DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

CUSTOMS ACT, 1962

IPC-II

Dr. Nandini C.P.

Submitted By-
Bhavya Chaudhary (2016021)
Devvrat Shivhare (2016033)
Ashuthosh Malviya (2016016)
Akshaya (2016009)
ACKNOWLEDGEMENT
 I am grateful to my learned teachers for their academic patronage I have made my project
titled “CUSTOMS ACT,1962” under the supervision of Dr. Nandini C.P., Faculty Lecturer,
Damodaram Sanjivayya National Law University. I find no words to express my sense of
gratitude towards Ma’am for providing the necessary guidance at every step during the
completion of this project.

I am also grateful to the office, librarian and library staff of DSNLU, Visakhapatnam for
allowing me to use their library and persistent encouragement extended to me.  I am
once again highly indebted to the office and Library Staff of DSNLU for the support and
cooperation extended by them from time to time. I cannot conclude with recording my
thanks to my friends for the assistance received from them in the preparation of this
project.

LITERATURE INDEX
S.NO CONTENT P.NO.
.
01. Introduction

02. Literature Review

03. Chapterisation
(I) Fabricating False Document and Obstructing the
Way of Customs Officers (Bhavya)
(II) Evasion or Attempt to Evade Custom Duty (Devvrat)
(III) Offences by Customs Officers (Ashuthosh)
(IV) Offences by Companies (Akshaya)
04. Case Analysis

05. Conclusion

06. Bibliography

INTRODUCTION
Customs is an authority or tax collection wings are being appointed by the Government in
every country for controlling and for collecting of tax on the flow of goods, including live
animals and hazardous items into and out of a country. Customs Act and Tariff are two
regulations was evolved by the World Customs Organization to control imports and exports
of goods into and out of a country. Each country has its own Customs Act and Tariff on the
basis of the guidelines and principles of the World Customs Organization.

Objectives of imposing Customs act can be summarized as follows-

1. Restricting Imports for conserving foreign exchange.

2. Protecting Indian Industry from undue competition.
3. Prohibiting imports and exports of goods for achieving the policy objectives of the
Government.
4. Regulating exports.
5. Prevent Smuggling.
6. Facilitate implementation of laws relating to Foreign Trade Act, Foreign Exchange
Regulation Act, Conservation of Foreign Exchange, Prevention of Smuggling Act,
etc.

In tune with international practice, the entry and exit of goods and passengers into and out of
the country is regulated by law. The Customs Act, 1962 is the basic statute which governs
and regulates the entry and exit of different categories of vessels, crafts, goods, passengers
etc, into or outside the country. In addition to the Customs Act, the Customs Department also
works to ensure compliance with various other national and international laws and
regulations. It is the responsibility of the Customs to handle international traffic speedily and
effectively while ensuring that all movement of goods and passengers across the national
borders are in conformity with the laws of the land.
Essentially all goods brought into the country or taken outside the country must pass through
authorized entry/exit points, be reported to Customs, and the importers/exporters must fulfill
the prescribed legal and procedural requirements laid down under Customs Act, 1962 and
allied laws including payment of the duties leviable, if any. Accordingly, the Customs Act
lays down in detail provisions to deal with acts and omissions that violate the law, and
provide for penalties that can be imposed by departmental authorities and punishments that
can be imposed by courts of law. The law also empowers Customs officers to carry out
searches, arrests and prosecution of persons involved in such offences. The Customs Act also
lays down the procedural requirements to be followed while imposing the various penal
provisions for violations so as to ensure that due process of law is followed before action is
taken against offending goods, persons or conveyance involved in the violations.
Types of Punishments
The Customs Act envisages two types of punishments:
(a) Civil Liability: Penalty for violation of statutory provisions involving a penalty of money
and confiscation of goods, which can be imposed by the departmental authorities. Chapters
XIV of the Customs Act (Sections 111 to 127) deals with confiscation of goods and
conveyances and imposition of penalties.
(b) Criminal Liability: Criminal punishment is of imprisonment and fine; which can be
granted only in a criminal court after prosecution. Both penalty and punishment can be
imposed for same offence. Chapter XVI (Sections 132 to 140A) deals with other offences
under the Act.
LITERATURE REVIEW

1. The threat of arrest is much misused in customs, excise and service tax. It is therefore
salutary to have clarity on when arrest is actually possible. The administrative
guidelines on this provide a higher threshold than the enabling powers in the statute.
These thresholds have recently been revised upwards. Arrest is supposed to be an
interim action, pending punishment by the courts in the form of a jail term. The
provisions for arrest are inextricably linked with these provisions for prosecution in the
respective statutes, in that the power to arrest is available to the department when
specified offences that attract prosecution appear to have been committed1.

2. In tune with international practice, the entry and exit of goods and passengers into and
out of the country is regulated by law. The Customs Act, 1962 is the basic statute
which governs and regulates the entry and exit of different categories of vessels, crafts,
goods, passengers etc, into or outside the country. In addition to the Customs Act, the
Customs Department also works to ensure compliance with various other national and
international laws and regulations. Accordingly, the Customs Act lays down in detail
provisions to deal with acts and omissions that violate the law, and provide for
penalties that can be imposed by departmental authorities and punishments that can be
imposed by courts of law2.

3. The basis of valuation is the "transaction value" of goods. The transaction value is the
price actually paid or payable for the goods when sold for export to India for delivery
at the time and place of importation or as the case may be or export from India for
delivery at the time and place of exportation. The transaction value as declared is
normally accepted, except in cases where the buyer and seller of the goods are related
persons and the price is not the sole consideration for the sale of goods.3

1
Ms.RadhaArun, Prosecution-and-Arrest-Customs-Central-Excise-and-Service-Tax (Jan. 22, 2018, 09:30 PM)
http://www.udyogsoftware.com
2
PG GunjanChauhan Lakshmi Radhakrishnan, Detailed study on Civil and Criminal Penalties under the
Customs Act, Prosecution and Compounding of Offences (Jan. 26, 2018, 10:05 PM)
3
Ashok Sagar, Trade Investment and Custom Duties in India, (Jan. 30, 2018, 09:45 PM)
http://www.mondaq.com
 1. This articles article deals with the Offence and Penal Provisions under Custom Act for
evasion of custom duty or involved in import or export of prohibited goods. Article
also deals with the provisions for arrests and prosecution to deter smuggling or
commercial fraud, which seriously affects the economic security. Article also deals
with seizure and confiscation of offending goods. It also deals with various types of
penalties and punishment levied under the custom act.4

2. This articles deals with the offence and prosecution under various stages of CA.1962.
Article deals with various types of offences and mainly focuses on the various
prosecution stages related to these offences under Customs Act, 1962. Article also
deals with punishment provisions and various sections, what is the punishment provided
and who has authority under which section, under Customs Act, 1962. 5

3. This Manual covers key aspects of Customs requirements such as classification,

valuation, and exemption notifications etc. for correct Self-Assessment of duty on
goods imported or exported. Self-Assessment is expected to usher in a new era of
trust based Customs-Trade partnership leading to greater facilitation of compliant
traders. Therefore, it is important that the trade takes its responsibility for making
correct Self-Assessment seriously. Of course, the Departmental officials shall be
readily available to resolve any doubts that the trade may have. The purpose of this
Manual is to serve as a guide or advise to Importers and exporters to peruse the
statutes, Rules and Regulations as well as Boards Circulars for ascertaining the
correct legal provisions.6

4
Central Board of Excise & Customs Department of Revenue Ministry of Finance Government of India, Central
Board of Excise & Customs Manual,2015 (Jan. 12, 2018, 10:04 PM) http://cbec.gov.in/resources//htdocs-
cbec/deptt_offcr/cs-manual2015.pdf
5

Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs (Anti-
Smuggling Unit) New Delhi, Prosecution In Relation To Offences Punishable Under Customs Act, 1962 (Jan.
13, 2018, 09:15 PM) cbec.gov.in/resources/htdocs-cbec/customs/cs/circ27-2015cs.pdf

