TaxTMI 
TaxTMI 
2017 (1) TMI 1066
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....f the petitioner from custody pursuant to an arrest and detention for violation of the provisions of the Customs Act. In the Writ Petition eight reliefs have been prayed for, the 8th relief being a residuary one praying to pass any further orders which the Court may deem fit and proper to issue in the interests of justice. The learned senior counsel for the petitioner submitted that the petitioner is not pressing relief (VII) at this stage and that the questions involved with respect to reliefs (V) and (VI) may be kept open with liberty to the petitioner to invoke those reliefs at the appropriate stage. That means, for the purpose of disposal of this Writ Petition, we need to confine to reliefs (I) to (IV). For the sake of convenience, reliefs (I) to (IV) are extracted hereunder: "I. Issue appropriate Writ, Order or directions quashing and setting aside the Arrest Memo dated 18.6.2015 bearing No.O.R.No.4/15, whereby, Respondent No.2 has arrested the petitioner in purported exercise of powers under Section 104 of the Customs Act, 1962 and consequential proceedings arising therefrom including the orders dated 18.6.2015 (Exhibit P4) and 24.6.2015 (Exhibit P6) passed by the Learned ....
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.... Drawback and other Export incentives by mis-declaring the material particulars whereby huge loss was caused to the government exchequer, the Directorate of Revenue Intelligence searched the office, godown and residence premises of M/s.R.Kishin & Co., Mumbai on 16.6.2015. Several incriminating documents were recovered during the search. Statements under Section 108 of the Customs Act, 1962 were recorded from the petitioner on 16.6.2015 and 18.6.2015 wherein he admitted that he had fraudulently availed drawback and other export incentives by mis-declaring the actual value and status of the goods exported. He admitted that he had imported Footballs, Gloves and Golf balls exported by him in the name of R.Kishin & Co., through Cochin Port under drawback scheme in the name of another company, M/s.Ambe Traders, Mumbai at a very low value through Nhava Sheva Port and which he had utilized for export again by repacking the goods at a godown at Panvel. He admitted the modus of rotating the same goods again and again for fraudulently availing ineligible drawback during the period 2012-2015. 4. In the occurrence report submitted by the Senior Intelligence Officer, D.R.I., Cochin before the....
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....ing 2007-2012, goods worth Rs. 440 crores were exported through the Port of Nhava Sheva. An amount of Rs. 35 crores approximately has been estimated to be the drawback. The benefits under the Focus Product Scheme to the tune of Rs. 32 crores were also availed by the petitioner through his firms M/s.R.Kishin & Co. and M/s.R.P.Trading Co. The Division Bench passed an order of interim bail dated 31.7.2015 in favour of the petitioner. For the sake of convenience, the relevant part of the order dated 31.7.2015 is extracted below: "6. Considering the nature of argument, we are of the view that by imposing certain conditions, interim bail can be granted to the petitioner, particularly, when the learned counsel for the 2nd respondent, on instructions, submitted that adequate conditions may be imposed. In the result, there will be an interim order granting interim bail to the petitioner and the Court of Additional Chief Judicial Magistrate (EO), Ernakulam, is directed to release the petitioner on bail on the following conditions: 1. The petitioner shall execute a bond for Rs. 50,000/- with two solvent sureties each for the like amount to the satisfaction of the learned Chief Judici....
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....y submitted that under the Customs Act, there is no provision to file a complaint. If so, with respect to a non-cognizable offence, a complaint can be filed only under the Code of Criminal Procedure. In the case of a cognizable offence, the customs authorities have to register First Information Report under Section 154 of the Cr.P.C., send a copy of the FIR to the jurisdictional Magistrate under Section 157 of the Cr.P.C., conduct investigation, maintain case diary under Section 172 of the Cr.P.C. and file a final report under Section 173(2) of the Cr.P.C. 9. Sri.Vikram Chowdhary submitted that unless the Customs Act contain specific provisions to the contrary, the offences under the Act shall be investigated, inquired into, tried or otherwise dealt with according to the provisions contained in the Code of Criminal Procedure, as provided in Section 4 of the Cr.P.C. The learned counsel relied on the decisions of the Supreme Court in Om Prakash and another v. Union of India and another ((2011) 14 SCC 1); Lalitha Kumari v. Government of Uttar Pradesh and others ((2014) 2 SCC 1); State of Haryana and others v. Bhajan Lal and others (1992 Supp.(1) SCC 335); Subodh Singh Modak v. The ....
