2008 (1) TMI 50 - SC - Customs

In instant case applicant gave different versions in his statement u/s 108 in his first bail application and in his application for compounding Benefit of compounding u/s 137(3) not allowed because of such contradictions & inconsistencies Revenue s appeal allowed by setting aside the HC order

Summary

Issues Involved:
1. Legality of the Compounding Authority's decision to compound offences under Sections 132 and 135(1)(a) of the Customs Act, 1962.
2. Examination of contradictions in the statements made by the accused.
3. Duty of the Compounding Authority in verifying the completeness and accuracy of disclosures.
4. Eligibility and criteria for compounding offences under Section 137(3) of the Customs Act, 1962.

Detailed Analysis:

1. Legality of the Compounding Authority's Decision:
The appeal challenges the decision of the Compounding Authority, which compounded the offences under Sections 132 and 135(1)(a) of the Customs Act, 1962, and imposed a fine of Rs. 15 lakhs. The Compounding Authority found the case eligible for compounding, stating it was a first offence and the application met the eligibility criteria under Rule 4 of the Customs (Compounding of Offences) Rules, 2005. The Delhi High Court upheld this decision, leading to the Union of India's appeal.

2. Examination of Contradictions in Statements:
Anil's statements contained contradictions. Initially, he claimed the diamond earrings were a gift from a friend and that he entered the Green Channel by oversight. However, in his first bail application, he alleged that DRI Officers forcibly took him to the Green Channel. Such contradictions are critical as they indicate potential dishonesty or intent to mislead the authorities, which is a significant factor in deciding the maintainability of a compounding application.

3. Duty of the Compounding Authority:
The Compounding Authority must ensure that the applicant has made full and true disclosures. In this case, the authority failed to verify the contradictions in Anil's statements. The Supreme Court emphasized that the Compounding Authority must conduct a thorough inquiry to ascertain the accuracy and completeness of the applicant's disclosures. The authority's failure to do so invalidated its decision to compound the offences.

4. Eligibility and Criteria for Compounding Offences:
Section 137(3) of the Customs Act allows for the compounding of offences under certain conditions. The principle of disclosure is paramount, requiring the applicant to provide an exhaustive account of the circumstances and demonstrate that they are a one-time evader. Anil's application did not meet these criteria due to the inconsistencies in his statements and lack of comprehensive disclosure. The Supreme Court highlighted that applications for compounding should be disallowed if there are demonstrable contradictions or incompleteness in the applicant's case.

Conclusion:
The Supreme Court set aside the orders of the Compounding Authority and the Delhi High Court, stating that Anil's application for compounding was not maintainable due to the contradictions in his statements and the failure of the Compounding Authority to conduct a proper inquiry. The civil appeal by the Department was allowed, emphasizing the need for thorough verification and consistency in disclosures for compounding offences under the Customs Act.