2007 (11) TMI 310 - HC - Customs

Bail - Diversion of imported goods - Held that - It is obvious that applicant indulged in white collar crime diverting non-edible palm oil to the ghee manufacturers for use into the ghee, which is consumed by the common people. He obtained licence for concessional import of crude palm oil by misrepresentation that it would be used for manufacture of washing soap, depriving the public exchequer of import duty of more than Rs. one crore. The applicant, first made an application for compounding of the offence, then flatly refused to compound the offence and refused to pay the amount. The counsel for the petitioner described act of making compounding application as a stupidity of the applicant. Considering all these facts and the fact that the applicant is in jail and the trial may take some time the applicant is granted bail if the applicant deposits 50% of the amount levied as compounding fee as specified with the Chief Commissioner of Central Excise without prejudice to the rights of the applicant. The applicant, if it is found after the trial, had not committed any offence shall be returned back this amount. If the evasion of duty is found, the amount shall be adjusted against duty payable and penalties levied as per law.

Summary

Issues: Bail application under Section 439 of Cr. P.C. for a bailable offence under Section 135(1)(ii) of the Customs Act, 1962, compounding of the offence, refusal to compound, and granting bail on depositing 50% of the compounding fee.

Analysis:
1. Bail Application: The applicant filed a bail application under Section 439 of Cr. P.C., citing recent Supreme Court orders and judgments from Punjab and Haryana High Court and Delhi High Court. The applicant argued that the offence under Section 135(1)(ii) of the Customs Act, 1962, was bailable based on recent legal developments and the compounding application filed as a sign of good faith. The prosecution had completed the investigation, and the applicant had been in custody for seven months, emphasizing the need for bail due to the lengthy trial process.

2. Opposition to Bail Application: The opposing party argued against granting bail, stating that the Supreme Court order cited by the applicant did not apply to the unamended provisions of the case. They highlighted that the issue of whether the offence was bailable was still under consideration by the Supreme Court, citing previous conflicting judgments and the stay on the Mumbai High Court's decision. The Delhi High Court had consistently held that the offence under Section 135(1)(ii) was non-bailable, as seen in previous cases.

3. Compounding of Offence: The applicant made an application for compounding the offence, which was granted by the Chief Commissioner of Central Excise and Service Tax. The compounding fee amounted to over Rs. 2 crores, covering various sections of the Customs Act and Central Excise Act. The applicant's counsel argued against the compounding, labeling it as unnecessary and burdensome, leading to a refusal to pay the hefty fee.

4. Nature of Offence: The petitioner was involved in diverting non-edible palm oil meant for manufacturing washing soap to ghee manufacturers, resulting in a significant evasion of customs duty. The applicant misrepresented the end-use of the imported oil, leading to a loss of over Rs. 1 crore to the public exchequer. The court highlighted the seriousness of the offence as a white-collar crime impacting public finances and consumer goods.

5. Granting Bail: Considering the gravity of the offence and the lengthy trial process ahead, the court granted bail on the condition that the applicant deposits 50% of the compounding fee levied by the Chief Commissioner. The bail was subject to the applicant's exoneration after trial, with the deposited amount to be returned if found innocent or adjusted against any dues if found guilty. The applicant was required to execute a personal bond and provide a surety for release on bail.

In conclusion, the judgment addressed the complex legal aspects of the bail application for a potentially bailable offence under the Customs Act, the compounding of the offence, and the conditions for granting bail based on the seriousness of the alleged white-collar crime and the financial implications involved.