ARREST AND PROSECUTION under custom.pptx

CUSTOM ACT 1962
ARREST AND PROSECUTION

ARREST UNDER CUSTOM LAW
 The power of arrest under the Customs Act is an
important tool for customs officers in the prevention
and investigation of customs-related offenses, but its
exercise must be balanced with the fundamental
rights of the individual and must comply with the
guidelines and safeguards prescribed under the law
 Under Section 104 of the Customs Act 1962, a person
can be arrested for violating Section 132, 133, 134,
135, 135A, and 136 of the Customs Act 1962.

POWER TO ARREST
 As per section 104 of custom Act 1962
 (1) If an officer of customs empowered in this behalf by
general or special order of the Principal Commissioner of
Customs or Commissioner of Customs has reason to
believe that any person * 1[….] has committed an offence
punishable under section 132 or section 133 or section
135 or section 135A or section 136, he may arrest such
person and shall, as soon as may be, inform him of the
grounds for such arrest.
 *1 wording “in India or within the indian custom waters”
are omitted Finance Act 2019 .

POWER TO ARREST
 (2)Every person arrested under sub-section (1) shall,
without unnecessary delay, be taken to a magistrate.
 (3)Where an officer of customs has arrested any
person under sub-section (1), he shall, for the
purpose of releasing such person on bail or
otherwise, have the same powers and be subject to
the same provisions as the officer-in-charge of a
police-station has and is subject to under *4 the Code
of Criminal Procedure, 1973 .

POWER TO ARREST
 (4)Notwithstanding anything contained in the Code of Criminal Procedure,
1973, any offence relating to
 (a) prohibited goods
 (b)evasion or attempted evasion of duty exceeding *1 [fifty lakh rupees]
 (c)*2fraudulently availing of or attempting to avail drawback or any
exemption from duty provided under this Act, where the amount of
drawback or exemption from duty exceeds fifty lakh rupees
 (d) fraudulently obtaining an instrument for the purposes of this Act or the
Foreign Trade (Development and Regulation) Act, 1992, and such
instrument is utilised under this Act, where duty relatable to such
utilisation of instrument exceeds fifty lakh rupees.
 shall be cognizable.
 (5)Save as otherwise provided in sub-section (4), all other offences under
the Act shall be non-cognizable.
*1 Substituted (w.e.f. 1-8-2019) s.73(ii)(A) of the Finance Act, 2019 .
*2 Inserted (w.e.f. 1-8-2019) s.72(ii)(B) of the Finance Act, 2019.

POWER TO ARREST
 (6) Notwithstanding anything contained in the Code of Criminal Procedure,
1973, (2 of 1974) an offence punishable under section 135relating to—
 (a) Evasion or attempted evasion of duty exceeding fifty lakh rupees.
 (b) Prohibited goods notified under section 11 which are also notified under
sub-clause (C) f clause (I) of sub-section (1) of section 135.
 (c) Import or export of any goods which have not been declared in
accordance with the provisions of this Act and the market price of which
exceeds one crore rupees.
 (d) fraudulently availing of or attempt to avail of drawback or any
exemption from duty provided under this Act, if the amount of drawback or
exemption from duty exceeds fifty lakh *1 [rupees].
 *1 Substituted (w.e.f. 1-8-2019) s. 73 (iii) (A) of the Finance (No.2) Act,
2019 (23 of 2019)

POWER TO ARREST
*1(e)fraudulently obtaining an instrument for the purposes of this Act
or the Foreign Trade (Development and Regulation) Act, 1992, and
such instrument is utilised under this Act, where duty relatable to
such utilisation of instrument exceeds fifty lakh rupees, shall be non
bailable.
 (7) Save as otherwise provided in sub-section (6), all other offences
under this Act shall be bailable.
 *2Explanation- For the purposes of this section, the expression
"instrument" shall have the same meaning as assigned to it in
Explanation 1 to section 28AAA.
*1 Inserted (w.e.f. 1-8-2019) s.73(iii)(B) of the Finance (No.2) Act,
2019 .
*2 Inserted (w.e.f. 1-8-2019) s.73(iv) of the Finance Act, 2019 .

