Insights

Investigation Phase

What if Summons or notices received from the Indian Customs department or any investigating agency like DRI (Directorate of Revenue Intelligence), ED (Enforcement Directorate), CBI, CIU M& P Wing

Summons

Summon in simple language is “Calling”. To gather evidences and leads in investigation, the Customs Officer issues summons requiring a person, to whom it is issued, to appear to give evidence and /or produce documents, etc. Section 108 of Customs Act, 1962 gives powers to the Customs Officer to call upon a person either to give evidence or produce documents which would have a vital bearing in the enquiry, including judicial and adjudication proceedings.

Inquiry under Section 108 of Customs Act, 1962 is deemed to be “judicial proceeding” within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860. Therefore, if any person gives false evidence under summons or intentionally insults or interrupts the Officer sitting in summon proceedings, he shall be liable to punishment under Section 193 and 228 of the Indian Penal Code respectively. Co-operation to investigating agency is key to effective defense, but whenever the summoned person feels that the statement is not recorded as per his version or is recorded incorrectly which may be detrimental to his case, he may retract the same at earliest opportunity by following due procedure and stating correct facts. However, for retraction to sustain, it must be done by following appropriate procedure of law for which taking help of Counsel is always advisable.

Search & Seizure

The Customs officer is empowered to search a person or vehicle or premises etc. which can only be done under proper and valid authority of law. To check authenticity of the Search warrant make sure that it carries a Document Identification Number (DIN) on it.

The officer of and above the rank of Inspector of Customs Preventive Officer, Examining Officer, Intelligence Officer of DRI is authorized to search the suspected persons entering or leaving India under Section 100 of Customs Act, 1962. The suspected person can be X-Rayed in case there is reason to believe that goods liable to confiscation are secreted inside his/her body. However, for x-ray procedures order of Magistrate is a must. Search of a vehicle on road is conducted by or in presence of the officer empowered under the law. It is also called transit checks. The officer of and above the rank of Inspector of Customs , Preventive Officer, Examining Officer, Intelligence Officer of DRI is authorized to stop and search the vehicle under Section 106 of Customs Act, 1962. However, for seizing the goods, there should be “reasonable belief” that the goods being carried are smuggled and “liable to confiscation” under the Act.

These two conditions for seizure invites thorough understanding of law for which it is advisable to take help of a counsel to avoid any prejudice to be caused to the affected person and his property.

Arrest & Bail

The procedure is separately outlined for the different categories viz. bailable / non-cognizable and non-bailable / cognizable offences. In cases falling under the category of bailable / non-cognizable offence, the arresting officer is bound to release a person on bail against a bail bond. In cases falling under the category of non-bailable / cognizable offence investigating officer is empowered to arrest by following due procedure of law. Though arrest is not mandatory, seeking Anticipatory bail wherever practicable, protects the person in the event of arrest.

Pre-litigation & Litigation process

How to defend Show Cause Notice received from the Indian Customs Department.

On receiving Show Cause Notice it must be defended adequately. The very first submissions or strategy adopted in defense cannot be altered in future course of action such as in appellate stage. Therefore, complete understanding of facts and law by the counsel as well as litigant is essential for effective representation of the case. This complete understanding of the case is helpful for the litigant to decide whether he should carry on legal battle by approaching Appellate Tribunal and various Courts or to opt for Settlement Commission.

When to Opt for Settlement Commission

One of the effective route to circumvent the lengthy procedures of litigation is by approaching Settlement Commission once Show Cause Notice is received. Though, the proceedings under Settlement Commission are treated as Judicial proceedings, the spirit of the Settlement Commission is that of “Conciliation”. The advantage offered is of waiver of the whole or part penalty and fine and immunity from prosecution under Customs Act for the time being in force in respect of the case covered by the Settlement Commission except that of cases involving NDPS Act or Sec. 123 of Customs Act.

However, the Settlement Commission has it’s own limitations. No application could be made before the Settlement Commission in the following types of cases:-

Where the applicant has not filed any Customs documents or where no show cause notice has been issued;
The additional amount of duty accepted by the applicant in his application shall be `3 lakh and above;
The case of the applicant is not pending before the Appellate Tribunal (CESTAT) or any court;
The goods relating to the dispute is not the goods as specified under Section 123 of the Customs Act;
The goods in relation to the dispute is not covered under the Narcotic Drugs and Psychotropic Substances Act, 1985;
The applicant cannot bring any dispute before the Settlement Commission which involves interpretation of the classification of any goods under the Customs
Where any dutiable goods, books of accounts, other documents or any sale proceeds of the goods have been seized, no application can be filed before the Settlement Commission till expiry of one hundred and eighty days from the date of seizure.

In order to avoid litigation process which at times would be a bit expensive and also in order to unburden oneself of the heavy fines and penalties and that of prosecution ordeal, one can approach the Settlement Commission. The order of the Settlement Commission is conclusive with the matters settled therein and those orders cannot be re-opened in any proceedings under Act.

When to Opt for litigation

When the case is strong enough on law point and sufficiently prepared to prove the facts, litigation is the best way to deal with the issue. The greatest advantage of being in litigation is that it leaves precedence which is useful to settle the same kind of issues in future.

Stages of litigation

First:

The Show Cause Notice is received by the notices. It is decided by the issuing Authority itself being a quasi judicial Authority viz. Assistant/Deputy / Joint / Additional Commissioner of Customs or Commissioner of Customs depending on the amount of duty involved. The Noticee/Litigant gets opportunity to defend his case by way of written submissions and also personal representations before the Authority. The outcome is issue of Order-in-Original wherein the quasi judicial authority may drop all the charges or confirm the duty demand totally or partially with or without penalty / fine.

Second:

The adverse Order-in-Original may be appealed before Commission (Appeals) or CESTAT (Tribunal) which is a matter of right bestowed in the Statute. On appeal before CESTAT, the appellant gets mandatory stay on Order-in-Original or Order-in-Appeal, as the case may be, on depositing a fixed percentage of confirmed duty demand. The Tribunal is equivalent to High Court, therefore next appellate court is Supreme Court of India. However, if question of law is involved it can be challenged before High Court.

Third:

All orders of High Courts and the Tribunal can be challenged before Supreme Court of India with leave of the court.

Cargo on hold

If a hold is placed on your cargo, it won’t be leaving the terminal until the issue has been resolved. Here’s what you need to know about some of the more common types of holds, and how to handle them.

Get the details of the reasons for hold by logging into the ICEGATE systems, wherein the officer is required to put reasons to keep the goods on hold. Many a times, the contact details of the officer, who holds the goods, is also mentioned in the systems.
Ascertain from the officer as to how long he is going to take to complete formalities like examination of containerized goods, etc.
If it is going to take more time, it is advisable to take the help of counsel to speed up the formalities to free the container from hold as fast as possible, so that cost to your business is reduced.