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Haja Najimudeen Sulaiman S/o. Haja Najimudeen Versus The Senior Intelligence Officer, Directorate of Revenue Intelligence

2016 (5) TMI 298 - MADRAS HIGH COURT

Offence under Section 132 & 135 of the Customs Act, 1962 - illegal import of electronic goods - Circular No.27 of 2015-Customs dated 23.10.2015 - Appellant submitted that trial Court had committed an error in not appreciating the vital fact that the Learned Metropolitan Magistrate can very well drop the proceedings at the instance of the Accused. Also failed to take into consideration the Circular No.27 of 2015 with retrospective effect issued by the Union Ministry of Finance dated 23.10.2015. A .....

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, the Circular No.27 of 2015-Customs, dated 23.10.2015 of the Ministry of Finance, Government of India, does not point out expressly that payment of penalty imposed upon a person in Adjudication Proceeding is a condition precedent for 'withdrawal of prosecution' by the Respondent/complainant. In the present case, for nearly six years, the Respondent/complainant had not filed any complaint before the Competent Court, not withstanding the fact that in terms of Customs Act, 1962, the prosecution mu .....

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s a compoundable one, in terms of Section 137(3) of the Customs Act. The spirit and tenor of the guidelines issued for launching the prosecution, procedure for withdrawal of prosecution, procedure for withdrawal of sanction order, procedure for withdrawal of complaint already filed for prosecution, etc., were not evaluated/appreciated and looked into in a proper and real perspective by the trial Court which has resulted in dismissal of the said Miscellaneous Petition. Therefore, this Court, to s .....

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fore this Court as against the order dated 11.03.2016 in Crl.M.P.No.3809 of 2015, passed by the Learned Additional Chief Metropolitan Magistrate (E.O.I), Egmore, Chennai-600 008. 2. The Learned Additional Chief Metropolitan Magistrate, [E.O.I], Egmore, Chennai, while passing the impugned order on 11.03.2016 in Crl.M.P.No.3809 of 2015 in R.R.No.23 of 2009 [filed by the Petitioner/Accused] at para-5 had observed the following: 5. Point:- "The petition is filed by the Petitioner to drop the pr .....

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vailable from the internet and the same is not an acceptable method of valuation. The Union Ministry of Finance o 23.10.2015 vide circular No.27/2015 communicated the customs officials to drop the criminal proceedings pending against the accused committed offence to the value of ₹ 20 lakhs in case of baggage and outright smuggling cases and ₹ 1 crore in case of appraising cases and commercial frauds. On perusal of the above circular the Petitioner is falling under both categories. He .....

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to be dismissed. Therefore considering both side arguments, the Petitioner has no locus standi to file the petition to drop the proceedings. If at all the Petitioner has aggrieved by the pendency of the R.R.No.23/2009 he has to approach the Hon'ble High Court to quash the proceedings. It is true that the complainant only can file a petition to drop the proceedings as per the Union of Ministry of Finance on 23.10.2015 vide circular No.27/2015 Customs and the petition is dismissed." 3. A .....

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ned Counsel for the Petitioner seeks an aid of the decision of the Hon'ble Supreme Court in K.M.MATHEW VS. STATE OF KERALA reported in AIR 1992 SUPREME COURT AT PAGE 2206. 4. The Learned Counsel for the Petitioner projects an argument that the trial Court had failed to take into consideration the Circular No.27 of 2015 with retrospective effect issued by the Union Ministry of Finance dated 23.10.2015, whereby and whereunder the Government of India had fixed a threshold limit for launching a .....

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reme Court in RADHESHYAM KEJRIWAL V. STATE OF WEST BENGAL AND ANOTHER reported in (2011) 3 SUPREME COURT CASES at page 581. 6. The Learned Counsel for the Petitioner draws the attention of this Court that the Respondent/Prosecution has an objection to the effect that 'for dropping the proceedings' by the prosecution, the Petitioner is to pay the penalty levied in the 'Adjudication Proceedings' and the same cannot be countenanced in the eye of law. 7. Per contra, it is the submiss .....

