2016 (5) TMI 298 - HC - Customs

Offence under Section 132 & 135 of the Customs Act, 1962 - illegal import of electronic goods - Circular No.27 of 2015-Customs dated 23.10.2015 - Appellant submitted that trial Court had committed an error in not appreciating the vital fact that the Learned Metropolitan Magistrate can very well drop the proceedings at the instance of the Accused. Also failed to take into consideration the Circular No.27 of 2015 with retrospective effect issued by the Union Ministry of Finance dated 23.10.2015. Also failed to take into account that the Criminal Prosecution and Adjudication Proceedings are independent in nature and the finding rendered in the Adjudication Proceedings does not bind the parties facing Criminal Prosecution. Held that - the Petitioner had not preferred any Appeal as against the Adjudication Order dated 17.04.2010, wherein the penalty of ₹ 1,50,000/- was imposed on him. The said order has become final, conclusive and binding between the parties. Also that, the Circular No.27 of 2015-Customs, dated 23.10.2015 of the Ministry of Finance, Government of India, does not point out expressly that payment of penalty imposed upon a person in Adjudication Proceeding is a condition precedent for withdrawal of prosecution by the Respondent/complainant. In the present case, for nearly six years, the Respondent/complainant had not filed any complaint before the Competent Court, not withstanding the fact that in terms of Customs Act, 1962, the prosecution must not be imposed any one in respect of offences covered under Sections viz., 132, 133, 134, 135A or 1136 of the Customs Act, 1962. It is for the Appropriate Authority to take into consideration of the nature of the offence, the role of the individual concerned and evidence available on record to substantiate the guilty mind of the person for launching prosecution. It is to be noted that Section 132 of the Customs Act is a Bailable one. Further, the offence under Section 135 of the Act is a compoundable one, in terms of Section 137(3) of the Customs Act. The spirit and tenor of the guidelines issued for launching the prosecution, procedure for withdrawal of prosecution, procedure for withdrawal of sanction order, procedure for withdrawal of complaint already filed for prosecution, etc., were not evaluated/appreciated and looked into in a proper and real perspective by the trial Court which has resulted in dismissal of the said Miscellaneous Petition. Therefore, this Court, to secure the ends of justice and in furtherance of substantial cause of justice, at this stage without expressing any opinion on merits of the case, sets aside the impugned order. Consequently, the Revision succeeds. - Revision petition allowed

Summary

Issues Involved:
1. Legality of the trial court's dismissal of the petition to drop proceedings.
2. Applicability of Circular No.27 of 2015 issued by the Ministry of Finance.
3. Distinction between criminal prosecution and adjudication proceedings.
4. Requirement to pay penalties imposed during adjudication before prosecution can be dropped.
5. Procedural guidelines for launching and withdrawing prosecution under the Customs Act.

Detailed Analysis:

1. Legality of the Trial Court's Dismissal of the Petition to Drop Proceedings:
The petitioner challenged the trial court's order dated 11.03.2016, which dismissed his petition to drop proceedings under Section 135 of the Customs Act. The trial court had observed that the petitioner had no locus standi to file the petition and that only the complainant could file such a petition as per Circular No.27/2015. The petitioner argued that the trial court erred in not appreciating that it could drop proceedings at the instance of the accused, citing the Supreme Court's decision in K.M. Mathew vs. State of Kerala.

2. Applicability of Circular No.27 of 2015 Issued by the Ministry of Finance:
The petitioner contended that the trial court failed to consider Circular No.27 of 2015, which directed customs officials to drop criminal proceedings for offenses below certain monetary thresholds. The circular specified that cases involving baggage and outright smuggling with a value below ?20 lakhs should have proceedings dropped. The petitioner argued that his case fell within this threshold and thus, the proceedings against him should be dropped.

3. Distinction Between Criminal Prosecution and Adjudication Proceedings:
The petitioner emphasized that criminal prosecution and adjudication proceedings are independent, and findings in adjudication do not bind criminal prosecution. This argument was supported by the Supreme Court's decision in Radheshyam Kejriwal vs. State of West Bengal, which held that exoneration in adjudication does not preclude criminal prosecution unless the exoneration was on merits.

4. Requirement to Pay Penalties Imposed During Adjudication Before Prosecution Can Be Dropped:
The respondent argued that the petitioner had not appealed against the adjudication order, which imposed a penalty of ?1,50,000, making the order final. The petitioner countered that the requirement to pay penalties before dropping prosecution was not stipulated in Circular No.27 of 2015 and thus should not be a condition precedent for withdrawing prosecution.

5. Procedural Guidelines for Launching and Withdrawing Prosecution Under the Customs Act:
The court examined the detailed guidelines in Circular No.27 of 2015 regarding the threshold for launching prosecution, exceptions, and procedures for withdrawal of prosecution. The circular mandated that cases pending for filing complaints should be reviewed and necessary actions taken, including filing complaints or withdrawing prosecution based on the merits and evidence available.

Conclusion:
The court concluded that the trial court had not adequately considered the guidelines and procedural requirements outlined in Circular No.27 of 2015. The impugned order was set aside, and the trial court was directed to restore the petition and dispose of it afresh, considering the guidelines and principles of natural justice. The trial court was instructed to determine whether the petitioner needed to pay the penalty as a condition precedent for withdrawing prosecution and whether non-payment of the penalty barred the dropping of prosecution proceedings. The trial court was given six weeks to comply with these directions.