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....nit (1984 KLT 215); Superintendent of Customs v. Ummerkutty and others (1984 KLT 1); Percy Rustomji Basta v. State of Maharashtra (AIR 1971 SC 1087); Poolpandi and others v. Superintendent of Central Excise and others ((1992) 3 SCC 259); Veera Ibrahim v. State of Maharashtra ((1976) 2 SCC 302); Directorate of Enforcement v. Deepak Mahajan and another ((1994) 3 SCC 440); Union of India v. Padam Narain Aggarwal (AIR 2009 SC 254); Sunil Gupta v. Union of India (2000 (118) E.L.T. 8 (P & H)); Bhavin Impex Pvt. Ltd. v. State of Gujarat (2010 (260) E.L.T. 526); Prashant J. Mehta v. Directorate of Revenue Intelligence (2013 (3) KLT 764); Noor Aga v. State of Punjab ((2008) 16 SCC 417); Tofan Singh v. State of Tamil Nadu ((2013) 16 SCC 31); Nirmal Singh Pehlwan alias Nimma v. Inspector, Customs, Customs House, Punjab ((2011) 12 SCC 298); State of Orissa v. Sudhansu Sekhar Mishra (AIR 1968 SC 647); Amrendra Pratap Singh v. Tej Bahadur Prajapati and others ((2004) 10 SCC 65); Girnar Traders v. State of Maharashtra and others ((2007) 7 SCC 555); Arun Kumar Aggarwal v. State of M.P. and others ((2014) 13 SCC 707); State of U.P. and another v. Synthetics and Chemicals Ltd. and another ((1991) 4 ....
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....) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under section 135 relating to -- (a) evasion or attempted evasion of duty exceeding fifty lakh rupees; or (b) prohibited goods notified under section 11 which are also notified under sub-clause (C) of clause (i) of sub-section (1) of section 135; or (c) import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds one crore rupees; or (d) fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees, shall be non-bailable." Sub-section (7) provides that save as otherwise provided in subsection (6), all other offences under the Act shall be bailable. 12. The expression "any person" occurring in sub-section (1) of Section 104 indicates that he need not be an accused. It is sufficient that if an officer of the customs has reason to believe that the person concerned has committed an offence punishable under Section 132 or S....
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....an Penal Code. Arrest under Section 104 can be made by any empowered customs officer whereas the evidence to be taken under Section 108 shall be by any Gazetted Officer of customs. The expression "to state the truth" occurring in sub-section (3) of Section 108 gives a clear indication that the person who is summoned is not an accused, since an accused cannot be compelled to state the truth. If he is so compelled, the theory of testimonial compulsion will apply. By the arrest under Section 104 alone, the person concerned does not become an accused. So also, even after arrest, the person concerned can be asked to give a statement under Section 108 of the Customs Act. If it is insisted that a First Information Report should be registered against the person concerned immediately on getting information of any violation, taking a statement under Section 108 thereafter would not be possible and it would be unconstitutional and illegal. On the other hand, even after arrest under Section 104, the person concerned can be directed to give a statement under Section 108 of the Customs Act. 14. The provision in Section 104(2) of the Customs Act that every person arrested shall, without unnece....
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.... of Cr.P.C., the power of the State Government in certain contingencies is contemplated. There is no such power for the State Government to issue such directions in a customs case. 15. The learned senior counsel appearing for the petitioner heavily relies on Section 4(2) of Cr.P.C. which provides that all offences (other than offences under the Indian Penal Code) under any law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. The learned Additional Solicitor General submitted that under the Scheme of Section 104 of the Customs Act, a Customs Officer is invested with certain powers which a police officer has under the Code of Criminal Procedure and nothing more. In respect of Section 104(3) of the Customs Act, the provisions of the Code of Criminal Procedure are made applicable only for the purpose of releasing a person on bail or otherwise. For contravention of a provision under the Customs Act, a person can be arrested immediately. It is not necessary to regi....
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....gnizable offence, if given to an officer in charge of a police station, shall be reduced to writing and shall be entered in a book to be kept by such officer in such form as the State Government may prescribe. On the other hand, Sections 104, 105 and 106 of the Customs Act use the expression "has reason to believe" in the matter of arrest, search of premises and search of conveyances. "The reason to believe" is with respect to commission of an offence under the Customs Act; or reason to believe that the goods are liable for confiscation; or has reason to believe that any aircraft, vehicle or animal or vessel is being or is about to be used in the smuggling of any goods or in the carriage of any goods which have been smuggled, as the case may be. Going by the Scheme of the Customs Act, a search or seizure or arrest of a person need not necessarily lead to the prosecution of the person concerned. It may end in confiscation of the goods, imposing a penalty in adjudication proceedings or it may end up in compounding of the offence. Only in a very few cases detected, it may end in prosecution of the offender. The machinery under the Customs Act is intended to check evasion of duty, smug....
