TaxTMI 
TaxTMI 
2023 (9) TMI 185
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....he petitioners besides return of documents/records; ii) to declare Section 6(5)(b) of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as, 'PMLA') as unconstitutional or alternatively to read down the said provision by holding that the Bench of the Adjudicating Authority may be constituted by the Chairperson with two or more Members including one Judicial Member; and iii) to declare Section 6(7) of PMLA as unconstitutional or in the alternatively to read down the said provision to mean that if at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of more than two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer to such Bench as the Chairperson may deem fit. 3. However, at the time of hearing, learned Senior Counsel for the petitioners confined his arguments to prayer No. (i) above, that too, on two grounds which we will advert to in the course of the judgment. 4. At the outset, it would be apposite to briefly mention the facts as pleaded in ....
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....PMLA at the business premises of petitioners No. 2 and 3 as well as their partners and directors and seized certain documents and property. Following the same, respondent No. 1 passed a freezing/debit freeze order dated 11.10.2021 under Section 17(1A) of PMLA, thus freezing all the bank accounts of the petitioners. 5.6. Petitioners have alleged that copy of the freezing order dated 11.10.2021 was not served upon them. They became aware of the freezing order only when they tried to operate their bank accounts for regular business operations. However, petitioners were communicated the freezing order by respondent No. 1 only on 21.10.2021. 5.7. Be that as it may, on 27.10.2021 respondent No. 1 filed original application under Section 17(4) of PMLA before the Adjudicating Authority seeking retention of the record and property seized and continuation of the freezing order dated 11.10.2021. 5.8. Petitioners have stated that in the meanwhile, W.P. Nos. 26535 of 2021 and 26543 of 2021 were filed before this court wherein this court had passed a common order on 29.10.2021 directing the Enforcement Directorate to defreeze all the bank accounts of the Sri Krishna Group of Companies f....
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.... void. Further reference has been made to Regulation 26 of the Adjudicating Authority (Procedure) Regulations, 2013. 6.3. Petitioners have also questioned the vires of Sections 6(5)(b) and Section 6(7) of PMLA being contrary to Section 6(2) of PMLA as well as being arbitrary, as it is contended that those two provisions are violative of Article 14 of the Constitution of India. It is incomprehensible that when the Adjudicating Authority discharges quasi judicial functions, it can comprise of only a single Member, that too a technical member deciding intricate questions of law. 6.4. Petitioners have further contended that the requirements of Sections 17(1) and 17(1A) of PMLA are not satisfied. Therefore, respondents could not have taken action under the aforesaid provisions. 6.5. Relatable to the above ground is the contention that there was no reason to believe for invoking power under Section 17 of PMLA. 6.6. It is also contended that there was no material on record to draw an inference that petitioners had derived any property as a result of criminal activity relating to a scheduled offence. 6.7. Additionally, it is contended that show cause notice under Section 8(1....
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....na Jewellers Private Limited by the DRI officers. The search revealed that the consignment was meant for export to M/s. Krishe Hong Kong; the gold content declared was 19,374 grams, whereas the government approved valuer's report said that it was just 565 grams. The weight of semi-precious stones declared in the invoice was 2,060 grams, whereas the actual weight of the semi-precious stones was 20,850 grams. Thus, Sri Krishna Group was exporting bogus ornaments mostly made of semi-precious and coloured stones with very little gold by declaring them as 'studded gold jewellery' and the misdeclaration of value was to the tune of Rs.5.23 crores which was to evade duty chargeable under the Customs Act. Further, it was revealed that petitioner No. 2 and M/s. Krishe Hong Kong were involved in large scale hawala operations. Therefore, petitioner No. 1, being the Vice Chairman and Managing Director of M/s. Sri Krishna Jewellers Private Limited, was arrested for an offence committed under Section 135 of the Customs Act read with the Special Economic Zones Act, 2005, whereafter he was sent to judicial custody by the Special Judge for Economic Offences, Nampally, Hyderabad. 9.1. During the c....
