Arrests and or Prosecution for Customs Offences-Guidelines on Launching of Prosecution Arrests - Customs - F.No.394/71/97-Cus(AS)

Government of India Ministry of Finance Department of Revenue Dated: June 22, 1999 I am directed to refer to this Ministry's instructions conveyed under F.No. 711/16/84-CUS (AS), dated the 21st May, 1990 and 20th February, 1992, on the above subject and to say that in view of the various changes in the policy economic liberalisation effected since 1990, the changes in the value of the rupee need to avoid arrests/prosecutions in relatively petty offence cases under the new environment, the guidelines contained in the aforesaid letters have been reviewed by the Government. Having due regard to the suggestions of various Chief Commissioners and Commissioners in response to the Board's communication on the above subject and after careful consideration, the Government has decided to prescribe the following revised guidelines for launching of prosecution for offences under the Customs Act. 1962, and arrests where warranted, in suppression of the existing guidelines contained in the aforesaid letters. 2. Prosecutions should be considered and launched after very careful consideration of the nature of offence, the role of the person concerned and evidence available to substantiate the quilty knowledge/mens rea etc. Prosecution may be considered in the following categories of cases: (i) (a) Cases involving unauthorised importation in baggage / under Transfer of Residence Rules, where the CIF value of the goods involved is ₹ 5,00,000/- (Rupees five lakhs) or more; (b) Cases relating to importation of trade goods (i.e. appraising cases) involving deliberate mis-declaration/mis-classification with a view to importing banned or highly restricted items or with a view to attempt to defraud revenue or to smuggle goods in the guise of trade consignment and where the CIF value of the offending goods is ₹ 10,00,000/- (Rupees Ten lakhs) or more; (c) Other cases involving smuggling of goods and cases of attempted unauthorised exportation/smuggling of currency by outgoing passengers or town seizures, where the CIF value of the goods currency is ₹ 5,00,000/- (Rupees Five lakhs) or more; (ii) The above criteria would, however, not apply in cases of repeat offences or persons indulging professionally or habitually in such violations or where criminal intent is evident in ingenious way of concealment or otherwise, where prosecutions can be considered irrespective of the value of goods/currency involved in such repeat, professional or habitual offences, etc. However, prosecution may not be considered in petty repeat violations so long as cumulative value of the offending goods/currency is not more than rupees five lakhs. (iii) The above criteria would also not apply in the cases involving offences relating to very sensitive items like narcotic drugs and psychotropic substances, arms, ammunitions and explosives, antiques, art treasures, wild life items and endangered species of flora and fauna. In such cases, launching of prosecution should be considered invariably, irrespective of the value of the offending goods involved. It may be noted that considering the liberalisation in Gold/Silver import policy since 1991, those items have been taken out of the list of sensitive items as per earlier guidelines where prosecution was considered irrespective of value limit. Prosecution for offences relating to these items will now be covered by guidelines at (i) (ii) above. (iv) In respect of cases involving non-declaration of foreign currency by foreign nationals and NRIs ( normally visiting india for travel/business trips etc.) detected at the time of departure, exceeding the value limit of rupees 5 lakhs is prescribed under sub-para (i) (c) above, who claim the currency having been legally acquired and brought into India but inadvertently not declared, the arrest and prosecution need not be considered in routine. The status business standing of the foreign nationals/ NRIs the manner and place of recovery, corrobative evidence if any to substantiate the claim of bonafide proper acquisition but inadvertent non-declaration, and other attendant factors may be considered immediately by the Commissioner concerned and a decision taken whether the case involves criminal intent warranting arrest and launching of prosecution or not. Where the prosecution is not considered called for the case can be adjudicated on the spot by the proper officer and suitable order for confiscation/fine/ penalty etc. passed. (v) Except in respect of cases covered by sub-para (i) (b) above, in all other cases, prosecution may be launched after due sanction by concerned Commissioner of Customs. Prior concurrence of the Chief Commissioner will be essential for prosecutions under category covering by (i) (b) above. 