Adjudication Manual 1988 - Tuticorin Customs & Publications/Adjudication... · execution of the...

Adjudication Manual 1988

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For Departmental use only

MANUAL OF DEPARTMENTAL INSTRUCTIONS ON ADJUDICATION

CHAPTER VI

CUSTOMS

56. Provisional Release of Seized Vehicles – Pending Adjudication on Deposit of Security – Execution of Bond: - In cases where vehicles are seized by customs officers for carrying contraband goods for action under section 115 of the Customs Act, such vehicles may be provisionally released to the owner pending adjudication on payment of security deposit and on execution of the bond in the form in appendix V. *Assistant Collectors in Central Excise Collectorates are empowered to allow provisional release of the conveyance seized for the violation of the Customs regulations. The bond amount in every case should be the estimated value of the vehicles. The security deposit to be made in terms of the bond will depend on the gravity of the offence committed in relation to the vehicle liable to confiscation under section 115 of the Customs Act. The object of such deposit is mainly to cover the penalty, if any, that may be imposed on the driver/owner etc., under section 117 of the Customs Act. Such deposit should in any case be limited to Rs. 1000 which is the maximum penalty under the Customs Act. The possibility of the driver or the cleaner being charged with being concerned in the unauthorized importation and thus punishable under section 117 of the Customs Act, generally speaking, is remote. Where however, a prima facie case is made out for such punishment a security deposit exceeding of the limits prescribed above may be taken depending upon the gravity of the offence.

Before provisional release of the vehicle it should however, be ensured that the same will not be required as evidence at a later date. If it is likely to be so required the vehicle should not be released even provisionally.

*(F.No.22/32/67-LCII dt.15-4-68)

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57. Cases against Diplomatic and Consular Officers of Foreign Countries in India, how to be dealt with: - Although some of the foreign


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representatives in India is immune from the prohibition and restrictions imposed under the various laws of the country it is necessary in the foreign relations point of view that proper care and caution should be exercised in dealing with any offences under the Customs Act committed by such persons. All officers of Customs or Central Excise competent to adjudge offences should not adjudicate on their own authority any cases against such foreign representatives in the ordinary way but should refer them to and obtain orders from the Ministry of Finance, (Dept. of Revenue) before making any final adjudication.

All such cases therefore should be referred to the Central Board of Excise and Customs, by the Collectorates of Customs/Central Excise.

58. Deleted.

59. Scales of imposition of Fines and Penalties in cases of Contravention of Import trade Control: - All officers competent to impose penalties, fines, etc., under the Customs Act should carefully bear in mind that the fines and penalties imposed in case of contravention of Import Trade Control regulations/restrictions should not be less than the scale prescribed in the instructions issued by the Chief Controller of Imports and Exports from time to time. These instructions should strictly be adhered to while adjudicating such cases.

60. Permission for reshipment within specified period of confiscated goods: - Instances have been brought to the notice of the Board where adjudicating or Appellate authorities permit reshipment of goods within a specified period. There are invariably cases where for one reason or the other reshipment is not effected during the period specified in the order-in-original or order-in-appeal. In the absence of any provision for extension of the time limit for reshipment in the order itself, Custom Houses have taken a view that reshipment beyond the period specified in the order can be permitted only by the next higher authority. This creates avoidable harassment of the passengers if reshipment could not be effected in time on account of unavoidable difficulties.

Board, therefore, desires that adjudicating as well as appellate authorities while permitting reshipment of any goods should clearly state in the order

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that reshipment would he permitted within specified period or such extended period as may be permitted by the concerned Assistant Collector.

These instructions should invariably be kept in view while deciding cases involving reshipment of the goods.

(Board's letter ENo.495/19/87-Cus.VI dated 9.4.87).

61. Adjudication of cases of Gold Smuggling in the form of Crude Jewellery: - The competent adjudicating authority before passing orders in respect of gold imported in the form of crude jewellery, should personally inspect the articles and satisfy himself that they are not in fact crude jewellery.

62. Procedure in respect of seizure of jwellery or precious stones, currency notes, hundis and other securities etc. attempted to be exported: - The following procedure should be adopted in regard to the treatment to be accorded to cases of attempted exports of jewellery or precious stones, currency notes, foreign exchange, hundis, shares and securities in contravention of the provisions of sections 13 and 19 of the Foreign Exchange Regulations Act, 1973.

(i) Cases of export of jewellery or precious stones in which the value of the articles is in excess of the permissible limits and not covered by Reserve Bank of India permit in Form 'J' may be reported to the Enforcement Directorate as soon as they are detected for instituting appropriate enquiries. This, however, is without prejudice to the action to be taken by the Custom House under the Customs Act for violation of relevant provisions of the Foreign Exchange Regulations Act.

(ii) In all cases of unauthorized export of Indian and foreign currency notes, the notes may be confiscated straightaway under the Customs Act and credited to the Govt. account.

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(iii) In respect of cases of export of currency, cheques, travelers cheques, draft and other credit instruments by post where the amount involved does not exceed Rs 1000 penal action may be taken under the Regulations unless Collectors have reason to believe that the sender is not a fictitious person that he has exported, in the past, foreign exchange in small amount under assumed names with a view to avoiding seizure, in which case the matter


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should be reported to Enforcement Directorate. Action against seized credit instruments as provided for in Section 42 of FERA, 1973 must be taken promptly. While taking action under Customs Act against credit instruments, a detailed report be sent to Directorate in cases of seizures of value of more than Rs.50,000/-.