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.... abroad and then rotated back part of the illegal proceeds in the form of fake export earnings. Thus, they are prima facie responsible for creation of proceeds of crime, their layering and concealment. They had transferred their illegal gains into real estate business and tried to project it as untainted assets. Enforcement Directorate is investigating the fund trail and tracing the proceeds of crime which are liable to be attached under Section 5 of PMLA. In this connection, Enforcement Directorate had conducted searches at various places relating to Sri Krishna Group of Companies and its directors. Searches were also conducted at the residential premises of employees of petitioner No. 2 and their statements were recorded on 07.10.2021 under Section 17(1)(iv)(f) of PMLA. The documents etc. that were seized/frozen during the course of the search on 07.10.2021 and 08.10.2021 contained substantial evidence which would assist in tracing further proceeds of crime. Respondent No. 1 filed application, being O.A. No. 590 of 2021, on 27.10.2021 before the Adjudicating Authority wherein it was prayed for retention of the seized materials and continuation of freezing order. Adjudicating Auth....
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....g the reasons based on the record available, searches were conducted at the premises of the petitioners and reasons recorded were supplied to the Adjudicating Authority. Based on such reasons, prayer for continuation of freezing order was made in the original application. Contention of the petitioners that reasons to believe as required under Section 17 of PMLA could not have been formed in the facts of the present case as there was no scheduled offence, has been denied. It is stated that petitioner No. 1 along with others is accused of committing scheduled offence under Section 135 of the Customs Act as has been clearly mentioned in the arrest memo served upon him by DRI. Existence of the reasons to believe is ultimately a question of fact to be decided on evidence and cannot be subject matter of a writ petition. 9.10. It is asserted that proceedings under PMLA are standalone and independent. Enforcement Directorate is still in the process of identifying the quantum of proceeds of crime. However, considering the huge amount of gold smuggled and involvement of hawala transactions, it can be assumed that proceeds of crime would be more than Rs. 50.00 crores. 9.11. Respondent N....
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....Standing Counsel for respondent No. 1 to produce the relevant record in original before the court on the next date. 12. On the next date of hearing i.e., on 09.06.2023, Mr. V.Ram Krishna Reddy, learned Standing Counsel, Enforcement Directorate produced the record in a sealed cover which we had opened in the court. After perusal of the same, the record was re-sealed. 13. Learned Standing Counsel submits that Sri Pradeep Kumar, Managing Partner of M/s. Sri Krishna Jewellers Private Limited, was arrested by the competent customs officer under Section 135 of the Customs Act. Therefore, it would be wrong to say that there is no scheduled offence involving the petitioners for invocation of the provisions of PMLA. In this connection, he referred to paragraphs 311, 313 and 314 of the decision of the Supreme Court in Vijay Madanlal Choudhary v. Union of India 2022 SCC OnLine SC 929. 13.1. Insofar the submission of learned Senior Counsel for the petitioners regarding the requirement of passing of an independent order under sub-section (2) of Section 20 of PMLA, learned Standing Counsel submits that the order referred to in sub-section (2) of Section 20 is relatable to the order pass....
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....ion or continuation of freezing of property nor forwarded the same to the Adjudicating Authority as mandated under Section 20(2) of PMLA. Thus, proceedings initiated pursuant to filing of application under Section 17 of PMLA before the Adjudicating Authority are void ab initio. 14.2. Learned Senior Counsel in reiteration of his submissions once again referred to relevant provisions of the Customs Act and PMLA. He submits that mere arrest of a person by a customs officer would not make him an accused in a criminal proceeding. In this connection, he has referred to a Constitution Bench decision of the Supreme Court in Ramesh Chandra Mehta v. State of West Bengal AIR 1970 SC 940, more particularly to paragraphs 26 and 27 thereof. He also referred to a decision of the Gujarat High Court in Bhavin Impex Private Limited v. State of Gujarat 2009 SCC OnLine Guj 9965, in which Gujarat High Court applied the decision of the Supreme Court in Ramesh Chandra Mehta (supra). 14.3. Adverting to Section 20 of PMLA, he submits that legislature has used the expression "reason to believe" in different sections of PMLA including in Sections 17 and 20. "Reason to believe" in Section 17 of PMLA can....