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....Customs Act. Every offence under the aforesaid Sections, as a matter of course, does not lead to prosecution. Only if sanction is granted, a prosecution can be launched against an offender under the aforesaid Sections. 18. Offences under the Customs Act are committed or detected mainly at airports, seaports and other places where dutiable goods under the Customs Act are dealt with, whereas offence under the Indian Penal Code may take place at any place. An offence under the Customs Act mainly affects the economy whereas an offence under the Indian Penal Code mainly affects the person and property of individuals. That distinction also has to be borne in mind while considering the question whether all the provisions of the Code of Criminal Procedure should be followed in the matter of every customs offence and every customs violation. 19. After collecting all the materials with respect to the offence the officer of the Customs is not expected to file a final report before Court, as provided under Section 173(2) of Cr.P.C.. What is to be done by the officer of the Customs is to file a complaint before the Court concerned, going by the Scheme of the Customs Act. When a matter com....
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.... offences as cognizable. Relying on Ramesh Chandra Mehta v. The State of West Bengal (AIR 1970 SC 940), it was held that officers under the Customs Act are not police officers. It was also held that since all the offences under the Act are non-cognizable, the Customs Officer will have no authority to make arrest without obtaining a warrant. We do not think that the decision in Om Prakash's case would help the petitioner to contend that in a customs case it is necessary to register a FIR and after investigation, a final report should be filed under Section 173(2) of Cr.P.C. In the present case, the offence is a cognizable offence. At the time when the decision in Om Prakash's case was rendered, an offence under the Customs Act was not cognizable. So also, categorisation of cases which are non-bailable and cases which are bailable was not there before the amendment of Section 104 by Act 23 of 2012 and Act 17 of 2013. We do not think that the decision in Om Prakash's case would apply to the facts of the present case. 21. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what lo....
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....ents made to them were not inadmissible under Section 25 of the Indian Evidence Act. In Ramesh Chandra Mehta v. The State of West Bengal (AIR 1970 SC 940), a constitution bench of the Supreme Court held: "5. ....... For collecting evidence the Customs Officer is entitled to serve a summons to produce a document or other thing or to give evidence, and the person so summoned is bound to attend either in person or by an authorized agent, as such officer may direct, and the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes a statement and to produce such documents and other things as may be required. The power to arrest, the power to detain, the power to search or obtain a search warrant and the power to collect evidence are vested in the Customs Officer for enforcing compliance with the provisions of the Sea Customs Act. For purpose of Sections 193 and 228 of the Indian Penal Code the enquiry made by a Customs Officer is a judicial proceeding. An order made by him is appealable to the Chief Customs- authority under Section 188 and against that order revisional jurisdiction may be exercised by the Chief Customs - authority and a....
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....r any other thing, and by clause (3) the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents and other things as may be required. The expression "any person" includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling is not, when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an inquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Sea Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of Customs: when collecting evidence in respect of smuggling against a person suspected of infringing the p....
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....evisional jurisdiction of the Central Board of Revenue and may be carried to the Central Government. Powers are conferred upon him primarily for collection of duty and prevention of smuggling. He is for all purposes an officer of the revenue. 25. For reasons set out in the judgment in Criminal Appeal No.27 of 1967 and the judgment of this Court in Badaku Joti Savant's case, 1966-3 SCR 698 = (AIR 1966 SC 1746), we are of the view that a Customs Officer is under the Act of 1962 not a police officer within the meaning of Section 25 of the Evidence Act and the statements made before him by a person who is arrested or against whom an inquiry is made are not covered by Section 25 of the Indian Evidence Act." 25. In Illias v. The Collector of Customs, Madras (AIR 1970 SC 1065), a constitution bench of the Supreme Court held: "12. ....... After examining the various provisions of the Central Excise Act and in particular Section 21 it was observed that a police officer for the purpose of clause (b) of Section 190 of the Code of Criminal Procedure could only be one properly so called. A Central Excise Officer had to make a complaint under Cl.(1) of Section 190 of the Code to a magis....
