UNION OF INDIA Vs. K SIRAJ

JUDGEMENT

(1.) A learned single Judge of this Court has found a summons issued under Section 108 of the Customs Act to the petitioner-respondent invalid. The Union of India, the Collector of Customs and Officers of the directorate of Revenue Intelligence who were party-respondents in the writ petition have appealed against the said order. The impugned summons was issued to the petitioner-respondent by the Assistant Director, Directorate of Revenue intelligence, Madras, stating that he was making inquiries in connection with investigation into alleged evasion of custom duty on the import of Lupofresh browary HDP Extract/pollots in the name of M/s. Integrated Exports, M/s. Trio imports and Exports (P) Ltd. and Arasan Industries. According to the summons, the goods were cleared through Madras Air Cargo and through Trivandrum Airport , but the Assistant Director considered the attendance of the petitioner-respondent necessary to give evidence and produce documents relating to import of the consignment and sales thereof.

(2.) THE petitioner-respondent is the proprietor of M/s. Integrated Exports, M/s. Arasan Industries and a Director in M/s. Trio Imports and Exports (P) Ltd. During September, 1990, M/s. Integrated Exports imported hop extracts by Air. This however was not cleared by the Customs. He preferred a writ petition in W. P. No. 15553 of 1990 seeking amandamusto Customs authorities to assess the bill of entry. THE writ petition however was allowed in the sense that he was allowed to clear the entire consignment on payment of duty subject to any adjudication proceedings. In December, 1990, M/s. Trio imports and Exports Private Limited imported the very same item, i. e. to say, hop extracts by Air and when there was a delay, M/s. Trio Imports and Exports private Limited filed this time a writ petition in W. P. No. 26 of 1991. THE court once again ordered for the release of the goods on payment of the duty as assessed. A further consignment of the very same item was imported in February, 1991 this time, again leading to a writ petition in W. P. No. 1587 of 1991. THE court this time, however, ordered for release of the goods on payment of duty and on payment of a sum of Rs. 12 lacs in respect of each bill of entry by way of cash and execution of a personal bond for the balance of redemption fine and the total of personal penalty. THE petitioner-respondent shifted the Port from Madras Air Port to Trivandurm Air Port in June, 1991 and instead of in the name of M/s. Trio Imports and Exports private Limited imported hop pellets in the name of M/s. Arasan Industries. THE collector of Central Excise and Customs, Cochin , ordered in the month of July, 1991 clearance of the goods on payment of a redemption fine of Rs. 8 lacs and a personal penalty of Rs. 2 lacs. In september, 1991, another consignment of hop pellets came for M/s. Arason industries at Trivandrum Air Port. THE Collector directed the release of goods on payment of redemption fine of Rs. 36 lacs, a personal penalty of Rs. 16 lacs and a further penalty of Rs. 2 lacs on one R. Ramanan. According to the petitioner-respondent, the said order of adjudication dated 1/6-11-1991 was passed after issuing a show cause notice dated 21-10-1991 and after the officers of the Directorate of Revenue Intelligence investigated into the value of the goods imported by making inquiries and recording a statement of various persons by summoning them. THE same who challenged before this Court in Writ petition No. 15742 of 1991. In a miscellaneous petition in the said writ petition, this Court ordered on 18-12-1991 for the release of the impugned goods on condition that the admitted duty of Rs. 12, 18, 321/- was paid plus 50% of the differential duty sought to be demanded; for the balance 50% of the differential duty, the petitioner therein was directed to furnish a bank guarantee. Both the petitioner in the said writ petition as well as the respondent preferred writ appeals against the order in the miscellaneous petition W. A. Nos. 1544 of 1991 and 1547 of 1991, which were disposed of by a bench of this Court on 30-12-1991 confirming the order in the miscellaneous petition with regard to payment of duty, but modifying with respect to the fine and penalties by vacating the stay and directing that the Importer should furnish a bank guarantee for Rs. 12 lacs onwards redemption fine and furnish personal bond for the balance amount of redemption fine. Notwithstanding the adjudications as above and the various orders that were passed with respect to different consignments in the cases of M/s. Integrated Exports, M/s. Trio imports and Exports Private Limited and M/s. Arason Industries, however, on 18-11-1991, the impugned summons was issued. Petitioner-respondent challenged the same alleging that the goods imported by the above mentioned firm and companies were all cleared by the orders of this Court and orders of adjudication by the Customs Authorities and if the Authorities were aggrieved by the orders of adjudication or orders of release, they could have challenged the same in accordance with the provisions of the Customs Act before the appropriate forum and that once the goods were released on assessment and payment of duty, penalty, etc. , the Customs Authorities cease to have any further jurisdiction to inquire or investigate into the alleged evasion of customs duty on the import.