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....o be obtained under Section 137 of the Customs Act. No such previous sanction has been obtained in the present case. He further submits that offence under Section 135 is a compoundable one by the Principal Chief Commissioner of Customs or Chief Commissioner of Customs and if it is compounded, then there can be no prosecution for an offence under Section 135 of the Customs Act. Since the matter is at the stage of issuance of show cause notice under Section 124 of the Customs Act, it can only lead to confiscation of the goods or imposition of penalty. Therefore, question of a proceeding under Section 135 of the Customs Act against the petitioners does not arise. He submits that it is not open to the Enforcement Directorate to assume jurisdiction merely on the assumption that petitioners had committed a scheduled offence or that there is a scheduled offence. Adverting to the decision of the Supreme Court in paragraph 253 of Vijay Madanlal Choudhary (supra), he submits that the said decision would have to be read in conjunction with paragraph 27 of Ramesh Chandra Mehta (supra). 15. Submissions made by learned counsel for the parties have received the due consideration of the court. ....
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..... In W.P. Nos. 29508 of 2021 and 29531 of 2021 this court had passed an order dated 19.11.2021 staying the show cause notices dated 26.06.2020 and 27.06.2020 issued by DRI to petitioners No. 2 and 3. 16.8. Original application filed by respondent No. 1 before the Adjudicating Authority was registered as O.A. No. 590 of 2021. Adjudicating Authority issued show cause notice dated 10.12.2021 to the petitioners under Section 8(1) of PMLA in O.A. No. 590 of 2021. In response thereto, petitioners had submitted reply. Following the adjudication proceedings, Adjudicating Authority passed the impugned order dated 25.07.2022 allowing further retention of the seized properties and continuation of the freezing order passed by respondent No. 1. 16.9. At this stage, it may be mentioned that according to respondent No. 1, petitioner No. 1 being the Vice Chairman and Managing Director of petitioner No. 3 was arrested for the offence under Section 135 of the Customs Act whereafter he was sent to judicial custody by the Special Judge. 17. Having noticed the factual backdrop, we may now briefly summarise the relevant legal provisions. 18. The Prevention of Money Laundering Act, 2002 (alre....
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....s or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of the offence of money laundering. Therefore, to attract the offence of money laundering one must directly or indirectly attempt to indulge or knowingly assist or is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment etc., or use and project or claim it as untainted property would be guilty of committing the offence of money laundering. As we have seen in Section 2(1)(u), proceeds of crime is property derived or obtained as a result of criminal activity relatable to a scheduled offence. Thus, a person would be guilty of committing an offence of money laundering under Section 3 of PMLA if he directly or indirectly or knowingly attempts to indulge or assist or is a party or is involved in any process or activity connected with such proceeds of crime including its concealment etc., and projecting it as untainted money. Explanation below Section 3 clarifies two things. Firstly, it clarifies that a person shall be guilty of the offence of mon....
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.... 18.7. As per the first proviso, no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 Cr.P.C or a complaint has been filed by a person authorised to investigate the offence mentioned in that schedule before a Magistrate or court for taking cognizance of the scheduled offence. The second proviso says that notwithstanding anything contained in the first proviso, any property of any person may be attached under Section 5 if the Director or the authorised officer not below the rank of Deputy Director has reason to believe which must be recorded in writing on the basis of material in his possession that if such property involved in money laundering is not attached immediately the non- attachment of the property is likely to frustrate any proceeding under PMLA. 18.8. The Director or the authorised officer shall immediately after attachment forward a copy of the order of attachment along with relevant materials in his possession to the Adjudicating Authority under sub-section (2) of Section 5 which shall be retained by the Adjudicating Authority. Sub-section (3) thereof says that every or....
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....e is for the purpose of search and seizure under sub- section (1) of Section 17. The reason to believe in Section 5(1) is that a person must be in possession of any proceeds of crime and such proceeds of crime are likely to be concealed etc., thereby frustrating any proceeding for confiscation then the Director or the authorised officer may provisionally attach such property. On the other hand, the reason to believe in Section 17(1) should be that the person has committed an act of money laundering or is in possession of any proceeds of crime involved in money laundering or is in possession of any proceeds relating to money laundering or is in possession of any property related to crime then he may cause search of such property. Thus, the requirement or the standard of reason to believe in Section 17(1) is on a higher plane than in Section 5(1) inasmuch as the Director or the authorised officer must have reason to believe that the person concerned has committed the offence of money laundering or is in possession of any proceeds of crime involved in money laundering etc., instead of being in possession of any proceeds of crime etc. 18.11. Considering its centrality we shall rever....