6
M.C. Thakur, Customs Manual on Self-Assessment, 2011, Central Board of Excise & Customs Department of
Revenue Ministry of Finance, (Jan. 16, 2018, 11:15 PM) www.cbec.gov.in/htdocs-cbec/deptt_offcr/cs-self-
assesmt2011-manual.pdf
 1. The author in this article talked about India which hs introduced several trade
facilitation measures in the last couple of years. The proactive strategy adopted by
CBEC has helped in traducing several policy measures which have not only
streamlined the role of the customs department but has also helped industry in major
way without compromising collection of revenue. However the private sector in India
survey in India conducted in 2005/06 identified customs valuation as an issue of
particular concern among other TF related initiatives. It also analyses 300 cases
sampled from a database of appeal cases at Customs, Excise and Service Tax
Appellate Tribunal (CESTAT).7

2. Customs Manual 2014 discusses various customs functions which the Customs officer
performs which cover substantial areas of activities involving international
passengers, general public, importers, exporters, traders, custodians, manufacturers,
etc. Customs is continuously rationalizing and modernizing its Customs procedures
through adoption of EDI and global best practises. Also, as a member of the World
Customs Organization, the Customs has adopted various international Customs
Conventions and procedures including the revised Kyoto Convention, Harmonized
Classification System, GATT based valuation etc.8

3. Compounding of offences is available only in respect of those offences committed

against individuals and not against those offences against the public policy/ society.
Though the offences under the Central Excise Act, 1944/ Customs Act, 1962 are
against the exchequer, the liberal attitude of the Government to provide for
“compounding” of such offences against public is definitely a welcome measure.9

7
Sachin Chaturvedi, Customs Valuation in India: Identifying Trade Facilitation related Concerns, Asia pacific
research and training network on trade working paper series. (Jan 16, 2018, 11:09 PM),
http://www.unescap.org/posts
8
Shobna L Chary , Customs Manual 2014, Central Board of Excise and Customs. (Jan 17, 2018, 3:25 PM),
http://www.cbec.gov.in
9
S. Jaikumar and G Natarajan, Compounding of Offences in Customs act ( Feb 01, 2018, 2:12
PM).http://www.taxindiaonline.com.
 1. The Customs Manual 2013 contains various instructions, orders circulars on Customs
matters compiled meticulously to guide departmental officers in effectively rendering
their duties as well to provide information to trade and industry in dealing with
Customs. This articles deals with all the provisions Customs Act,1962. Particularly
Chapter 30 of this article deals with the Offence and Penal Provisions under Custom
Act.10

2. The report talks about illicit trading activities such as smuggling are a pervasive
socio-economic threat entrenched in the global trade system. Their syndicates, which
are drawn by huge profits, while benefiting from weak legislation. The formidable
task faced by enforcement agencies of facilitating the flow of legal trade while
dismantling organisations involved in smuggling operations. Smugglings dampens the
economy in multidimensional ways. It destabilises the legal industry, restrains
innovation and investments, reduces government revenues, fuels transnational
organised crime and hampers the health and safety of consumers.This report further
attempts to highlight the key challenges posed by smuggling and the possible
solutions needed to make compliance and processes more robust which will reduce
the threat of smuggling.11

3. The Customs Manual 2013 contains various instructions, orders circulars on Customs
matters compiled meticulously to guide departmental officers in effectively rendering
their duties as well to provide information to trade and industry in dealing with
Customs.12

FABRICATING FALSE DOCUMENT AND OBSTRUCTING THE WAY OF

CUSTOMS OFFICER: AN OVERVIEW
10
Central Board of Excise and Customs Department of Revenue Ministry of Finance Government of India,
Central Board of Excise and Customs Manual, 2012 (Jan 15, 2018, 03:15 PM)
http://www.cbec.gov.in/resources//htdocs-cbec/cs-manual
2012.pdf;jsessionid=37F6431B57B801C8A4EF3FF52D7E3071
11
invisible enemy – threat to our national interests by ficci, Thought Arbitrage Research Institute for FICCI
Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (Jan 18, 2018, 02:10 PM)
http://ficci.in/spdocument/20807/final-Smuggling-report.pdf.
12
Sandhya Baliga, Central Board of Excise and Customs Department of Revenue Ministry of Finance
Government of India, Central Board of Excise and Customs Manual, 2013 (Jan 21, 2018, 01:05 PM)
http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/cs-manual2013.pdf.
Offences under Chapter XVI of the Customs Act, 1962: 'Offences' mean acts or omissions
made punishable by law. Unlike civil penalties, which can be adjudged in departmental
adjudication, offences are to be tried in a criminal court and punishments can be granted only
after regular prosecution and trial.

(A) FALSE DECLARATION, FALSE DOCUMENTS, ETC. [SECTION 132]

“Whosoever 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, shall be punishable with imprisonment for a term which may extend to
two years, or with fine, or with both” -Section 132

Ingredients

1. Makes sign or uses, or causes to be made, any declaration, statement or document

2. Knowing or having a reason to believe

This section means that when someone makes, signs or uses, or causes to be made, signed or
use, any statement or document for some business relating to customs knowing that such
declaration is false, will be subject to punishment as per given in this section.

The Court has interpreted this section in the case of Ram kumarVs M/S.V.M &Sons13. The
facts of the case are that the appellant is an Exporter of leather products from India to foreign
countries and if the products are finished products, the exporters are entitled to customs duty
exemption and also duty drawback. The exporters are intended to export finished leathers and
after packing the leather consignments and preparing the packing list, invoice and
declarations signed by Agents who submitted their documents to their Customs House Agent
who told him that he will give him ‘let export’ order if he illegally pays him some money and
so he is convicted for the same. Because it was a case under customs act so he had to take
sanction from the commissioner of custom. In the present case, the appellant was convicted
under sec 132 and 135(1)(i) of the customs act since the appellants gave a false declaration
that they exported a finished leather for obtaining customs duty exemption and also duty
drawback.

13
Ram kumarVs M/S.V.M & Sons, Criminal Appeal Nos.102 to 104 of 2003 &Criminal Appeal No.792 of 2003
Section 132 of customs act says that “Whosoever 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, shall be punishable with imprisonment for a
term which may extend to two years, or with fine, or with both”. Now, in this case the
accused had deliberately gave a ‘let export’ order although the leather products were not
finished as required which leads to fabricating the false document. So the Hon’ble Court
deemed it fit to sustain the conviction under sec 132 of the customs act. We can clearly see
that the ingredients of sec 132 have been fulfilled.

Similarly, in the case of UoiVsGulamMdFarooque, the respondent who was an NRI and
having stayed for 10 months at Doha (Qatar) had arrived at the IGI airport with two checked-
in baggage and one hand luggage. On arrival, he was asked that if he had any dutiable items
to which he replied in the negative. He passed through green channel. At the exit gate, he was
stopped by the Custom officer and was enquired whether he had any gold or silver items to
which he again replied in the negative. He was diverted for X-ray examination where the
metal detector beeped positive. Notice under Section 102 of the said Act was given to him.
He did not opt for search either before the Magistrate or before any senior officer. On his
personal search from his jacket, he was found carrying 10 gold biscuits, 4 gold bangles and
two pairs of earrings valued at Rs.5,24,700/-. The respondent was unable to furnish any
document of custom duty payment. The gold items and jacket were confiscated. The accused,
herein, took the plea that he had been falsely implicated in the present case and admitted that
he was an NRI living in Doha for 10 months and he was legally entitled to bring 10 kgs of
gold. He also added that he had already declared the gold to the custom officer posted at
immigration hall but despite that the custom officer had falsely implicated him. Two
witnesses were examined by the prosecution; one was the customs officer who had
apprehended the accused at the exit gate of the airport. The second witness was the
superintendent of custom who had issued summons to the accused under section 108 of the
said act. The appellants argued that the officers concerned here were doing their official duty
and there was no such grudge against the accused for which they would falsely implicate him.
The argument from the side of respondent was that the accused was carrying 1100 USD and
had gone to the custom declaration counter to pay the customs duty but his payment was
refused and he was falsely implicated. It was also argued that 1100 USD was illegally
usurped by the customs department and there was no intention on the part of the accused to
hide or conceal the gold as he was admittedly carrying it in his pocket which clearly showed
that there was no such intention.

