2025 (4) TMI 1101 - HC - Customs

Petition dismissed for quashing complaint against cigarette smuggling worth Rs 74 lakhs under customs law

Mr. Mohammed Muzzamil Versus Union of India

The Telangana HC dismissed a petition seeking quashment of a complaint filed under Section 200 CrPC for smuggling foreign cigarettes worth Rs. 74 lakhs ... Seeking for quashment of the complaint filed under Section 200 of the Code of Criminal Procedure Code, 1973 - smuggling of foreign made cigarettes in the guise of importing of electronic goods and computer parts - competent authority to grant sanction of prosecution - limitation in terms of Section 468 Cr.P.C/corresponding Section 514 of BNSS - maintainability of filing of the complaint case now beyond a period of three years. Value of the alleged smuggled goods being less than Rs. 2 crores in terms of Circular of the Customs Department dated 16.08.2022, the prosecution is liable to be dropped - HELD THAT:- On reading Clause 3.1(ii) it will clearly indicate that the Circular so far as the sanction for prosecution in respect of goods notified under Section 123 of the Act, the threshold value of the products have to be not more than Rs. 50.00 lakhs and it is Clause 3.1 which would be applicable in the case of the petitioners and not Clause 3.2. In the opinion of this Bench, Clause 3.2 is in relation to importation of trade goods which can be brought within the ambit of appraising cases where the importer makes certain willful mis-declaration in respect of the value as also in respect of the description of the goods, which is not attracted in the instant case. The petitioners herein have tried to import foreign made cigarettes worth more than Rs. 74.00 lakhs in the guise of importing electronic and computer parts. Thus, the contention of the petitioners that Clause 3.2 of the said Circular being attracted is not sustainable and the same is rejected. Additional Director General who has granted sanction for prosecution was competent authority or not - HELD THAT:- The learned Senior Standing Counsel for the Department drew the attention of this Court to the Circular dated 23.10.2015, whereby it has been explained in very categorical terms in Clause 4.6 and 7.1, both of which are reproduced hereunder to find that the Additional Director General also is one of the competent authorities who has been permitted to grant sanction except in respect of certain category of cases which stands covered under Clause 4.2.1.2 and 4.2.2 - The present case, therefore, does not fall under Clause 4.2.1.2 and 4.2.2. Hence, the said ground of the petitioners also is not sustainable and is answered in the negative. The filing the complaint case in August, 2023 is barred by limitation in terms of Section 468 Cr.P.C/corresponding Section 514 of BNSS - HELD THAT:- The petitioners have been prosecuted in addition to the offence under Section 132, also for the offences punishable under Section 135(1)(a) and 135(1) (b) of the Act and the same are punishable under Section 135(1)(i) (B) & (C) where the punishment may be extended up to seven years with fine. Keeping that in view, on reading Section 468 Cr.P.C.,/corresponding Section 514 of BNSS, it would reflect that the period of limitation prescribed for an offence is only up till three years and that there is no limitation provided for an offence with a sentence of more than three years and as such the said period of limitation as is prescribed under Section 468(a) Cr.P.C.,/corresponding Section 514 of BNSS would not be applicable in the instant case. Conclusion - No strong case is made out by the petitioners calling for interference to the prosecution case initiated by the complainant/the respondent department. Nonetheless, insofar as criminal case having been instituted against the petitioners, the right of the petitioners to avail appropriate legal recourse available to them under the provisions of Cr.P.C.,/BNSS would be still left open. Petition dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court in this matter are:(i) Whether the prosecution initiated against the petitioners under Sections 132, 135(1)(a), and 135(1)(b) of the Customs Act, 1962, is liable to be quashed on the ground that the value of the alleged smuggled goods is below the monetary threshold prescribed in the Customs Department Circular dated 16.08.2022;(ii) Whether the Additional Director General who granted sanction for prosecution on 28.11.2020 was a competent authority to do so under the relevant Circular and legal provisions;(iii) Whether the complaint filed in August 2023 is barred by limitation under Section 468 of the Code of Criminal Procedure, 1973 (Cr.P.C.) and the corresponding Section 514 of the BNSS;(iv) Whether the offences charged, being punishable for a maximum period of two years, render the complaint filed beyond three years from the alleged offence date as not maintainable.2. ISSUE-WISE DETAILED ANALYSISIssue (i): Applicability of Monetary Threshold for Prosecution under Customs Department Circular dated 16.08.2022The petitioners contended that since the value of the smuggled goods was less than Rs. 2 crores, prosecution should be dropped as per the Circular dated 16.08.2022 issued by the Customs Department. The Circular revised the threshold limits for launching prosecution in various categories of cases.The Circular delineates two relevant categories:Clause 3.1: Baggage and outright smuggling cases, prescribing a threshold of Rs. 50 lakhs for unauthorized importation of goods including those notified under Section 123 of the Customs Act, 1962;Clause 3.2: Appraising cases/commercial