2013 (6) TMI 807 - HC - Customs

Customs Tribunal Upheld: Redemption of Seized Gold Allowed. Bond Required for Return. Separate Criminal & Departmental Proceedings.

The High Court upheld the Customs Tribunal's decision allowing redemption of seized gold biscuits upon payment of fines and duties. It rejected the ... - ISSUES PRESENTED AND CONSIDERED 1. Whether the provisions of Section 457 of the Code of Criminal Procedure permit return of goods seized by Customs authorities in a pending criminal prosecution under the Customs Act. 2. Whether an appellate departmental order permitting redemption of seized goods on payment of fine and duty operates to exonerate the accused or otherwise bar continuation of the parallel criminal prosecution. 3. Whether the criminal prosecution should be quashed under inherent or constitutional powers (including Section 482 CrPC) because of delay or by reason of the departmental appellate decision. 4. Whether Section 110A of the Customs Act prevents a criminal court from returning seized goods to the accused when the Customs appellate authority has permitted redemption and the accused has paid the fine and duty. 5. Under what conditions a trial court may release seized exhibits required for trial (including the nature and quantum of security) and the procedural directions appropriate where trial is pending but not commenced. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of Section 457 CrPC to Customs seizures and return of seized goods Legal framework: Section 457 CrPC deals generally with custody and disposal of exhibits in criminal cases; Customs seizures are regulated by the Customs Act and by customs-specific provisions governing confiscation, redemption and custody. Precedent treatment: No binding precedent in the judgment directly holding that Section 457 is inapplicable to Customs seizures was adopted; an earlier unreported High Court order was referred to by the Customs but not followed. Interpretation and reasoning: The Court examined whether Section 457 is the determinative provision and concluded the question is not strictly whether Section 457 applies, but whether the seized articles are required for trial. The Court emphasized the practical inquiry - whether the articles need to remain in custody for use as material evidence - rather than a formal exclusion of Section 457. Ratio vs. Obiter: Ratio - the magistrate may return seized goods when they are not necessary for trial, irrespective of technical applicability of Section 457 to customs seizures; Obiter - discussion that Section 457 'is not applicable' was treated as not decisive, the Court reframed the issue. Conclusions: Return of customs-seized goods to the accused is permissible where the court is satisfied the items are not required in evidence, subject to suitable conditions (bond, production when required). Issue 2 - Effect of departmental appellate order permitting redemption on criminal prosecution Legal framework: Customs Act permits departmental adjudication and appellate remedies including redemption of seized goods on payment of fine and duty; criminal prosecution under Customs Act is a separate statutory process. Precedent treatment: The Court distinguished the cited authority relied on by the petitioner (a decision finding exoneration in a departmental context) because factual and legal outcomes differed: redemption is not exoneration. Interpretation and reasoning: The Tribunal's order permitting redemption was held not to have exonerated the accused of allegations; rather it represented a lenient departmental outcome. Departmental and criminal proceedings are independent and may run concurrently; one does not automatically terminate the other unless the departmental outcome amounts to factual or legal exoneration. Ratio vs. Obiter: Ratio - a departmental appellate permission to redeem goods (on payment) does not, by itself, bar continuation of criminal prosecution; Obiter - leniency in departmental proceedings may be a factor in exercising judicial discretion regarding custody of exhibits. Conclusions: The appellate departmental direction to permit redemption does not preclude the magistrate from continuing criminal proceedings; however, it is a relevant circumstance when deciding whether seized goods should be returned on conditions. Issue 3 - Power to quash criminal prosecution for delay or in view of departmental order Legal framework: High Court's inherent and supervisory powers, including Section 482 CrPC, permit quashing in rare and exceptional cases where allegations, accepted on their face, do not disclose a cognizable offence or where continuation would amount to abuse of process; delay is a relevant but not automatically decisive factor. Precedent treatment: The Court reiterated settled principles that quashing is extraordinary and to be exercised sparingly; it distinguished situations warranting quash where allegations fail on their face from cases where factual disputes require trial adjudication. Interpretation and reasoning: The Court found the allegations in the complaint, if accepted, could make out an offence; contradictory admissions and retractions raise factual issues for trial. Delay in commencement was acknowledged but not deemed sufficient to quash where allegations prima facie sustain trial. Ratio vs. Obiter: Ratio - criminal proceedings will not be quashed merely because of delay or because a departmental authority reduced penalties or allowed redemption, unless exceptional circumstances show abuse of process or absence of offence on face of record; Obiter - guidance that quashing should be sparingly used. Conclusions: Petition to quash was rightly rejected; continuation of prosecution is permissible and necessary to resolve factual disputes despite departmental leniency and delay. Issue 4 - Impact of Section 110A of the Customs Act on return of seized goods by criminal court Legal framework: Section 110A (as referenced) relates to redemption and treatment of confiscated goods under the Customs Act; interplay between customs-specific provisions and the criminal courts' powers must be harmonized. Precedent treatment: The Court considered but rejected the contention that Section 110A ousts the criminal court's discretion to release seized goods when departmental authority has permitted redemption and the accused has paid required sums. Interpretation and reasoning: The Court reasoned that Section 110A does not operate as a bar to the Magistrate returning seized goods on condition of security and undertaking; the magistrate's duty is to ensure availability of exhibits for trial, and where that requirement can be satisfied by bond and condition, Section 110A does not preclude return. Ratio vs. Obiter: Ratio - Section 110A of the Customs Act does not preempt the criminal court's discretion to return seized goods where conditions ensure productions at trial; Obiter - observations on the interaction between departmental redemption and judicial custody. Conclusions: Section 110A did not prevent the Magistrate from returning goods upon bond where the departmental appellate authority had allowed redemption and the accused had paid fine and duty. Issue 5 - Conditions and procedural directions for release of seized exhibits pending trial Legal framework: Courts must balance the needs of fair trial (availability of exhibits) with rights of accused; security (bond) and undertaking to produce exhibits when required are traditional safeguards. Trial courts also have duty to proceed without undue delay, including framing of charge. Precedent treatment: The Court relied on established discretionary principles: exhibits may be released if not required for trial or if their production can be secured; release is subject to condition of production and preservation of nature and character. Interpretation and reasoning: Given that trial had not commenced, and exhibits were not yet marked, and the appellant had paid redemption amounts, the Court found retention in custody served no useful purpose if the accused furnishes adequate security to produce the goods unchanged for trial. The Court imposed a specific bond (Rs. 5 lakhs) and condition to produce goods when required, and directed expeditious framing of charge and completion of trial within fixed timeframes. Ratio vs. Obiter: Ratio - seized goods may be returned on furnishing of an adequate bond and undertaking to produce them unaltered for trial; courts can and should impose time-bound directions to prevent further delay. Obiter - suggested quantum of bond is case-specific; directions on timeframes are discretionary but pragmatic. Conclusions: The seized goods were ordered returned upon a Rs. 5 lakh bond conditioned on production in trial without altering nature/character; the trial court was directed to frame charge within one month and complete trial within six months on top priority basis.