The High Court relied on the travelling documents of the accused in which he had admitted in
his own handwriting that he did not have any kind of dutiable items. The court, in its
profound reasoning concluded that the above mentioned document was crucial one and the
accused being an architect (that is an educated man) himself admitted that he did not have
any such items. The Court held that this document was wholly contrary to the defence set up
by the accused wherein he stated that he went to the counter to pay but he was not allowed to
do so. The declaration made by the accused was not held to be a forced one as it was a six
page long statement wherein he also stated some of his personal facts which could not have
been forced. The court held that the sentence already undergone by the accused would be the
sentence suffered by him and he had to pay a fine of 20,000 rps. He was convicted under
section 135 of the customs act.

In this case, the court referred two cases KamleshKumariUppalVs. Dept. Of Customs
&Anth.and Md. JamilVs Customs and came to the conclusion that the accused being literate
person could not have made such a declaration and he was obviously not forced which was
established by the facts. In the above mentioned two cases, the court had noted that for
special and adequate reasons, under section 135 of customs act are substantially less
punishment could be awarded and hence in the present case the sentence was reduced to the
sentence already undergone.

Section 133

Obstruction of officer of customs. - 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.

Ingredients

1. Intentionally
2. Obstructs any officer of custom

Any person guilty of serious offence under Customs Act, 1962 which is punishable under
Section’s 132, 133, 135, 135A and 136 of the said Act, can be arrested by a Customs officer
authorized in this behalf, as provided under Section 104(1) of the said Act. Under the law, the
person being arrested is entitled to be informed of the grounds for such arrest. Also, every
arrested person has to be taken without unnecessary delay to the nearest Magistrate. The
Customs Act, 1962 does not contain any provision regulating the manner in which an arrested
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. The power to remand an
arrested person to judicial custody vests in the Magistrate by virtue of Section 165 of the
CrPC.

In the case of PARADIP PORT TRUST Vs COLLECTOR OF CUSTOM AND CENTRAL

EXCISE, the Vessel M.V. JAGDARSHAN arrived at the Port on 29-3-1976. The Assistant
Collector of Customs and Central Excise, having received information that the vessel was
being used as a conveyance for disposal of foreign imported prohibited articles, exercised his
power under Section 110 of the Act and at the same time on 7-4-1976 started rummaging
operation which continued up to 4 p.m. on that day. On the same day he issued notice to the
Master of the Vessel with the copies to both the petitioners. Petitioner V.L. Choudhury was
further informed that he should ensure that no clearance was given from his side unless the
Port clearance was granted by the Superintendent of Customs, Paradip Port. A copy of the
notice was also sent to the petitioner B.D. Naygandhi for the purpose of information. The
notice mentioned that during the rummaging operation, the Assistant Collector of Customs
had recovered goods of foreign origin worth Rs. 40,000/- as per the list attached to the notice.
By the notice the Master of the Vessel was directed not to sail the vessel from the port except
with the previous permission of the competent customs authority. It is alleged that both the
petitioners, in spite of such direction, shifted the vessel towards the deep sea which
obstructed the rummaging operation and thereby facilitated the smugglers in disposing of the
smuggled goods either by throwing them into the sea or otherwise. Since this act of the
petitioners amounted to an offence as defined in Section 133 and punishable under Section
117 of the Act, the Collector of Customs and Central Excise, Bhubaneswar issued a show
cause notice to the petitioners for appropriate action under the provisions of the Act as
mentioned above.

This case went to the Supreme Court also but Supreme Court reverted it back to the High
Court for fresh disposal.
The High Court decided that under section 151 of the said act, the petitioners in their capacity
as the officers of the port were bound to assist the customs officers in the operating of
rummaging. The other finding of the court was that the correct authority to punish under
section 133 of the said act was only a court and not the collector of customs and therefore the
imposition of penalty by the collector of customs was without any jurisdiction. The court also
referred certain judgements of the Supreme Court and a judgment in the case KinchiffeVs
Shelton wherein, the lordships observed that obstruction does not only mean physical
obstruction but it includes anything which makes it more difficult for the police or a public
officer to carry out their duties.

It was held in this case that the shifting of the vessel from a berth to a place deep into the sea
which accessible by a sailing vessel amounted to obstruction, under section 133 of the said
act, the Court mentioned that when the statutory authorities under the Act were discharging
their duties, it was none of-the business of the two petitioners to shift the vessel from the
dock to a distant place irrespective of the fact as to whether there was inconvenience to other
vessel or to make available berths to other waiting vessels. The explanations offered by them
in justifying their act of shifting the vessel cannot be accepted on the face of their own
admission that it was at their instance that the vessel was shifted. There is nothing wrong in
the order of the Collector and hence there is no reason to interfere with the order.
EVASION OR ATTEMPT TO EVADE CUSTOM DUTY –

Section 135 of Customs Act,1962 deals with evasion of custom duty or prohibitions. This
section contains the main penal provision in the under this act for evasion or attempt to
evasion of custom duty. Under section 135 of Customs Act, 1962 offences are punishable for
the term of imprisonment of three years or more. Offences under this section were made
cognizable and bail able.

Ingredients-

(a) If any person is in relation to any goods in any way knowingly concerned in miss
declaration of value or 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

Can a Person Be Held Liable For Fraudulently Evasion Of Custom Duty-

In the case of STATE OF MAHARASHTRA VS. P.K. PATHAK 14 a huge quantity of
smuggled goods of worth Rs. 15 lakhs were recovered from both the accused of which
custom duty was fraudulently evaded by accused subsequently they were charged under
section 135 (a)(b) of CA Act, 1962. Trial court sentenced PK Pathak to rigorous
imprisonment for three years under Section 135(a) and (b) of the Customs Act and for one
year under Section 120B, I.P C. and Section 3 of the Imports and Exports (Control) Act. He
further directed that the sentences would run concurrently. Sari Madhukar Keshav was also
convicted of the aforesaid offences but contended only to rigorous imprisonment for one
year. In appeal Bombay High Court Set aside Trial Court order and acquitted them but Sc set
aside HC court order and restore trial court order.

(b) If any person acquires possession of or is in any way concerned in carrying, removing,
depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner

14
State Of Maharashtra Vs. P.K. Pathak AIR 1980 SC1224 in this case the recovery was made from both the
accused of a huge quantity of smuggled goods worth Rs. 15 lakhs which consisted partly of imported watches
valued at Rs. 12.50 lakhs and partly of diacenantwerpon packed in 40 small cartons (each containing 20 sticks)
worth about Rs. 2.50 lakhs were recovered from two different places and subsequently were charged under
Sections 135 of Customs Act,1962; Imports and Exports (Control) Act, 1947 - Sections5; Indian Penal Code (IPC)
- Sections 120B.
dealing with any goods which he knows or has reason to believe are liable to confiscation
under section 11115 or section 113, as the case may be; or

(c) If any person attempts to export any goods which he knows or has reason to believe are
liable to confiscation under section 11316

(d) Fraudulently avails of or attempts to avail of drawback or any exemption from duty
provided under this Act in connection with export of goods, he shall be punishable,

(i) In the case of an offence relating to,—

 any goods the market price of which exceeds one caror of rupees; or
 the evasion or attempted evasion of duty exceeding fifty lakh of rupees; or
 such categories of prohibited goods as the Central Government may, by notification in
the Official Gazette, specify; or

Punishments Under Section 135 Of Customs Act, 1962-

Section 135 of CA Act,1962 lays down two separate punishments-

(i) Where the market price of the goods exceeds one crore of rupees, or the evasion or
attempted evasion of duty exceeds fifty lakh of rupees; or the goods fall into such categories
of prohibited goods as notified by the Central Government or in case of fraudulent availing of
drawback, if the amount of drawback or exemption from duty exceeds fifty lakh of rupees,
the person is liable to be punished with imprisonment for a term extending up to seven years
and with fine. 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.

(ii) In other cases, the term of imprisonment may extend up to three years, or with fine, or
with both.
15
Confiscation of improperly imported goods
16
Confiscation of goods attempted to be improperly exported, etc. -  any goods attempted to be exported by
sea or air from any place other than a customs port or a customs airport appointed for the loading of such goods;
or any goods attempted to be exported by land or inland water through any route other than a route specified in a
notification issued under clause.
In the case of PAKEER MUHAMMED FIROSKHAN VS. THE ASST. COMMISSIONER OF
CUSTOMS17 The petitioner was under possession of smuggled gold biscuits, petitioner was
arrested by Custom officers and subsequently petitioner was charged under section 135(1)(i)
Trial Court convicted him was sentenced there under to undergo R.I. for a term of one year
and to pay a fine of Rs. 20,000/-. In appeal filed Sessions Court, confirmed the conviction of
the appellant, but reduce the sentence of imprisonment to six months. In revision petition HC
alter the charges from Section 135(1)(i) of the Customs Act to one under Section 135(1)(ii) of
the Act and set aside the sentence of imprisonment awarded to the petitioner and modify and
enhance the sentence of fine to Rs. 30,000/.

