CUSTOMS (COMPOUNDING OF OFFENCES) RULES, 2005 - AN OVERVIEW

[Mr. M. GOVINDARAJAN]

OFFENCES AND PROSECTUIONS:

            Chapter XVI of the Customs Act, 1962 ('Act' for short) deals with the offences and prosecutions. 

            Section 132 of the Act provides that whoever makes, signs or uses or causes to be made, signed or used, any declaration, statement or document in the transaction of any business relating to the customs, knowing or having relation to believe that such declaration, statement or document is false in any material particular shall be punishable with imprisonment for a term which may extend to two years or with fine or with both.

            Section 133 of the Act provides that if any person intentionally obstructs any officer of customs in the exercise of any powers conferred under the Act, such person shall be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.

            Section 134 of the Act provides that if any person resists or refuses to allow a  radiologist to screen or to take X-ray picture of his body in accordance with an order made by a Magistrate under Section 103 or resists or refuses to allow suitable action being taken on the advice and under supervision of a registered medical practitioner for bringing out goods liable to confiscation secreted inside his body, as provided in Section 103, he shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both.

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

(a)    is in relation to any goods in any way knowingly concerned in misdeclaration 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

(b)   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

(c)    attempts to export any goods which he knows or has reason to believe are liable to confiscation under Section 113

he shall be punishable-

(i)      in the case of an offence relating to-

(A)  any goods the market price of which exceeds one crore of rupees; or

(B)  the evasion or attempted evasion of duty exceeding thirty lakh of rupees; or

(C)  such categories of prohibited goods as the Central Government may, by notification in the Official Gazette, specify

with imprisonment for a term which may extend to seven years and with fine;

(ii)    in any other case, with imprisonment for a term which may extend to three years, or with fine or with both

If any person convicted of an offence above noted is again convicted of an offence then he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to seven years and with fine.

            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.  For this purpose the following shall not be considered as special and adequate reasons for awarding a sentence-

- the fact that the accused has been convicted for the first time for an offence under this Act;

- the fact that in any proceedings under this Act, other than a prosecution, the accused has been ordered to pay a penalty or the goods which are the subject matter of such proceedings have been ordered to be confiscated or any other action has been taken against him for the same act which constitutes the offence;

- the fact that the accused was not the principal offender and was acting merely as a carrier of goods or otherwise was a secondary party to the commissioner of an offence;

- the age of the accused.

Section 135 A of the Act provides that if a person makes preparation to export any goods in contravention of the provisions of this Act, and from the circumstances of the case it may be reasonably inferred that if not prevented by circumstances independent of his will, he is determined to carry out his intention to commit the offence, he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.

COMPOUNDING OF OFFENCES:

                        Section 137(3) of the Act provides that any offence, before or after the institution of prosecution, be compounded by the Chief Commissioner of Customs on payment, by the person accused of the offence to the Central Government, of such compounding amount as may be prescribed. Section 156 (h) of the Act gives powers to the Central Government to make rules for the amount to be paid for compounding. The offences as noted above are eligible for compounding. The Central Government, in exercise of the powers conferred, make the 'Customs (Compounding of Offences) Rules, 2005 ('Rules' for short).

Form and application:

                        An applicant, viz., any importer, exporter or any other person , but shall not include officers of Customs, may, either before or after institution of prosecution, make an application in form prescribed to the compounding authority for compounding of the offence. The Chief Commissioner of Customs, having jurisdiction over the place where the offence under the Customs Act, has been or alleged to have been committed in the compounding authority. Where an offence has been committed at more than one place falling under the jurisdiction of more than one compounding authority, then the Chief Commissioner of Customs having jurisdiction over such place where the value of goods seized, or the amount of duty evaded or attempted to be evaded or the amount of export incentives wrongly claimed or attempted to be claimed wrongly is more than others shall be competent authority.  The applicant cannot claim, as of his right, that his offences shall be compounded.

Procedure:

1.      On receipt of the application the compounding authority shall call for a report from the reporting authority with reference to the particulars furnished in the application, or any other information, which may be considered relevant for examination of such application;

2.      The Commissioner of Customs, having jurisdiction over the place where the offence under the Act has been or alleged to have been committed or any other officer as may be authorized in this regard by the Chief Commissioner of Customs having jurisdiction over the place  where such offence has been or alleged to have been committed, is the reporting authority;

3.      The reporting authority shall furnish the report within a period of one month or within such extended period as may be allowed by the compounding authority, from the date of receipt of communication from the compounding authority;

4.      The compounding authority after taking into account the contents of the said application may, by order, allow the application indicating the compounding amount as detailed below:

Offences	Compounding amount
Section 132	Rs.50,000/- for the first offence and to be increased by 100% of this amount for each subsequent offence
Section 133	Rs.50,000/- for the first offence and to be increased by 100% of this amount for each subsequent offence
Sec 134	Rs.50,000/- for the first offence and to be increased by 100% of this amount for each subsequent offence
Section 135(1)(a)	Up to 20% of the market value of the goods or Rs.10 lakhs whichever is higher
Section 135(1)(b)	Up to 20% of the market value of the goods or Rs.10 lakhs whichever is higher
Section 135(1)(c)	Up to 20% of the market value of the goods or Rs.10 lakhs whichever is higher
Section 135A	Up to 20%  of the market value of the goods or Rs.10 lakhs whichever is higher

5.      The compounding authority, if he is satisfied that any person who has made the application for compounding of offence has co-operated in the proceedings before him and has made full disclosure of facts relating to the case, may grant to such person, subject to conditions as he may think fit to impose, immunity from prosecution for any offence under the Customs Act, 1962 with respect to the case covered under the compoundable offence;

6.      The application shall not be rejected unless an opportunity has been given to the applicant of being heard and the grounds of such rejection are mentioned in such order;

7.      A copy of every order shall be sent to the applicant;

8.      The applicant, within a period of 30 days from the date of receipt of the order allowing the compounding  of offences, pay the compounding amount, as ordered to be paid by the compounding authority and shall furnish the proof of such payment to the compounding authority;

9.      The compounding amount once paid shall not be refunded except in cases where the Court rejects the grant of immunity from prosecution.

Withdrawal of Immunity:

            An immunity granted to a person shall stand withdrawn if such person fails to pay any sum specified in the order of compounding by the compounding authority within the time specified in the said order or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of the Customs Act, 1962 shall apply as if no such immunity had been granted.           

            An immunity granted to a person may, at any time, be withdrawn by the compounding authority if he is satisfied that such person had, in the course of compounding proceedings concealed any particulars, material or had given the false evidence and thereupon such person may be tried for the offence with respect to which immunity was granted or for any other offence that applies to have been compounded by him in connection with the compounding proceedings and thereupon the provisions of the Customs Act, 1962.