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...., and after due compliance with the requirements of law, the Inspector of Customs questioned the appellant and recorded his statement under Section 108 of the Customs Act. The Supreme Court held that under the circumstances it was manifest that at the time when the customs officer recorded the statement of the appellant, he was not formally "accused of any offence" and therefore, his statement is not hit by Article 20(3) of the Constitution. 30. In Directorate of Enforcement v. Deepak Mahajan and another ((1994) 3 SCC 440), the question of law raised for consideration by the Supreme Court was the following: "Whether a Magistrate before whom a person arrested under sub-section (1) of Section 35 of the Foreign Exchange Regulation Act of 1973 which is in pari materia with sub-section (1) of Section 104 of the Customs Act of 1962, is produced under sub-section (2) of Section 35 of the Foreign Exchange Regulation Act, has jurisdiction to authorise detention of that person under Section 167(2) of the Code of Criminal Procedure?" 31. Answering the above question, the Supreme Court in Deepak Mahajan's case held thus: "116. It should not be lost sight of the fact that a poli....
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....s (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA." 32. In Union of India v. Padam Narain Aggarwal (AIR 2009 SC 254), it was held that the power to arrest a person by a Customs Officer is statutory in character and cannot be interfered with. Referring to Section 108 of the Customs Act, it was held that Section 108 does not contemplate magisterial intervention. The power is exercised by a Gazetted Officer of the Department. It obliges the person summoned to state truth upon any subject respecting which he is examined. He is not absolved from speaking truth on the ground that such statement is admissible in evidence and could be used against him. Section 108 of the Customs Act enables the officer to elicit truth from the person examined. The underlying object of Section 108 is to ensure that the officer questioning t....
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....as held to have no authority to arrest without warrant in non-cognizable offence under Central Excise Act 1944 in light of section 155 of the Code." 34. The Gujarat High Court in Bhavin Impex Pvt. Ltd. v. State of Gujarat (2010 (260) E.L.T. 526 (Guj.), considered the question whether the authorities under the Central Excise Act, 1944 have the power to arrest a person under Section 13 of the said Act without a warrant and without filing an FIR or lodging a complaint before a Court of competent jurisdiction. The Gujarat High Court held that mere conferment of powers of investigation into criminal offences under the Central Excise Act does not make the Central Excise Officer a police officer. It was further held: "26, From the decisions referred to hereinabove, the following principles emerge:- ........ (v) Where a Customs Officer arrests a person and informs that person of the grounds of his arrest (which he is bound to do under Article 22(1) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In case of an offence by....
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.... state the truth. 16. The main argument of the counsel for the petitioners was that despite the provisions of Section 9, it has been provided in Section 9A that the offences "shall be deemed to be non-cognizable ...." Section 18 requires that arrest made under this Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure ......." Thus, no arrest can be made by an officer of the Central Excise except by following the procedure applicable to the cases involving noncognizable offences under the Code of Criminal Procedure. Is it so? 17. In terms of the provisions of Section 2(c) of the Code of Criminal Procedure, a cognizable offence is one "for which ....... a police officer may ...... arrest without warrant." Similarly, according to Section 2(l), a non-cognizable offence is that "for which ...... a police officer has no authority to arrest without warrant." Despite the fact that punishment for offences under Section 9 may extend to imprisonment for seven years, these are deemed to be non-cognizable within the meaning of Code of Criminal Procedure, 1898. When the provisions are literally construed, the implication is merely that a police offic....
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.... correct. This appeal is, accordingly, dismissed." Learned Additional Solicitor General submitted that the principles laid down in Gorav Kathuria v. Union of India and others are against the several decisions of the Supreme Court and the decision of the Punjab and Haryana High Court in Sunil Gupta v. Union of India (2000 (118) E.L.T. 8 (P&H)) and the decision of the Gujarat High Court in Bhavin Impex Pvt. Ltd. v. State of Gujarat (2010 (260) E.L.T. 526 (Guj.). The Additional Solicitor General also submitted that the Criminal Appeal filed before the Supreme Court was not by the Department but Gorav Kathuria, the petitioner in the writ petition. However, the Criminal Appeal was dismissed. It is submitted that there is no finding by the Supreme Court against Union of India. We are inclined to accept the submissions made by the learned Additional Solicitor General in this regard. 39. On applying the principles of law mentioned in the judgments of the Supreme Court and other High Courts mentioned above, we are of the view that registration of FIR is not necessary before arresting a person under Section 104 of the Customs Act. Sections 154 to 157 and Section 173(2) of the Code o....