If any person convicted of an offence under this section or under sub-section (1) of section
13618 is again convicted of an offence under this section, 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, 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.

Exceptions-
For the purposes of sub-section (1) and (2), the following shall not be considered as special
and adequate reasons for awarding a sentence of imprisonment for a term of less than one
year, namely:—
(i) the fact that the accused has been convicted for the first time for a reference under
this Act;
(ii) the fact that in any proceeding under this Act, other than a prosecution, the
accused has been ordered to pay a penalty or the goods which are the subject
matter of such proceedings have been ordered to be confiscated or any other
action has been taken against him for the same act which constitutes the offence;
(iii) the fact that the accused was not the principal offender and was acting merely as a
carrier of goods or otherwise was a secondary party to the commission of the
offence;
(iv) the age of the accused.

17
Pakeer Muhammed Firoskhan Vs. The Asst. Commissioner Of Customs 2009(167)LC253(Kerala) in this case
the petitioner had landed at the Thiruvananthapuram Airport and Custom officers recovered gold biscuits
from the petitioner. The market value of the gold seized as being Rs. 7,94,151/- inter alia as regards the purity
and the weight of the gold biscuits seized. He was charged under Customs Act - Sections 135(1); Code of
Criminal Procedure (CrPC) – Sections 428
18
Offences by officers of customs
Preparation as a Crime Under Customs Act, 1962-
Section 135 (A) of Customs Act, 1962 deals with preparation 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.

Whether Preparation Can Be Ground For Conviction Under Customs Act,1962-

Preparation can be ground for conviction in the case of A.K. Thakervs vs Miss Marylivina
Chinyere Okereke and ors,19 the accused illegally possess heroin in breach of law which she
attempted to export to Lagos, a foreign country, she had made preparations to export the
same in contravention of the provisions of the Customs Act, 1962. Bombay High Court
convicted her under Sections 21, 23, 30 of N.D.P.S Act. She is also sentenced to undergo
imprisonment for a term of three years under Section 135A of the Customs Act, 1962.

19
A.K. Thakervs vs Miss Marylivina Chinyere Okereke and ors. 2001 ALL MR(Cri)1776 in present case
Narcotics Control Bureau, Mumbai, received secret information that the unaccompanied baggage was booked
for Lagos and that baggage contained about 20 k.g. of heroine and that baggage booked to M/s Eastern Cargo
Carriers Respondent No. 1 Ms .Marylivina a Nigerian citizen. From the office of M/s. Eastern Cargo Carriers 2
bags were found and total 15.080 kgs brown powder were recovered from both the suitcase. Both the accused
arrested and charged under Sections 21, 23, 28, 29 and 30 of the Narcotic Drugs & Psychotropic Substances
Act, 1985 and under Section 135A of the Custom Act,1962.
Offences by customs officers

The officers of customs cannot escape serious action including prosecution action, if they
abuse their powers or collude or connive with tax evaders. In the following cases prosecution
proceeding against a Custom officer may be initiated under section 136 of the customs act,
1962;

Offences by Customs officers Punishment

1-If a customs officer enters into or Punished with imprisonment for a term
acquiesces in any agreement to do or abstains which may extend to three years or with fine
or doing, permits or conceals or connives at or both.
any act or thing, whereby any fraudulent
export is effected20 or any duty of customs
liveable on any goods is evaded.
2-If any customs officers require any person Punished with imprisonment for a term
to be searched for goods liable for which may extend to six months, or with fine
confiscation or any document relating which may extend to one thousand rupees, or
thereto, without having reason to believe both.
that he has such goods or document secreted
about his person.
3- If he arrests any person without having Punished with imprisonment for a term
reason to believe that he has been guilty of which may extend to six months, or with fine
an offence punishable under section 135 which may extend to one thousand rupees, or
both.
4-If he searches or authorizes any other Punished with imprisonment for a term
custom officer to search any place without which may extend to six months, or with fine
having reason to believe that any goods, which may extend to one thousand rupees, or
documents or things of nature referred in both.
Section 10521 are secreted in that place.
5-If any officer of Customs discloses any Punished with imprisonment for a term
particulars learnt by him in his official which may extend to six months, or with fine
capacity in respect of any goods. [Except in which may extend to one thousand, or with

20
W.e.f. 14.5.2003.
21
Power to search premises- If the [assistant commissioner of customs or deputy commissioner of customs] or
in any area adjoining the land frontier or the coast of India an officer of custom especially empowered by name
under this behalf has reason to believe that any goods liable to confiscation or any documents or things which
may be useful or relevant to any proceedings under this act , are secreted in any place, he may authorize any
officer of Custom to search or he may himself search for such goods, documents or things.
 the discharge in good faith of his duty or in both.
compliance with any requisition made under
any law for the time being in force].

A customs officer is a law enforcement agent who enforces customs laws on behalf of the
government. If any person convicted of an offence under this section or under sub- section of
Section 136 is again convicted of an offence under this section, then, he shall be punishable
for the second and for every subsequent offence with imprisonment of a term which may
extend to seven years and fine. Provided that in the absence of special and adequate reasons
to the contrary to be recorded in the judgement of the court such imprisonment shall not be
less than one year.

Does “any person” mentioned in Section 135 of Customs act include Customs Officer?

In this context the Delhi High Court in Pawan Kumar And Ors. Vs Directorate of
Revenue22 rightly observed that even if a customs officer in the doing of an act takes part or
consciously takes any step in the illegal import/export of the contraband/prohibited goods, he
may qualify as “any person”, the expression used in Section 135. What Section 135 stipulates
is that if “any person”, in relation to any goods is in any way knowingly concern in any
fraudulent evasion, or acquires possession of or is in any way concerned in carrying,
removing. Thus, any person, who is concerned with the acts stipulated in Clauses (a) and (b)
of Sub Section (1) of Section 136 would be covered under Section 135. It is well settled
under the customs law that a person will be considered in the doing of an act if he takes part
or consciously takes any step whatsoever in the illegal export/import on the
contraband/prohibited goods. The word “Concern” as per Chambers Dictionary means “to
relate or belong” to affect or interest; to involve by interest and the word concerned means,
interested, involved, troubled. As per Oxford dictionary to be concerned means, take part in
or be related to. The expression of the word concerned in as such is of wide import.
Therefore, a person may be concerned in the importation or exportation for goods without
being a smuggler himself or himself contravening any of the provisions of FERA/ Customs
Act. As such it has to be said that if a person is interested in or consciously takes any step

22
2007(218) ELT 331 Del (where Accused No. 5 A.K. Saxena, who is a customs officer, have floated various
firms in false and fictitious names and some of the firms are not even existing at the given address. Under these
assumed names they have allegedly exported readymade garments and claimed duty drawback amount to the
tune of Rs. 1,04,62,596/, it was held that a Custom officer falls within the term "any person" as occurring
in Section 135. His conviction was upheld by Delhi High Court.)
whatever in the illegal import, he will be guilty, particularly because the words concerned in
have been anything to do in the process or operation which proceeds the bringing or
prohibited goods into the country. Therefore, a person will be concerned in the doing of an
act if he takes part or consciously takes any step whatsoever in the illegal import of the
goods.

Cognizance of Offence

In law, there is a distinction between cognizable and non-cognizable offences, wherein the
former is one where the police officer can arrest, without a warrant form a magistrate. Under
section 137, the court may not take cognizance, for offences under this section, except with
previous sanction of the Central Government or Commissioner of Customs.

Jayantilal Kalidas Mehta Vs State of Maharashtra 23

Petitioners in this case contended that Section 137 of the Customs act is ultra vires in view of
Article 14 of the Constitution of India. The section confers on the Commissioner of Customs
and Central Government unguided, uncontrolled and arbitrary powers to determine whether a
particular person would be dealt with only departmentally or will also be prosecuted in a
Court of law. There are no Guidelines provided in the Act itself for regulating the exercise of
the above discretion conferred on the Commissioner.