SECTION 132 CUSTOM ACT 1962
 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.
 ** Substituted by the Taxation Laws (Amendment) Act, 2006 (29
of 2006), section 30, for the phrase "six months". The
substitution came into effect from July 13, 2006.

 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.
 ** Substituted by the Taxation Laws (Amendment) Act, 2006 (29
of 2006), section 31, for the phrase "six months". The
substitution also came into effect from July 13, 2006

 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
misdeclaration 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;
 (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 *1 [export of goods;]
 *2(e) obtains an instrument from any authority by fraud,
collusion, willful misstatement or suppression of facts and such
instrument has been utilised by such person or any other person.
 *1Substituted (w.e.f. 1-8-2019) s.79(I)(a) of the Finance Act,
2019
 *2 Inserted (w.e.f. 1-8-2019) s.79(I)(b) of the Finance Act, 2019 .

 he shall be punishable, -
 (1) in the case of an offence relating to, -
 (A) any goods the market price of which exceeds one crore of
rupees.
 (B) the evasion or attempted evasion of duty exceeding fifty lakh of
rupees .
 (C) such categories of prohibited goods as the Central Government
may, by notification in the Official Gazette, specify.
 (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 *1 (of rupees) or
with imprisonment for a term which may extend to seven years and
with fine.
 Substituted (w.e.f. 1-8-2019) s.79(I)(c)(I) of the Finance (No.2) Act,
2019 .

 *1(E) obtaining an instrument from any authority by fraud,
collusion, willful misstatement or suppression of facts and such
instrument has been utilised by any person, where the duty
relatable to utilisation of the instrument exceeds fifty lakh rupees.
 Provided that in the absence of special and adequate reasons to the
contrary to be recorded in the judgment of the court, such
imprisonment shall not be for less than one year.
 (ii) in any other case, with imprisonment for a term which may
extend to three years, or with fine, or with both.
 *1Inserted (w.e.f. 1-8-2019) s.79(I)(c)(II) of the Finance (No.2) Act,
2019 (23 of 2019

 *1(2) If any person convicted of an offence under this section or
under sub-section (1) of section 136 is again convicted of an offence
under this section, then, he shall be punishable for the second and
for every subsequent offence with imprisonment for a term which
may extend to seven years and with fine
 Provided that in the absence of special and adequate reasons to the
contrary to be recorded in the judgment of the court such
imprisonment shall not be for less than one year.
*1Inserted by the Customs, Gold (Control) and Central Excises and
Salt (Amendment) Act, 1973 (36 of 1973), sec.5(ii) (w.e.f. 1.9.1973).

 (3) For the purposes of sub-sections (1) and (2), the following shall
not be considered as special and adequate reasons for awarding a
sentence of imprisonment for a term of less than [one year], namely
:-
 (I) the fact that the accused has been convicted for the first time for
an offence under this Act
 (ii) the fact that in any proceeding under this Act, other than a
prosecution, the accused has been ordered to pay a penalty or the
goods which are the subject matter of such proceedings have been
ordered to be confiscated or any other action has been taken against
him for the same act which constitutes the offence;
 (iii) the fact that the accused was not the principal offender and was
acting merely as a carrier of goods or otherwise was a secondary
party to the commission of the offence;
 (iv) the age of the accused.

 *1Explanation. - For the purposes of this section, the expression
"instrument" shall have the same meaning as assigned to it in the
Explanation 1 to section 28AAA.
 Explanation For the purposes of this sub-section, "instrument"
means any scrip or authorisation or licence or certificate or such
other document, by whatever name called, issued under the Foreign
Trade (Development and Regulation) Act, 1992 (22 of 1992),
 *1Inserted (w.e.f. 1-8-2019) s. 79 (ii) of the Finance (No.2) Act,
2019 (23 of 2019).