(iv) In regard to export of foreign currency cheques, travelers cheques, drafts and other credit instruments by passengers the position is as under:-

(a) The passengers may be allowed to take with them foreign currency, cheques, travelers’ cheques, drafts and other credit instruments which are obtained from authorised dealers in foreign exchange in India, even though the details of the credit instruments are not endorsed on their passports provided the instruments are actually issued in the name of the passenger concerned and in case of travelers’ cheques and letters of credit, the signature appearing thereon is verified with that on the passport. Foreign exchange to travelers is issued by the banks in the form of travelers’ cheques or letters of credit and it is only in exceptional circumstances that drafts are issued in their favour. In case where bonafides are suspected a detailed report giving the name of the bank issuing the travelers cheques etc; the date of purchase (where available) the name of the purchaser, his passport number and the amount involved may be sent to the Enforcement Directorate for further enquiries.

(b) Where a traveler is a resident of India and has in his possession credit instrument issued in favour of third parties by authorised dealers in India or by banks outside the country, the instruments should be detained and a special report with appropriate particulars stating, inter alia the passport number of the traveler, his full name and address should be forwarded to the Enforcement Directorate for such action as the Enforcement Directorate may deem fit. Action under the Customs Act may be taken in consultation with the Enforcement Directorate.

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(c) Transit passengers who are on a short visit to India may be allowed to take out travelers cheques, drafts etc. obtained by them from banks in India or abroad provided they are made out in their names or endorsed in their favour or where these conditions are not fulfilled, the Collector of Central Excise/Customs are reasonably satisfied about the bonafides of the 'transit passengers'. In cases where credit instruments are acquired by such


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passengers in India they will either be in the form of travelers’ cheques or travelers’ letters of credit and in both these cases, it will be possible for Collectors to verify the identity of the holder.

(d) Specimen copy of the order passed by the Director, DRI confiscating some credit instruments which were attempted to be smuggled out of India, copy of letter written to State Bank for encashment of these credit instruments and copy of order releasing the amount so deposited in the Bank to the party are appended at Appendix XII for guidance of the officers.

(v) In regard to export be post by passengers of rupee cheques drawn on banks in India and of rupee drafts issued by banks in India drawn on their branches or other banks in India action may be taken under the Customs Act. Therefore in all cases of unauthorized export of rupee cheques/drafts, Collectors of Central Excise/Customs may confiscate them straightway under the Customs Act, 1962.

(vi) In regard to hundis the position is that it may be difficult to take suitable action and realize the amounts covered by such documents although appropriate enquiries may be made with the persons in India for contravention of sections 8 and 9 read with section 47 of the Exchange Regulations Act, 1973. Where the amounts involved are below Rs.1000/- the hundis may be confiscated under the Customs Act, 1962 and in case Collectors are unable to realize the value thereof, they may be fined. If, however, the persons, concerning, are suspected to be frequent dealers in such transactions, the case papers may be turned over to the Enforcement Directorate.

(vii) (a) With regard to the disposal of the seized securities the main difficulty is that registration with the companies concerned would be necessary in order to give any effect to any confiscation order passed by the Collector in respect of such documents.

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(b) It may be difficult to take any fruitful action against the securities of foreign companies but the fact of confiscation itself would, no doubt, put the shareholder to difficulty and inconvenience as he would have to comply with the detailed and time consuming procedure before he could obtain duplicates thereof. In such cases it may be useful if the company concerned may be served with a notice, that the original security has been seized and that


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pending satisfactory explanation from the shareholder its release is held up by the Collector. On receipt of such a notice the foreign company may refuse to issue a duplicate but such a refusal will be entirely at their discretion. In such cases the security concerned may be released against payment of appropriate fine.

(c) Where the securities concerned are of Indian companies, similar action can be taken and in this case Indian companies will most likely co-operate with Collectors in exacting the penalty before the document is allowed to be disposed of in terms of the current exchange Control Regulations.

(d) As regard Bearer Bonds and Government Promissory Notes, it is open to the Collectors to confiscate them and refrain the party an option to redeem them on payment of fine. By reason of confiscation the securities etc. effectively pass into the ownership and possession of the Central Government, who may notify the Government, concerned that by reason of the confiscation under the Customs Act the securities have come to be vested in them and that they should be regarded as the holders.

(e) National Savings Certificates are securities and as such their export without the Bank's permission is prohibited. In a number of cases the National Savings Certificates are taken out of India by the holders for purposes of safe custody. As the certificates are not transferable by endorsement to third parties the offence of exporting them without the Banks permit is technical and a reference should be made to the nearest office of the Enforcement Directorate in such cases. In all such cases a special report may be sent to the Enforcement Directorate on detection of the offence for further enquiries and action under the Customs Act should not be taken until the Collector receives communication from the Enforcement Directorate.

(f) Scrip or scrip certificates are not securities within the meaning of section 2 (u) of Foreign Exchange Regulations Act, 1973.

(g) Units or sub-units of the Unit Trust are also securities for the purpose of Foreign exchange regulations Act. These are also transferable. These should be dealt with in the same manner as Bearer bonds and Government Promissory Note.

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(viii) Under the present arrangements the Enforcement Directorate has been authorized by the Government to deal with the cases under the Foreign Exchange regulations Act, 1973. In all cases of infringements where the sums involved are in excess of amounts detailed above under appropriate headings, where the offenders are reported to be traffickers in unauthorized dealings and where it is considered that further enquiries are necessary to bring the offenders to book, Collector may immediately arrange to send a special report to the nearest office of the Enforcement Directorate. Copies of adjudication orders in all cases of infringements detected under the Foreign Exchange Regulations Act should be forwarded to the nearest office of the Enforcement Directorate. It is needless to say, whenever adjudications are made the usual process for compliance with the principles of natural justice, should be followed. The headquarters of the enforcement directorate are at New Delhi. The Directorate has established branch offices at Bombay, Calcutta and Madras and a number of other offices the addresses of which are given below:

1. New Delhi 6th Floor, Loknayak Bhawan, Khan Market, New Delhi – 1100 003.

2. Jaipur SB-109, Lalkothi, Tonk Road, Bapunagar, Jaipur – 302 015.

3. Agra 33/123, Adarsh Nagar, Pathappura, Agra. 4. Bombay Mittal Chambers, II floor, Zonal Office I,

Nariman Point, Bombay. 5. Bombay Janmabhoomi Chambers, I Floor, Zonal Office

II, W.H.Marg, Bombay 1. 6. Goa Shanta Building, no.11-C, 2nd Floor, St. Inez,

Panaji, Goa. 7. Ahmedabad Building ‘B’ Stadium, Oppo. Muncipal

Swimming Pool, Navarangapura, Ahmedabad. 8. Calcutta 8, Linday Street, 2nd Floor, Zonal Office,

Calcutta – 16. 9. Calcutta 225-C, A.J.Ch. Bose Road, Special Unit,

Calcutta – 2. 10. Varanasi 36, Gandhi Nagar, Sigra, Varanasi. 11. Gauhati Piyali Phoken Road, Roha, Bari, Guvahati – 8. 12. Jalandhar 39-A, Green Park, Jalandhar.

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13. Srinagar 151, Raj Bagh, Srinagar. 14. Madras Shastri Bhavan, 2nd Floor, 3rd Block, Haddows

Road, Madras – 600 006. 15. Bangalore 9/1, Madras Bank Road, Bangalore. 16. Calicut Wala Bhavan, Mavoor Road, Calicut. 17. Hyderabad No. 10-3-772, Vijayanagar Colony, Hyderabad-

57. 18. Madurai 42, Basant Road, Central Excise Wing,

Madurai. 19. Trivandrum TC-22/820 (Opp. Head P.O.) C.V.Raman Pillae

Road, Trivandrum.

63. Reallsation of value and Penal Action in Cases of Export of Handis and Cheques in contravention of Foreign Exchange Regulations Act: - When a cheque or hundi is confiscated under Section 111 or 113 of the Customs Act, 1962 read with section 11 of the said Act and Section 13 of the Foreign Exchange Regulations Act, 1973 the cheque or the hundi would thereupon vest in the Government by virtue of Section 126 of the Customs Act, 1962. When the Government acquires title to such cheque or hundi by operation of Law, and not by endorsement and delivery as required by Section 50 of the Negotiable Instruments Act, the Government is not in the position of holder in due course thereof and would not be entitled to the rights of a holder in due course thereof as defined in the said Act. Though the Government in such a situation could not be said to be a transferee within the meaning of Section 130 of the Transfer of Property Act, 1882, the position would be comparable to that of such a transferee. Broadly speaking the Government in such a situation like any other transferee by operation of law, would be entitled to enforce the claim by suing the drawer of the pro-note or in the case of a hundi, the drawer or the drawee thereof. Apart from this, if the amount of the pro-note or hundi has become due, the Government can as well recover the amount by way of set off from the funds in its possession belonging to the drawer or the drawee as the case may be.

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64. Imposition of Penalties etc., in cases involving unauthorized export of Indian Currency: - The instructions regarding export of India Currency contained in paragraph 3 of the Ministry of Finance (Revenue Division) letter F.no.11(1)-Cus.III/49, dated the 13th February 1950


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(reproduced in Appendix VI) are applicable to export to Pakistan only. In respect to countries other than Pakistan also the restrictions Oil the export of Indian currency in excess of permissible limits laid down by the Reserve Bank of India Notification No. F.E.R.A. 105/51-RB, dated the 27th February 1951 (as amended from time to time) may be enforced and the amount of fines in lieu of confiscation wherever they are imposed should be equal to the values of the amount of the currency involved, so as to make it uneconomic for the offender to redeem the notes.

65. Import Trade Control Regulations – Unauthorised Imports – Imposition of fine in lieu of confiscation: - In regard to infringement of Import Trade Control regulations orders are issued from time to time by the Import trade Control Authorities and the Central Board of Excise & Customs which should be strictly observed. Any doubts arising thereform should be referred to the Central Board of Excise and Customs through the Collectors.

66. Unlawful import of Non-dutiable and non restricted but unclaimed goods: - The following procedure should be followed for the disposal of non-dutiable and non-restricted goods which are not claimed by owner, imported without a proper permit. Under the law the only penal action permissible is the imposition of a personal penalty on either the owner or any person concerned in the passing of such goods unauthorisedly, but the goods themselves are not liable to confiscation. They should, therefore, be considered as abandoned goods and dealt with under the provisions of the Customs Act, 1962. The following detailed procedure may be followed.

0

(a) Perishable goods: - A public notice should issue either by hand bill or by notice put up on the notice board of the Land Customs Station nearest to which the goods were seized or both, indicating the nature of the goods seized, the fact that they have not been claimed, and the intention of the Customs officer to auction the same under the provisions of the Customs Act. The date of auction should not be over three days from the receipt of the goods in Land Customs Station. Every effort should be made to dispose of the goods before deterioration sets in. The sale proceeds realized should be adjusted firstly towards the payment of any customs charges like rent etc. Secondly towards the cost of the auction itself and the balance, if any, should be kept in assessment accounts of revenue deposit for a period of one year. Any person who can satisfy the Customs Collector that he is the


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owner of the goods sold can claim payment of the balance amount if he makes an application within one year. If the application is made beyond that period, sufficient cause should be shown to the satisfaction of the Assistant Collector of Land Customs concerned for not making it within such period.

(b) Other Goods: - The general procedure as detailed under (a) will apply. However, the goods cannot be sold within four months from the date of seizure of the same. A notice regarding sale should be published in the official gazette and the adjustment of sale proceeds will be as above. In effecting the sale of restricted goods, arms and ammunitions etc., provisions of special or local laws should be borne in mind.

(ii) When any person claims the balance of sale proceeds of an auction referred to above, the possibility of action under the Customs Act should be considered. The person will either have to be the owner of the one concerned with offence of passing the goods without a permit or through an unauthorised route. A show cause notice can be served on him immediately and the procedure of adjudication gone through before the balance amount is released to him. A penalty, if any, imposed can then be adjusted at the time of payment of the balance of sale proceeds.

