SMUGGLING OF FOREIGN MADE CIGARETTES IN THE GUISE OF IMPORTING ELECTRONIC GOODS AND COMPUTER PARTS

[DR.MARIAPPAN GOVINDARAJAN]

In MR. MOHAMMED MUZZAMIL VERSUS UNION OF INDIA - 2025 (4) TMI 1101 - TELANGANA HIGH COURT, the DRI authorities intercepted the consignment which the petitioners were removing out of the air cargo area, it was found that the boxes contained of foreign made cigarettes which were, in fact, not the goods which were said to be imported by them. The value of the smuggled goods was Rs.74.44 lakhs.  The Customs Department issued a show cause notice to the petitioner in this case.  The petitioners, instead of filing reply to the said show cause notice, filed a writ petition (No. 22805 of 2021) challenging the show cause notice and also with the prayer to quash the said show cause notice.  The High Court dismissed the said writ petition on 10.12.2024.

Then the Department filed a complaint under Section 200 of the Criminal Procedure Code (‘Cr.PC’ for short) for the alleged offence of smuggling carried out by the petitioners along with the other co-accused persons on 08.10.2015.  It was alleged that the petitioners along with the co-accused persons smuggled foreign made cigarettes in the guise of importing of electronic goods and computer parts.   Complaints were also made against the other accused persons under the provisions of the Act for the offences punishable under Sections 132, 135(1)(a) and 135(1)(b) of the Act.

Against the said complaint the petitioner filed the present writ petition before the High Court seeking for issuance of writ seeking for quashment of the complaint filed under Section 200 of the Cr.P.C. for the offences punishable under Sections 132, 135(1)(a) and 135(1)(b) of the Customs Act, 1962 (for short, ‘the Act’) and as a consequence has sought for quashment of C.C.No.8 of 2024, on the file of the learned Special Judge for Economic Offences, Nampally, Hyderabad.

The said writ petition has been filed seeking quashing of the prosecution.  The petitioner submitted the following before High Court for its consideration-

• that the value of the alleged smuggled goods being less than Rs. 2 crores in terms of Circular of the Customs Department dated 16.08.2022, the prosecution is liable to be dropped;
• the Additional Director General who has granted sanction for prosecution on 28.11.2020 was not competent authority;
• The filing the complaint case in August, 2023 is barred by limitation in terms of Section 468 Cr.P.C/corresponding Section 514 of BNSS;
• The offences charged against the petitioners being one which are punishable for a period of two years, therefore, the filing of the complaint case now beyond a period of three years is not maintainable.

The High Court considered the grounds of appeal filed by the appellant. In regard to the first ground the High Court took note of the Circular dated 16.08.2022.  The High Court analysed the clause 2 and 3 of the said circular.

Clause 2 of the circular provides that the then nominal monetary thresholds with respect to launching prosecutions and related matters were provided in Circular No. 27/2015-Customs, dated 23-10-2015 and taking relevant aspects into account, with the approval of the competent authority, it has been decided to revise the threshold limits for various categories of cases for launching prosecution.  The revised threshold limits are given as under:

1. Baggage and outright smuggling cases-

• Cases involving unauthorized importation in baggage/cases under Transfer of Residence Rules, where the market value of the goods involved is Rs. 50,00,000/- (Rupees Fifty Lakh) or more;
• Outright smuggling of high value goods such as precious metal, restricted items or prohibited items notified under section 11 of the Customs Act, 1962 or goods notified under section 123 of the Customs Act, 1962 or foreign currency where the market value of offending goods is Rs. 50,00,000/- (Rupees Fifty Lakh) or more;

2. Appraising Cases/Commercial Frauds-

• In cases related to importation of trade goods (i.e. appraising cases) involving –

• Wilful mis-declaration in value/description;
• concealment of restricted goods or goods notified under section 11 of the Act, where market value of the offending goods is Rs. 2,00,00,000/- (Rupees Two Crores) or more;

•  In cases related to fraudulent evasion or attempt at evasion of duty under the Act, if the. amount of duty evasion is Rs. 2,00,00,000/- (Rupees Two Crore) or more.

The High Court noted that vide notification dated 25.07.2016, cigarettes and silver bullion have been notified under section 123 of the Act.  Clause 3.1(ii) will clearly indicate that the Circular so far as the sanction for prosecution in respect of goods notified under section 123 of the Act, the threshold value of the products has to be not more than Rs. 50.00 lakhs.   Clause 3.1 would be applicable in the case of the petitioners and not Clause 3.2.

In the opinion of the High Court Clause 3.2 is in relation to importation of trade goods which can be brought within the ambit of appraising cases where the importer makes certain wilful mis-declaration in respect of the value as also in respect of the description of the goods, which is not attracted in the instant case.  The High Court held that the contention of the petitioners that Clause 3.2 of the said Circular being attracted is not sustainable and therefore, the High Court rejected the same.

In regard to the second ground the Department referred to the circular dated 23.10.2015.  The said circular clearly explains in Clause 4.6 and 4.7 that the Additional Director General also is one of the competent authorities who has been permitted to grant sanction except in respect of certain category of cases which stands covered under Clause 4.2.1.2 and 4.2.2.  Therefore, the High Court held that the second ground also is not sustainable and answered in negative to the petitioners.

In regard to limitation the High Court analysed the provisions of Section 468 of Cr.P.C. corresponding Section 514 of BNSS.  The High Court found that the petitioners have been prosecuted in addition to the offence under Section 132, also for the offences punishable under Section 135(1)(a) and 135(1) (b) of the Act.  The same are punishable under Section 135(1)(i) (B) & (C) where the punishment may be extended up to seven years with fine.  The said section 468 of Cr.PC/514 of BNSS provides the period of limitation prescribed for an offence is only up till 3 years and that there is no limitation provided for an offence with a sentence of more than 3 years.  Therefore, the High Court held that period of limitation as is prescribed under Section 468(a) Cr.P.C.,/corresponding Section 514 of BNSS would not be applicable in the instant case.

The petitioners relied on two judgments in support of their arguments.  The High Court held that the same would not be applicable to the case of the petitioners.  The High Court did not find grounds in interfering with the impugned order.  The petitioners are having the right to avail appropriate legal recourse under the Cr.PC/BNSS.