SECTION 135A CUSTOM ACT 1962
 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.

 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 1 [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 2 [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;
 (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.

CASE LAW ON ARREST
 OM PRAKASH VERSUS UNION OF INDIA (2012)34 STT1 16
TAXMANN .COM
 The SC stated that the power to arrest without a warrant is limited to
cognizable offenses only, and it does not extend to non-cognizable
offenses. Therefore, in cases of non-cognizable offenses, a customs
officer cannot arrest a person without a warrant.
 According to Section 2(c) of the Code of Criminal Procedure , the term
"cognizable offense" refers to an offense for which a police officer has
the authority to arrest an individual without a warrant.
 Statements made before custom officers even after arrest one not but by
section 25 of Indian Evidence Act and these statements can be used as
evidence against the arrest .

CASE LAW ON ARREST
 SERIOUS FRAUD INVESTIGATION OFFICE V. NITIN
JOHARI & ANR., (2019) 9 SCC 165,
 A Three-member bench of the Supreme Court of India
held that a strict approach must be adopted in granting
bail in cases related to economic offenses.
 The court observed that economic offenses such as fraud,
embezzlement, and money laundering have a serious
impact on the economy and financial system of the
country. Therefore, such offenses must be dealt with
strictly, and bail should not be granted easily or routinely.

PROCEDURE OF ARREST AS PER CODE OF
CRIMINAL PROCEDURE PROVISIONS
 SECTION 50 : A Person arrested should be informed full
particulars of offence and his right about bail .
 SECTION 57 :A Person arrested without a warrant cannot be
detained for more than 24 hours without a special order from a
Magistrate under section 167. The 24-hour period includes the
time needed to travel from the place of arrest to the Magistrate's
court.
 SECTION 167(2) : Release the arrested person if investigation
not completed within 60 days .

INSTRUCTION ABOUT ARRST REPORT AND
INCIDENTS REPORT
 The Board has instructed field formations to use prescribed
formats for reporting arrests and incidents to maintain uniformity
and ease of compilation. Annexure I is for Arrest Reports, and
Annexure II is for Incident Reports. Reports should be sent via
email only, and a copy should be marked to the Commissioner
(Inv.-Customs) : Instruction no. 19/2018(Custom circulars &
instruction 2018) dated 22 November ,2018.

PROSECUTION UNDER CUSTOM ACT 1962
 The prosecution may be launched against any person including legal
person in respect of the offences covered under any of the Sections
namely Sections 132, 133, 134, 135, 135A or 136 of the ('Act' for short)
after a careful consideration of the nature of offence, the role of the
person concerned and evidence available to substantiate the guilty
knowledge/mens rea.

CONDITION OF PROSECUTION
 The prosecutions should not be launched as a matter of routine. Before
launching any prosecution, it is essential that the department should have
sufficient evidence to prove that the person, individual or company, against
whom prosecution is being considered, had prior knowledge of the offence or
had fraudulent intent of committing the offence, or in any manner
possessed mens-rea which would indicate his guilt. 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
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. The Commissioner/Pr. Commissioner or
ADGRI/Pr. ADGRI should go through the relevant case file thoroughly and
ascertain for themselves that 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.
 Thus, the intent of the statute is clear that no witch hunting should be resorted to.

THRESHOLD LIMIT OF PROSECUTION
 The Board issued circulars fixing threshold limit for initiation of prosecution for the
offences under Sections 132, 133, 134, 135 and 135A. monetary limit for
initiating prosecution has been fixed. vide Circular No. 12/2022-Cus., dated 16-8-
2022.
 Cases involving unauthorized importation in baggage/cases under Transfer of
Residence Rules, where the market value of the goods involved is Rs. 50 lakhs
or more;
 Outright smuggling of high value goods such as precious 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,foreign currency
where the market value of offending goods is Rs. 50 lakhs or more;
 In cases related to importation of trade goods (i.e. appraising cases) involving-
(1) wilful mis-declaration in value/description;
(2)concealment of restricted goods or goods notified under section 11 of
the Customs Act, 1962
where market value of the offending goods is Rs. 2 crores or more

