1990 (2) TMI 65 - HC - Customs

Summary

Issues Involved:
1. Validity of the sanction accorded by the Development Commissioner for prosecution.
2. Discharge of accused Nos. 2, 4, 6, and 7 due to the sanction not covering them.
3. Whether the complaint disclosed any evasion of import duty.
4. Territorial jurisdiction of the sanctioning authority.
5. Impact of collateral proceedings on the current prosecution.
6. Recovery of import duty and its effect on the prosecution.

Detailed Analysis:

1. Validity of the Sanction Accorded by the Development Commissioner for Prosecution:

The main contention was whether the sanction given by Niranjan Singh, described as the Development Commissioner of KFTZ, was valid under Section 137(1) of the Customs Act, which requires the sanction of the "Collector of Customs." The court noted that it was not clear if Niranjan Singh held both posts and if he was exercising his powers as the Collector of Customs. The court found that statutory powers are vested in an authority, not an individual, and since the sanction was given in the capacity of Development Commissioner, it raised questions about its validity. However, the court decided that this issue could be addressed at a later stage, as it was not possible to conclusively determine the matter at the current stage.

2. Discharge of Accused Nos. 2, 4, 6, and 7 Due to the Sanction Not Covering Them:

The Magistrate had discharged accused Nos. 2, 4, 6, and 7 because the sanction did not cover them. The complainant argued that these accused were integrally connected with accused Nos. 1 and 5, and thus the sanction should implicitly include them. However, the court held that Section 140 of the Customs Act requires specific proceedings against individuals responsible for the company's conduct. Since the sanction did not explicitly cover accused Nos. 2, 4, 6, and 7, their discharge by the Magistrate was upheld.

3. Whether the Complaint Disclosed Any Evasion of Import Duty:

The complaint alleged "evasion of payment of import duty," while the sanction referred to "unauthorised export of bonded goods." The court acknowledged a technical merit in the variation of terms but noted that Section 2(39) of the Customs Act defines smuggling broadly. The court concluded that the variation between the complaint and the sanction did not render the latter unmaintainable at this stage.

4. Territorial Jurisdiction of the Sanctioning Authority:

The defense argued that the offences were committed in Bombay, and thus the sanction should have been accorded by the Collector of Customs at Bombay, not by an officer based in KFTZ. The court recognized the need for a territorial nexus between the offence's location and the sanctioning authority but noted that the components came duty-free to KFTZ, which was entitled to collect import duty. This issue was also relegated for consideration at a later stage.

5. Impact of Collateral Proceedings on the Current Prosecution:

The defense argued that the exoneration of accused Nos. 1 and 5 in collateral proceedings should result in the quashing of the current complaint. The court examined the exoneration in disciplinary proceedings and found that accused No. 1 was given the benefit of doubt, not honorably exonerated. The court concluded that the exoneration did not automatically nullify the basis of the current complaint.

6. Recovery of Import Duty and Its Effect on the Prosecution:

The defense contended that since the import duty had been recovered, the prosecution should not continue. The court acknowledged the impermissibility of prolonged prosecutions but emphasized the gravity of the alleged offences. The court decided that justice required the law to take its due course, despite the recovery of import duty.

Conclusion:

The High Court upheld the Magistrate's order, dismissing both the appeal and the revision. The court confirmed the discharge of accused Nos. 2, 4, 6, and 7 and decided that the issues regarding the validity of the sanction and other contentions should be addressed at a later stage in the trial. The complainant and accused Nos. 1 and 5 were directed to appear before the Magistrate to proceed further with the case.