Distinguish between scope of section 155(1) and Section 155(2) of the Customs ACt 1962. Analysis of the protection under Section 155(2) that criminal proceedings are also covered in the word proceedings other than suit . You can rely on customs cases laws and rules of general interpretation for substantiating that criminal proceedings are also covered in the word proceedings other than suit.

 *Distinguishing between Section 155(1) and Section 155(2) of the Customs Act, 1962*

155. Protection of action taken under the Act.

(1)No suit, prosecution or other legal proceedings shall lie against the Central Government or any officer of the Government or a local authority for anything which is done, or intended to be done in good faith, in pursuance of this Act or the rules or regulations.

(2)No proceeding other than a suit shall be commenced against the Central Government or any officer of the Government or a local authority for anything purporting to be done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof, or after the expiration of three months from the accrual of such cause.

Section 155(1) of the Customs Act, 1962, provides protection to the Central Government, its officers, and local authorities against suits and other proceedings, including criminal proceedings. This protection is limited to actions taken in good faith and in pursuance of the Act or any rules ( Section 2(36)  or regulations  Section 2 (35 ) made thereunder.

On the other hand, Section 155(2) provides a broader protection, stating that "no proceedings other than a suit  shall lie against the Central Government or any officer of the Government or local authority for anything purporting to be done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof, or after the expiration of three months from the accrual of such cause.

Analysis of the  protection under Section 155(2) 

We submit that the word "proceedings" in Section 155(2) is broad enough to cover not only civil proceedings but also criminal proceedings. The use of the word "proceedings" without any qualification or limitation indicates that the legislature intended to provide a comprehensive protection to the Central Government, its officers, and local authorities.

. *Rules of General Interpretation*: According to the rules of general interpretation, when a word or phrase is used in a statute without any qualification or limitation, it should be given its broadest meaning. In this case, the word "proceedings" should be interpreted to cover all types of proceedings, including criminal proceedings.

In light of the above, we submit that the protection under Section 155(2) extends to criminal proceedings as well.

DEFENSE REPLY ON BEHALF OF THE RESPONDENT/ACCUSED UNDER SECTION 155 OF THE CUSTOMS ACT, 1962

 Defense Reply for Protection Under Section 155 of the Customs Act, 1962

BEFORE THE HONORABLE COURT

IN THE MATTER OF:
[Case Title and Details]

DEFENSE REPLY ON BEHALF OF THE RESPONDENT/ACCUSED UNDER SECTION 155 OF THE CUSTOMS ACT, 1962

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1. Preliminary Submissions

1.1. The present proceedings against the Respondent/Accused are not maintainable in light of the statutory protection granted under Section 155 of the Customs Act, 1962.

1.2. Section 155 explicitly provides that:

"No suit, prosecution, or other legal proceeding shall lie against the Central Government or any officer of the Government for anything done or purported to be done in good faith under this Act unless the complaint is filed within three months from the date of the act complained of."

1.3. The Respondent has acted strictly in accordance with the provisions of the Customs Act, 1962, and within the scope of official duties. There has been no violation of law or malafide intention on the part of the Respondent.

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2. Reliance on Case Laws

2.1. Assistant Collector of Central Excise, Guntur v. Ramdev Tobacco Company
The Hon’ble Supreme Court interpreted similar protections under Section 40(2) of the Central Excise Act, holding that "other legal proceedings" include only those proceedings similar to suits and prosecutions. Administrative actions taken in good faith are protected, and the limitation period of six months must be strictly adhered to.

2.2. S.P. Garg v. State of Delhi
In this case, the Hon’ble Delhi High Court emphasized that prior sanction is mandatory for initiating proceedings against Customs officers for actions performed under the Act. Further, any such proceedings must be initiated within three months of the alleged act.

2.3. Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni
The Hon’ble Supreme Court reiterated that statutory protections for officers aim to prevent frivolous litigation and ensure that grievances are addressed within a reasonable time frame.

2.4. Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills
The Court held that statutory protections requiring notice periods or time limitations are intended to provide an opportunity to resolve disputes without resorting to litigation and to safeguard officers acting in good faith.

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3. Similar Protections Under Other Indian Laws

3.1. Central Excise Act, 1944 (Section 40(2)): Officers are protected from legal proceedings for actions taken in good faith, with a limitation period of three months for initiating complaints.

3.2. Major Port Trusts Act, 1963 (Section 120): Legal proceedings must be initiated within six months of the alleged act.

3.3. Cantonment Act, 1924 (Section 273): Protects officers for acts done in good faith, with a one-month notice requirement and a six-month limitation period for suits.

3.4. Delhi Municipal Corporation Act, 1957 (Section 487): Requires a two-month notice period before initiating legal action, ensuring adequate time for resolution.

3.5. The Police Act, 1861 (Section 42): Imposes a three-month limitation period for suits against police officers for acts done in good faith.

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4. Application of Section 155 of the Customs Act

4.1. The Respondent acted within the scope of duties as prescribed under the Customs Act, 1962, and in good faith to enforce the law. There is no evidence of malafide intent or violation of the Act.

4.2. The present complaint has been filed beyond the statutory limitation period of three months as prescribed under Section 155(2) of the Customs Act. Therefore, the proceedings are barred by limitation and are liable to be dismissed.