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As a matter of fact, the arrest of the Petitioner was made on the allegation of illegal import of electronic goods, valued in all at ₹ 7,98,150/-. 8. Expatiating his submission, the Learned Special Public Prosecutor strenuously contends that the Government of Tamil Nadu had issued the detention order against the Petitioner under COFEPOSA G.O.No.SR.1/569-2/2009 dated 15.10.2009 and that since the said Detention Order could not be served on him, the Government had issued a Gazette Notificat .....

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the instant case comes [O.S.No.04/2010-INT] approximately ₹ 11.97 lakhs and the valuation of smuggled goods at ₹ 7,98,150/- as per the Order-in-Original No. 12/2010-ADC (Air) was not merely a mechanical replication of the internet prices of the smuggled goods, but an abatement of 40% was allowed towards duty and profit, that too on the least price of such goods available on the internet. 10. The Learned Special Public Prosecutor takes a stand that the Revision Petitioner was provide .....

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27 of 2015-Customs, dated 23.210.2015, issued by the Central Board of Excise and Customs, whereby and whereunder it was communicated by the Ministry to all Customs Officials to drop the criminal proceedings in respect of offended value below ₹ 20 lakhs in case of baggages and Rupees One Crore in the matter of appraising cases and commercial frauds, the said Circular does not prescribe a mere mechanical dropping of all proceedings, but merely directs the concerned authorities to review the .....

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ioner in the 'Grounds of Revision' in para - E had stated that he is ready to pay the penalty imposed in the adjudication on ' instalments' by citing the CBEC Circular No.996/3/2015-CX dated 28.02.2015, but this Circular was issued in respect of arrears of duty of Central Excise Recoverable from Manufacturers and that the Manufacturers are the assessees who normally have factory/premises where production facilities and Capital Goods are installed and they are registered with Cent .....

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[seeking to drop the proceedings against the Petitioner] finds that the Petitioner had averred that for the alleged offence under Section 135 of the Customs Act, 1962, the Petitioner was arrested by the Respondent/Complainant on 02.08.2009, on the allegation of illegal import of RAMS AND CD players worth about ₹ 7,50,000/- and subsequently, he was released on bail. Further, even after lapse of six years, the Respondent/Complainant had not filed any complaint and therefore, the Petitioner .....

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and outright ' smuggling cases' and Rupees One Crore in case of appraising cases and commercial frauds and therefore, in this background, the proceedings pending against him deserves to be dropped. 15. At this juncture, this Court for a fuller and better appreciation of the subject matter in issue, refers to Circular No.27 of 2015-Customs dated 23.10.2015 in F.No.394/68/2013-Cus (AS), Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs .....

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e of the goods involved is ₹ 20,00,000/- (Rupees twenty lakh) or more; (ii) Outright smuggling of high value goods such as previous metal, restricted items or prohibited items notified under section 11 of the Customs Act, 1962 or goods notified under section 123 of the Customs Act, 1962 or foreign currency where the value of offending goods is ₹ 20,00,000/- (Rupees twenty lakhI or more;" 16. That apart, in the aforesaid circular, Sl.No.4.2.2. under the caption 'Exceptions .....

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ara 4.2.1 above respectively." 17. Besides above, in the aforesaid Circular No.27 of 2015 dated 23.10.2015, Sl.No.11, 11.1, 11.2, 11.2 and 11.2.3 of the guidelines enjoin as under: "11. Procedure for withdrawal of prosecution 11.1. Procedure for withdrawal of sanction order of prosecution In cases where prosecution has been sanctioned but not filed and new facts or evidences have come to the notice of the Commisionerate or the DGRI which warrant review of the sanction for prosecution, .....

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ll past cases where filing of prosecution is pending beyond three months of the sanction for prosecution shall be reviewed in the light of these instructions and necessary action taken to either file complaint expeditiously or to propose withdrawal of sanction. 11.2. Prosecution for withdrawal of Complaint already filed for prosecution 11.2.1. In cases where the complaint has already been filed in the court, it will be up to the court to decide whether or not to pursue prosecution in terms of se .....

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r identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue, and (b) in case of exoneration, however,l on merit where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of circumstances cannot be allowed to continue, underlying principle being the higher standard of proof in criminal cases. 11.2.3. In respect of cases cove .....

