may extend to a term of three years, or with fine, or with both. However, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than one year {section 135 (i)}.[/font]
[font=""trebuchet ms""](e) [/font][font=""trebuchet ms""]If a person makes preparation to export any goods in contravention of the provisions of this Act, and from the circumstances of the case it may be reasonably inferred that if not prevented by circumstances independent of his will, he is determined to carry out his intention to commit the offence, he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both (section 135A).[/font][/align]
[align=justify][font=""trebuchet ms""](f) [/font][font=""trebuchet ms""]The officers of Customs also cannot escape serious action including prosecution action, if they are found abusing their powers or are shown to be colluding/conniving with tax evaders. In the following cases, prosecution proceeding against a customs officer may be initiated under section 136 of the Customs Act:-[/font]
[font=""trebuchet ms""](i) [/font][font=""trebuchet ms""]In cases of connivance in the act or thing whereby any duty of customs leviable on any goods, or any prohibition for the time being in force under this Act or any other law for the time being in force with respect to any goods is or may be evaded, a customs officer shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.[/font]
[font=""trebuchet ms""](ii) [/font][font=""trebuchet ms""]In cases of vexatious search, i.e., where any person is searched for goods liable to confiscation or any document relating thereto, without having reason to believe that he has such goods or document secreted about his person, a customs officer may be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both; or[/font]
[font=""trebuchet ms""](iii) [/font][font=""trebuchet ms""]If a customs officer arrests any person without having reason to believe that he has been guilty of an offence punishable under section 135, he may be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both; or[/font]
[font=""trebuchet ms""](iv) [/font][font=""trebuchet ms""]If a customs officer searches or authorises any other officer of customs to search any place without having reason to believe that any goods, documents or things of the nature referred to in section 105 are secreted in that place, he may be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.[/font]
[font=""trebuchet ms""](v) [/font][font=""trebuchet ms""]If any officer of customs, except in the discharge in good faith of his duty as such officer or in compliance with any requisition made under any law for the time being in force, discloses any particulars learnt by him in his official capacity in respect of any goods, he may be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.[/font][/align]
[align=justify][font=""trebuchet ms""]Presumption of culpable mental state[/font]
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[align=justify][font=""trebuchet ms""]27. As per section 138A of the Customs Act, in prosecution proceedings under the said Act for an offence under the said Act, the culpable (guilty conscience or mens rea) on the part of the accused person shall be presumed and it will be for the accused to proof that he had no deliberation with respect of alleged offence. When the presumption of culpable mental state is drawn under this provision, that presumption includes intention, motive, knowledge, belief as well as reason to belief. The presumption could be deemed as rebutted only if the proof is beyond reasonable doubt not merely when its existence is established by a preponderance of probability.[/font][/align]
[align=justify][font=""trebuchet ms""]Prosecution:[/font][/align]
[align=justify][font=""trebuchet ms""]28. No prosecution proceedings can be launched in a Court of Law against any person under Customs Act, and no cognizance of any offence under sections 132 to 135 of the Customs Act, 1962 can be taken by any Court, except with the previous sanction of concerned Commissioner of Customs. Based upon the results of investigations and evidence brought on record, Commissioners of Customs apply their mind before sanctioning prosecution- after being satisfied that there are sufficient reasons justifying prosecution. Criminal complaint is thereafter filed in appropriate Court of law and followed up with a view to get expeditious orders / conviction.[/font][/align]
[align=justify][font=""Trebuchet MS""]Courtesy:CBEC Website[/font][/align]