4.3. The actions of the Respondent were in furtherance of statutory obligations and are protected under Section 155. The complainant has failed to demonstrate any actionable wrongdoing or lack of good faith.

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5. Relief Sought

In view of the above submissions, it is respectfully prayed that:

1. The Hon’ble Court dismiss the complaint against the Respondent as being barred by limitation under Section 155(2) of the Customs Act, 1962.
2. The Hon’ble Court recognize the statutory protection granted to the Respondent for actions performed in good faith under the Customs Act, 1962.

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6. Prayer for Costs

It is further prayed that the Hon’ble Court award costs to the Respondent for being subjected to unnecessary and frivolous litigation.

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Submitted by:
[Name of the Counsel]
[Designation]
[Contact Information]

Date:
[Insert Date]

Place:
[Insert Place]

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This reply is structured to defend the Respondent effectively using statutory protections, case laws, and comparable provisions in other laws, while emphasizing the absence of malafide intent or statutory violations

The Supreme Court of India has deliberated on the protections afforded to officers under various statutes, particularly focusing on the time limitations for initiating legal proceedings

 The Supreme Court of India has deliberated on the protections afforded to officers under various statutes, particularly focusing on the time limitations for initiating legal proceedings. Below are key judgments elucidating these protections:

1. Section 40(2) of the Central Excises and Salt Act, 1944

In the case of Assistant Collector of Central Excise, Guntur v. Ramdev Tobacco Company, the Supreme Court examined whether the term "other legal proceeding" in Section 40(2) encompassed departmental actions such as adjudications and penalties. The Court applied the ejusdem generis rule, determining that "other legal proceeding" refers to proceedings of a nature similar to "suit" and "prosecution," thereby excluding departmental or administrative actions from the six-month limitation period prescribed by Section 40(2).

CaseMine

2. Section 155 of the Customs Act, 1962

In S.P. Garg v. State of Delhi, the Delhi High Court addressed the protection granted to customs officers under Section 155 of the Customs Act. The Court emphasized that for the initiation of any legal proceeding against a customs officer for actions performed under the Act, prior sanction is required, and such proceedings must be initiated within the stipulated three-month period from the date of the alleged act.

Indian Kanoon

3. Section 120 of the Major Port Trusts Act, 1963

In Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni, the Supreme Court interpreted Section 120, which provides that no suit or other proceeding shall be commenced against a Board or any member or employee thereof for any act done in pursuance of the Act after the expiration of six months from the date of the act complained of. The Court held that this provision aims to protect officers from prolonged vulnerability to legal actions, ensuring that any grievances are addressed within a reasonable and specified time frame.

4. Section 487 of the Delhi Municipal Corporation Act, 1957

In Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, the Supreme Court dealt with Section 487, which requires that no suit shall be instituted against the Corporation or any officer or employee thereof in respect of any act done in pursuance of the Act until the expiration of two months after notice in writing has been delivered to the Corporation or left at its office, stating the cause of action, the relief sought, and the name and residence of the intending plaintiff. The Court observed that this provision is intended to give the Corporation an opportunity to reconsider its legal position and make amends, if necessary, without the need for litigation.

5. Section 273 of the Cantonment Act, 1924

In Chief Executive Officer, Cantonment Board, Secunderabad v. Surender Singh, the Supreme Court examined Section 273, which stipulates that no suit shall be instituted against any person for anything done under the Act, or in good faith intended to be done under the Act, until the expiration of one month after notice in writing has been delivered to him or left at his office, stating the cause of action, the relief sought, and the name and residence of the intending plaintiff. The Court held that this provision is designed to protect officers from unnecessary litigation and to provide them with an opportunity to settle claims without recourse to the courts.

These judgments underscore the judiciary's recognition of statutory protections for officers, balancing the need for accountability with safeguards against protracted and unwarranted legal proceedings.

whether Section 155(2) of the Customs Act is pari materia with unamneded Section 40 (2) of the Central Excise and Salt Act 1944 . Therefore, this case of Supreme Court of India, Public Prosecutor, Madras vs R. Raju & Anr. Etc on 8 August, 1972, has applicability for protection seeking from Prosecution under Section 155(2) of the Customs Act.

 

Analysis of Section 155(2) of the Customs Act and its Comparison with Unamended Section 40(2) of the Central Excise and Salt Act, 1944

To determine whether Section 155(2) of the Customs Act, 1962 is pari materia (similar in substance and scope) with unamended Section 40(2) of the Central Excise and Salt Act, 1944, and whether the Supreme Court ruling in Public Prosecutor, Madras v. R. Raju & Anr. (1972) applies, we must analyze the provisions and the judgment in detail.

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1. Provisions in Question

Unamended Section 40(2) of the Central Excise and Salt Act, 1944:

"No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of."

Section 155(2) of the Customs Act, 1962:

"No proceeding, other than a suit, shall be commenced against the Central Government or any officer of the Government for anything done or purported to have been done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof or after the expiration of three months from the accrual of such cause."