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67. Procedure for adjudication of offences under Drugs Act and Rules: - When drugs contravening sections 9 & 10 of the Drugs Act become liable for action under Section 111(d) of Customs Act, 1962 the imposition of a personal penalty should not take the place of confiscating the goods in the ordinary course. In terms of the guarantee provided for under rule 40 of the Drugs Rules, 1955, the consignment is released to the importers before it is ascertained whether the drugs are of a standard quality or not or have been mislabeled etc. By virtue of the guarantee, the importer binds himself not to dispose of the consignment without obtaining the written permission of the proper officer. As such, at the time of adjudication, the goods should be available for confiscation even though they may be in possession of the importer. It is of course, quite open to the adjudicating authority to impose a personal penalty in addition to the confiscation of the goods but where confiscation of goods is possible the personal penalty should not take its place. There may, of course be cases where even though the importer has given guarantee undertaking not to dispose of the goods, such goods are sold or allowed or passed into consumption in contravention of the


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guarantee. It is, therefore, necessary to ensure before adjudicating the case that the goods are actually available for confiscation, for in the absence of the goods, an order of confiscation under Sec. 111 (d) of Customs Act, 1962, which relies merely on the guarantee might be infructuous, In cases, therefore, where action under section 111 (d) of the Customs Act, 1962 is contemplated, it would be advisable to seize the goods before hand and thus ensure that they are available before proceeding to adjudicate. The following procedure for the guidance of the Custom Houses is accordingly prescribed:-

(i) Where, after test, it is found necessary to confiscate the drugs absolutely because they are sub-standard and as such not fit to be allowed for home consumption etc, the drugs should be seized from the importer's premises and brought to the Custom House. Where, however, it is not proposed to confiscate the goods absolutely the drugs need not be brought to the Custom House but sealed and left at the importers premises. If, it is decided by the adjudicating authority to give an option for re-shipment, the goods, in such an event also, need not be brought to the Custom House but should be only sealed. On compliance with the terms of the adjudication order the drugs should be released to the importer. If, however, the terms the adjudication order are not complied with e.g., if the fine in lieu of confiscation, if any, is not paid, the drugs should then be brought to the Customs House.

(ii) An order of confiscation should be passed with or without fine in lieu of confiscation. Where the imported drugs brought for ready use are of sub-standard quality, no option however be given for their clearance for home consumption, but the importer can be permitted to re-export the goods within the period specified. The local Assistant Drugs Controller should of course be consulted in accordance with the current practice of the Custom Houses.

(iii) In addition, personal penalty may be imposed if the offence is deliberate and the circumstances of the case warrant that action.

(iv) Where the goods are not available for confiscation having been disposed of in violation of the guarantee, deterrent penalties should be imposed for the offence of unauthorised importation and also for the breach of the condition of the guarantee.

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The form of guarantee referred to herein should be seen from Appendix VII & VIII.

67-A Prohibition and restrictions under NDPS Act, 1985 and Rules made thereunder regarding Narcotic Drugs and Psychotropic substances: - Possession, import into India, export from India and transshipment of Narcotic Drugs and Psychotropic Substances is completely prohibited under Section 8 of the Narcotic Drugs and Psychotropic Substances Act, 1985 and Rules made thereunder except as provided for in the said Act.

All prohibitions and restrictions imposed by or under NDPS Act, 1985 on the import into India, export from India and transshipment of Narcotic Drugs and Psychotropic Substances shall be deemed to be prohibited and restrictions imposed by or under the Customs Act, 1962 and the provisions of the Customs Act shall apply accordingly as per Section 79 of NDPS Act, 1985.

No Narcotic Drug or Psychotropic Substance specified in the NDPS Act 1985 and rules made therein shall be exported out of India/imported into India without export authorization/import certificate issued by the Narcotics Commissioner and in a manner specified in the said rules.

68-69. Deleted.

70. Citing of proper authority in the adjudication order where Goods are absolutely Confiscated: - Where absolute confiscation of the goods is ordered the relevant Act authorising such absolute confiscation must be cited in the adjudication orders e.g. section 3(2) of the Imports & Export (Control) Act. Unless the orders of adjudication are precise and correctly worded, they are open to challenge. All officers competent to adjudge offences therefore should carefully note that the provisions of Law under which confiscation etc. is ordered must be clearly and unambiguously stated in such orders.

71. Whether same goods can be confiscated twice for misdeclaration of value and contravention of import Trade Control Regulations: - In order to make the position quite clear it would be better to illustrate it by quoting a specific case; the case is:-

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A consignment of Toymonicas valued at Rs.1357 was imported from the United States of America without a valid import licence. As the goods originated from a dollar area and were a 'nil' item for licensing purposes, they were confiscated absolutely by a Collector of Customs. The importers appealed to the Central Board of Excise & Customs against Collectors Order but it was rejected. Against the Board's order, the importers preferred a revision petition to the Government of India who, however, directed that the offending goods be released for home consumption on payment of a fine of Rs.630 in lieu of confiscation. When the case was taken up for action by the Customs in accordance with the Government of India orders quoted above it was discovered that the goods had also been undervalued. This point had not been considered at the time of presentation of the Bill of Entry when the question of Import Trade Control Offences only was considered. The same goods were again confiscated by the Collector of Customs, for the offence attracting clause 37 of Section 167, Sea Customs Act, and an option was given to clear them for home consumption on payment of an additional fine of Rs.1500. Against this new order (original) of the Collector the importer preferred an appeal to the Central Board of Excise & Customs who in the peculiar circumstance's of the case held the view that the Government of India having an exercise of its revisional powers under the Sea Customs Act, 1878, directed the release of the goods on payment of a specified sum as fine, the Collector was in law bound and to carry out this order and to release the goods accordingly.

