2019 (10) TMI 852 - HC - Customs

DRI investigation under Customs Act invalidated for non-compliance with procedural safeguards

Adani Enterprises Limited, Adani Power Limited Versus Union of India, Directorate of Revenue Intelligence, State of Maharashtra

The court held that the Directorate of Revenue Intelligence (DRI) investigation against the petitioner for alleged offenses under the Customs Act was not ... Over-Valuation - Coal of Indonesian Origin - Offence punishable under Section 135 of the Customs Act, 1962 - legality and validity of commencement of the investigation against the petitioner - issuance of the Letter of Rogatory by the Magistrate - provisions of Section 166-A of the Code of Criminal Procedure, 1973 - period from October 2010 to March 2016. Whether it was permissible for the Magistrate to issue such a Letter of Rogatory without following the procedure mandates by sub-section (2) of Section 155 and whether the letter of Rogatory was issued on initiation of a valid investigation under Chapter XII of Cr.P.C.? HELD THAT:- Though the Customs Act, 1962 classifies the offence punishable thereunder as cognizable/non-cognizable, it do not lay down any set of procedure for dealing with the information received by the Custom Officer for proceeding under the provisions of the Act. It also do not define the term “cognizable/non-cognizable” and in absence of such a definition, the terms take the meaning assigned in the Code of Criminal Procedure. In absence of any set of procedure for commencing the so-called ‘investigation’ in words of the learned senior counsel Shri Maninder Singh, though the statute applies the phrase ‘inquiry’ for commencing conducting and culminating a valid investigation into the distinct classes of offences, the position that would therefore emerge is to resort to sub-section (2) of Section 4 in relation to an investigation into an offence under the special statute and in absentia of any provision setting out the modalities for commencing, conduct and culmination of investigation. In absence of any overriding provision in the Customs Act, stipulating any contrary procedure, relating to an information received and the manner in which the Custom Officer, who for limited purpose posses the power of a police officer, by virtue of Section 4(2) of the Code, the respective provisions in the Code relating to dealing with the information requiring an inquiry/investigation into the offences classified as cognizable/non-cognizable shall necessarily follow. In ILLIAS VERSUS COLLECTOR OF CUSTOMS, MADRAS [1968 (10) TMI 48 - SUPREME COURT], the Constitution Bench has held that the custom authorities have been invested with many powers akin to that of a police officer in matter relating to arrest, investigation and search which was not there in the earlier Customs Act. Even though the custom officers possess the said power, they do not become police officials within the meaning of Section 25 of the Evidence Act and it was held that the confessional statements made by the accused persons to custom officers would be admissible in evidence against them. Since we are of the express opinion that Section 166A is not an independent island on which any investigating/inquiring authority can jump on without taking recourse to Section 154/155, we hold and declare that the action of the respondents in giving effect to the letter of Rogatory issued by the learned Metropolitan Magistrate, Mumbai in relation to the import of coal of Indonesian origin cannot be sustained and it deserves to be quashed and set aside. Petition allowed. Issues Involved:1. Legality of the Directorate of Revenue Intelligence (DRI) investigation under Section 135 of the Customs Act, 1962.2. Validity of the issuance of a Letter of Rogatory under Section 166-A of the Code of Criminal Procedure (Cr.P.C.), 1973.3. Applicability of the procedural safeguards under Chapter XII of the Cr.P.C. to the Customs Act.Detailed Analysis:1. Legality of the DRI Investigation:The pivotal issue in the writ petition was whether the DRI legally and validly commenced the investigation against the petitioner for alleged offenses under Section 135 of the Customs Act, 1962. The petitioner was accused of overvaluing Indonesian coal imports to siphon money abroad and avail higher power tariff compensation. The DRI alleged misdeclaration of grade and value, making the goods liable for confiscation under Section 111(m) of the Customs Act, and the persons involved liable for penalties under Sections 112(b)(iii) and 114AA. The DRI also alleged that the petitioner’s actions fell under Section 132 for making false declarations, which could lead to imprisonment for up to 7 years.2. Validity of Issuance of Letter of Rogatory:The DRI sought a Letter of Rogatory from the Additional Chief Metropolitan Magistrate, Mumbai, to secure information from authorities in Singapore, UAE, Hong Kong, and British Virgin Islands. The petitioner challenged the issuance of the Letter of Rogatory on the grounds that the investigation was not commenced under Chapter XII of the Cr.P.C., which mandates procedures under Sections 154 and 155 for cognizable and non-cognizable offenses, respectively. The court examined whether the DRI could invoke Section 166-A of the Cr.P.C. without following these procedural safeguards.3. Applicability of Procedural Safeguards:The court analyzed the interplay between the Customs Act and the Cr.P.C., noting that the Customs Act does not provide a detailed procedure for commencing investigations into cognizable or non-cognizable offenses. The court referred to Section 4(2) of the Cr.P.C., which states that all offenses under special laws shall be investigated according to the provisions of the Cr.P.C., unless the special law provides otherwise. The court emphasized that the Customs Act classifies offenses as cognizable or non-cognizable but does not prescribe the procedure for dealing with information received by the Customs Officer.The court relied on precedents, including the Supreme Court's judgment in Directorate of Enforcement vs. Deepak Mahajan, which held that in the absence of a special procedure in a special enactment, the provisions of the Cr.P.C. would apply. The court concluded that the DRI's investigation into a non-cognizable offense without obtaining permission from the Magistrate, as required under Section 155(2) of the Cr.P.C., was not valid. Consequently, the issuance of the Letter of Rogatory by the Magistrate did not meet the procedural requirements of Chapter XII of the Cr.P.C.Conclusion:The court held that the DRI's investigation was not validly commenced as it did not follow the mandatory procedural safeguards under Chapter XII of the Cr.P.C. The issuance of the Letter of Rogatory was quashed and set aside. The writ petition was allowed, and the actions of the respondents in giving effect to the Letter of Rogatory were declared unsustainable.