TMI BlogOffences and Penal ProvisionsX X X X Extracts X X X X X X X X Extracts X X X X ..... fault. The Customs Act, 1962 contains specific provisions for imposition of penalty in case of contraventions of the legal stipulations. 2. Seizure of offending goods: 2.1 In terms of Section 110 of the Customs Act, 1962 an officer of Customs can seize any goods, if he has reason to believe that the goods are liable to confiscation under the said Act. If it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. The proper officer may also seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under the said Act. The person from whose custody any documents are seized shall be entitled to make copies thereof or take extracts there from in the presence of an officer of customs. 2.2 The person from whom the goods are seized is issued Show Cause Notice, usually within 6 months, otherwise the goods shall be returned to the person from whose possession they were seized. However, Commissioner of Customs, on sufficient cause being shown can extend the time pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 120 of the Customs Act, 1962. 4. Confiscation of conveyances/packages etc.: 4.1 In addition to confiscation of goods, the conveyances, i.e., vessels, aircrafts or vehicles, or animal s used in the smuggling activities or in connection with exportation under claim of Drawback and unloaded without permission of the proper officer are liable to confiscation as per Section 115 of the Customs Act, 1962. 4.2 In case the goods liable to confiscation are imported in a package, the package and its other contents, if any, are also liable to confiscation as per Section 118 of the Customs Act, 1962. 4.3 The goods used for concealing smuggled goods are liable to confiscation as per Section 119 of the Customs Act, 1962. 4.4 There may be situations when the smuggled goods are sold off. In such a situation, the sale proceeds thereof are liable to confiscation as per Section 121 of the Customs Act, 1962. 5. Penalties in respect of improper importation of goods: 5.1 In terms of Section 112 of the Customs Act, 1962 any person involved in acts of omission or commission, in relation to any goods which renders such goods liable to confiscation under Section 111 of the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under the Customs Act, 1962, whichever is greater. 7. Mandatory penalty in certain cases: 7.1 Section 114A of the Customs Act, 1962 deals with imposition of mandatory penalty in certain cases. Thus, in cases of non-levy or short levy of duty or where the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or wilful mis-statement or suppression of facts, the person liable to pay the duty or interest, as the case may be, as determined under Section 28(2) of the Customs Act, 1962 shall also be liable to pay a penalty equal to the duty or interest so determined. However, where such duty or interest, as the case may be, and the interest payable thereon, is paid within 30 days from the date of the communication of the order, the amount of penalty to be paid shall be reduced to 25% of the duty or interest. 7.2 If the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate tribunal or, as the case may be, the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding ₹ 1 lakh. 9. Adjudication of confiscations and penalties: 9.1 The Customs Act, 1962 enjoins quasi-judicial proceedings to be followed before any penalties are imposed and any confiscation action etc., initiated against any offending goods. Apart from issuing Show Cause Notice under Section 124 of the said Act, the persons concerned are required to be given opportunity of representation in writing and personal hearing in the matter. The adjudication authority is then required to pass final order taking due note of all evidences brought on record. 9.2 As per Section 122 of the Customs Act, 1962 the adjudication powers given to different officers are as follows: (a) Without limit, by a Commissioner of Customs or a Joint Commissioner of Customs; (b) Where the value of the goods liable to confiscation does not exceed ₹ 5 lakhs by an Assistant/Deputy Commissioner of Customs; and (c) Where the value of the goods liable to confiscation does not exceed ₹ 50,000, by a Gazetted Officer of Customs lower in rank than an Assistant/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to ensure proper investigations and penal action against the persons (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. 10.5 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 person(s). These grounds/reasons should also be recorded by the concerned Commissioner/ADG in writing on file before the arrest is ordered and affected by the proper officer. 10.6 As far as possible, in other than commercial fraud cases warranting prosecution under Section 135 of the said Act, where arrest is considered necessary prior clearance and approval for arrest may be taken from Commissioners/ADGs. 