(3.) BEFORE we dwell into the contentions and record our opinion, we may do a little probing into the provisions of the Customs Act, 1962. With a view to consolidate and amend the law relating to Customs, the parliament adopted by a Legislation such laws that made specific prescription as to prohibition on importation and exportation of goods, prevention or detection of illegal export of goods, levy of exemption from customs duties, clearance of imported goods and exported goods, etc. and in particular with respect to searches, seizure and arrest of persons and goods in Chapter XIII thereof. Section 108 which falls in this Chapter, reads as follows :- "108. Power to summon persons to give evidence and produce documents.- (1) Any gazetted officer of customs shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document of any other thing in any inquiry which such officer is making in connection with the smuggling of any goods. (2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required : Provided that the exemption under Section 132 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to any requisition for attendance under this section. (4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Indian penal Code (45 of I860 ).'section 107 preceding this Section 108 reads as follows :-" 107. Power to examine persons.- Any officer of customs empowered in this behalf by general or special order of the Collector of customs may, during the course of any inquiry in connection with the smuggling of any goods, - (a) require any person to produce or deliver any document or thing relevant to the inquiry; (b) examine any person acquainted with the facts and circumstances of the case.' The word "enquiry" in Section 107 and the word "inquiry" in Section 108 do not appear to cannote proceedings of two different kinds, but for the fact that when power to summon persons to give evidence and produce documents is envisaged, it is conferred upon any gazetted officer of customs, but when it is with respect to examining persons found during the course of any inquiry in connection with smuggling of any goods, it is conferred upon any Officer of Customs empowered in this behalf by general or special order of the Collector of Customs. The word'enquiry'or'inquiry'has not been defined in the Act, but as meaning may be gathered from the scheme of the Act and particularly, Chapter XIII. A proper officer who has reason to believe that any person who has landed from or is about to board or is on board any vessel within the Indian customs water, any person who has landed from or is about to board, or is on board a foreign-going aircraft, any person who has got out of, or is about to get into, or is in a vehicle, which has arrived from, or is to proceed to any place outside India and any person not included in the above who has entered or is about to leave India as well as any person in a customs area, had secreted about his person, any goods liable to confiscation or any document relating thereto, he may search that person. Besides the above, any person who has secreted about his person any goods, viz. , gold, diamonds, manufacture of gold or diamonds, watches and any other class of goods which is specified in the Official Gazette by the Central government, can be subjected to search by an Officer of Customs empowered in this behalf by general or special order of Collector of Customs. A person secreting any goods liable to confiscation may be screened or x-rayed and arrested by an Officer of Customs empowered in this behalf by general or special order of the Collector of Customs. The power to search is not confined to any person's body, but is extended also to the premises, if the Assistant collector of Customs, or in any area adjoining the land frontier or the coast of India, an Officer of Customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion, will be useful for or relevant to any proceeding under the Act are secreted in any place. In such case, the Assistant collector of Customs or the Officer of the Customs specially empowered by name in this behalf by the Board, as the case may be, may authorise any officer of customs to search or may himself search for such goods, documents or things. There can be a search of any part of any aircraft, vehicle or vessel in India or within the Indian customs water by the Proper Officer, if he has reason to believe that such aircraft, vehicle or vessel is used in the smuggling of any goods or in the carriage of any goods which have been smuggled. These are provided under sections 100 to 106a. Sections 109 and 110 which also fall in Chapter XIII, provide about the power to require production of the order made under Section 47 of the Act permitting clearance of the goods and seizure of goods, documents and things. Sections 107 and 108 which intervene the power to require production of order permitting clearance of the goods and seizure of goods, documents and things, speak of the power to examine persons or to summon persons to give evidence and produce documents as above. Seen in this background, the inquiry in connection with the smuggling of any goods for the purposes either of Section 107 or of Section 108 must relate to the belief that any person has secreted about his person any goods liable to confiscation or there is any reason to believe that any goods are smuggled or intended to be smuggled. The word'smuggling'in relation to any goods has been given a definite meaning in the Act, which means, any act or omission which will render such goods liable to confiscation under Section 111 or Section 113. Sections 111 and 113 are in Chapter XIV of the Act. The words used in Section 111 are, 'the following goods brought from a place outside India shall be liable to confiscation. . . .'. The words used in Section 113 are,'the following export goods shall be liable to confiscation. . . . .'. Export goods means any goods, which are to be taken out of Indi a to a place outside India . All acts thus which are in the course of the search of any person, premises or conveyance, seizure of goods, documents and things with respect to the goods brought from a place outside India and falling under any of the types of goods and any export goods specified in Section 113 of the Act, must be seen as acts during the course of any inquiry. This enquiry in which power is given to summon persons to give evidence and produce documents, is in the nature of a preliminary enquiry to actions that are taken for confiscation of goods, etc. A regular inquiry is held, however, only after notice is given to the owner of the goods to decide whether to order confiscation or to impose penalty. The grounds on which it is proposed to confiscate the goods or to impose a penalty are served upon him and opportunity of making a representation in writing against the grounds of confiscation or imposition of penalty is given to him. This is contemplated under Section 124 of the Act. Although there is nothing like enquiry or trial, stated in any of the provisions in this behalf, it is obvious it is a proceeding in the nature of an enquiry by the officer, who is empowered to impose the penalty or order confiscation of the goods. Although words, in the course of any inquiry, are used as alternative to the expression during the course of any inquiry. Courts always bear in mind that something done during the course of inquiry may bede horsthe enquiry, if done in connection with the smuggling by any officer of customs empowered in this behalf by general or special order [see 1962 Madras Weekly Notes Criminal 168].