 In cases related to fraudulent evasion or attempt at evasion of
duty under the Customs Act 1962, if the amount of duty evasion is Rs. 2 Crores
or more;
 In cases related to fraudulent availment of drawback or attempt to avail of
drawback or any exemption from duty provided under the Customs Act 1962, in
connection with export of goods, if the amount of drawback or exemption from
duty is Rs. 2 Crores or more;
 In cases related to exportation of trade goods (i.e. appraising cases) involving
 (1) Wilful mis-declaration in value/description;
(2)concealment of restricted goods or goods notified under section 11 of
the Customs Act, 1962, where market value of the offending goods is Rs. 2
Crores or more
where market value of the offending goods is Rs. 2 Crores or more

 Obtaining an instrument from any authority by fraud, collusion, wilful
misstatement or suppression of facts and utilization of such instrument where
the duty relatable to utilization of the instrument is Rs. 2 Crores or more.

STAGES FOR LAUNCHING OF PROSECUTION
 The prosecution may be launched immediately on completion of
adjudication proceedings. However, prosecution in respect of cases
involving offences relating to items i.e. Gold, 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. If the party deliberately delays
completion of adjudication proceedings, prosecution may be launched
even during the pendency of the adjudication proceedings, where
offence is grave and qualitative evidences are available.
 It has been held that adjudication and prosecution proceedings are
independent of each other and can be initiated simultaneously.

MONITORING OF PROSECUTION
 The Commissioner/Pr. Commissioner or ADGRI/Pr. ADGRI should
monitor cases of prosecution at monthly intervals and take the
corrective action wherever necessary to ensure that the progress
of prosecution is satisfactory. For this purpose a Prosecution Cell
should be created in each Commissionerate under the supervision of
Additional/Joint Commissioner. A prosecution register should be
maintained in the Prosecution Cell of each Commissionerate. The
register should be updated regularly and inspected by the Principal
Commissioner/ Commissioner at least once in every quarter of the
Financial Year.
 The field formations should upload/update the information
regarding prosecution initiated in the Management Information System
(MIS) under prescribed Proforma.

WITHDRAWAL OF PROSECUTION
 Where prosecution has been sanctioned but not filed and new facts or
evidences have come to the notice of the Commissionerate or the DGRI
which warrant review of the sanction for prosecution, it should be
immediately brought to the notice of the sanctioning authority. After
considering the new facts and evidences the sanctioning authority may
recommend withdrawal of sanction order to the next higher authority.
 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 sections 257 and 321 of Cr. P.C, 1973. If the order for
withdrawal has been given by a court, the prosecution can be
withdrawn by the Assistant/ Deputy Commissioner or
Assistant/Deputy Director after getting a formal order from the Chief
Commissioner/ Principal Commissioner or DGRI/ Pr. DGRI as the case
may be.

APPEAL OF PROSECUTION
 Where it is found that the accused person have been let off with
light punishment than what is envisaged in the Customs Act,
1962 or has been acquitted despite the evidence being strong, the
question of filing appeals under law should be considered within
the prescribed time period.
 The case of acquittal by the Court can be appealed against in
terms of Section 378(4) of Cr. P.C. by the complainant. In these
cases approval of the Chief Commissioner/Principal
Commissioner or DGRI/Pr. DGRI as the case may be has to be
obtained before filling appeal.

ABEYANCE AND COMPOUNDING UNDER
CUSTOM
 Abeyance of prosecution
 The prosecution need not be kept in abeyance on the ground that
the party has gone in appeal/revision. However, in order to
ensure that 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 adjudication should be maintained.
 Compounding of offence
 The provisions regarding compounding of offence should be
brought to the notice of person being prosecuted and such
person be given an offer of compounding by the
Commissioner/Pr. Commissioner or ADGRI/Pr. ADGRI.

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