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ery of arrears of instalments and amendment of Garnishee Notice. To put it precisely, the said Circular at para Nos.5 to 7 contain the following: 5. It has been decided by the Board to allow recovery of arrears of taxes, interest and penalty in instalments. The power to allow such payment in monthly instalments shall be discretionary and shall be exercised by the Commissioners for granting sanction to pay arrears in instalments upto a maximum of 24 monthly instalments and by the Chief Commission .....

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ness is maintained taking into consideration the overall financial situation of the company, its assets, liabilities, income and expenses. Frequent defaulters may not be allowed payment of arrears in instalments. The decision shall be taken on a case to case basis taking into consideration the facts of the case, interest of the revenue, track record of the company its financial situation. 7. The application for allowing payment of arrears shall be made to the jurisdictional Commissioner giving f .....

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28 of the Customs Act, 1962, speaks about 'filing of Appeal before the Commissioner (Appeal)' by any person aggrieved by any decision or order passed under this Court by an officer of customs lower in rank than a [Commissioner of Customs] [within six days] from the date of the communication to him of such decision or order. Indeed, the power exercised under Section 128 of the Act by the Collector [Appeals] or by the Appellate Tribunal being of a quasi-judicial in nature, in the considere .....

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ge 285 (S.C.) wherein it was held that where an adjudicating authority has passed an order which is appealable in the statue and the party aggrieved did not choose to exercise the right of filing of appeal, it is not open to the party to question the correctness of the order of the 'Adjudicatory Authority' subsequently, by filing a claim for refund on the ground that the 'Adjudicating Authority 'had committed an error in passing the order. 21. It cannot be gainsaid that only an o .....

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22. One of the essential ingredients of an offence under Section 135 of the Customs Act, 1962, is that the person / accused should have acquired or carried, removed, deposited, harboured, kept, concealed, sold or purchased or in any other manner dealt with any goods which he knew or had reason to believe were liable to confiscation under Section 111 of the Act. In fact, the accused must have knowledge of goods being smuggled in order that he may be held guilty under Section 135 of the Customs A .....

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ion was confiscated and penalty was imposed against the appellant. Arising out of the penalty proceeding, the matter was taken to Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as "CEGAT") and, by order dated 18th April, 1995, the appeal has been allowed and penalty has been deleted on merit. It has been submitted that in view of the fact that penalty imposed, against the appellant under the provisions of the Act, has been deleted by CEGAT on merit, it w .....

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sions of the Income-Tax Act on the sole ground that penalty imposed against him was deleted on merit. In our view, the present case is squarely covered by the aforesaid decision of this Court, as such, it would be just and expedient to quash the prosecution of the appellant." 24. It is quite appropriate for this Court to point out that the decision of the Hon'ble Supreme Court in K.M.MATHEW V. STATE OF KERALA AND ANOTHER reported in AIR 1992 SUPREME COURT 2206 at Special Page 2208 at pa .....

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To ask the Chief Editor to undergo the trial of the case merely on the ground of the issue of process would be oppressive. No person should be tried without a prima facie case. The view taken by the High Court is untenable. The appeal is accordingly allowed. The order of the High Court is set aside." 25. Also in the decision of the Hon'ble Supreme Court in RADHESHYAM KEJRIWAL V. STATE OF WEST BENGAL AND ANOTHER reported in (2011) 3 SUPREME COURT CASES 581 at Special Page 583, it is laid .....

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ellant is facing trial in the criminal case. Therefore, the determination of facts in the adjudication proceedings cannot be said to be irrelevant in the criminal case." 26. As far as the present case is concerned, the Petitioner/Accused had not preferred any 'Appeal' as against the Adjudication Order dated 17.04.2010 in O.S.No.05 of 2010, wherein the penalty of ₹ 1,50,000/- was imposed on him. The said order has become final, conclusive and binding between the parties. 27. Al .....

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prosecution must not be imposed any one in respect of offences covered under Sections viz., 132, 133, 134, 135A or 1136 of the Customs Act, 1962. It is for the 'Appropriate Authority' to take into consideration of the nature of the offence, the role of the individual concerned and evidence available on record to substantiate the guilty mind of the person for launching prosecution. 28. Be that as it may, in the light of the detailed qualitative and quantitative discussions and also this .....

