2007 (1) TMI 81 - HC - Customs

Prosecution against custom officer Alleged that appellant(customs officer) have floated various firms in false and fictitious names and have allegedly exported readymade garments and claimed the duty drawback Held that allegation was not sustained

Issues Involved:
1. Whether a customs officer can be prosecuted under Section 135 of the Customs Act.
2. Whether the allegations in the complaint constitute an offense under Sections 132 and 135 of the Customs Act, especially in light of the amendment by the Finance Act, 2003.

Issue-Wise Detailed Analysis:

1. Prosecution of Customs Officer under Section 135 of the Customs Act:
The first issue raised was whether a customs officer, specifically A.K. Saxena, could be prosecuted under Section 135 of the Customs Act, given that Section 136 specifically deals with offenses by customs officers. The petitioners argued that customs officers should be prosecuted under Section 136 and not Section 135, as Section 135 does not include customs officers within the term "any person."

The court analyzed Section 136, which covers offenses related to evasion of customs duty, misuse of position, and unauthorized disclosure of information. It concluded that these offenses do not encompass situations where a customs officer conspires with others to evade customs duty. The court noted that Section 135 uses the term "any person," which can include customs officers if they are involved in illegal import/export activities. The court cited the trial court's interpretation that a person is considered to be "concerned in the doing of an act" if they take part or consciously take any step in the illegal activity, thus covering customs officers under Section 135.

The court upheld the trial court's decision, stating that A.K. Saxena could be arraigned as an accused under Section 135 of the Customs Act based on the nature of the allegations against him.

2. Allegations Constituting an Offense under Sections 132 and 135 of the Customs Act:
The second issue was whether the allegations in the complaint, even if taken at face value, constituted an offense under Sections 132 and 135 of the Customs Act, especially considering the amendment by the Finance Act, 2003. The petitioners argued that the fraudulent claim of duty drawback was only made punishable by the amendment effective from 1-4-2003, implying that such activities were not punishable prior to this date.

The court examined Section 135, which deals with evasion of duty or prohibitions, and noted that the unamended provision already covered offenses related to fraudulent evasion or mis-description of goods. The court referred to the judgment in Sanjeev Kumar Gupta v. Commissioner of Customs, which held that mis-description of goods or their value makes such goods prohibited and punishable under Section 135. The court also cited the Supreme Court's judgment in Om Prakash Bhatia v. Commissioner of Customs, which supported the view that over-invoicing and fraudulent claims of duty drawback are punishable under Section 135.

The court clarified that the amendment by the Finance Act, 2003, was merely declaratory and clarificatory, intended to remove doubts and make the position clear beyond any doubt. It emphasized that such amendments are often retrospective and that the offense of fraudulent duty drawback claims was already covered under the unamended provisions of Section 135.

The court dismissed the petition, concluding that the allegations in the complaint did constitute an offense under Sections 132 and 135 of the Customs Act, even before the amendment by the Finance Act, 2003.

Conclusion:
The petition was dismissed on both grounds. The court held that customs officers could be prosecuted under Section 135 of the Customs Act if they conspire in illegal activities and that the fraudulent claims of duty drawback were punishable under the unamended provisions of Section 135, with the amendment by the Finance Act, 2003, being merely clarificatory.

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