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Offences and Penal Provisions

Customs - CBEC s Customs Manual 2015 - 30 - Chapter 30 1. Introduction: 1.1 Persons involved in import or export activity in violation of prohibitions or restrictions in vogue or with the intent to evade duties or fraudulently claim export incentives are liable for strict penal action under the Customs Act, 1962. The offending goods can be confiscated and heavy fines and penalties imposed on the persons concerned. In fact, sensitive goods like narcotics, FICN, arms and ammunitions, etc. are abso .....

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is provided in penal laws. It also means the sum payable as a punishment for a default. 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 off .....

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erson 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 period for issue of Show Cause Notice, for a period not exceeding 6 months. Further, Section 110 of Customs Act, also provides for the proper officer may seize any documents or things which, in his opinion, will be useful for, or r .....

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rency (Indian and foreign), liquors, P&P medicines, gold, silver, software, Petroleum products, red sanders, sandalwood, etc. 3. Confiscation of seized goods: 3.1 The word 'confiscation' implies appropriation consequential to seizure. The essence and the concept of confiscation is that after confiscation, the property of the confiscated goods vests with the Central government. 3.2 The adjudicating authority makes the decision regarding confiscation of goods. The specific/different ca .....

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if there is an intention to evade Customs duty or to fraudulently avail the benefits available under various export promotion schemes, such as Drawback, EOU etc. Also liable to confiscation are goods entered for exportation which does not correspond in respect of value or in any material particular with the entry made or in the case of baggage with the declarations made under Section 77 of the Customs Act, 1962. 3.3 Smuggled goods may be confiscated even if its form has been changed. In case the .....

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le 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 liabl .....

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or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under the said Section 111, shall be liable to penalties as follows:- (i) In the case of goods in respect of which any prohibition is in force under the Customs Act, 1962 or any other law for the time being in force, to a penalty not exceeding the value of the goods or ₹ 5,000/-, whichever is the greater; (ii) In the case of dutiable goods, other than prohibited goods, to a pena .....

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value and the value thereof or ₹ 5,000/-, whichever is the highest; and (v) In the case of goods falling both under clauses (ii) and (iii) above, to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or ₹ 5,000/-, whichever is the highest. 6. Penalties in respect of improper exportation of goods: 6.1 In terms of Section 114 of the Customs act, 1962 the person involved in commission or omission, in rela .....

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In the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or ₹ 5,000/-, whichever is the greater; and (iii) In the 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 .....

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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 Court, then the duty or interest as reduced or increased, as the case may be, shall be taken into account for the purpos .....

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l be levied under Sections 112 or 114 of the said Act. 8. Other penalties: 8.1 If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, then in terms of Section 114AA of the Customs Act, 1962 such person shall be liable to a penalty not exceeding five times the value of goods. 8.2 In terms of Sect .....

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charge of the conveyance shall be liable to the following penalty: (i) In the case of goods loaded in a conveyance for importation into India or goods transshipped under the provisions of the Customs Act, 1962 to a penalty not exceeding twice the amount of duty on the goods not unloaded or the deficient goods, as the case may be, had such goods been imported; and (ii) In the case of coastal goods, to a penalty not exceeding twice the amount of export duty on the goods not unloaded or the deficie .....

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ings 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 adjudicati .....

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not required to be proof for the imposition of penalty under the provisions of the Customs Act. The amount of penalty depends on the gravity of the offence and is to act as a deterrent for the future. 9.4 Whenever the goods confiscated are not prohibited, an option is to be given as per Section 125 of the Customs Act, 1962 to pay a 'redemption fine', as the adjudicating authority deems fit, in lieu of the confiscation. Prohibited goods shall be confiscated absolutely. 10. Arrest: 10.1 To .....