Bombay High Court stated that provision as to sanction under section 137 of the Customs Act
is itself a safeguard against indiscriminate prosecution. Mere possibility of abuse of power
would not be a ground to hold section 135 as invalid. The legislative history and background
of the statute in question, its purpose, its scheme and policy as disclosed by the various
provisions thereof furnish enough guidelines and section 137 do not confer unguided,
unfettered discretion so as to violate Article 14 of the Constitution.

The Court has interpreted Section 136 in the case of Sudhir Sharma Vs Commissioner of
Customs24 stating that, the provisions of Section 136 are attracted only where the offence is
committed by a Customs officer during discharge of official duties and not otherwise.

Customs officer not to be treated as a police officer

23
(1972) 74 BOMLR 391

24
(2015) Del LR 326
The apex court in Surjeet Singh Chhabra Vs. UOI25, held that Customs Officials are not
police officers and admissions made before them though retracted binds the deponent. In
view of voluntary statements recorded and such statements are not retracted did not warrant
cross examination when other circumstantial evidence provide reliable basis corroborating
the statements. When nothing surfaced that witnesses had any enmity with the appellants,
those were not liable to be discarded nor required to be put to cross examination.

The madras High court in Shri.Bharath Bhusan Goyal Vs State by Inspector of Police 26
has convicted A5 A. Sivaram Kumar, appraising officer, Customs House Chennai and A7 V.
Rajpriyan, Foreign Trade development officer, Former Controller of Imports and Exports, for
the alleged offences under Sections 120B, 420, 468, 471, IPC and Section 13(2) read with
13(1)(d) of prevention of corruption act, 1988 and Section 132 and 136 of the Customs act
1962 for abusing their positions as public servants by allowing the other accused persons to
derive pecuniary advantage for which they were not entitled.

Protection of Customs officer under KVS Scheme

The Kar Vivad Samadhan Scheme came into effect from 1998. The said scheme provided
immunity from prosecution and imposition of penalties in certain cases where the person
invokes this KVSS and if he fulfils the norms prescribed under the scheme then a certificate
of immunity is granted to him under section 94 of said scheme. Provided they have to pay the
amount determined by the designated authorities towards full and final settlement of tax or
penalty arrears within 30 days from the date of issuance of certificate. The Madras high court
granted complete immunity and acquitted the accused by taking into consideration KVVS in
the case of Mrs. Sashi Balasubramanian Vs State by Superintendent of Police, Central
Bureau of Investigation (Economic Offences Wing), ACB, Chennai.

OFFENCES BY COMPANIES

25
AIR 1996 SCC
26
(2004) 2 Mad. 147 [The Customs duty to the tune of 137 lakhs was evaded by the active connivance A5 and
A7 by illegally issuing advance license].
Section 140 of the Customs Act, 1962 contains provision of the offences committed by the
companies.

The legal interpretation of 140(1) – If an offence committed under this provision is done by
an company, every person related to the company, and was at the time of the commitment of
the offence was in charge of, or responsible to the company, shall be deemed guilty of the
offence and shall be subject to criminal proceedings and will be punished accordingly.
This sub-section also provides that no person shall be liable to such punishment provided in
this chapter if he proves that the offence was committed without his knowledge or he
exercised all due diligence to prevent the commission of such offence.

140(2) – This sub-section states that, if an offence under this chapter of the act has been
committed by a company and it is proved to have been committed with the consent, or
negligence on the part of the, any director, manager, secretary or other officer of the
company, such director, manager, secretary or other officer shall be guilty of that offence and
shall be subject to criminal proceedings against them and will be punished accordingly.

Ingredients:

 The act done is an offence under the Indian Customs Act, 1962.
 To constitute an offence under this section, the offence should be committed by a
company.

Difference between provisions of section 140 (1) and 140 (2)

is that in former case, the person in charge is deemed to be guilty and burden of proof is on
him to prove that he had no knowledge; while in later case, burden of proof is on prosecution
to prove that offence was committed with knowledge or connivance of the director, manager,
secretary or other officer.

Criminal punishment is of imprisonment and fine; which can be granted only in a criminal
court after prosecution. Both penalty and punishment can be imposed for same offence.

The director of the company will be liable if the offence is committed during his/her
tenure -
In the case, Shalaka V. Ranevs Commissioner of Customs, an appeal against the order of the
Commissioner of Customs and Central Excise, Goa inter alia imposing a penalty of Rs. 1.00
lakh on the appellant herein, a Director of M/s. Prashant Polyconcrete Products Pvt. Ltd., on
whom duty of Customs has been confirmed and capital goods imported by the company have
been confiscated with an option to redeem them on payment of fine. The appellant is one of
the Directors. The company and other Directors did not file appeals before this Tribunal.

M/s. Prashant Polyconcrete Products Pvt. Ltd., a 100% EOU, had not complied with the
conditions specified in Notification No. 13/81-Cus., dated 9-2-1981 i.e. fulfilment of export
obligations and it is for this reason that capital goods imported by the company were liable to
confiscation. The appellant herein has been penalised, in her capacity, as a Director of the
company. No ground was raised in the appeal memorandum before the Tribunal except to say
that no effective opportunity to be heard was given. There was no substance in the appeal of
violation of the principles of natural justice as many chances were given to them in this
tribunal. There is no ground that she was not a person responsible for the conduct of the
business of the company. As per Section 140 of the Customs Act, 1962, in the event of an
offence committed by a company, the person who at the time, when the offence was
committed, was in charge of, and was responsible to the company for the conduct of the
business of the company shall be liable to be proceeded against. The plea of the appellant that
she ceased to be a Director of the company at the time of issue of Show Cause Notice, does
not in any way absolve her, as undisputedly she was a Director of the company during the
period when the offence was committed. The appeal was dismissed in this case.

Whether simultaneous penalties can be imposed on both the partners of the partnership
firm under the Customs Act?

In the case of Amritlakshmi Machine Works, Mumbai and another v Commissioner of

Customs (Import)27, the question before the Bombay High Court was that whether Tibunal
has erred in imposing simultaneous penalties on both partners and partnership firm under the
Custom Act, 1962 ?

It was held by the Hon'ble court that in the Section 140 of the Act, it is stated that firm and its
partners as persons shall be liable for penalty depending on the facts of the case.

27
(2016)9 Bom 461.
Simultaneous penalty can be imposed on firm and its partners, where authorities on materials
available to them are clear of direct or indirect involvement of partners in contravening
provisions of the Customs Act.It is permissible to impose penalty separately on partnership
firm and partners in adjudication proceedings under 1962 Act.

Whether offence under section 140 of the Customs Act attracts vicarious liability or
not?

In the case of Sadhana Jain v P. Sudhir28, the question to be considered is when departmental
authority have not imposed any penalty against petitioner, will her prosecution on same
allegation be desirable and should be allowed to continue. There was no specific averment
against petitioner indicating her active participation in conduct of business of company. She
has been arrayed as accused only because she is Director of Company. Petitioner admittedly
looked after affairs of DCP much after imports took place. No penalty on her is warranted. It
is because of this admission made by department that Commr. did not impose any penalty on
petitioner. Obligation of accused to prove that offence took place without his knowledge or
that he/she exercised all due due diligence to prevent such offence arises only when
prosecution established that he was responsible for carrying on business and was during
relevant time in charge of business. In absence of such proof, no partner can be convicted. It
was held that evidence produced by department did not indicate that all partners were actively
participating in business of firm, it could not be said that when offence was committed all
partners were conducting business of firm hence they will not be liable for conviction.
Criminal proceedings against the petitioner was hereby quashed.

