Custom Clearance Services

Prosecutions under Customs Act- A Detailed Guide

The Customs Act 1962^[1] is the enactment that oversees the passage or the exit of different types of vessels, aeroplanes, products, travellers, etc., into India and outside India. The Act is applicable throughout India. It was enacted to consolidate and modify the principles of customs. It is one of the basic acts that deal with India’s levy of customs duty. The Act contains provisions relating to conveyances carrying imported or exported goods, search, seizure and arrest, offences and prosecutions, and so on. In this article, we will discuss prosecutions under Customs Act. 

Chapter XVI- Offences and Prosecutions under Customs Act

The Customs Act under Chapter XVI provides for the law relating to offences and prosecution. It lays down different types of offences under the Customs Act, such as the false declaration, obstruction of the officers in customs, refusal to be x-rayed, evasion of duty, etc.

Per the Act, anyone who commits offences provided under Sections 132, 133, 134, 135, 135A, or 136 of the Act can be prosecuted. In the next segment, we will discuss these offences and prosecutions under the Customs Act in detail.

False Declaration, False Documents, etc. & Obstruction of an Officer of Customs

Section 132 of the Act states that whoever makes signs or uses any declaration or statement, or document in the transaction of a business relating to customs, knowing that or having reasons to believe that the declaration, statement, or document is false, shall be punished with imprisonment for a maximum period of two years or with fine or with both.

Section 133 of the Act states that if a person deliberately obstructs a customs officer in the exercise of powers conferred under the Customs Act, the person will be imprisoned for a maximum of two years or with a fine or both.

Refusal to Be X-Rayed

In the case where a person resists or refuses to permit a radiologist to screen or to take an X-ray of his body in pursuance of an order made by the magistrate under Section 103 or if the person resists or refuses to allow suitable action to be taken on the advice of a registered medical practitioner for getting goods liable to confiscation from his body, such person shall be punished with imprisonment for a period not extending six months or with fine or with both.

Evasion of Duty or Prohibition

If a person-

• Is related to any goods in any way knowingly concerned in misdeclaration of value or in fraudulent evasion or attempt to evade duty chargeable thereon or of any prohibition imposed under the Customs Act or any other law being in force for the time being with respect to such goods;
• Or acquires possession of or is concerned in carrying, depositing, harbouring, removing, concealing, keeping, selling or purchasing or in any other deals with goods which he knows is liable to confiscation under Sections 111 or 113;
• Attempts to export goods that he knows or has reasons to believe are liable to be confiscated under Section 113;
• Fraudulently avails or attempts to avail of drawback or exemption from duty provided under the Act in connection with the export of goods;

He shall be punished with, in the case of an offence relating to-

• Any goods whose market price exceeds Rs 1 crore;
• Evasion  of duty or its attempt exceeding Rs. 50 Lakh;
• Goods in the Prohibited categoer as notified by the Central Government may specify;
• Fraudulently availing of or attempting to avail of drawback/exemption from duty referred to in Section 135 clause (d) if the amount of drawback/exemption from duty exceeds Rs. 50 Lakh.

With imprisonment for a term that can be extenedto seven years. In other cases, he shall be punished with imprisonment for a term that can extend to three years.

If a person convicted under Section 135 or sub-section 1 of Section 136 gets convicted again for an offence under this section. In that case, such a person will be punished for the second and every subsequent offence with a maximum of 7 years of imprisonment and an adequate fine. In the absence of adequate reasons to the contrary to be recorded in the Judgment, such imprisonment will be for a minimum of one year.

It may be noted that the following will not be considered special and adequate reasons for imposing the sentence of imprisonment for a minimum of one year-

• Accused convicted for the first time for an offence under the Customs Act;
• In any proceeding under the Customs Act, other than a prosecution, the accused has been asked to pay the penalty or the goods that are relevant to the proceedings have been ordered to be confiscated, or any other action has been initiated against the person for the same act which constitutes an offence.
• That the accused was not the main offender and was acting just as a carrier of goods or otherwise was a second person in the commission of the offence;
• Age of the accused.

Preparation

If a person prepares to export goods in contravention of the provisions of the Customs Act and from the facts of the case, it can be inferred that if not prevented, he is determined to act as per his intention to commit the offence, such person can be punished with imprisonment of maximum three years or with fine or with both.

Court’s Power to Publish Convict’s Name, Place of Business, etc.

If a person is convicted under the Customs Act for contravention of any provisions thereof, the Court convicting the person shall have the power to cause the name and place of business or person’s residence, nature of contravention, and such other particulars as the Court may consider to be fit, to be published in newspapers at the expense of the such person.

However, no such publication can be made until the period for filing an appeal against the Court’s Order has expired without an appeal having been preferred or where an appeal has been preferred and has been disposed of.

The expense of publication shall be recoverable from the convicted person as a fine imposed by the Court.