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2. Comparison of the Two Provisions

Aspect	Unamended Section 40(2)	Section 155(2) of the Customs Act
Scope	Covers suits, prosecutions, and other proceedings	Excludes suits; applies to prosecutions and other proceedings
Limitation Period	Six months from the accrual of the cause of action	Three months from the accrual of the cause of action
Notice Requirement	No notice requirement	Mandatory one-month prior notice for prosecutions and other proceedings
Good Faith Protection	Implicit under Section 40(1)	Implicit under Section 155(1)

Key Similarities:

1. Both provisions impose a time limitation for initiating legal proceedings.
2. Both aim to protect government officers and the government from delayed and frivolous litigation for acts done in the course of duty.

Key Differences:

1. Unamended Section 40(2) covers suits, prosecutions, and other legal proceedings, whereas Section 155(2) explicitly excludes suits.
2. Section 155(2) introduces a procedural requirement of a one-month prior notice, which was absent in Section 40(2).

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3. Applicability of the Supreme Court Judgment

Case Summary: Public Prosecutor, Madras v. R. Raju & Anr. (1972):

• Facts: The case involved a prosecution under the Central Excise and Salt Act, 1944. The accused contended that the prosecution was time-barred under Section 40(2) of the Act, as it was initiated after six months from the date of the alleged act.
• Judgment: The Supreme Court held that Section 40(2) barred prosecutions initiated beyond the six-month limitation period. The Court emphasized the importance of adhering to statutory time limits to protect officers from harassment for acts done in good faith.

Relevance to Section 155(2) of the Customs Act:

1. Time Limitation: The principle laid down in R. Raju—that legal proceedings must adhere to statutory time limits—applies equally to Section 155(2) of the Customs Act, which prescribes a three-month limitation period for prosecutions.
2. Good Faith Protection: The judgment in R. Raju reinforces the legislative intent to protect officers acting in good faith, a principle embedded in both Section 40(2) (unamended) and Section 155(2).
3. Parity of Provisions: While Section 155(2) introduces additional procedural safeguards (e.g., prior notice), its core objective and structure are pari materia with unamended Section 40(2). Therefore, the reasoning in R. Raju is applicable.

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4. Conclusion

1. Section 155(2) of the Customs Act, 1962, is pari materia with unamended Section 40(2) of the Central Excise and Salt Act, 1944, as both provisions aim to protect government officers and impose time limitations on legal proceedings.
2. The principles laid down in Public Prosecutor, Madras v. R. Raju & Anr. (1972) regarding the enforcement of statutory time limits and protection of officers acting in good faith are directly applicable to cases under Section 155(2) of the Customs Act.
3. Any prosecution under the Customs Act must strictly adhere to the three-month limitation period and the one-month prior notice requirement under Section 155(2). Failure to comply with these procedural safeguards would render the prosecution invalid.

Guidelines for launching of prosecution in relation to offences punishable under Customs Act, 1962