3. Arrests in Customs offence cases: (i) Persons involved in customs related offence cases who may be liable to prosecution should not be arrested in routine unless exigencies of certain situations demand their immediate arrest. Thus, at times, prior to prosecution, arrest (s) may be necessary to ensure proper investigations and penal action against the person (s), as otherwise the person involved in the offence may hamper investigations or disappear from the scene/area - such as in cases involving outright smuggling by Sea/Air/Land route. (ii) Arrest should be mae only when it is intended to prosecute the offenders and the monetary limits or conditions provided for prosecution would apply equally to arrests. (iii) Though under Sec. 104 of the Customs Act, Commissioners of Customs have been empowered to delegate to an officer of Customs by general or special order, powers of arrest of persons guilty of offence punishable under Sec. 135. Government would like extreme circumspection and care in exercising these powers and ordering arrests. In all commercial fraud cases in relation to regular imports or exports, before arresting any person (s) the Commissioner/ADG concerned should be approached by the Investigating officer and the Commissioner/ADG should be personally satisfied that there are sufficient grounds warranting arrest of the persons (s). These grounds/reasons should also be recorded by the concerned Commissioner/Additional Director General in writing on file before the arrest is ordered and effected by the proper officer. (iv) As far as possible, in other than commercial fraud cases also warranting prosecution under Sec. 135, where arrest is considered necessary Commissioner's/ADG's prior clearance and approval for arrest may be taken. However, there could be situations, for example in outright smuggling cases in remote areas (and sometimes even in town seizure or international passenger clearance offence cases) where it may not be administratively possible to get prior permission of concerned Commissioner/ADG before effecting arrest. In such cases, the decision to arrest a person in offence against the person which has coming light in investigations carried out, should be taken at the minimum level of the concerned Assistant Commissioner/Assistant Director - recording the reasons in writing. Further, in such cases, the concerned Assistant Commissioner/ Assistant Director or other higher officer (lower than Commissioner/ ADG) who has ordered arrest, should immediately after arrest furnish a report incorporating reasons for arrest, to the jurisdictional Commissioner/ADG and his satisfaction for the arrest made should also be kept on record in writing. 4. The following aspects of earlier instructions , (as modified where necessary) may also be kept in view while considering launching of prosecution for offences under the Customs Act, 1962 :- (i) Prosecutions should not be launched as a matter of routine and/or in cases of technical nature, where the additional claim for duty is based solely on a difference of interpretation of the law. Before launching any prosecution, it is essential that the department should have sufficient evidence to prove that the person company or individual, against whose prosecution is being considered, had quality knowledge of the offence or had fraudulent intention of committing the offence, or in any manner possessed mens rea which would indicate his guilt. It follows, therefore, that in the case of Public Limited Companies, prosecution should not be launched indiscriminately against all the Directors of the Company, but should be restricted to only such of the Directors like the Managing Director, Director in charge of marketing and/or sales, Director (Finance) or such other Directors who are concerned with the import/export of the goods. The intention should be to take recourse to the prosecution only against those persons, who have taken active part in committing, or have connived at, the offence relating to either of smuggling or of Customs Duty evasion or of mis-declaration of value, quantity etc. For this purpose, the Commissioners should go through the relevant case file thoroughly and ascertain for themselves the definite involvement of different partners/directors/executives/officials, against whom reasonable evidence about their involvement in the offence exists and should be proceeded against, while launching the prosecution. For example the nominee Directors of the Financial Institutions, who are not concerned with day to day matters, should not be prosecuted, unless there is a definite evidence to establish their active involvement. Prosecution should be launched only against those Directors, Partners, Officials etc. who are found to have quality knowledge, fraudulent intention of mens rea necessary to bind than to criminal liability; (ii) One of the important considerations for deciding whether prosecution should be launched, is the availability of adequate evidence. Prosecution should be launched against top management only if there is adequate evidence/material to show their involvement in the offence and after proper application of mind at the level of Commissioners/Chief Commissioners; (iii) Normally, adjudication proceedings should be completed before launching prosecution. However, if the party deliberately delays the adjudication proceedings or in any case, it is not possible to complete the adjudication proceedings within a reasonable time limit, prosecution may be launched even during the pendency of the adjudication proceedings, as undue delay could weaken the department's case. However, in straight cases, where persons, including foreigners, are caught red handed and protracted investigations are not to be carried out, prosecution may be launched immediately after the seizure of the goods. (iv) Prosecution should not be kept in abeyance morley on the ground that the party has gone in appeal/revision. However, in order to ensure that the proceedings in appeal/revision are not unduly delayed, because the case records are required for purposes of prosecution, a parallel file containing copies of the essential documents relating to adjudication should be maintained. It is necessary to reiterate that in order to avoid delays, the Commissioners should indicate, at the time of passing the adjudication order itself, as to whether they consider the case fit for prosecution. So that it could be further processed for launching prosecution or for being sent to the Chief Commissioner for prior approval, wherever necessary. 