frauds involving wilful mis-declaration or concealment of goods, prescribing a threshold of Rs. 2 crores.The Court noted that cigarettes were notified under Section 123 of the Customs Act by a notification dated 25.07.2016. The smuggling involved foreign-made cigarettes worth approximately Rs. 74.44 lakhs. Therefore, Clause 3.1(ii) of the Circular applies, which sets a threshold of Rs. 50 lakhs for outright smuggling of goods notified under Section 123. The petitioners' reliance on Clause 3.2 was rejected because that clause pertains to appraising cases involving wilful mis-declaration, which was not the case here.The Court concluded that the prosecution is not liable to be dropped on the ground of monetary threshold as the value of the smuggled cigarettes exceeded Rs. 50 lakhs, and Clause 3.1(ii) is applicable.Issue (ii): Competency of Additional Director General to Grant Sanction for ProsecutionThe petitioners challenged the sanction granted by the Additional Director General (ADG) on the ground that he was not the competent authority under the law.The Court examined Circular No. 27/2015-Customs dated 23.10.2015, specifically Clauses 4.6 and 7.1, which clarify the authorities competent to grant prosecution sanction. Clause 4.6 states that except for certain categories of cases (covered under sub-paras 4.2.1.2 and 4.2.2), prosecution may be launched after sanction by the Commissioner/Principal Commissioner or Additional Director General/Principal Additional Director General of Revenue Intelligence. The requirement of prior approval from higher authorities applies only to the specified categories.Since the present case does not fall under the exceptions, the ADG was competent to grant sanction. Clause 7.1 further outlines the procedural requirements for investigation reports and sanction approvals, confirming the ADG's role.The Court rejected the petitioners' contention and held the sanction by the ADG to be valid and competent.Issue (iii): Limitation for Filing Complaint under Section 468 Cr.P.C./Section 514 BNSSThe petitioners argued that the complaint filed in August 2023 was barred by limitation under Section 468 Cr.P.C. and the corresponding Section 514 of BNSS.The Court noted that the offences charged include Sections 132, 135(1)(a), and 135(1)(b) of the Customs Act. The offences under Sections 135(1)(i)(B) and (C) attract punishment extending up to seven years with fine.Section 468 Cr.P.C. prescribes a limitation period of three years for offences punishable with imprisonment up to three years. For offences punishable with imprisonment exceeding three years, no limitation period is prescribed.Therefore, since the offences here attract punishment beyond three years, the limitation period under Section 468 Cr.P.C. does not apply, and the complaint is not barred by limitation.The petitioners' reliance on a Single Bench judgment where the market value was less than Rs. 50 lakhs was found inapplicable given the higher value in the present case. Similarly, reliance on another judgment which did not deal with goods notified under Section 123 was held to be distinguishable.Issue (iv): Maintainability of Complaint Beyond Three Years for Offences Punishable up to Two YearsThe petitioners contended that since the offences are punishable for a maximum of two years, the complaint filed after more than three years from the alleged offence date is not maintainable.The Court observed that the offences under Sections 135(1)(a) and (b) are punishable with imprisonment extending up to seven years, as per Sections 135(1)(i)(B) and (C). Therefore, the limitation period of three years does not apply.The Court rejected this ground as well.3. SIGNIFICANT HOLDINGS'Vide notification dated 25.07.2016, cigarettes and silver bullion have been notified under Section 123 of the Act. In the light of the said notification, if we read Clause 3.1(ii) it will clearly indicate that the Circular so far as the sanction for prosecution in respect of goods notified under Section 123 of the Act, the threshold value of the products have to be not more than Rs. 50.00 lakhs and it is Clause 3.1 which would be applicable in the case of the petitioners and not Clause 3.2.''Except in respect of cases covered by sub-paras 4.2.1.2 and 4.2.2 above, in all other cases, prosecution may be launched after due sanction by the Commissioner/ Principal Commissioner (Pr.Commr.) or Additional Director General (ADGRI)/Principal Additional Director General of Revenue Intelligence (Pr.ADGRI), as the case may be.''Section 468 Cr.P.C. prescribes that the period of limitation is only up till three years for offences punishable with imprisonment up to three years. Since the offences charged attract punishment exceeding three years, the limitation period does not apply.'The Court established the principle that the monetary threshold for launching prosecution under the Customs Department Circular must be applied in accordance with the category of goods involved, particularly taking into account notifications under Section 123 of the Customs Act.The Court affirmed that the Additional Director General is a competent authority to grant sanction for prosecution except in specified categories.The Court clarified that limitation under Section 468 Cr.P.C. does not bar prosecution for offences punishable with imprisonment exceeding three years, even if the complaint is filed beyond three years from the date of the offence.Accordingly, the Court dismissed the writ petition seeking quashment of the complaint and prosecution, leaving open the petitioners' right to pursue appropriate remedies under the law.