Once the goods are released and are taken away, the Collector would cease to have jurisdiction to pass an order confiscating the same. The goods had not yet been released, and that the owner had not yet paid the amount of fine although he seemed to have offered to do so. The legal effect of the orders, including the order of the Govt. of India, is that until they are so released the goods stand confiscated to the Govt. and by section 184, they vest in the Government subject only to the right of the owner to redeem them on payment of fine. In the eye of the law, the goods belong to the Government of India unless and until the fine is paid and the goods are released. It follows, therefore, that since at the time the Collector made the order of confiscation the goods already stood confiscated to the Govt. and were the property of the Government and thus the Collector's (second) order confiscating the same goods again for under-valuation is inoperative and null

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and void. This is the legal position in a case where the goods had been confiscated by the Collector Customs and the fine in lieu of confiscation had not been paid by the importers. In case of this nature Collector has no authority to make the second order of confiscation before fine has been paid and while the goods already stood confiscated.

A question, however, arises whether the position would change if the fine in lieu of confiscation had been paid and ownership had reverted to the importer and whether in that case the Collector of Customs could lawfully again proceed against the same goods in respect another offence. The correct legal position in this changed context and circumstances is that there is nothing in Customs Act to bar an action for an offence on the ground that it had not been taken earlier when action was taken in respect of another offence concerning the same goods. If therefore any goods are seized once and confiscated or any goods in customs custody are confiscated, and the fine imposed in lieu of confiscation is set aside in appeal or revision it would still be lawful thereafter to seize the goods under section 178 in connection with a distinct offence for which action had not been previously taken, after the ownership has reverted to the person concerned. The principle contained this paragraph may be applied mutatis mutandis to Central Excise cases.

72. Deleted.

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73. Imposition or enhancement of personal penalty in adjudication cases under section 122 of Customs Act, 1962: - There may be a situation where the appellant authority had quashed an adjudication order in which a fine in lieu of confiscation was imposed with or without personal penalty with directions for making a de-novo adjudication. The question arises whether at the time of fresh adjudication it would be legally correct for the adjudicating authority to impose a fresh personal penalty where no penalty was initially imposed or to impose a penalty higher than one that may have been imposed in the quashed order. The correct legal position is that section 111 of the Customs Act, 1962 provides for dealing with offences enlisted therein. Neither this section nor any of the provision in the said act provides any guiding principles as to when any of the penalties prescribed therein could be imposed. In the circumstances the officer making the adjudication has full discretion to inflict the penalty or penalties provided therein, which in his view may be just and adequate to meet the situation


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existing in a particular case. The fact that the adjudicating officer did not impose any personal penalty on the previous occasion, i.e. in the initial (quashed) adjudication, would not debar him from doing so once the said proceedings is quashed by the appellate authority and he proceeds ahead to make a fresh adjudication. This, however, does not mean that personal penalty could be levied against a person who may not be concerned with any of the offences described therein and this essential condition should be satisfied before the punishment of personal penalty could be inflicted. The principles contained in this paragraph may be followed in Central Excise cases as well.

73A. Onus of proof that goods are smuggled or imported illegally on Customs Department: - (i) The Customs authorities should exercise caution in deciding cases involving confiscation of goods, merely suspected to have been smuggled and to which section 123 of the Customs Act, 1962 does not apply. While considering the question of onus of proof in such cases, the High Court of Calcutta observed as follows:

“However, the point is that throughout the order the Assistant Collector assumed that the burden of proof was on the Petitioner No.1 to prove that the goods in his possession were not smuggled into India or not imported illegally. According to him the Petitioner No.1 was unable to prove that the goods that were seized were not smuggled goods and had not been illegally imported. In my opinion the entire approach is contrary to law and the order cannot be supported. The burden of proof in this case did not lie on the Petitioner No.1 or either of the petitioners, but the burden of proof was on the customs authority to prove beyond reasonable doubt that the goods had been illegally imported and were smuggled goods. The mere fact that the goods were of foreign make was not sufficient to discharge this onus or shift the same upon the petitioner. If the respondents had discharged the initial onus of showing that the goods had been illegally imported, then they could confiscate the same. For purpose of penalty they would have to go further and show that the petitioner no.1 had been in possession of the said goods with the knowledge that they were smuggled. That, of course, has never been proved, because the initial onus has not been discharged by the respondents.

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(ii) It is now well settled that except for commodities which attract the provisions of section 178A of S.C.A. or section 123 of the Customs Act, the burden to prove that he goods seized are smuggled is on the customs authorities and save in a very exceptional class of case, this burden never shifts. Even the provisions of section 106 of the Evidence Act do not help in shifting the onus. However, in a case where the person from whose possession the goods are recovered, admits that he imported these goods, he may, by aid of the principles under section 106 of the Evidence Act, be called upon to show that he had a licence for such importation. In case the goods were recovered from a person who is not proved to be the importer of the goods and claims to be a purchaser of the imported articles, onus is always on the Customs authorities to establish that the goods were imported contrary to any import prohibition or restriction, and they have to bring home the guilt to the person alleged to have committed a particular offence by adducing satisfactory evidence.

(iii) There are three essential ingredients of the offence under section 167 (8) of the S.C.A. or under section 111(d) of the Customs Act:

(1) that the importation of certain goods has been prohibited or restricted;

(2) that the goods in question belonging to such category, have been imported into India i.e. the goods are of foreign origin;

(3) that such importation has been contrary to such prohibition or restriction.

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Unless all the three ingredients proved by the department, the offence is not established. In other words even if the import of a particular commodity has been prohibited for quite some time and it is also proved that the seized goods of that commodity are of foreign origin, it would not be sufficient evidence to hold that the goods seized are smuggled, unless there is evidence which conclusively leads to the inference that the said goods were imported contrary to any prohibition or restriction. It has been held that the circumstances that a person makes inconsistent statements regarding the manner in which he came into possession of the articles, recovered from him, or that he did not maintain proper accounts to show the purchase of the article or, that the purchase vouchers produced were found to be forged cannot necessarily lead to the conclusion that the articles were smuggled or


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were imported contrary to any prohibition or restriction. The evidence to justify an inference of smuggling should be one which is relevant for proving the unauthorized importation of the goods and not the unauthorized possession of the goods.