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....ch order and material for such period as may be prescribed. 18.16. As per sub-section (3) of Section 20, on expiry of the period specified in sub-section (1) the seized property or the frozen property, as the case may be, shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. 18.17. Requirement of sub-section (4) of Section 20 is that Adjudicating Authority before authorising retention or continuation of freezing of such property beyond the period specified in sub-section (1) shall satisfy himself that the property is prima facie involved in money laundering and that the property is required for the purposes of adjudication under Section 8. 18.18. Section 65 of PMLA provides that provisions of Cr.P.C. shall apply insofar as they are not inconsistent with the provisions of PMLA to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under PMLA. 18.19. As per sub-section (1) of Section 66, the Director or any other authority specified by him by a gen....
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....that thing but not otherwise. 20.2. In the context of the Customs Act, the expression "reason to believe" confers jurisdiction upon the proper officer to seize goods liable to confiscation under sub- section (1) of Section 110 of the said Act. 20.3. The expression "reason to believe" found place in the old Income Tax Act. Under Section 34 of the Indian Income Tax Act, 1922, if the Income Tax Officer had reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax had escaped assessment for that year, the Income Tax Officer could initiate a process for reopening of assessment. Supreme Court explained in Calcutta Discount Company Limited v. Income Tax Officer AIR 1961 SC 373 that the expression "reason to believe" postulates belief and the existence of reasons for that belief. The belief must be held in good faith. It cannot be merely a pretence. The expression does not mean a purely subjective satisfaction of the Income Tax Officer. The Income Tax Officer must on information at his disposal believe that ....
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....upreme Court opined that the said expression does not connote the subjective satisfaction of the officer concerned. Such a power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law; the belief must be that of an honest and reasonable person based upon reasonable grounds. If the authority acts without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open to the court to examine the same though sufficiency of the reasons for the belief cannot be investigated. 21. Having analysed the expression "reason to believe" appearing in different statutes, we may now examine the implication of the same in the context of its application in different provisions of PMLA. 22. The expression "reason to believe" as appearing in Section 5(1) of PMLA is relatable to the formation of belief based on materials in his possession of any proceeds of crime and that such proceeds of crime are likely to be concealed etc., which may frustrate any proceedings for confiscation of such proceeds of crime then the director or the authorised officer would have the jurisdiction to p....
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.....04.2023). It has been held as follows: 24. Pausing here for a moment, we find that sub- section (1) of Section 17 of PMLA deals with two stages: one is at the stage of pre-authorisation and the next is the stage of post-authorisation. 24.1. In the first stage, the Director or any other officer authorised by him not below the rank of Deputy Director must have in his possession certain information; on the basis of such information in his possession, he must form reason to believe which must be recorded in writing that any person has committed any act of money laundering etc. Therefore, the information in his possession must have a causal relation with the recording of reasons which in turn must be the basis for forming the belief that any person has committed an act which constitutes money laundering. Therefore, possession of information, derivation of reason from such information and thereafter formation of belief on the basis of the reasons that any person has committed an act which constitutes money laundering etc., are the sine qua non or conditions precedent for invoking the power under sub-section (1) of Section 17 of PMLA. 24.2. Insofar the second stage is concerned,....
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....ficer authorised by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in sub-section (1), to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. 22.7. A careful reading of sub-section (2) of Section 20 of PMLA would indicate that the officer authorised by the Director is required to pass an order for retention or continuation of freezing of the property. The word "shall" employed in sub-section (2) of Section 20 reflects the obligatory nature of the mandate. The reason for this is not difficult to fathom. Seizure or freezing of property is a serious matter. It is not only an infringement of the right to property of a person but is also an intrusion into his right to privacy. Therefore, the need to retain the property or continue with the freezing of the property for the purpose of adjudication under Section 8 must be reflected in the reason to belie....
