2018 (10) TMI 910 - HC - Customs

Jurisdiction - CBI - Proper Officer - contentions raised before the trial court in their discharge petitions are that CBI is not proper officer to decide about under valuation - The contentions of A1 to A3 is that the UO letters were sent by them on the approval and instruction of the Commissioner, who is the controlling Officer, therefore, they cannot be prosecuted either for 120(B) I.P.C, conspiracy, 420 of IPC, cheating or misappropriation under Section 13(C) of Prevention and Corruption Act. Held that - The disputed fact whether the respective UO letters referred above sent by the accused A1 to A3 were issued with the knowledge of the Commissioner or can be decided only after trial. The UO letters issued by A1 to A3 were not part of their duty but created falsely to cheat the exchequer. No element of duty is found in issuing a misleading, false document under the capture UO letter. Hence, Section 155 (2) of the Customs Act have no relevance. The said Section 155 of Customs Act places embargo for mitigating proceedings against the customs official only in respect of the act done in the course of their duty in consonance with the act, not for the acts done dishonestly and contrary to law. The Section 155 of the customs act refers to act done in good faith, in pursuance of this Act or the rules or regulations are protected from legal proceedings. The sub Section (2) of Section 155 puts embargo to initiate any proceedings, without a months notice, for anything purporting to be done in pursuance of this Act. Issuing UO letters contrary to Act, rules and Regulations containing falsehood does not attract Section 155 of the Act, to claim protection. Hence, the orders of the trial court dismissing the discharge petitions are liable to be confirmed. Petition dismissed.

Issues Involved:
1. Criminal conspiracy and cheating.
2. Under-valuation of imported goods.
3. Role and authority of CBI in investigating customs violations.
4. Misjoinder of persons and charges.
5. Protection under Section 155 of the Customs Act.

Issue-wise Detailed Analysis:

1. Criminal Conspiracy and Cheating:
The accused, A1 to A5, were alleged to have conspired to undervalue Star Aniseed imports, causing a wrongful loss to the Customs Department and corresponding gain to themselves. The final report indicated that the customs officials (A1 to A3) issued false U.O. Notes to clear undervalued Bills of Entry, leading to a loss of ?92,24,730/- to the Customs Department. The prosecution argued that the U.O. Notes were issued without the approval of the controlling officers, thereby abusing their positions to obtain pecuniary advantages.

2. Under-valuation of Imported Goods:
The customs officials were accused of clearing undervalued Bills of Entry for M/s. Unik Traders. The investigation revealed that the declared value of the imported goods was significantly lower than the guideline value provided by the Directorate of Valuation (DOV) and National Information Data Base (NIDB). The prosecution presented evidence, including statements from customs officials and comparative data, to support the claim of undervaluation and the resultant revenue loss.

3. Role and Authority of CBI in Investigating Customs Violations:
The petitioners contended that the CBI was not the proper authority to investigate undervaluation issues, arguing that such matters should be addressed by customs officials under the Customs Act. However, the court held that the CBI had the authority to investigate cases involving public servants abusing their positions for pecuniary gain, distinguishing between customs adjudication and criminal misconduct.

4. Misjoinder of Persons and Charges:
The petitioners argued that the final report suffered from misjoinder of persons and charges, as the matter involved different periods and Bills of Entry. The court dismissed this contention, stating that the issue of conspiracy and cheating could only be decided after a full trial, based on the evidence and documents presented.

5. Protection under Section 155 of the Customs Act:
The petitioners claimed protection under Section 155(2) of the Customs Act, which provides immunity for actions taken in good faith under the Act. The court rejected this argument, noting that the issuance of false U.O. Notes was not done in good faith or in accordance with the Act, rules, or regulations. Therefore, Section 155 did not apply to acts done dishonestly and contrary to law.

Conclusion:
The court dismissed the criminal revision petitions, confirming the trial court's orders rejecting the discharge petitions. The court held that the prosecution had presented sufficient material to frame charges and proceed with the trial. The actions of the accused, including issuing false U.O. Notes and clearing undervalued goods, were found to be outside the scope of their official duties and not protected under Section 155 of the Customs Act. Consequently, the criminal proceedings against the accused were allowed to continue.

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