Prosecution of Customs Officers

Section 136 states that if a customs officer enters into or acquiesces in an agreement to do, abstains from doing, conceals, permits, or connives at an act, whereby a fraudulent export is effected or any customs duty leviable on any goods or any prohibition under the Act or any other law with respect to any goods is evaded or may be evaded, then such officer shall be punished with imprisonment for a 3 years or with fine or both.

If a customs officer-

• Requires to search a person for goods that are liable to be confiscated or any document relating to it without having reasons to believe that such person has the goods or document secreted about his person; or
• Arrests a person without having reasons to believe that he is guilty of an offence under Section 135; or
• Searches or authorizes an officer or customs to search any place without having reasons to believe that the goods, documents, or things of nature mentioned in Section 105 are secreted in that place,

Then the person will be punished with imprisonment for a term extending to six months or with a fine or with both.

If a customs officer, except in the discharge of his duty in good faith, discloses any particulars known to him in his official capacity relating to any goods, then such officer shall be  imprisoned for a term that can be extended to six months or with fine or with both.

Prosecutions under the Customs Act Relating To the Presumption of Culpable Mental State

In prosecutions under the Customs Act, which requires a culpable mental state of the accused, the Court shall presume the element of culpable mental state; however, it shall be a defence for the accused person to prove the fact that he had no culpable mental state with respect to the act charged as an offence in that prosecution.

In terms of this section, a fact is proved when the Court believes it to exist beyond a reasonable doubt and not just when the existence is established by a preponderance of probability.

Relevancy of Statements Made Under the Act

A statement made by a person during inquiry under the Act will be relevant for proving the truth of the facts that it contains when-

The person who made the statement is not found or is dead, or is incapable of giving the evidence or is kept out of the way by the adverse party or whose presence cannot be ensured without delay or expense, which the Court considers being unreasonable; or

The person who made the statement is examined before the Court as a witness, and the Court believes that the statement should be admitted in evidence so as to advance justice.

Presumption as To Documents

If a person produces a document or it has been seized from the custody of a person or has been received from a place outside India in the course of the investigation of an offence under the Customs Act and such document is tendered by the prosecution in evidence against him, then the Court shall-

Presume that the signature and every part of the document which purports to be in the handwriting of a person or which the Court shall assume it to be signed by or to be in the handwriting of a person is in that person’s handwriting. If the document is executed or attested, the Court shall presume that it was executed or attested by the person by whom it purports to be executed or attested.

Accept the document in evidence, notwithstanding that it’s not stamped if the document is otherwise admissible in evidence.

Offences by Companies

If the company has committed the offence. In that case, every person who, at the time of the commission of the offence, was in charge of the company shall be deemed guilty and liable to be prosecuted accordingly. 

However, no person shall be liable to any punishment provided in prosecutions under Customs Act if the person can prima facie prove that the offence was committed without his or her knowledge or that he had exercised due diligence for preventing such an act.

Suppose the offence has been committed with the consent or with the connivance of any director, secretary, manager, or other company officer. In that case, such an official shall also be liable to be prosecuted accordingly.

Monetary Threshold for Launching Prosecutions under Customs Act

The CBEC has revised the monetary threshold limit for initiating prosecutions under Customs Act. The details are as follows-

The monetary threshold for launching prosecutions under Customs Act in Baggage and Outright Smuggling Cases-

• Cases where there is unauthorized importation in baggage under transfer of residence rules, wherein the market value of the goods is more than or equal to 50 Lakhs;
• Outright smuggling of high-value goods like precious metal, restricted or prohibited items mentioned under Section 11 of the Customs Act, goods mentioned under Section 123 of the Act or foreign currency wherein the market value of the concerned goods is Rs. 50 Lakh or more.

The monetary threshold for launching prosecutions under Customs Act in appraising cases or commercial frauds-

• In cases where the importation of trade goods involving wilful misdeclaration in value and concealment of restricted goods, where the market value of the offending goods is Rs. 2 crores or more;
• In cases involving fraudulent evasion or attempt at evasion of duty under the Customs Act, if the amount of duty evasion amounts to Rs 2 Crore or more;
• In cases involving availing of drawback or attempt to avail of drawback or any exemption from duty in a fraudulent manner in connection with goods export, if the amount of drawback or exemption from duty is Rs. 2 Crore or more;
• In cases involving the export of trade goods involving wilful misdeclaration in value and concealment of restricted goods, where the market value of the offending goods is Rs. 2 crores or more;
• Obtaining an instrument from the authority through fraud, wilful misstatement, collusion, or suppression of facts and use of such instrument where the duty related to the use of the instrument is Rs. 2 crores or more.

Note:- In cases involving non-declaration of overseas currency by NRIs and foreign nationals, which are found at the time of departure from India and which is more than the limit of Rs 50 Lakh and if it has been claimed that the currency has been acquired legally and brought to India but not declared unintentionally, then prosecution is not required to be considered as a routine.

Conclusion

For launching prosecutions under Customs Act, there must be adequate evidence. The prosecution cannot be initiated merely because of confirmation of demand in the adjudication process. The decision to initiate prosecutions under Customs Act is taken case-to-case basis by relying upon various factors.  

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