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.... Court examined the expression "money laundering" as defined in Section 3 of PMLA. In this connection Supreme Court also examined the definition of "proceeds of crime" as appearing in Section 2(1)(u) of PMLA and thereafter held as follows: 249. Coming to the next relevant definition is expression "money-laundering", it has the meaning assigned to it in Section 3 of the Act. We would dilate on this aspect while dealing with the purport of Section 3 of the Act a little later. 250. The other relevant definition is "proceeds of crime" in Section 2(1)(u) of the 2002 Act. This definition is common to all actions under the Act, namely, attachment, adjudication and confiscation being civil in nature as well as prosecution or criminal action. The original provision prior to amendment vide Finance Act, 2015 and Finance (No. 2) Act, 2019, took within its sweep any property (mentioned in Section 2(1)(v) of the Act) derived or obtained, directly or indirectly, by any person "as a result of" criminal activity "relating to" a scheduled offence (mentioned in Section 2(1)(y) read with Schedule to the Act) or the value of any such property. Vide Finance Act, 2015, it further includ....
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....al activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money-laundering under Section 3 of the Act. 252. Be it noted that the definition clause includes any property derived or obtained "indirectly" as well. This....
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.... forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now. 23.1. Supreme Court held that any property which is derived or obtained directly or indirectly as a result of criminal activity concerning the scheduled offence has to be regarded as proceeds of crime. In other words, property in whatever form which is or can be linked to criminal activity relating to o....
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....nce of money laundering is an independent offence. Once committed, it is an offence separate from the scheduled offence but for the offence to be committed it must be regarding the process or activity connected with the proceeds of crime derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. 23.2. After saying so, Supreme Court posed the next question as to whether the offence under Section 3 is a standalone offence. While answering this question, Supreme Court held as follows: 281. The next question is : whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of "proceeds of crime" under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" un....
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....e in itself, it is only in respect of matters connected with offence of money-laundering, and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) of the Act is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution. 284. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of "proceeds of crime". Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. 23.3. Thus, Supreme Court has clarified that the offence of money laundering under Section 3 of PMLA is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a schedule....
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....concerning search and seizure in connection with the offence of money-laundering. Supreme Court has clarified that before resorting to action of provisional attachment, registration of scheduled offence or complaint filed in that regard, is not a precondition. The authorised officer can still invoke power of issuing order of provisional attachment and contemporaneously send information to the jurisdictional police about the commission of scheduled offence and generation of property as a result of criminal activity relating to a scheduled offence, which is being made subject matter of provisional attachment. Supreme Court further observed that such power can be exercised by the Director or by the authorised officer in the matter of search and seizure. 24.1. The process of search and seizure under PMLA is not only for the purpose of inquiring into the offence of money laundering, but also for the purpose of prevention of money laundering. This is markedly distinct from the process of investigating into a scheduled offence. 25. We may now advert to relevant provisions of the Customs Act. As we have noticed, show cause notices dated 26.06.2020 and 27.06.2020 were issued to the pe....
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....asons to the contrary, such imprisonment shall not be for less than one year. In any other case, he shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. 25.3. Section 137 deals with cognizance of offences. As per sub-section (1), no court shall take cognizance of any offence under the sections mentioned therein including Section 135 except with the previous sanction of the Principal Commissioner of Customs or Commissioner of Customs. 25.4. Learned Senior Counsel for the petitioners in the course of his arguments highlighted this aspect that no cognizance can be taken by any court under Section 135 without the previous sanction of the Principal Commissioner of Customs or Commissioner of Customs. He has asserted that there is no such previous sanction in the present case. Therefore, question of any cognizance being taken by any court of the offence under Section 135 of the Customs Act would not arise. We will deal with this submission a little later. 25.5. For the moment, we may refer to sub-section (3) of Section 137 of the Customs Act. Sub-section (3) says that any offence under Chapter XVI may either before or after t....
