An offence by the Customs Officer while on duty - Whether the provisions of customs act protect hem from Initiation of criminal proceedings under section 135 of the Customs Act, 1962 "

The appellant  was a Customs Officer.  He floated various firms in false and fictitious names.  Duty drawback amount was claimed for alleged export of readymade garments by the said firms under certain assumed names to the extent of Rs.1,04,62,596/-  Appellant herein alongwith others made statements under Section 8 of the Act corroborating the allegations made against them that they had conspired with each other in regard to export of  inferior quality of readymade garments which had been over-invoiced.

Cognizance of the said offence was taken by the Additional Chief Metropolitan Magistrate on 16^th April, 2003.

One of the contentions raised before the High Court was that the appellant being a Customs Officer could not have been proceeded against under Section 135 of the Act and, thus, the complainant committed a serious illegality in exercising his power of arrest as against him which is not contemplated under Section 104 thereof.  It was further more contended that the allegations made in the complaint petition even if taken to be correct in its entirety do not disclose an offence under Section 135 of the Act.

High Court, refused to quash the proceeding.

By reason of the 2003 Amendment, Section 135 was amended, which reads as under :-

""135. Evasion of duty or prohibitions.-

(1) Without prejudice to any action that may be taken under this Act, if any person,-

(a) is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods, or

(b) acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 or section 113, as the case may be, or,

(c) attempts to export any goods which he knows or has reason to believe are liable to confiscation under section 113, he shall be punishable,-

(i) in the case of an offence relating to any of the goods to which section 123 applies and the market price whereof exceeds one lakh of rupees, with imprisonment for a term which may extend to seven years and with fine:

Provided that 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 three years;

(ii)  in any other case, with imprisonment for a term which may extend to three years or with fine, or with both.

(2) If any person convicted of an offence under this section or under sub-section (1) 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 for a term which may extend to seven years and with fine:

Provided that 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.

(3)  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 an offence 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.""

After detailed discussion and findings, the honorable Supreme Court (in this case reported in 2008 -TMI - 3598 - SUPREME COURT) has observed that,

""It is also a trite law that the Court while interpreting a statute must consider the purpose for which the Act has been enacted.  (See - Indian Handicraft Emporium and others vs. Union of India and others :   (2003) 7 SCC 589 and Balram Kumawat  vs. Union of India :  (2003) 7 SCC 628. 

At this stage the court is concerned with establishment of a prima facie case.  As the allegations made in the complaint prima facie discloses an offence under Section 135 of the Act, the High Court, in our view, has correctly refused to quash the proceeding."" 

(For full text of judgment visit - 2008 -TMI - 3598 - SUPREME COURT)

Evasion of duty: criminal proceedings may be initiated against customs officers where complaint prima facie discloses an offence. Allegations that a customs officer and others used fictitious firms to claim duty drawback on over invoiced exports and made corroborative statements raised charges under the amended evasion provision which criminalises knowing participation in fraudulent evasion, dealing in goods liable to confiscation, and attempted export of such goods; on a prima facie consideration the court found the complaint discloses an offence and refused to quash proceedings.