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 pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of high value goods such as precious metal, restricted items or prohibited items or goods notified under Section 123 of the Customs Act, 1962 or foreign currency where the value of offending goods exceeds ₹ 20 lakhs, (b) in a case related to importation of trade goods (i.e. appraising cases) involving wilful mis-declaration in description of goods/concealment of goods/goods covered under Section 123 of Customs Act, 1962 with a view to import restricted or prohibited items and where the CIF value of the offending goods exceeds ₹ 50 lakhs. (iv) There is no prescribed format for arrest memo but an arrest memo must be in compliance with the directions in D.K Basu vs. State of W.B. [1997(1) SCC 416 (see para 35)]. (v) Certain modalities that should be complied with at the time of arrest and pursuant to an arrest include (a) female offender should be arrested by or in the presence of woman Customs officers, (b) medical examination of an arrestee should be conducted by a medical officer in the service of Central or State Government and in case such medical officer is not available, by a registered medical practitioner soon after the arrest is made. If an arreste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealing, selling or purchasing or in any other manner dealing with any goods, or (e) Attempts to export any goods, or (f) Fraudulently avails of or attempts to avail of drawback or any exemption from duty provided under the said Act in connection with export of goods. 11.2 Section 135 provides the following punishments to the person held liable for offences mentioned therein: I. Imprisonment for a term not exceeding 7 years (and in any case ordinarily not less than 1 year) in the case of an offence relating to: (a) Any goods the market price of which exceeds ₹ 1 crore; or (b) The evasion or attempted evasion of duty exceeding ₹ 50 lakhs; or (c) Such categories of prohibited goods as the Central Government may, by notification, specify; or (d) Fraudulently availing of or attempting to avail of drawback or any exemption from duty referred to above, if the amount of drawback or exemption from duty exceeds ₹ 50 lakhs. II. In any other case, with imprisonment for a term not exceeding 3 years or with fine, or with both. 11.3 If any person convicted of an offence under Section 135(1) (or of Section 136(1) which applies to Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut 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. 12. Offences by Customs officers: 12.1 The officers of Customs also cannot escape serious action including prosecution action, if they abuse their powers or collude or connive with tax evaders. In the following cases, prosecution proceeding against a Custom officer may be initiated under Section 136 of the Customs Act, 1962: (i) In cases of connivance in the act or any fraudulent export is effected or thing whereby any duty of customs leviable on any goods, or any prohibition for the time being in force under the said Act or any other law for the time being in force with respect to any goods is or may be evaded, a customs officer shall be punishable with imprisonment for a term which may extend to 3 years, or with fine, or with both. (ii) In cases of vexatious search, i.e., where any person is searched for goods liable to confiscation or any document relating thereto, without having reason to believe that he has such goods or documents secreted about his person, a Customs Officer may be punishable with imprisonmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any offence relating to - (a) Prohibited goods; or (b) Evasion or attempted evasion of duty exceeding fifty lakh rupees shall be cognizable and all other offences under the Act shall be Non-cognizable. Section 104 (6) of the Customs Act, 1962 provides for the categories of offences punishable under Section 135 that are non-bailable and all other offences under this Act shall be bailable as per Section 104 of the Customs Act. The following categories of offences shall be non-bailable: (a) evasion or attempted evasion of duty exceeding ₹ 50 Lakhs; or (b) prohibited goods notified under Section 11 of the Customs Act, 1962 which are also notified under Section 135(1)(i)(C) of the Customs Act, 1962; or (c) import or export of any goods which are not declared as per the provisions of the Customs Act, 1962 and the market price of which exceeds ₹ 1 Crore; or (d) fraudulently availing of or attempt to avail of drawback or any exemption from duty, if the amount of drawback or exemption from duty exceeds ₹ 50 Lakhs. 15. Prosecution: 15.1 No prosecution proceedings can be launched in a Court of Law against any person under the Customs Act, 1962 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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