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....ffence punishable under Section 135 and the information to be given to him amounts to a formal accusation of an offence and in any case the person who has been arrested and who has been informed of the nature of the infraction committed by him stands in the character of an accused person. Supreme Court did not agree to such a contention. Referring to Section 104 of the Customs Act, Supreme Court held that the said provision only prescribes the conditions in which the power of arrest may be exercised. The officer must have reason to believe that a person has committed an offence punishable under Section 135, otherwise he cannot arrest such person. But, by informing such person of the grounds of his arrest, the customs officer does not formally accuse him with the commission of an offence. Such arrest and detention are only for the purpose of holding an inquiry for confiscation of seized goods and for imposition of penalty. After adjudging penalty and confiscation of goods or without doing so, if the customs officer forms an opinion that the offender should be prosecuted he may prefer a complaint in the manner provided under Section 137 with the sanction of the Collector of Customs a....
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....ention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited. He does not on that account become a police officer nor does the information conveyed by him, when the person guilty of an infraction of the law is arrested, amount to making of an accusation of an offence against the person so guilty of infraction. Even under the Customs Act, a formal accusation can only be deemed to be made when a complaint is filed before a Magistrate competent to try the person guilty of the infraction amongst others under Section 135 of the Customs Act. This is what the Supreme Court clarified in paragraph 27, relevant portion of which reads as under: 27. .....He does not on that account become either a police officer, nor does the information conveyed by him, when the person guilty of an infraction of the law is arrested, amount to making of an accusation of an offence against the person so guilty of infraction. Even under the Act of 1962 formal accusation can only be deemed to be made when a complaint is made before a Magistrate competent to try the person guilty of the infraction under Sections 132, 133, 134 and 135 of the Act. 27.....
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.... suspicion that he is concerned in smuggling goods 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 enquiry under the 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 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 provisions of the Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate. 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 ....
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....wer to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Section 173 of Cr.P.C. He can only make a complaint in writing before the competent Magistrate. As per principle No.(iv), 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 goods, when he is called upon by the customs officer to make a statement or to produce a document or thing, does not become a person accused of an offence within the meaning of Article 20(3) of the Constitution. Steps taken by the customs officer are for the purpose of holding an enquiry under the 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 provisions of the 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 provisions of the Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistr....
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.... petitioner No. 1, as annexed to the intimation of arrest, it was stated that petitioner No. 1 was found involved in the diversion of imported foreign marked gold bars and misdeclaration of gold in shipping bill by petitioner No. 2 in contravention of provisions of the Customs Act and thereby he rendered himself liable for punishment under Section 135 of the Customs Act. He was placed under arrest at 14:30 hours of 05.05.2019 in the office of DRI, Hyderabad, and on production before the Special Judge for Economic Offences, Nampally, Hyderabad, on 05.05.2019 he was remanded to judicial custody. 31. In the hearing we were informed that the arrested persons including petitioner No. 1 were subsequently released on bail by the court. 32. On 03.08.2020 Additional Director, Department of Revenue (Central Economic Intelligence Bureau), Government of India, wrote to the Director of Enforcement Directorate sharing the information regarding search and issuance of show cause notices. 33. The additional material papers also contain minutes of Risk Assessment Monitoring Committee (RAMC) meeting of southern region of the Enforcement Directorate dated 12.10.2020. It may be mentioned that ....
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....e Customs Act with the customs authorities to take the requisite steps under Section 137 of the Customs Act. 37. That brings us to the impugned order of the Adjudicating Authority dated 25.07.2022. This order was passed by the Adjudicating Authority on the original application filed by the Deputy Director of Enforcement Directorate under Section 17(4) of PMLA for retention of documents/records/articles/accounts etc., seized under sub-section (1) of Section 17 of PMLA. Deputy Director mentioned that the documents/records/articles/accounts seized/frozen from different premises during the course of the search contained substantial evidence which would assist in tracing further proceeds of crime concealed by the persons and entities concerned; those would be required by the investigating officer to unearth proceeds of crime; there was reasonable belief that the suspects have committed the offence of money laundering and in order to unearth the same, search was conducted leading to seizure. On behalf of the petitioners, it was contended that the expression "reason to believe" appearing in Section 17 of PMLA could not have been formed in the facts of the present case as there was no s....