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135A or 136 of the said Act, can be arrested by a Customs officer authorized in this behalf, as provided under Section 104(1) of the said Act. Under the law, the person being arrested is entitled to be informed of the grounds for such arrest. Also, every arrested person has to be taken without unnecessary delay to the nearest Magistrate. The arrested person is to be dealt with by the Magistrate, as per the provisions of the Criminal Procedure Code which regulate this aspect would be applicable. .....

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ould be resorted to only in cases of sufficient grave nature. 10.4 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. At times, prior to prosecution, arrests (s) may be necessary 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 - s .....

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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 .....

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gher 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. 10.7 The guidelines for arrest are summed up as follows: (i) Offences under the Customs Act, 1962 are either (i) bailable; or (ii) non-bailable. Since arrest takes away the liberty of an individual, the power must be exercised w .....

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t be arrested unless the exigencies of certain situations demand their immediate arrest. These situations may include circumstances like ensuring proper investigation, to prevent such person from absconding, cases involving organised smuggling of goods or evasion of Customs duty by way of concealment, masterminds or key operators effecting proxy/ benami imports/exports in the name of dummy or non-existent persons/IECs, etc. The decision to arrest should be taken in cases which fulfil the require .....

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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 .....

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stered medical practitioner soon after the arrest is made. If an arrested person is a female then such an examination shall be made only by, or under supervision of a female medical officer, and in case such female medical officer is not available, by a female registered medical practitioner, (c) it shall be the duty of the person having the custody of an arrestee to take reasonable care of the health and safety of the arrestee. (vi) A person arrested for a non-bailable offence should be produce .....

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nce and bail bond accepted. If the conditions of the bail are fulfilled, the arrestee shall be released on bail forthwith. The arresting officer may, and shall if such a person is indigent and unable to furnish surety, instead of taking bail from such person, discharge him or her executing a bond without sureties for his appearance as provided under Section 436 of Cr.PC.in cases where the conditions for granting bail are not fulfilled, the arrestee shall be produced before the appropriate Magist .....

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elation to the goods, or (b) Anyway knowingly concerned in mis-declaration of value, or (c) In any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under the said Act or any other law for the time being in force with respect to such goods, or (d) Acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any g .....

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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 convi .....

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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 reason to believe that such declaration, statement or document is false in any material particular, he shall be punishable with imprisonment for a term which may extend to 2 years, or with fine, or with both. (b) Section 133 of the Customs Act 1962: If any person intentionally obstructs any officer of Customs in the exercise of any powers conferr .....

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r bringing out goods liable to confiscation secreted inside his body, he shall be punishable with imprisonment for a term which may extend to 6 months, or with fine, or with both. (d) Section 135 of the Customs Act 1962: In all offences under the Customs Act other than those mentioned under 'non-bailable or cognizable offences' above, the punishment for imprisonment may extend to a term of three years, or with fine, or with both. However, under Section 135(1) (i) of the said Act, in the .....

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all 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 .....

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ing reason to believe that he has such goods or documents secreted about his person, a Customs Officer may be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to ₹ 1,000/-, or with both; or (iii) If a Customs Officer arrests any person without having reason to believe that he has been guilty of an offence punishable under Section 135 of the said Act, he may be punishable with imprisonment for a term which may extend to 6 months, or with fi .....

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harge in good faith of his duty or in compliance with any requisition made under any law for the time being in force, discloses any particulars learnt by him in his official capacity in respect of any goods, he may be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to ₹ 1,000/- or with both. 13. Presumption of culpable mental state: 13.1 As per Section 138A of the Customs Act, 1962 in prosecution proceedings there under, the culpability ( .....

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of probability. 14. Cognizability and Bailability: 14.1 Broadly, Cognizable Offences as per Code of Criminal Procedure, 1973 (2 of 1974) are those offences which are punishable with imprisonment for a term of more than three years. Further, as per Cr.PC, the offences punishable with imprisonment for a term of less than 3 years or with fine are covered in the category of non-cognizable offences. However, Section 104 of Customs Act, 1962 stipulates that notwithstanding anything contained in the C .....

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asion 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 ex .....

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