CASE ANALYSIS

(1) Name of the Case- Paradip Port Trust Vs Collector Of Customs And Central Excise
28
2004 (76) DRJ 15,
Citation- 1991 (56) ELT 290

Judges; Name of Court- B Hansaria; D Patnaik;

Act- The customs act, 1962

Fact- The Vessel M.V. JAGDARSHAN arrived at the Port on 29-3-1976. The Assistant
Collector of Customs and Central Excise, having received information that the vessel was
being used as a conveyance for disposal of foreign imported prohibited articles, exercised his
power under Section 110 of the Act and at the same time on 7-4-1976 started rummaging
operation which continued up to 4 p.m. on that day. On the same day he issued notice to the
Master of the Vessel with the copies to both the petitioners. It is alleged that both the
petitioners, in spite of such direction, shifted the vessel towards the deep sea which
obstructed the rummaging operation and thereby facilitated the smugglers in disposing of the
smuggled goods either by throwing them into the sea or otherwise. Since this act of the
petitioners amounted to an offence as defined in Section 133 and punishable under Section
117 of the Act, the Collector of Customs and Central Excise, Bhubaneswar issued a show
cause notice to the petitioners for appropriate action under the provisions of the Act as
mentioned above.

ISSUE

1. Did the collector of Customs and Central Excise had jurisdiction to deal with the
matter?
2. Who is the correct authority to punish under section 133 of the said act; common
court of law or collector of customs?

Ratio Decidendi- This case went to the Supreme Court also but Supreme Court reverted it
back to the High Court for fresh disposal. The High Court decided that under section 151 of
the said act, the petitioners in their capacity as the officers of the port were bound to assist the
customs officers in the operating of rummaging. The other finding of the court was that the
correct authority to punish under section 133 of the said act was only a court and not the
collector of customs and therefore the imposition of penalty by the collector of customs was
without any jurisdiction.

(2) Name of the case- Ram Kumar Vs M/S.V.M. & Sons

Citation- Crl.A.No.792/2003
Judges- MS. JUSTICE R. MALA;

Name of court- High Court of Madras

Act- The Customs Act, 1962

Fact

The appellant is an Exporter of leather products from India to foreign countries and if the
products are finished products, the exporters are entitled to customs duty exemption and also
duty drawback. The exporters are intended to export finished leathers and after packing the
leather consignments and preparing the packing list, invoice and declarations signed by
Agents who submitted their documents to their Customs House Agent who told him that he
will give him ‘let export’ order if he illegally pays him some money and so he is convicted
for the same.

Issue

1. Is the accused liable for the offence under sec 132 and 135(1)(i) of the customs act?

Reasoning

Because it was a case under customs act so he had to take sanction from the commissioner of
custom. In the present case, the appellant was convicted under sec 132 and 135(1)(i) of the
customs act since the appellants gave a false declaration that they exported a finished leather
for obtaining customs duty exemption and also duty drawback.

Critical Analysis

Now, in this case the accused had deliberately gave a ‘let export’ order although the leather
products were not finished as required. So the Hon’ble Court deemed it fit to sustain the
conviction under sec 132 of the customs act. We can clearly see that the ingredients of sec
132 have been fulfilled.

(3) Name of the case- UoiVsGulamMdFarooque

Citation- Appeal (civil) 4950 of 1999

Name of the Judge- ArijitPasayat, Dr. Ar. Lakshmanan

Name of Court- Supreme Court of India

Act- The Customs Act, 1962

Facts- The respondent who was an NRI and having stayed for 10 months at Doha (Qatar) had
arrived at the IGI airport with two checked-in baggages and one hand luggage. On arrival, he
was asked that if he had any dutiable items to which he replied in the negative. He passed
through green channel. At the exit gate, he was stopped by the Custom officer and was
enquired whether he had any gold or silver items to which he again replied in the negative.
He was diverted for X-ray examination where the metal detector beeped positive. Notice
under Section 102 of the said Act was given to him. He did not opt for search either before
the Magistrate or before any senior officer. On his personal search from his jacket, he was
found carrying 10 gold biscuits, 4 gold bangles and two pairs of earrings valued at
Rs.5,24,700/-. The second witness was the superintendent of custom who had issued
summons to the accused under section 108 of the said act.

ISSUE

1. Was the accused falsely implicated in the case?

REASONING

The High Court relied on the travelling documents of the accused in which he had admitted in
his own handwriting that he did not have any kind of dutiable items. The court, in its
profound reasoning concluded that the above mentioned document was crucial one and the
accused being an architect (that is an educated man) himself admitted that he did not have
any such items. The Court held that this document was wholly contrary to the defence set up
by the accused wherein he stated that he went to the counter to pay but he was not allowed to
do so. The declaration made by the accused was not held to be a forced one as it was a six
page long statement wherein he also stated some of his personal facts which could not have
been forced.

(1) Case Name- Padma Ram vs Supdt.(Prosecution) Central Ex

Citation- 1962CriLJ584
Judges- Justice M.N. Bhandari, Rajasthan High Court

Acts- Customs Act, 1962 - Sections 123, 135(1)(i); Code of Criminal Procedure (CrPC) ,
1973 - Sections 313

Issue Raised-
Whether conviction and sentence of the petitioner under clause (i) of sub-section (1) of
section 135 of the Act of 1962 is proper?
Facts-
The facts of this case are that on 18.4.1992 a jeep bearing No.GJ 2 A 1258 was stopped by
police officers based on prior information that the jeep may have smuggled goods. On the
search of jeep, in two secret boxes, 138 slabs of silver and 190 gold biscuits were found, and
total 17.018 kg and 22.161 kg of silver and gold confiscated having market value of more
than Rs.1 crore. The accused persons were not in possession of any document to show title
over the goods recovered. Presuming it to be smuggled goods from Pakistan, seized goods
were handed over to the officers of the Customs Department. Both the accused admitted that
gold and silver were smuggled by them. They were taken into custody and thereupon a
complaint was filed against both the accused on 2.3.1992 and both were charged under
section 135(1) (i) Customs Act, 1962.

Judgment-

Trail court convicted accused for offence under section 135 (1) (i) of Customs Act, 1962 and
sentencing him to undergo three years rigorous imprisonment and fine of Rs.2000/- High
Court Alter the charges into Section 135(1)(ii) and upheld the sentence of Trial Court.

Ratio Decidendi-

Court held that section 135(1)(i) will not apply to this case ,it applies only when section 123
of Custom Act applies(applies when value of goods exceeding ofone lakh rupee), but Trial
Court didn’t attracted section 123. On the basis facts and circumstances comes under the
ambit of sub clause (ii) so HC altered the charges.

(2) Case Analysis- Union of India (UOI) Vs. Angelito Mercado

Citation- 2003(90)ECC797; 2003(157)ELT264(Bom)

Judge : V.M. Kanade, Bombay High Court
Acts- Custom Act, 1962-Sections 135
Issue Raised-
Whether Court can award lesser punishment then minimum prescribed under section 135 of
Custom Act, 1962?
Facts-

In this case from the vessel named AI-Wattyah total 600 gold bars were found from six
stitched cloth belts each containing 100 foreign marked gold bars concealed in the carpenter's
store on board. They were weighing 69.998 kgs and valued Rs. 2,48,11,482/- in International
Market Value and Rs. 2,89,08,348/- in Local Market Value. Both accused were arrested and
charged under Section 135(1)(i) of Customs Act 1962. Trial Court convicted both the accused
and sentenced to RI for two years and imposed fine of Rs. 5000/-.The Union of India being
aggrieved by the said judgment and order passed by the Magistrate filed Criminal Appeal
seeking enhancement of the punishment. It is inter alia contended that Section 135(1)(i)
provides that the minimum punishment should be three years and maximum punishment
should be seven years and inspite of the said provision the Magistrate has convicted the
respondents for two years and imposed a fine of Rs. 5000/-.

Judgment-

Bombay High Court said if magistrate is satisfied then he can award lesser punishment then
minimum prescribed punishment, Court also observed that in these circumstances, this is not
a fit case where the sentence as awarded should be enhanced. The appeal is therefore
dismissed. Accused already served the punishment awarded by Trial Court, hence they were
released.
Ratio Decidendi-
In this present case, Magistrate has taken into consideration their financial condition due to
which they couldn’t apply for bail, as they are only earning members of the family. By the
time the present appeal was filed the appellant had already undergone the sentence as
imposed by the Trial Court. Being satisfied on above grounds court awarded lesser
punishment then prescribed.

