Changes in Prosecution guidelines vis a vis smuggling of gold and foreign currency by Foreign Nationals under Customs Act, 1962

Central Board of Indirect Tax & Customs has made certain changes with regard to Prosecution of Foreign Nationals for the offences covered under the Customs Act, 1962 involving Foreign Currency vide Circular No.12/2019-Customs dated 24th May, 2019.  The aforesaid changes is attributed to increase in the instances of foreign nationals not found available at the time of trial of the case after getting bail from Indian authorities and the authorities were also reportedly faced difficulties in service of Show Cause Notices to such accused.  Considering the large number of such cases involving accused being Foreign Nationals, Foreign Currency has been included among the articles in relation to which Customs authorities are allowed to launch prosecution immediately after issuance of Show Cause Notice.  Said Circular further provides that Prosecution can even be launched before issuance of Show Cause Notice in cases involving Foreign Nationals.  

The list of articles wherein Customs authorities can launch prosecution before completion of adjudication  proceedings is as under:-

a.  Gold

b.  Foreign Currency

c.  Fake India Currency Notes

d.  Arms

e.  Ammunition and Explosives

f.   Antiques

g.  Art Treasures

h.  Wild Life Items

i.   Endangered species of flora and fauna

Background:-

Relevant provisions of the Customs Act, 1962:-

Section 132-False declaration, false documents, etc. - 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 reason 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- Obstruction of officer of customs. - If any person intentionally obstructs any officer of customs in the exercise of any powers conferred under this 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-Refusal to be X-rayed. - If any person -

 (a)    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

(b)    resists or refuses to allow suitable action being taken on the advice and under the 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-Evasion of duty or prohibitions. – (1) 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 mis-declaration 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, harbouring, 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; or 

(d)  fraudulently avails of or attempts to avail of drawback or any exemption from duty provided under this Act in connection with export of goods,

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 fifty lakh of rupees; or 

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

      (D)   fraudulently availing of or attempting to avail of drawback or any exemption from duty referred to in clause (d), if the amount of drawback or exemption from duty exceeds fifty lakh of rupees,

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

Section 135A-Preparation. - 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.

Section 136-Offences by officers of customs. - (1) If any officer of customs enters into or acquiesces in any agreement to do, abstains from doing, permits, conceals or connives at any act or thing, whereby any fraudulent export is effected or any duty of customs leviable on any goods, or any prohibition for the time being in force under this Act or any other law for the time being in force with respect to any goods is or may be evaded, he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.

(2) If any officer of customs, -

(a)  requires any person to be searched for goods liable to confiscation or any document relating thereto, without having reason to believe that he has such goods or document secreted about his person; or

(b)  arrests any person without having reason to believe that he has been guilty of an offence punishable under section 135; or

(c)  searches or authorises any other officer of customs to search any place without having reason to believe that any goods, documents or things of the nature referred to in section 105 are secreted in that place,

he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

(3)   If any officer of customs, except in the discharge in good faith of his duty as such officer 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 shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

Normally, prosecution may be launched immediately on completion of adjudication proceedings.  However, as per CBEC vide Circular No.27/2015-Customs dated 23.10.2015,  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 preferably be launched immediately after issuance of show cause notice.  Foreign Currency has been added in said list of items after inclusion of Gold items.  Further, said Circular provides that investigation may be completed in time bound manner preferably within six months and adjudication may be expedited to facilitate launching of prosecution in below mentioned cases:-(a) In case where arrest has been made during investigation (for commercial fraud cases as well as outright smuggling cases) or in the case of a habitual offender; (b) In case where arrest has not been made but it relates to outright smuggling of high value goods such as precious 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 Rs. 20, 00,000 (Rupees twenty lakh) or more.

Conclusion

Though inclusion of Foreign Currency in said list may be beneficial for Government to overcome to some extent the situation of accused not appearing for facing trial, however, allowance to launch prosecution even before issuance of Show Cause Notice may hamper the quality of evidences available at that stage till the  investigation itself do not gets completed thereby affecting the liberty of the accused.