However, once there is evidence relevant for the consideration of the adjudicating authority and it reasonably leads to an inference that the goods were imported contrary to any import prohibition or restriction; the Courts are not likely to interfere with the order of confiscation on the ground of insufficiency of the evidence. In fact in Ambala’s case the Supreme Court upheld confiscation of certain items which based merely on a retracted admission of the owner of the goods.

(iv) It is further well settled that (a) as soon as it is shown that certain goods have been imported contrary to the statutory prohibition and restriction are liable to confiscation and for confiscation it is not necessary to establish that the person from whose possession the said goods have been seized is concerned with the illegal importation, as it is necessary for awarding the penalty and (b) the question of bonafides of the person from whose possession the goods have been taken is immaterial, once it is shown that the goods by whomsoever the importation may have been made, were imported in contravention of the statutory prohibition or restriction.

(v) If the goods are resnullius i.e., are unclaimed and they are not seized from anybody's custody or possession, it would be open to the Department to confiscate them as soon as it is found that they are goods of foreign manufacture and the importation of such goods is prohibited or restricted.

(vi) In view of the foregoing, the investigations should be primarily directed to procuring evidence which would be relevant for holding the goods as smuggled, though we should not discard our enquiries regarding the manner in which the goods were acquired by the person from whose possession they were recovered. It must also be pointed out that the purpose of these instructions is not to slacken anti-smuggling measures or to discourage town seizures but to make our investigations more purposeful, so that they lead to adjudications which are based on sound legal footings.

(F.No.4/116/62-Cus.VI and 4/149/65-Cus.III).

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73B. Enhancement of adjudication powers of Deputy Collectors etc.: - The Board has recently had an occasion to review the powers of adjudications of Deputy Collectors and Assistant Collectors. In regard to the powers of adjudications of Asstt. Collectors it had been decided that they should be permitted to exercise the full statutory powers of adjudicating cases involving goods valued upto Rs.25,000/- including the power for imposition of penalty in deserving cases upto five times of the value of the goods in terms of the Section 112 of the Customs Act, 1962.

2. It has also been decided that the powers of Deputy Collectors should continue to adjudicate cases where the value of goods is less than Rs. 1 lakh and the normal fine is less than Rs. 1 lakh, However, taking into account the fact that in several cases involving mis-declarations, under-valuation and other offences of a deliberate nature, need would arise for imposition of penalties exceeding Rs. 1 lakh by Deputy Collector, it has been decided that the Deputy Collectors may impose personal penalties upto Rs. 2 lakhs.

3. A large number of cases where penalties have to be imposed on carriers under Section 116 of the Customs Act for not accounting for the goods were required to be adjudicated by the Collectors. In such cases, the penalty is really in the nature of duty, and there is little scope for arbitrariness. The Board therefore, has also decided the Deputy Collectors in charge Manifest Clearance Departments of the Custom House, Bombay, Calcutta and Madras may be permitted to exercise full statutory power only in respect of adjudication of cases under Section 116 of the Customs Act, where goods loaded in conveyances are not satisfactorily accounted for by the carriers.

4. In view of the foregoing, Board’s orders shall stand modified to the extent indicated above.

(CBE&C F.No.450/93/77 Cus.IV dated 4.2.80).

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73C. Enhancement of Adjudication Powers of Deputy Collectors of Customs: - In the Finance Bill 1984, which received assent of the President on the 11th May 1984 and enacted as Finance Act, 1984 (21 of 1984) certain categories of cases under the Customs Act, 1962 as spelt out in the clause 40 of the Finance Bill, 1984 amending Section 129A of the Customs Act, 1962 have been taken away from the jurisdiction of the Customs, Excise & Gold Control Appellate Tribunal (CEGAT). Consequent upon the exclusion of


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the jurisdiction of the Appellate Tribunal, a provision has been made for revision to the Central Government of Orders-in-appeal passed in such cases. With a view to ensuring that in all cases pertaining to the excluded categories, the first appeal lies to the Collector (Appeals) and the second to the Revisionary Authority i.e. the Joint Secretary to the Govt. of India, Ministry of Finance (Dept of Revenue), New Delhi, it has become necessary to invest the Deputy Collectors with full statutory powers of adjudication in relation to the excluded categories of cases, viz.

(a) Any goods imported or exported as baggage;

(b) Any loaded in a conveyance for importation into India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at such destination are short of the quantity required to be unloaded at their destination.

(c) Payment of Drawback as provided in Chapter-X and the rules made thereunder.

2. Under section 122 of the Customs Act, 1962, Deputy Collectors are empowered to adjudicate cases without any value limit, although by issue of executive instructions their adjudication powers have been restricted to monetary ceilings.

3. In the context of the new provisions as contained in the Finance Act, 1984, it has, therefore, been decided by the Government that in partial modification of Board’s earlier instructions on the subject, the Deputy Collectors may exercise full statutory powers vested in them under section 122 of the Customs Act, 1962, in adjudicating cases pertaining to the excluded categories only. Powers of adjudication of the Deputy Collectors in respect of cases other than the above mentioned excluded-categories of cases, however, would remain unchanged.

It should be ensured that the cases falling in the excluded categories which have been taken away from the jurisdiction of the Tribunal are adjudicated at the level of the Deputy Collectors and that the preamble to the orders contain clear directions that first appeal against that appeal will lie with the concerned Collectors (Appeals) and the second appeal will lie with the Revisionary Authority, i.e. the Joint Secretary to the Government of India,

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Ministry of Finance, (Department of Revenue), New Delhi. Additional Collector is also, basically a Deputy Collector and while adjudicating baggage cases he should adjudicate it as Deputy Collector.