(3) Case Name- A.K. Thakervs vs Miss Marylivina Chinyere Okereke and ors.
Citation- 2001 ALL MR(Cri)1776
Judge: Mr. B.N. Singh, C.J. and ;Mrs.Ranjana Desai, Bombay High Court

Acts: Narcotic Drugs and Psychotropic Substances Act, 1985 - Sections 21, 23, 30 and 67;
Customs Act, 1962 - Sections 135A; Code of Criminal Procedure (CrPC) , 1973 - Sections
313

Issue Raised-
(i) Whether the order of acquittal of accused by the Special Judge is correct or not?
(ii) Whether accused is liable for export of prohibited goods under Custom Act, 1962 or
not?

Facts-

Narcotics Control Bureau, Mumbai, received secret information that the unaccompanied
baggage was booked for Lagos and that baggage contained about 20 k.g. of heroine and that
baggage booked to M/s Eastern Cargo Carriers Respondent No. 1 Ms .Marylivina a Nigerian
citizen. From the office of M/s. Eastern Cargo Carriers 2 bags were found and total 15.080
kgs brown powder were recovered from both the suitcase. Both the accused arrested and
charged under Sections 21, 23, 28, 29 and 30 of the Narcotic Drugs & Psychotropic
Substances Act, 1985 (hereinafter referred to as the Act) and under Section 135A of the
Custom Act,1962.

Judgment-
Trial Court acquitted then but Bombay High Court convicted her under Sections 21, 23, 30 of
N.D.P.S Act. She is also sentenced to undergo imprisonment for a term of three years under
Section 135A of the Customs Act, 1962. All the sentences are directed to run concurrently.

Ratio Decidendi-
The accused illegally possess heroin in breach of law which she attempted to export to
Lagos, a foreign country, she had made preparations to export the same in contravention of
the provisions of the Customs Act, 1962.

(1) Case name- Pawan Kumar And Ors. vs Directorate Of Revenue

 Court name- Delhi High Court

Citation: 2007 (218) ELT 331 Del Bench- Hon'ble Mr.Justice AK Sikri

Facts- Accused No. 5 A.K. Saxena, who is a customs officer, have floated various firms in
false and fictitious names and some of the firms are not even existing at the given address.
Under these assumed names they have allegedly exported readymade garments and claimed
duty drawback amount to the tune of Rs. 1,04,62,596/-. Names of these firms and the manner
in which they allegedly drew these duty drawbacks illegally by showing fictitious exports. It
is alleged that A.K. Saxena verified the feasibility report of factory stuff of export goods in
respect of non-existing firms, namely, Dig Dig Creations, Anu Exports, Amico International,
Zebra Inc. and Prayas Enterprises. The allegations against him specifically are that he
connived with other accused for fraudulent export of inferior quality of readymade garments,
which had been over invoiced. Some of the other accused persons, namely, Pawan Kumar,
Govind Jha, Radhey Lal and Gurcharan Singh in their statements under Section 8 of the
Customs Act have also corroborated this fact.

Charges-135 of Customs Act and 136 of Customs Act

Issues Raised- Whether Customs Officer Falls within the term "any person" as occurring
in Section 135?

Holding- A Custom officer falls within the term "any person" as occurring in Section 135.
His conviction was upheld by Delhi High Court.

Ratio Decidendi- It is well settled under the customs law that a person will be considered in
the doing of an act if he takes part or consciously takes any step whatsoever in the illegal
export import/export on the contraband/prohibited goods.  As per the Oxford Dictionary to be
concerned means to take part in or to be related to.If a customs officer in the doing of an act
takes part or consciously takes any step in the illegal import/export of the
contraband/prohibited goods, he may qualify as "any person", the expression used in Section
135.

(2) Case Name- Pavitar Singh vs Inspector of Customs (Anti Smuggling) Ministry of
Finance
Citation- (2016) P&H H.C 164
Court Name-Punjab-Haryana High Court
Bench-Hon'ble Mr.Justice Kuldip Singh
Facts- Facts of the case are that a complaint No.120-2-2010 dated 13.12.2010 (original
complaint No.6/2.2.2003 at Amritsar) has been filed under Sections 132 and 135 of the
Customs Act, 1962 for evasion of customs duty amounting to Rs.1.85 crores by fraudulent
means. It is stated that an intelligence input was received that M/s Megna Impex, 7 Sehdev
Market, Jalandhar are engaged in fraudulent availment of benefit under Duty Entitlement
Pass Book (in short, 'DEPB') scheme by forging the export documents. Ashok Kumar, Pavitar
Singh, Satbir Singh, Vijay Madan and Gurkirpal Singh have violated the provisions
of Sections 132 and 135 of the Act and that they have also submitted forged/ false export
documents by way of substitution and forgery of BRCs for fraudulently obtaining the DEPB
licence amounting to Rs.1.85 crore. Allegations of corruption against the officials of the
Custom Department were also there.

Charges-  Sections 120-B IPC read with Sections 420, 467, 468, 471 IPC and 13(1)(d) read

with Section 13(2) of the Prevention of Corruption Act. Along with Section 132 and 135 of
Customs act, 1962.
Issues raised- Whether the complaint is hit by the principles of Double jeopardy or not?
Holding- It was held that, present complaint against the accused is hit by the principles of
double jeopardy and is liable to be quashed.

Ratio Decidendi- The court perused Article 20(2) of the Constitution which says that, “No
person shall be prosecuted and punished for the same offence more than once.” Along with
Section 300 of Cr.PC which says that, “Person once convicted or acquitted not to be tried for
same offence.” In the CBI case against the accused , allegations under Sections
420, 467, 468 and 471 IPC were also levelled alleging that he has done cheating by evading
custom duty to the extent of Rs.1.85 crores has and prepared forged documents. Therefore,
charges are substantially same for which accused has already tried, convicted and sentenced.
Therefore, present complaint against is hit by the principles of double jeopardy and is liable
to be quashed.
(3) Case Name- Mrs. Sashi Balasubramanian Vs State by Superintendent of Police,Central
Bureau of Investigation,(Economic Offences Wing),ACB,Chennai.
Citation- (2005) 7 Mad. 423
Court name- Madras High Court
Bench- THE Honourable Mr.Justice V.Kanagaraj
Facts- A1 to A7 entered into a criminal conspiracy to cheat the Government of India in
pursuance of the said conspiracy, A2 applied for an advance licence under the duty
exemption entitlement scheme without valid export orders and A3 forged the said licences
and thus with connivance of A2 imported three consignments of man made fabrics using the
forged advance licence with the connivance of A2, A5 and A6; that A7 helped in getting the
said licence amended as man made cotton fabrics against the provisions of Import & Export
Policy, 1992 1997; that thereafter A3 with connivance of A2 tampered the certificate by
striking out the word "cotton" and A2 with connivance of A4 and A5 imported the
consignment of man made fabrics by abusing their position as public servant and to make A2
get pecuniary advantage for which he was not entitled; that A2 falsely declared in the bill of
entry; that the customs officials namely A4 and A5 allowed A2 to commit these offences.
Charges- A5 and A6 who were Customs officer were charged for the offences punishable
under Sections 120-B r/w.420,467,468, 471 r/w.468 IPC and 13(2) r/w.13(1)(d) of
the Prevention of Corruption Act, 1988 and Section 136of the Customs Act, 1962 along with
the other accused.
Issues- Whether the settlement of the charge sheet under KVS Scheme 1998 will discharge
the accused persons from liability?
Holding- It was held that all accused persons will be discharged from their liability due to
settlement of the case under KVS scheme.
Ratio Decidendi- The court observed that the accused has filed before the designated
authority under the KVS scheme. Acknowledgements were issued by the designated authority
to each of these declarations and subsequently the certificates were issued to them. Hence, it
follows that the declarations have been accepted by the competent authority, the duty has
been paid and accepted and immunity granted. Therefore, the matter has to be treated as
closed. The authorities were aware of the whole proceedings, yet the declaration was
accepted and immunity granted. Once the declaration was made under the K.V.S. Scheme
and accepted by the Government, the immunity was granted against prosecution
unreservedly.

(1) Case name: Hasmukh Dalpatrai Ganatra and Another v Collector of Customs, Bombay
Citation: Order No. 121/86-WRB, Dt. 9 February 1987

Issues raised:

(1) Whether the Addl. Collector has no jurisdiction to impose a personal penalty of Rs. 75,
000/- on Shri H.D. Ganatra under Section 112 of the C.A. and penalty of Rs. 25, 000/- on
M/s. Export Enterprises under Section 112.