                                                                Circular No.27/2015-Customs
F.No.394/68/2013-Cus (AS)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
(Anti-Smuggling Unit)
*****
New Delhi, the 23rd October , 2015
To
All Chief Commissioners of Customs,
All Chief Commissioners of Customs (Preventive),
All Chief Commissioners of Customs, Central Excise and Service Tax,
All Chief Commissioners of Central Excise and Service Tax,
All Chief Commissioners of Service Tax,
Chief Commissioner (AR), CESTAT,
All Directors General,
Webmaster, CBEC
Sir/Madam,
Subject – Guidelines for launching of prosecution in relation to offences
punishable under Customs Act, 1962- reg.
Attention of the field formations is invited to the existing prosecution
guidelines issued by the Ministry vide order No.394/71/97-CUS (AS) dated
22.06.1999 revising the guidelines issued vide order No.711/16/84-CUS (AS) dated
21st May, 1990 and 20th February, 1992.
2. Since then, several significant changes have been effected in the Customs Act
and other relevant enactments. Amendments and changes were made in section 135
of Customs Act, 1962 vide Finance Act, 2007 and Finance Act, 2013 relating to
threshold limit/categorization of offences. Moreover, section 137 of Customs Act,
1962, has been amended and provisions of compounding of offences had been
incorporated through Finance Act, 2004 and Finance Act, 2009. Amendments were
made in section 104 of the Customs Act, 1962 through Finance Act, 2012 and
Finance Act, 2013 wherein certain offences were made cognizable and non-bailable
and certain other offences were kept as non-cognizable and bailable. Revised
guidelines for arrest and bail were accordingly issued by the Ministry vide order
No.394/68/2013-Cus (AS) dated 17th September, 2013.
3. Keeping in view the above changes, the following revised guidelines for
prosecution in relation to offences punishable under Customs Act, 1962 are issued in
supersession of the earlier guidelines on launching prosecution issued vide
Ministry’s letter No. 394/71/97-Cus (AS), dated the 22nd June, 1999.
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4. Guidelines for Prosecution:
4.1. Person liable to be prosecuted: As per the provisions of the Customs Act,
1962, prosecution may be launched against any person including legal person in
respect of the offences covered under any of the sections namely 132,133,134,
135,135A or 136 of the Customs Act, 1962.
4.1.1. The decision for launching prosecution should be taken in cases which fulfil
the requirement of the provisions of any of the sections 132,133,134, 135,135A or
136 of the Customs Act, 1962 after a careful consideration of the nature of offence,
the role of the person concerned and evidence available to substantiate the guilty
knowledge/mensrea.
4.2. Threshold limit for launching prosecution and exceptions:
4.2.1. Prosecution may be considered in the following categories of cases:
4.2.1.1. Baggage and Outright smuggling cases:
(i) Cases involving unauthorized importation in baggage / cases under Transfer of
Residence Rules, where the CIF value of the goods involved is Rs. 20, 00,000/-
(Rupees twenty lakh) or more;
(ii) 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 or foreign currency where
the value of offending goods is Rs.20,00,000 (Rupees twenty lakh) or more;
4.2.1.2. Appraising Cases/ Commercial Frauds:
(i) In cases related to importation of trade goods (i.e. appraising cases) involving-
(a) wilful mis-declaration in value/description;
(b) concealment of restricted goods or goods notified under section 11 of the
Customs Act, 1962,
where CIF value of the offending goods is Rs. 1,00, 00,000 (Rupees one crore) or
more;
(ii) 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, if the
amount of drawback or exemption from duty is Rs. 1,00, 00,000 (Rupees one crore)
or more;
(iii) In cases related to exportation of trade goods (i.e. appraising cases) involving,-
(a) wilful mis-declaration in value / description ;
(b) concealment of restricted goods or goods notified under section 11 of the
Customs Act, 1962
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where FOB value of the offending goods is Rs. 1,00,00,000/- (Rupees one crore) or
more.
4.2.2. Exceptions:
 The above threshold limits would not apply in case of persons indulging
habitually in such violations or where criminal intent is evident in ingenious way of
concealment, where prosecutions can be considered irrespective of the value of
goods/currency involved in such professional or habitual offenders, etc. provided the
cumulative value of 3 or more such offences in past five years from the date of the
decision exceeds the threshold limit (s) indicated at sub para 4.2.1 above
respectively.
4.2.3. Special Cases relating to FICN, arms, ammunitions, wild life etc.:
The threshold limits mentioned in sub para 4.2.1 would also not apply in cases
involving offences relating to items i.e. FICN, arms, ammunitions and explosives,
antiques, art treasures, wild life items and endangered species of flora and fauna. In
such cases, launching of prosecution should be considered invariably, irrespective of
value of offending goods involved.
4.3. In respect of cases involving non-declaration of foreign currency by foreign
nationals and NRIs (normally visiting India for travel/ business trips etc.) detected at
the time of departure back from India, exceeding the threshold limits of Rs. 20 lakh
as prescribed under sub-para (4.2) above, if it is claimed that the currency has been
legally acquired and brought into India but not declared inadvertently, prosecution
need not be considered as a routine. The status and business standing of the foreign
nationals/ NRIs, the manner and place of recovery, corroborative evidence, if any to
substantiate the claim of bonafide and proper acquisition but inadvertent nondeclaration,
and other attendant factors may be considered immediately and a
decision taken whether the case involves criminal intent warranting launching of
prosecution or not. Where the prosecution is not considered called for, the case can
be adjudicated by the proper officer and suitable order for confiscation/ fine / penalty
etc. passed.
4.4. It is mentioned that the quantum of punishment under section 135 of the
Customs Act, 1962 is linked with the amount of imports duty/market price of
offending goods/drawback amounts. However, the quantum of punishment in respect
of the offences covered under remaining sections namely 132,133,134, 135A or 136
of the Customs Act, 1962 is not linked with the amount of imports duty/market price