5. Procedure for launching prosecution: (i) In all such cases, where prior approval of chief Commissioner is necessary for launching prosecution i.e. in cases covered by para 2 (i) (b) above, an investigation report for the purpose of launching prosecution (as per Annexure-I), should be carefully prepared and signed by the Assistant Commissioner concerned. The investigation report, after careful scrutiny ( for incorporation of all relevant facts) and duly endorsed by the Commissioner, should be forwarded to the Chief Commissioner for approval, within a month of the adjudication of the case. A criminal complaint in a Court of Law in such cases, should be filed only after the approval of jurisdictions Chief Commissioner has been obtained. The chief Commissioners should ensure that a decision about launching of prosecution or otherwise, is taken after careful analysis of evidence available on record and communicated to the Commissioners, within a month of the receipt of the proposal from the Commissioners; (ii) In all other cases, where prior approval of Chief Commissioner is not required, the decision about launching of prosecution or otherwise should be taken by the Commissioner after careful application of mind and analysis of evidence brought on record. This should be completed within a month of adjudication of the case (unless it is decided to go for prosecution even prior to adjudication in certain category of cases/particular case, mentioned earlier); (iii) It is hardly necessary to emphasise that the prosecution once launched should be vigorously followed. The Commissioners should monitor cases of prosecution at monthly intervals and take corrective action, wherever necessary, to ensure that the progress of prosecution is satisfactory; (iv) With a view to ensure that the prosecutions have a deterrent effect, it is necessary that convictions should be secured with utmost speed. This can only be done by regular monitoring of the progress of the prosecution; (v) It has been observed that the delays in the Court proceedings occur due to the non-availability of records required to be produced before the Magistrate. As a matter of practice, whenever a case is taken up for seeking the approval of the Commissioner or Chief Commissioner, as the case may be, for launching prosecution, an officer should be nominated/designated, who shall immediately take charge of all documents, statements and other exhibits, that would be required to be produced before a Court. The list of exhibits etc. should be finalised in consultation with the Public Prosecutor at the time of drafting of the complaint. Such exhibits should be kept in the safe custody; (vi) Once conviction is obtained in a prosecution case, the Commissioner responsible for the conduct of the prosecution, should study the judgement and where it is found that the persons have been let off with light punishment than what is envisaged in the Act. the question of filing appeal under the law should invariably be examined with reference to the evidence on record within the stipulated time. This is equally applicable in cases in which a Court orders acquittal without recording sufficient reasons in the judgement even though adequate evidence is available and was provided before the Court; (vii) Section 135-B of the Customs Act. 1962, grants the power to publish name/place of business etc. of persons convicted under the Act, by a Court of law. It is observed that this power is being exercised very sparingly by the Courts. The Board desires that in all cases in respect of all persons, who are convicted under the Act, the department should make a prayer to the Court to invoke this section. (viii) A Prosecution Register in the form enclosed as Annexure-II to this letter, would be maintained in the prosecution cell of the Commissionerate headquarters/Custom House. 6. Director General (Inspection) and Chief Commissioners of Customs Central Excise, while carrying out inspection of the Commissionerates/Custom Houses, should specially check all the above mentioned points, and make a mention about implementation of the guidelines in their Inspection Reports. 7. Where a case is considered suitable for launching prosecution and where adequate evidence is forthcoming, securing conviction largely depends on the quality of investigation. It is, therefore, necessary for senior officers to take personal interest in investigations of important cases of smuggling/duty evasion and to provide quidance and support to the investigating officers at the stage of investigation itself. 8. It has also been noticed that the officers posted for prosecution work do not have proper training. The Director General. NACEN, Faridabad, should therefore, organise separate training courses on prosecution/arrests etc., from time to time and also should incorporate a series of lectures on this issue in the courses organised for for anti-smuggling. The Commissioners should judiciously sponsor officers for such courses. 9. Please acknowledge receipt of this letter. F.NO.394/71/97-CUS (AS) Your Faithfully, (Dr N K Soren)