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e a significant mention that the circular No.27/2015-Customs dated 23.10.2015 at Sl.Nos.6. to 7.5 read as under: "6. Stage for launching of prosecution: Normally, prosecution may be launched immediately on completion of adjudicating proceedings. However, prosecution in respect of cases involving offences relating to items i.e. FICN, arms, ammunitions and explosives, antiques, art treasures, wild life items and endangered species of flora and fauna may be preferably be launched immediately a .....

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ods such as previous metal, restricted items or prohibited items notified under section 11 or goods notified under Section 123 of the Customs Act, 1962 or foreign currency where the value of goods is ₹ 20,00,000/- (Rupees twenty lakh) or more. 6.2. In a recent judgment passed by Hon'ble Supreme Court of India in the case of Radhe Shyam Kejriwal [2011(266)ELT 294(S), the Apex court had, interalia, observed that (i) adjudication proceedings and criminal proceedings can be launched simult .....

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n proceedings, prosecution may be launched even during the pendency of the adjudication proceedings, where offence is grave and qualitative evidences are available. 6.3. Prosecution need not be kept in abeyance on the ground that the party has gone in appeal/revision. However, in order to ensure tht the proceeding in appeal/revision are not unduly delayed because the case record are required for purpose of prosecution, a parallel file containing copies of the essential documents relating to adju .....

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/Principal CC or DGRI/Pr. DGRI is necessary for launching prosecution, an investigation report for the purpose of launching prosecution (as per Annexure-I), should be carefully prepared and signed by the Assistant Commissioner/Assistant Director concerned. The investigation report, after cartful scrutiny (for incorporation of all relevant facts) should be endorsed by the Commissioner/Pr. Commr. or ADGRI/Pr.ADGRI. The Chief Commissioner/Principal CC or DGRI/Pr.DGRI should ensure that a decision a .....

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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 mentioned at para 6 above) 7.3. Prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings particularly in cases of technical nature or where interpretation of law is involved. One of the important considerations for deciding whether prosecuti .....

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ctioning prosecution. Decision should be taken on case-to-case basis considering various factors, such as, gravity of offence, quantum of duty evaded and the nature as well as quality of evidence collected. 7.4. It is reiterated that in order to avoid delays, Commissioner/Pr. Commr. or ADGRI/Pr.ADGRI/adjudicating authority should indicate, at the time of passing the adjudication order itself as to whether he considers the case fit for prosecution so that it could be further processed for launchi .....

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l be informed of the decision so that there is no need for him to examine the case subsequently from the perspective of prosecution. 7.5. It is 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 for launching prosecution, an officer should be nominated/designated, who shall immediately take charge of all documents, statements and .....

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or ADGRI/Pr. ADGRI, as the case may be, who are responsible in the case for ensuring the timely filing of the complaint." 30. Further, Sl.Nos.15 and 16 of the aforesaid Circular dated 23.10.2015 read as under: 15. Transitional Provisions: All cases, where sanction for prosecution is accorded after the issue of this circular, shall be dealt in accordance with the provisions of this circular irrespective of the date of the offence. Cases where prosecution has been sanctioned but no complaint .....

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money laundering angle and to provide guidance and support to the investigating officers." 31. It is to be pointed out that in the case of Assistant Collector of Customs Vs L.R.Malani 1999 (110) E.L.T. 317 (Supreme Court), the Hon'ble Supreme Court has held that 'Departmental Authority' is not a Court within the meaning of Article 20(2) of the Constitution of India. 32. Besides the above, it is to be noted that Section 132 of the Customs Act is a Bailable one. Further, the offen .....

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d looked into in a proper and real perspective by the trial Court which has resulted in dismissal of the said Miscellaneous Petition. Therefore, this Court, to secure the ends of justice and in furtherance of substantial cause of justice, at this stage without expressing any opinion on merits of the case, sets aside the impugned order dated 11.03.2016 in Crl.M.P.No.3809 of 2015. Consequently, the Revision succeeds. 34. In the result, the Criminal Revision Petition is allowed and the order dated .....

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