of offending goods/ineligible drawback amount. In these circumstances, the
threshold limit for deciding on launching of prosecution under these sections may be
taken as the value which is applicable for section 135 of the Customs Act, 1962
(refer to para 4.2 & 4.3).
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4.5. It is clarified that prosecution in respect of narcotic drugs and psychotropic
substances may be launched as per the provisions of the NDPS Act, 1985.
4.6. Except in respect of cases covered by sub paras 4.2.1.2 and 4.2.2 above, in all
other cases, prosecution may be launched after due sanction by the Commissioner
/Principal Commissioner (Pr. Commr.) or Additional Director General (ADGRI) /
Principal Additional Director General of Revenue Intelligence (Pr. ADGRI), as the
case may be. Prior approval of the Chief Commissioner / Principal Chief
Commissioner (Principal CC) or Director General / Principal Director General of
Revenue Intelligence (Pr. DGRI), as the case may be, will be essential for launching
of prosecution in respect of cases covered under sub paras 4.2.1.2 and 4.2.2 above.
5. The following aspects may also be kept in view while considering launching
of prosecution for offences under the Customs Act, 1962:-
5.1. Prosecutions should not be launched as a matter of routine and/or in cases of
technical nature, where the additional claim for duty is based solely on a difference
of interpretation of the law. 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 guilty knowledge of
the offence or had fraudulent intention of committing the offence, or in any manner
possessed mens-rea which would indicate his guilt. It follows, therefore, that 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 misdeclaration
of value, quantity etc. For this purpose, the Commissioner /Pr. Commr.
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.
6. Stage for launching of prosecution: Normally, prosecution may be launched
immediately on completion of adjudication proceedings. However, prosecution in
respect of cases involving offences relating to items i.e. FICN, arms, ammunitions
and explosives, antiques, art treasures, wild life items and endangered species of flora
and fauna may preferably be launched immediately after issuance of show cause
notice.
6.1. Further, in following cases investigation may be completed in time bound
manner preferably within six months and adjudication may be expedited to facilitate
launching of prosecution. These cases are:
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(a) In case where arrest has been made during investigation (for commercial fraud
cases as well as outright smuggling cases) or in the case of a habitual offender.
(b)In case where arrest has not been made but it relates to outright smuggling of
high value goods such as precious metal, restricted items or prohibited items
notified under section 11 or goods notified under section 123 of the Customs Act,
1962 or foreign currency where the value of goods is Rs. 20, 00,000 (Rupees
twenty lakh) or more.
6.2. In a recent judgement passed by Hon’ble Supreme Court of India in the case
of Radhe Shyam Kejriwal [2011(266)ELT 294 (SC)], the Apex court had, interalia,
observed that (i) adjudication proceedings and criminal proceedings can be launched
simultaneously;(ii) decision in adjudication proceedings is not necessary before
initiating criminal prosecution; (iii) adjudication proceedings and criminal
proceedings are independent of each other in nature and (iv) the findings against the
person facing prosecution in the adjudication proceedings is not binding on the
proceeding for criminal prosecution. In view of aforesaid observations of Hon’ble
Supreme Court, it is reiterated that 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.
6.3. 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.
6.4. The Superintendent in charge of adjudication section should endorse copy of
all adjudication orders to the prosecution section. The Superintendent in charge of
prosecution section should monitor receipt of all serially numbered adjudication
orders and obtain copies of adjudication orders of missing serial numbers from the
adjudication section every month.
7. Procedure for launching prosecution:
7.1. In all such cases, where prior approval of Chief Commissioner/Principal CC
or DGRI / Pr. DGRI is necessary for launching prosecution, an investigation report
for the purpose of launching prosecution (as per Annexure- I), should be carefully
prepared and signed by the Assistant Commissioner / Assistant Director concerned.
The investigation report, after careful scrutiny (for incorporation of all relevant
facts) should be endorsed by the Commissioner/ Pr. Commr. or ADGRI/ Pr.
ADGRI. The Chief Commissioner/Principal CC or DGRI / Pr. DGRI should ensure
that a decision about launching of prosecution or otherwise, is taken after careful
6
analysis of evidence available on record and communicated to the Commissioner /
Principal CC or ADGRI / Pr. ADGRI within a month of the receipt of the proposal.
7.2. In all other cases, where prior approval of Chief Commissioner/Principal CC
or DGRI / Pr. DGRI is not required, the decision about launching of prosecution or
otherwise should be taken by the Commissioner/ Pr. Commr. or ADGRI /
Pr. ADGRI after careful application of mind and analysis of evidence brought on
record. This should be completed within a month of adjudication of the case
(unless it is decided to go for prosecution even prior to adjudication in certain
category of cases mentioned at para 6 above).
7.3. Prosecution should not be filed merely because a demand has been confirmed
in the adjudication proceedings particularly in cases of technical nature or where
interpretation of law is involved. One of the important considerations for deciding
whether prosecution should be launched is the availability of adequate evidence.
The standard of proof required in a criminal prosecution is higher as the case has to
be established beyond reasonable doubt whereas the standard of proof in
adjudication proceedings is decided on the basis of preponderance of probability.
Therefore, even cases where demand is confirmed in adjudication proceedings,
evidence collected should be weighed so as to likely meet the test of being
reasonable doubt for recommending & sanctioning prosecution. Decision should be
taken on case- to- case basis considering various factors, such as, gravity of
offence, quantum of duty evaded and the nature as well as quality of evidence
collected.
7.4. It is reiterated that in order to avoid delays, Commissioner / Pr. Commr. or
