2024 (10) TMI 316 - HC - Customs

Smuggling of Gold - Constitutional validity of Sections 104, 105 and 108 of the Customs Act, 1962 - Legality of search and seizure operations conducted by the respondents - Applicability of Section 155 of the Criminal Procedure Code (Cr.P.C.) concerning non-cognizable offences - whether the acts or omissions, which are the foundation for the proceedings in question against the present petitioners, fall under the prohibited goods or evasion or attempted evasion of duty exceeding fifty lakh rupees? - HELD THAT - The definition of Prohibited Goods clearly indicates that prohibition and restriction can be under the Customs Act or it can be under any other law. There is no absolute prohibition of gold either under the Foreign Trade (Development and Regulation) Act, 1992 or Customs Act. The same can be imported with certain restrictions/conditions. If the conditions are complied with then it is not a prohibited goods. If the conditions are not complied with then it amounts to prohibited goods as it is clear from the definition under Section 2 (33) and Section 11 of the Act of 1962 also. In the present case, summons were issued in pursuance of enabling provisions under Section 108 of the Act of 1962, which made to file the present criminal writ petitions. The challenge was made to the Constitutional validity of Sections 104, 105 and 108 of the Act of 1962, which is yet to be decided by this Court in the main writ petitions. It is needless to say that initial presumption is that all the provisions of the Act are presumed to be constitutionally valid unless it is otherwise declared to be unconstitutional. Such a situation would arise when this Court deals with the Constitutional validity of such provisions. Prima facie, this Court is not impressed by the submission with regard to Constitutional validity, which is yet required to be decided in the writ petitions. In the present case, there is allegation of smuggling, which made to arrest A. Tripathi from whose possession the gold was seized and his statement was foundation to make search and seizure in the premises owned by the petitioners herein. Prima facie, we feel that the alleged acts or omissions against the petitioners constitute within the parameters of prohibited goods. Such offence is cognizable and punishment is upto 7 years and therefore, the provisions of Section 155 of Cr.P.C. has no application in the present case whereas the Radhika Aggarwal s case was mainly based on Section 155 of Cr.P.C. In these circumstances, this Court, prima facie, feels that it is not a fit case to grant stay at this stage. The stay applications stand dismissed.

Summary

Issues Involved:

1. Constitutional validity of Sections 104, 105, and 108 of the Customs Act, 1962.
2. Legality of search and seizure operations conducted by the respondents.
3. Applicability of Section 155 of the Criminal Procedure Code (Cr.P.C.) concerning non-cognizable offences.
4. Whether the acts or omissions by the petitioners fall under the category of "prohibited goods" or involve evasion of duty exceeding fifty lakh rupees.

Issue-wise Detailed Analysis:

1. Constitutional Validity of Sections 104, 105, and 108 of the Customs Act, 1962:

The petitioners challenged the constitutional validity of Sections 104, 105, and 108 of the Customs Act, 1962, claiming they are unconstitutional and violative of fundamental rights. The court noted that the initial presumption is that all provisions of the Act are constitutionally valid unless declared otherwise. The court did not find prima facie merit in the petitioners' submission regarding constitutional validity, which remains to be decided in the main writ petitions.

2. Legality of Search and Seizure Operations:

The petitioners sought the quashment of the search and seizure operations conducted on their business premises on 14/15.05.2024, arguing they were illegal and void. The operations were based on information from an arrested individual, A. Tripathi, who alleged the gold belonged to the petitioners. The court did not find a prima facie case for quashing the operations, as the allegations involved prohibited goods, which are cognizable offences.

3. Applicability of Section 155 of the Cr.P.C.:

The petitioners argued that the proceedings against them should be null and void ab initio due to non-compliance with Section 155 of the Cr.P.C., which pertains to non-cognizable offences. However, the court highlighted that the offences in question involved prohibited goods, which are cognizable, making Section 155 inapplicable. The court distinguished the present case from Radhika Aggarwal's case, where the issue was non-compliance with Section 155.

4. Classification of Acts as "Prohibited Goods" or Evasion of Duty:

The court examined whether the acts or omissions by the petitioners fell under "prohibited goods" or involved evasion of duty exceeding fifty lakh rupees. The definition of "prohibited goods" under Section 2(33) of the Customs Act includes goods whose import or export is subject to prohibition unless conditions are met. The court found that the alleged acts involved smuggling, which constitutes prohibited goods, making the offence cognizable. Consequently, the provisions of Section 155 of the Cr.P.C. did not apply, and the petitioners could be arrested without a warrant.

Conclusion:

The court dismissed the stay applications filed by the petitioners, indicating that the allegations involved cognizable offences related to prohibited goods. The court emphasized that its observations were limited to the disposal of the stay applications, and all contentions would be considered during the main petitions.