DEFERMENT OF ADJUDICATION PENDING DISPOSAL OF CRIMINAL CASE UNDER CUSTOMS ACT, 1962

[Mr. M. GOVINDARAJAN]

The provisions of Customs Act, 1962 empower the Proper Officer to issue a show cause notice to the assessee for the contravention of the provisions of Customs Act in relation to export or import with directions to the assessee to give reply within the prescribed period.  The assessee shall file reply to the show cause notice along with the copies of documents relied on by him.  On receipt of reply the assessee shall be given a reasonable opportunity of hearing to put forth his defence and the order will be issued on completion of adjudication.

Despite the order passed in the adjudication order, in some cases the Department may initiate criminal action against the assessee.  Section 135 of the Customs Act provides that whoever commits any of the action that has been mentioned in section 135(1)(a) to (e) of the Act shall be punishable with the imprisonment which may extend to seven years and with minimum punishment of not less than one year.

Section 135(1) of the Act provides that without prejudice to any action that may be taken under this Act, if any person-

1. is in relation to any goods in any way knowingly concerned in mis-declaration of value or 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
2.  acquires possession of or is in any way concerned in carrying, removing, depositing, harboring, 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
3. attempts to export any goods which he knows or has reason to believe are liable to confiscation under section 113; or
4. fraudulently avails of or attempts to avail of drawback or any exemption from duty provided under this Act in connection with export of goods; or he shall be punishable, -

1. in the case of an offence relating to,-

1. any goods the market price of which exceeds one crore of rupees; or
2. the evasion or attempted evasion of duty exceeding fifty lakh of rupees; or
3. such categories of prohibited goods as the Central Government may, by notification in the Official Gazette, specify; or
4. fraudulently availing of or attempting to avail of drawback or any exemption from duty referred to in clause (d), if the amount of drawback or exemption from duty exceeds fifty lakh of rupees; or with imprisonment for a term which may extend to seven years and with fine:
5. obtaining an instrument from any authority by fraud, collusion, willful misstatement or suppression of facts and such instrument has been utilized by any person, where the duty relatable to utilization of the instrument exceeds fifty lakh rupees:

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;

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

5.  obtains an instrument from any authority by fraud, collusion, willful misstatement or suppression of facts and such instrument has been utilized by such person or any other person.

Thus it is clear that both adjudication process and criminal case may be proceeded against the criminal cases wherever require.

In SABEER AHAMED SAYEED VERSUS THE COMMISSIONER OF CUSTOMS (PREVENTIVE) , TIRUCHIRAPALLI [2021 (10) TMI 120 - MADRAS HIGH COURT], the writ petitioner is working as a Branch-in-charge of Cochin Air Cargo Clearing House at Trichy.  The said company is having its principal place of business at International Airport, Trivandrum, Kerala.  It is also having branches at Cochin, Trichy, Madurai, Coimbatore, Chennai, Mumbai, Bangalore and other important ports.

A show cause notice was issued to the company on the goods received against the six shipment bills dated 09.06.2019.  The said show cause notice was challenged before the High Court.  The High Court directed the petitioner to adjudicate the issue before the Department by giving a reply to the show cause notice and dismissed the petition.

The petitioner gave reply to the show cause notice on 10.06.2020.  The petitioner in their reply requested the Adjudicating Officer to give copies of certain documents.  But the Adjudicating Officer did not supply the documents as requested by the petitioner.  The Adjudicating Officer passed the final order on adjudication on 30.06.2000.  The said order was challenged by the petitioner before the High Court.  The High Court observed that the petitioner was not served with copies of the documents relied upon by the department both in the show cause notice and in the impugned order.  The High Court quashed the adjudication order on 16.02.2021.  The High Court further directed the Department to supply all the copies of the documents relied on by the Department.  The petitioner was also directed to file his reply within two weeks from the date of receipt of the documents.  The Department, thereafter, will pass its order.

On complying with the directions of the High Court the petitioner has given additional reply to the show cause notice.  In the reply the petitioner also sought for documents containing in Sl. No. 13, 20 and legible document No. 24 as relied on by the Department.  The petitioner also requested to cross examine the Assistant Commissioner and other officials connected with this case.  The Department permitted the petitioner to cross examine the witnesses/officials and also furnished the documents as required by the petitioner.

In the meanwhile the Department initiated criminal proceedings against the petitioner under Sections 135(1) (c), 135 (1) (d) and 135 (1) (i) (A) of the Customs Act, 1962 before the Judicial Magistrate, Trichirappalli.  The copy of the said complaint was issued to the petitioner by way of summons dated 06.08.2021.  The petitioner on receipt of the complaint observed that the majority of the witnesses who are going to be cross examined by the petitioner in the adjudication process will also be the witnesses in the criminal case.  The petitioner felt that simultaneous process of adjudication and criminal case will prejudice the interest of the petitioner.  Therefore the petitioner challenged the summon issued by the Department in the criminal case in the present writ petition with the prayer to quash the summon and direct the Department to defer the adjudication proceedings till the completion of the criminal case launched against the petitioner.

 The petitioner submitted the following before the High Court-

• The petitioner is not at all a clearing agent, nor an importer and only the Branch in charge of the Clearing Agency.
• The proceedings can be initiated only against the importer as well as the clearing agent and not against the branch in charge of the Clearing Agency.
• The Department singled out the petitioner under the mala fide intention for the reason the petitioner filed a contempt petition in the year 2018 against the then Commissioner of Customs and Central Excise, Tiruchirappalli.
• The action is only revenge against the petitioner by conducting adjudication proceedings and criminal case simultaneously.
• This will prejudice the interests of the petitioner.

Therefore the petitioner prayed the High Court to quash the adjudication proceedings as of now by way of deference, till the decision is taken in criminal proceedings.

According to Commissioner of Customs it is a separate proceeding under section 135 of the Act.  The criminal court will conduct the trial and ultimately come to a conclusion that whether any punishable offence has been committed by the petitioner and if the same is proved beyond reasonable doubt or otherwise then only ultimate verdict in the acquittal or conviction would be decided and delivered by the concerned criminal court.  In the present adjudication process it may end in imposing of penalty under section 114A and 114AA of the Act. 

The High Court considered the contentions of the petitioner and the documents available in this case.  The High Court observed that nowhere in the Customs Act there is any prohibition under Section 135 of the Act.  It cannot be stated that merely because of adjudication process is being conducted there will have a prejudice against the petitioner in the criminal proceedings launched against him. 

The High Court further observed that such type of interferences would be possible by law Courts by various pronouncements of the Supreme Court as well as the High Courts.  The High Court did not accept that in the adjudication proceedings, some of the witnesses are going to be utilized by the Department, who are going to be cross examined by the petitioner, would be the same in the Criminal Court and that will prejudice the interests of the petitioner in the criminal case.  Such kind of logic is not available to the petitioner.

The High Court, therefore, dismissed the present writ petition as not sustainable.