ADGRI / Pr. ADGRI / adjudicating authority should indicate, at the time of passing
the adjudication order itself as to whether he considers the case fit for prosecution,
so that it could be further processed for launching prosecution. Where at the time of
adjudication proceedings, no view has been taken on prosecution by the adjudicating
authority, the adjudication section shall resubmit the file within 15 days from the
days of issue of adjudication order to the adjudicating authority/Commissioner to
take a view of prosecution. Where the prosecution is proposed before the
adjudication of the case, Commissioner /Pr. Commr. Or ADGRI / Pr. ADGRI shall
record the reason for the same and the adjudicating authority shall be informed of
the decision so that there is no need for him to examine the case subsequently from
the perspective of prosecution.
7.5. It is observed that the delays in the Court proceedings occur due to the nonavailability
of records required to be produced before the Magistrate. As a matter
of practice, whenever a case is taken up for seeking the approval for launching
prosecution, an officer should be nominated/designated, who shall immediately take
charge of all documents, statements and other exhibits, that would be required to be
7
produced before a Court. The list of exhibits etc. should be finalised in consultation
with the Public Prosecutor at the time of drafting of the complaint. Such exhibits
should be kept in the safe custody. Where a complaint has not been filed even after
a lapse of three months from the receipt of sanction for prosecution, the reason for
delay shall be brought to the notice of Chief Commissioner/Principal CC or DGRI /
Pr. DGRI by the Commissioner /Pr. Commr. or ADGRI / Pr. ADGRI, as the case
may be, who are responsible in the case for ensuring the timely filing of the
complaint.
8. Publication of names of persons convicted under Customs Act,1962
Section 135-B of the Customs Act, 1962, grants the power to publish
name/place of business etc. of persons convicted under the Act by a Court of law.
It is observed that this power is being exercised very sparingly. In all cases in
respect of all persons, who are convicted under the Customs Act, 1962 the
department should make a prayer to the Court to invoke this section.
9. Monitoring of Prosecution
9.1. It is emphasized that prosecution, once launched, should be vigorously
followed. The Commissioner /Pr. Commr. 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.
9.2. For monitoring of prosecution cases, a Prosecution Cell should be created in
each Commissionerate under the supervision of Additional/Joint Commissioner. In
case of Directorate of Revenue Intelligence, an Additional/ Joint Director in
headquarter/each zonal unit should supervise the prosecution work relating to
headquarters or respective zonal unit, as the case may be.
9.3. For keeping track of prosecution cases launched by the Commissionerate, a
prosecution register in the format enclosed as Annexure-II to this Circular 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. For keeping track of prosecution
cases launched by DRI, prosecution register in the similar format as Annexure-II
should be maintained in the Zonal Unit / Hqrs of DRI pertaining to those prosecution
cases and similar regular monitoring to be carried out by ADGRI/ Pr. ADGRI
concerned.
10. Appeal against Court order in case of inadequate
punishment/acquittal:
10.1. Commissioner / Pr. Commr. responsible for the conduct of prosecution or
ADGRI / Pr. ADGRI (in respect of cases booked by DGRI), should study the
8
judgement of the Court and, 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 time period.
10.2. 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 CC or DGRI / Pr. DGRI as the case may be should be
obtained before filling appeal.
11. Procedure for withdrawal of prosecution
11.1. Procedure for withdrawal of sanction order of prosecution
In cases 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 case Commissioner / Pr. Commr. or ADGRI / Pr. ADGRI is the
sanctioning authority, the recommendation will be submitted to Chief Commissioner
/ Principal CC or DGRI / Pr. DGRI. The recommendation will be submitted to the
Board (Member of Policy Wing concerned) in such cases where sanctioning
authority is Chief Commissioner / Principal CC or DGRI / Pr. DGRI. All past cases
where filing of prosecution is pending beyond three months of the sanction for
prosecution shall be reviewed in the light of these instructions and necessary action
taken to either file complaint expeditiously or to propose withdrawal of sanction.
11.2. Prosecution for withdrawal of Complaint already filed for prosecution
11.2.1. 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 section
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 CC or DGRI/ Pr. DGRI as the case may be.
11.2.2. As per decision of Hon’ble Supreme Court in the case of Radhe Shyam
Kejriwal [2011(266) ELT 294 (SC)]:
(a) the findings in the adjudication proceeding in favour of the person facing trial
for identical violation will depend upon the nature of finding. If the exoneration in
adjudication proceedings is on technical ground and not on merit, prosecution may
continue, and
(b) in case of exoneration, however, on merit where allegation is found to be not
sustainable at all and person held innocent, criminal prosecution on the same set of
9
circumstances cannot be allowed to continue, underlying principle being the higher
standard of proof in criminal cases.
11.2.3. In respect of cases covered under clause (b) above, the Chief
Commissioner / Principal CC or DGRI/ Pr. DGRI would ensure moving an
application through Public Prosecutor in the court for withdrawal of prosecution in
accordance with law. The withdrawal can only be effected with the approval of the
court.
12. Compounding of offence:
Section 137 of Customs Act.1962 provides for compounding of offences by
the Chief Commissioner. 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. Commr. or ADGRI / Pr. ADGRI as
per Circular No. 54/2015-Cus. dated 30.12.2005.
13. Prosecution Register and dissemination of information
13.1. A Prosecution Register in the form as Annexed to this circular should be
maintained in the prosecution cell of the Commissionerate headquarters/Custom
House / DRI formations. Wherever the prosecution is compounded under section 137
of CA’62 by the Chief Commissioner, suitable endorsement may be kept in the
prosecution register.
13.2. It may be mentioned that offences under section 132 and 135 of the Customs