(2) Whether the Addl. Collector has no jurisdiction to order absolute confiscation of the
seized goods.

(3) Whether the imposition of separate penalties on the Proprietor and the firm is illegal.

Facts: This is an appeal against the confiscation of 79 takas of synthetic fabrics under
Section 111(p) of the Customs Act and levied a penalty on Shri H.D. Ganatra under Section
112 of the Customs Act and a further penalty of Rs. 25,000/-on M/s. Export Enterprises under
Section 112 ibid. The appellant submitted that the appellants imported under their REP
Licence 992 takas of the fabrics in question and cleared them, dated 12-7-1982. The Collector
in his order under appeal had accepted this fact and held that the goods namely, 79 takas
seized from the appellants were out of the stock imported under the aforesaid B/E. However,
the Collector confiscated the seized goods for contravention of Chapter 1V-A and he levied
the penalties for the same contravention. The appellants submitted that the penalties had been
levied on Shri Ganatra and his pro-prietory concern.

Judgement: The appeal is rejected, but the appellant is given an option to redeem the
confiscated goods on payment of fine of Rs. 24, 000/. The Addl. Collector's order of levying
a penalty of Rs. 75, 000/- on Shri H.D. Ganatra is confirmed, but his order of levying a
penalty of Rs. 25, 000/- on his proprietary firm M/s. Export Enterprises is set aside, and the
consequential relief is ordered to be granted to him.
Ratio decidendi:

The court observed that in this case the provisions of Section 140 of the Customs Act would
not apply, therefore in this case court set aside the penalty levied on the proprietary firm M/s
Export Entreprises.

(2) Case Name: Shalaka V. Rane Vs. Commissioner of Customs

Citation: Aug-10-2005

Issue Raised:

(1) Whether there was violation of natural justice of the appellants.

(2) Whether the appellant was the person responsible for the business of the company and
can fined.

Facts: This case is an appeal against the order of the Commissioner of Customs and Central
Excise, Goa inter alia imposing a penalty of Rs. 1.00 lakh on the appellant herein, a Director
of M/s. Prashant Polyconcrete Products Pvt. Ltd., on whom duty of Customs has been
confirmed and capital goods imported by the company have been confiscated with an option
to redeem them on payment of fine. The appellant is one of the Directors. The company and
other Directors have not filed appeals before this Tribunal.

M/s. Prashant Polyconcrete Products Pvt. Ltd., a 100% EOU, had not complied with the
conditions specified in Notification No. 13/81-Cus., dated 9-2-1981 i.e. fulfilment of export
obligations and it is for this reason that capital goods imported by the company were liable to
confiscation. The appellant herein has been penalised, in her capacity, as a Director of the
company. No ground has been raised in the appeal memorandum before the Tribunal except
to say that no effective opportunity to be heard was given. But, several hearings were given.

Judgement: The court upheld the conviction as per Section 140 of the Customs Act, 1962, in
the event of an offence committed by a company, the person who at the time, when the
offence was committed, was in charge of, and was responsible to the company for the
conduct of the business of the company shall be liable to be proceeded against.

Ratio decidendi: There is no substance in the appeal of violation of the principles of natural
justice as several hearings were given to the appellant. There is no ground that she was not a
person responsible for the conduct of the business of the company
(3) Case Name: Sashikant T. Mehta vs State Of West Bengal And Ors.

Citation: 1979 (4) ELT 5 Cal

Issues raised:

(1) Whether the partners of the firm, accused nos. 3 and 5 can be made liable under
section 140 of the custom act.
(2) Whether the partners can be made vicariously liable for the act?

Facts: The shop room of M/s. ThakorlalHiralal and Co. at premises No. 9, B.B.D. Bag (East)
Calcutta. Pursuant to that search some contraband primary gold and diamonds, for which
proper account was not found to have maintained and whose possession could not be
satisfactorily explained, were seized. The same were reasonably believed to be smuggled
goods.

The accused nos. 1 and 2 are the employees of the firm and the accused nos. 3 and 5 are its
partners.

Judgement: In this matter the company has not been made an accused. Hence for the alleged
possession by the company, the petitioner cannot be vicariously made liable. There is no
independent allegation against the petitioner and the partners.

Ratio decidendi: It was observed that simply because the firm is said to be in possession of
such gold and diamonds, the petitioner or partners have no vicarious liability reason being
they completely unaware of the said fraud and moreover they were not charged
independently of any of the offence under the Customs Act.
CONCLUSION

The Customs department is the final checkpoint for goods that enter or leave the country.
Customs officials are entrusted with the responsibility of ensuring that no illegal goods are
smuggled into, or out of the country. Their job is crucial for the safety, security, and economy
of the country.

Section,4(1)(b)(i) of Customs Act.1962, Particulars of Organization, Functions and Duties.

The National Academy of Customs, Excise and Narcotics (NACEN) is the apex institute of
Government of India for capacity building of civil servants in the field of indirect taxation,
particularly the areas of customs, central excise, service tax and narcotics control
administration. Located at Faridabad, near India's capital New Delhi, the Academy is
operated under the aegis of the Central Board of Excise and Customs29

In order to fulfil these responsibilities, Customs officials monitor screens that relay live X-
ray images for hours on end. Many of the India’s customs officers are overworked,
undertrained and unsupervised. Customs officers aren’t trained to use X- ray machines. A
customs officer can be deployed at the X ray machines anytime during his/ her tenure. It
could be at an international airport or at the Express Council of India, or the courier terminal,
from where goods enter or exit the country. All goods meant for exports and imports are
accumulated at the Express Industry Council of India[EICI]. Therefore it becomes very
crucial that the customs officers are trained enough to operate such machines.

Generally there is a 12 long hours shift at EICI which is manned by two customs officers-
one junior, and one senior. Sometimes they fall asleep while on duty. Many instances
happened when the officer in charge of a particular shift dozed off while the goods passed
without being checked. Because of 12 hour long shifts the officer gets tired and exhausted
both mentally as well as physically which ultimately reduces their efficiency at work
place.Around 40 percent of the goods that enter or leave the country pass through three
centres of the Express Industry Council of India- located in Delhi, Mumbai and Hyderabad.
This means that 40 percent of our imports and exports are scanned by government employees
who work exhausting 12 hours shift.

29
Central Board of Excise and Customs". www.cbec.gov.in. Department of Revenue, Ministry of Finance.
Detecting gold and weapons on the X- Ray is relatively easier than detecting narcotics and
explosives like RDX. As per the data released by Directorate of Revenue Intelligence [DRI],
in the fiscal ending 2015, the all India value of gold seizures was Rs 1,119.11
crore( including seizures worth Rs 274.80 crore by the DRI alone). During the same time
period, the DRI seized Rs 365.56 crore worth of Narcotics- the highest in the last three
financial years.30

In our study we have observed that under KVSS[Kar Vivad Samadhan Scheme] the accused
gets completely exonerated from his liability by fulfilling the norms prescribed under the
scheme. A certificate of immunity is granted to him by a designated authority under section
94 of the said scheme. But it failed miserably in its second objective of realising the dues
much earlier by giving an abatement of 50 per cent of the duty and full waiver of penalty and
immunity from persecution. To this end, the Government sacrificed Rs. 624 crores to realise
just Rs. 400 crores.31

At the end we would like to conclude our study by quoting that the executive authorities
which in this case is Custom Tribunal who discharge Judicial functions otherwise known as
quasi judicial authorities must follow the principles of Natural Justice both in letter as well as
in sprit so as to prevent the miscarriage of justice.

30
www.cag.gov.in/...report.../Union_Compliance_In_Direct_Tax_Customs_Revenue
31
www.cbec.gov.in/htdocs-cbec/deptt_offcr/misc/
Bibliography-

1. P.V Jois, Customs and Excise Laws and Administrative Justice, Oxford University
Press
2. R.K. Jain’s, Custom Law Manual, Centax Publications Pvt. Ltd. (56th ed. 2016-17)
3. Thakur Shailendra Nath, Customs Law and Procedure for Importers and Exporters,
LexisNexis.
4. K.D. Gaur, Textbook on Indian Penal Code, Universal Law Publication, (6th ed.)
5. Justice K.T. Thomas and M.A. Rashid, Ratanlal and Dheerajlal The Indian Penal
Code, LexisNexis, (34th ed. 2014)