(Bombay Custom House S.O.No.6808).

73D. Orders in appeal passed by the Collector (Appeals) under section 128A(3) of the Customs Act, 1962 and the corresponding provision of Central Excise Act, 1944 -Communication thereof:- Section 128A(5) of the Customs Act and the corresponding provision of Central Excise Act, 1944 require that the copies of the order passed by the Collector (Appeals) under Section 128(3) of the Customs Act, 1962, and the corresponding provision of the Central Excise Act, 1944 shall be communicated to the Collector Customs or the Collector of Central Excise as the case may be. Yet sometimes the copies are being marked to the subordinate authorities like A.C. (Refund), A.C. (Tribunal Cord., Unit) etc. This causes delay in taking a decision under section 129A(2) of the Customs Act, 1962 and corresponding provision of Central Excise Act, 1944, and results in delay in fling appeal to the Tribunal. Since it is statutory requirement, the Collector of Customs and Central Excise (Appeals) should ensure that in future all the copies of the orders are also endorsed directly to the executive Collectors concerned.

(Board’s letter F.No.390/123/85-A.U.dt.30.12.85).

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73E. Extension of summary procedure for disposal of adjudication: - In para 5.13 of their 89th Report, the Estimates Committee have recommended that the summary procedure of adjudication presently adopted in Baggage cases should be extended to even other cases where the parties agree to dispensing with the requirement of Show-Cause Notice. After careful consideration of the recommendations made by the Committee, it has been decided to extend the summary procedure, where the parties so desire in writing, to other similar simple cases besides baggage cases, if they do not involve determination of any question having a relation to the tariff classification and rate of duty or the value of goods for the purposes of assessment or frauds prosecution or preventive detention or complex points of facts or law, etc. It may, however, be emphasized that in every case of summary adjudication proceedings adopted, the waiver of show cause notice should be only on the basis of a written request received in this behalf from the concerned party.


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(Board’s letter F.No.394/233/84-Cus. (AS) Pt.V dt.6.9.85).

73F. Non-levy of penalty in lieu of duty on short landed goods: - Goods which are eligible for conditional exemption, when short landed, cannot be given the benefit of ‘Nil’ or concessional rate of duty while imposing penalty under section 116 of the Act. While adjudicating such cases, a cautious approach should be adopted to safeguard revenue. The obvious intention behind the provision under section 116 is to recover the duty on goods that have not been landed or accounted for satisfactorily and accordingly interest of revenue would require that conditional benefits or concessional rates of duty are not extended to short landed or not satisfactorily accounted for.

(Board’s F.No.442/16/85-Cus.IV. dt.18.11.85).

73G. Import of dry fruits – instructions contained in Board’s letter F.No.493/126/86-Cus. VI dated 22.12.86.: - There is very high profitability in the imported dry fruits possibly on account of under-invoicing resorted to by the importers in connivance with the exporters abroad and partly on account of the increased seasonal demand. According to certain reports, the profitability is over 200%. This has resulted in importers importing large quantities of dry fruits and producing a smaller value of REP licence with a view to get the excess value adjudicated for ITC purposes. Such imports have also been effected on additional licences issued to diamond exporters. Possibility of import of dry fruits on such licences and with heavy under-invoicing be kept in mind while adjudicating the cases and imposing redemption fine. Margin of profit available in such cases should be taken into consideration while imposing redemption fine. With a view to ensuring that the orders issued in adjudication are sustained in appeal, necessary market enquiries be made and rely upon the report of market enquiry in the adjudication proceedings. In appropriate cases it should even be possible for the adjudicating officer to order absolute confiscation, if the facts of the case so warrant.

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73H. Clearance of personal and home computers under baggage rules: - Personal and home computers with a memory of not exceeding 64-K were allowed under Baggage Rules. Since the Issue of these instructions in November, 1984, the import policy for computers has been considerably liberalized and computers up to a value of Rs. 10 lakhs have been placed


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under OGL. Further, with the advancement of technology personal computers with memory ranging upto 164-K or 232-K are available in the international market at very reasonable rates. The duty leviable on computers when imported as baggage is also more than the general rate of duty applicable to computers when imported as cargo. It has, therefore, been decided that there should be no objection to permit import of all personal and home computers under the Baggage Rules, 1978. Imports in baggage are only for bonafide purposes. In order to ensure that computers are not imported as baggage for sale, the Assistant Collectors may ensure that passengers importing computers in baggage have either the requisite qualification or the background or experience in use of computers.

Instructions have earlier been issued under Ministry’s letter of even number dated 28.5.83 permitting import of computers as baggage under Rule 4 of the Transfer of Residence Rules, 1978. In view of the instructions now contained above, personal and home computers can be imported under rule 2 of the Transfer of Residence Rules, 1978 also provided that the person transferring their residence satisfies the conditions stipulated in the said rule. In the case of such imports also, it would be necessary for the Assistant Commissioners to satisfy that persons importing computers under the Transfer of Residence Rules have the requisite qualifications or the background or the experience in the use of computers.

(Board’s letter F.No.497/14/83-Cus.VI. dt.18.11.86).

73I. Option in lieu of confiscation – Exercise of discretion – Recording of reasons: - The Government of India, Ministry of Finance, (Department of Revenue) observes that while absolute confiscation/exercising their discretion no reasons are being recorded by the adjudicating officers. Principles of Administrative Law require that discretion should be exercised in a judicious manner, i.e. action should be supported by reasons to enable the courts to look into the validity of these reasons. In the absence of reasons the departmental order, if challenged in courts, may not stand.

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It is, therefore, impressed upon all the adjudicating authorities that even for exercise of discretion, i.e. for not giving the option to redeem the goods on payment of fine in lieu of confiscation and for ordering absolute confiscation reasons therefore should be given in the order-in-original.