Act, 1962 are scheduled offences under the Prevention of Money Laundering Act,
2002(PMLA). In Customs’ prosecution cases warranting action under PMLA,
instructions have been issued vide F. No.394/51/2009-Cus (AS) dated 14.09.2009 for
monthly reporting of such cases to the Directorate of Enforcement in the prescribed
format. Once cognizance of complaint in respect of offence under section 132 and
135 of CA’62 filed by the Department is taken by the court, and reference has been
made to the Directorate of Enforcement for taking action under PMLA, suitable
remarks should be made in the prosecution register. In case, the prosecution under
PMLA is separately proposed to be launched by the Directorate of Enforcement, and
intimation is received to that effect in the prosecution unit of the Commissionerate/
DRI, suitable entry should be kept in the register for appropriate liaison with the
Directorate of Enforcement and further action as per the direction of Special Court.
13.3. Further instructions have been issued vide F. No. 394/124/2011-Cus (AS)
dated 17.07.2012 clarifying that all offences under Customs Act, 1962 shall be
within the ambit of ‘Plea Bargaining’ and any application for the same shall be dealt
with as per the provisions in Chapter XXIA of Code of Criminal Procedure.
Wherever ‘Plea Bargaining’ as per the provisions of chapter XXIA of Cr Pc is
permitted by the competent court, necessary endorsement may be made in the
10
prosecution register for proper record and monitoring. Similar record may be kept in
respect of appeal against court order and / or withdrawal of prosecution as detailed in
para 10 to 12 above.
13.4. The field formations should upload/update the information regarding
prosecution initiated in the Management Information System (MIS) under prescribed
Proforma.
14. Inspection of prosecution work:
Director General (Inspection) and Chief Commissioners/Principal CCs, while
carrying out inspection of the Commissionerates/Custom Houses, should specially
check all the above mentioned points, and make a mention about implementation of
the guidelines in their Inspection Reports.
15. Transitional Provisions:
All cases, where sanction for prosecution is accorded after the issue of this
circular, shall be dealt in accordance with the provisions of this circular irrespective
of the date of the offence. Cases where prosecution has been sanctioned but no
complaint has been filed before the magistrate shall also be reviewed by the
prosecution sanctioning authority in light of the provisions of this circular.
16. Where a case is considered suitable for launching prosecution and where
adequate evidence is forthcoming, securing conviction largely depends on the quality
of investigation. It is, therefore, necessary for senior officers to take personal interest
in investigations of important cases of smuggling/duty evasion and also in respect of
cases having money laundering angle and to provide guidance and support to the
investigating officers.
17. It has also been noticed that the officers posted for prosecution work do not
have proper training. The Director General, National Academy of Customs Excise
and Narcotics (NACEN), Faridabad, should therefore, organize separate training
courses on prosecution/arrests etc. from time to time and also should incorporate a
series of lectures on this issue in the courses organized for anti-smuggling. The
Commissioner / Pr. Commr. or ADGRI / Pr. ADGRI should judiciously sponsor
officers for such courses.
18. The field formations are hereby directed to circulate these guidelines to all the
formations under their charge. Difficulties, if any, in implementation of the aforesaid
guidelines may be brought to the notice of the Board.
19. Please acknowledge receipt of this circular.
Yours faithfully,
Enclosure: As above
 (A.C.MALLICK)
 Under Secretary to the Govt. of India
11
ANNEXURE – I
INVESTIGATION REPORT FOR THE PURPOSE OF LAUNCHING
PROSECUTION AGAINST___________________________________________
COMMISSIONERATE___________________________/Divisions
1. Name & address of the person (s) including legal persons.
2. Nature of offence including commodity :
3. Charges :
4. Date/Period of offence :
5. Amount of duty Evasion/value of contraband goods involved :
6. Particulars of persons proposed to be prosecuted :
(a) Name
(b) Father’s name
(c) Age__________________ Sex________________
(d) Address
(e) Occupation
(f) Position held in the company/firm
(g)Role played in the offence
(h) Material evidence available against the accused (Please indicate separately
documentary and oral evidence)
(i) Action ordered against the accused in adjudication proceedings
7. Brief note as to why prosecution is recommended
Place:
Date:
(Deputy/Assistant Commissioner)
Or (Deputy/Assistant Director)
8. I have carefully examined the investigation report and find it in order for filing
criminal complaint under section (s) (-------) of Customs Act, 1962.
Commissioner/ Pr. Commr.
Or ADGRI/ Pr. ADGRI
12
ANNEXURE – I (contd.)
NOTE
(A) The proposal should be made in the above form in conformity with the
guidelines issued by the Ministry. With regard to column 3 above, all the
charging sections in the Customs Act, 1962 and other allied Acts should be
mentioned. If the provision for conspiracy as under section 120-B of IPC is
sought to be invoked, this fact should be clearly mentioned. With regard to
S.NO 6, information should be filed separately for each person sought to be
prosecuted .
(B) A copy of the show cause notice as well as the order of adjudication (where
applicable) should be enclosed with this Report. If any appeal has been filed
against the adjudication order, this fact should be specifically stated.
(C) Where prosecution is being recommended even prior to completion of
adjudication, as per guidelines, brief reasons therefore be also indicated in
the brief note mentioned at Sl. No. 7 above.
13
ANNEXURE – II
FORMAT OF PROSECUTION REGISTER
Sl.
No.
Case
investigate
d by
Division
/
preventi
ve unit/
appraisi
ng
group/
DRI(Hqr
.)/ Zonal
Unit
File
no.
Criminal
complaint
no.
Date of
detection/
seizure
Name of
accused
person
being
prosecute
d and
address
Register
no.
Nature of
offence
1 2 3 4 5 6 7 8 9
Date of judgement Appeal statusdate/
court in
which filed
Date of hearing Date of
referral to
Directorate of
Enforcement
Remarks/signature
with name and
date (Officer filing
the complaint)
16 17 18 19 20
Amount of duty /
seizure/value
confirmed &
O-I-O No.
Period of
evasion
Date of
sanction of
prosecution
Date of
filling of
complaint
Date of
taking
cognisance
by court
Name of counsel
10 11 12 13 14 15

Claiming of wrong exemption notification is not misdeclaration as contemplated by section 111(m) of the Customs Act.

That claiming of wrong exemption notification is not misdeclaration as contemplated by section 111(m) of the Customs Act.

Relying  on  following case laws for above submission.

i)                    The  Honourbale Supreme Court  of India held ,in case of Northern Plastic Ltd Versus  Collector Of Customs & Central Excise, [1998 (101) E.L.T. 549 (S.C.)],

 vide Para 22, that wrong exemption notification are not  misdeclaration as contemplated by Section 111(m) of the Customs Act  :

“……. While dealing with such a claim in respect of payment of customs duty we have already observed that the declaration was in the nature of a claim made on the basis of the belief entertained by the appellant and therefore, cannot be said to be a misdeclaration as contemplated by Section 111(m) of the Customs Act. As the appellant had given full and correct particulars as regards the nature and size of the goods, it is difficult to believe that it had referred to the wrong exemption notification with any dishonest intention of evading proper payment of countervailing duty    “.

ii)                  As claiming  exemption notification cannot be treated  as declaration  for the purpose of  section 111(m).- J.K. Industries   v. Commissioner of Customs-1996(88) E.L.T 41 (Tribunal)

iii)                Claiming of classification and consequential exemption under a heading other than subsequently determined by the department does not amount to mis-declaration or an attempt to evade duty. No mala fides have been proved or established.- Hindustan Lever Ltd. V. Collector -1996(83) E.L.T. 520 (Tribunal); Metro Tyres Ltd. V, Collector -1994(74) E.L.T. 964( Tribunal)

Misclassification of goods and misdeclaration of goods are distinct in nature and scope

It is settled law that misclassification of goods and misdeclaration of goods are distinct in nature and scope. Misdeclaration  of goods   attract penal  provision under section 111(m) of Customs Act ,1962.But misclassification  of goods is a subject of interpretation  and  does not attract penal provision under Section 111(m).

   Relying on following case laws for above submission.

i)                    The Honourbale High Court  of Karnataka held, in case of  COMMISSIONER OF CUSTOMS, BANGALORE Versus  A. MAHESH RAJ - 2006 (195) E.L.T. 261 that In case of misclassification, it may be bona fide case of wrong classification as the importer or the person clearing the goods may not be fully conversant with the Schedule to the Act.

The relevant portion of  Para  20  of above cited  case law has been reproduced below as:

“. The scope of the provisions cannot be unduly enlarged if the intendment of the Legislature to provide for settlement in cases of short levy or non-levy on account of misclassification or misdeclaration also, as there is a vast and considerable distinction between cases of misclassification of goods and misdeclaration of goods. A misclassification of goods will only result in duty liability being at a different rate in terms of entry under which it is classified, whereas misdeclaration can be a situation of suppression, distortion and misrepresentation. In a situation of misclassification, only goods are disclosed or declared but goods are not properly classified for the purposes of determination of rate of duty, whereas in a case of misdeclaration, goods might not have been declared correctly at all, in the sense description is not of the actual goods also quantity may varying and mischief being deliberate and designed to avoid payment of customs duty. In case of misclassification, it may be bona fide case of wrong classification as the importer or the person clearing the goods may not be fully conversant with the Schedule to the Act. In the case where there was no deliberate or  intended desire on the part of the importer to evade or avoid payment of any customs duty, in tact, to provide immunity and protection of such class of people ,Chapter XIVA has been ushered in ……….”.

Ii) Misdeclaration can be of description but not of classification – Bajaj Health & Nutrition  Pvt Ltd V. Commissioner ,2004(166) ELT 189 (Tri)

Iii)    Mens rea not attributable – if importer have claimed wrong classification according to his limited Understanding  of the Customs Law- Jay Kay Exports & Industries V. Commissioner -2004(163) E.L.T. 359 (Tri-Kolkata)

Iv ) Demand on account of wrong classification –confiscation not resortable when description of goods given correctly- Hindustan National Glass &Indus limited V.Commissioner , Calcutta-2002(145) E.L.T.162(Tri-Kol)

v) The Honourable High Court of Bombay  ,in  case of Commissioner Of Central Excise Mumbai-V   Vs Guru Plastics Work, 2010 (261) E.L.T. 60 (Bom.),uphold the view of learned  Tribunal  that in the issue of classification  ,imposition of penalty was not called for.   The Para 2 and 3 of this order is reproduced here:

”2. From the facts and record, we find that the learned Tribunal had recorded the finding that the issue of classification in the case was an issue and in these circumstances, the imposition of penalty was not called for. The matter was thereafter remitted back to the Commissioner to re-determine the valuation as per the formulae in the case of M/s. Ujagar Prints v. Union of India - 1989 (39) E.L.T. 493 (S.C.).

3. It is this order which was the subject matter of the appeal before us. The law insofar as Section 11AC has been settled in the judgment of the Supreme Court in Dharamendra Textiles, 2008 (231) E.L.T. 3 (S.C.) and explained in Rajasthan Spinning & Weaving Mills Ltd., 2009 (238) E.L.T. 3 (S.C.) has laid down that Revenue has to prove the predicates of Section 11AC, one of which is that the non-payment of duty was with an intent to evade payment of duty. In the instant case, there is a clear finding of fact that there was a vexed issue of classification.”