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(Bombay C.H.S.O.6786 dated 8.8.83).

73J. Documents seized under the provision of section 110 of the Customs Act, 1962 – Providing copies thereof to respondents regarding:-

Of late the Board has been receiving complaints from time to time from importers/exporters, companies and business houses that when raids are conducted by the Customs and central Excise Officers a large number of documents are seized and taken away and they are not permitted to take copies of extracts therefrom, resulting in inconvenience in their day-to-day work. In view of of specific provision of law (Section 110(4) of the Customs Act, 1962) it is incumbent on the part of the seizing officer to provide an opportunity to the respondents to make copies of such seized documents or take extracts therefrom in the presence of an officer of customs. Needless to say that a responsible officer should supervise the inspection of seized documents when copies are being made or extracts taken so that no tampering/destruction of the documents take place.

73K. Import of Fire Arms: - At present import of fire arms as baggage is also not allowed vide ITC Public Notice No.131 dated 13.11.86. Earlier when fire arms were allowed as baggage but not as gift Board had issued instructions vide letter F.No.495/9/84-Cus. VI dated 13.6.86 that fire arms imported without CCP should not be allowed clearance on redemption fine but should be confiscated absolutely. Now when the import of fire arms is not allowed even as baggage those imported as such should also be confiscated absolutely.

73L. Adjudication of Baggage Cases: - As at present there is no upper limit for importation of goods by various categories of passengers it will suffice if the duty leviable is recovered and there will be no need for initiation of adjudication proceedings on account of contravention of the provisions of Import Trade (Control) Order as long as the goods brought by the passenger constitute bonafide personal and household effects and are not for sale or trade purposes. However, in cases where the goods imported appear, from their nature, number, value etc. to be for sale or trade purposes or when an attempt is made to smuggle goods by concealment or mis-declaration or when any other law is contravened, the usual penal

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proceedings for confiscation of goods and imposition of fines/penalties will have to be initiated apart from charging the duty that may be applicable.

(F.No.495/92/79-Cus.VI dated 11.7.80).

73M. Monitoring of adjudication cases - need for keeping a careful watch on completion of proceedings in 'REM' and in 'PERSONEM' in all adjudication cases: - Regarding.

It has come to the notice of the Ministry that in a Collectorate in 1969 in a major case of seizure involving contraband goods valued over Rs.41 lakhs, no departmental action for imposition of penalty was taken against the 19 persons involved so far, though 10 of them have been convicted by Court of Law. Details of the cases are as follows:-

On information, a Customs party keeping surveillance in a vulnerable coast noticed unloading of some goods from a vessel and a truck waiting nearby to transport the goods. Soon after completion of the unloading operations and before the loaded truck could leave the spot, the Customs party rushed in, opened fire and succeeded in detaining the loaded truck with the driver and three other persons as well as the vessel with 6 crew members. Another 4 persons were later traced out from the surrounding jungles. In all 153 packages of wrist watches, suiting, shirting and other miscellaneous goods valued over Rs. 41 lakhs were seized, including the vehicle and vessel.

After investigations, show cause notices were issued to 19 persons involved in the case for confiscation of the goods in April/May, 1970. But while issuing the show-cause notice penal provisions of section 112 for imposition of penalty against the persons involved and for confiscation of the vehicle and vessel (thus engaged) under section 115 of the Customs Act were not invoked. Subsequently the Collector passed adjudication order confiscating the contraband in July, 1970. This was without prejudice to any action that may be taken against the vehicle and vessel under 115 of the Customs Act.

Immediately after passing the adjudication order, prosecution complaint was filed in the Jurisdictional Court of Law in July, 1970. The judgement in the case was passed in March, 1972 in which out of 19 accused, 2 persons were discharged, 1 person died during the trial, 1 accused could not be traced, 2 persons were convicted and the rest were acquitted. Against the acquittal of

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13 persons an appeal was filed in High Court. The High Court passed its judgement in September, 1977 in which 8 persons were convicted, one person was acquitted and one died after filing the appeal and on 3 persons no notice could be served. Regarding one absconder (owner of the vessel) Collector had ordered to revive the prosecution proceedings.

Though the department case against the persons involved was strong, no departmental action against them for imposition of penalty under section 112 of the Customs Act was taken. Action for confiscation of the seized vehicle and vessel also was totally lost sight of during long 15 years. The successive officers in charge of the Collectorate also had not obviously checked up the records of this case, as well as various registers maintained in that Collectorate relating to adjudication of the case, disposal of goods, etc. The fact that departmental proceedings against the seized vessel and vehicle are pending seems to have escaped the attention of the officers who may have inspected the formations also.

The case cited in earlier paras underlines the need for proper scrutiny and follow-up action by superior officers at various levels, in respect of cases detected within the Collectorate. In order to avoid recurrence of such cases of the type referred to above, the Ministry desires that wherein proceeding in ‘rem’ would have been completed, leaving aside the proceedings in ‘personem’ under the Customs Act, it would be necessary to pursue the records of such cases where the proceedings were split to ensure that whatever proceedings pending, are completed without fail. Ministry desires that such serious lapses as stated above should not recur.

Further, prosecution should normally be launched only after completion of the departmental adjudication proceedings in ‘rem’ as well as in ‘personem’. But proceedings of the case for prosecution should simultaneously, be taken so that final decision on prosecution is taken immediately on completion of the adjudication proceedings.

Past cases of similar nature may please be examined to take action wherever necessary.

(Govt. of India, Ministry of Finance, (Department of Revenue), New Delhi’s letter F.No.711/16/84-LC(AS) dated 14th September, 1984).

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73N. General: - The Central Appraising Manual contains a chapter on adjudication. This chapter contains old and new instructions/guidelines concerning adjudication. It is suggested that this chapter in the Appraising Manual may be referred to as and when more detailed instructions are needed.

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