2019 (9) TMI 1038 - HC - Customs

Compounding of Offence - section 137(3) of the Customs Act, 1962 - HELD THAT - The offence is punishable under section 135 of the Customs Act, 1962 and the allegations are that the exotic birds have been smuggled/imported in India. Whatever may be the situation, the fact remains that the offence is compoundable. The offence was registered on 16th June 2019 and thus enough time was available for the respondent No.1 to carry out investigation. The respondent No.1 can still continue with the investigation. Under the provisions of section 137 of the Customs Act, 1962, the offence can be compounded either before or after filing the proceedings and, therefore, the prayer of the petitioner seeking directions regarding adjudication of the amount of customs duty for compounding the offences is reasonable. The Petitioner shall cooperate in the investigation and shall remain present as and when called by the investigating agency - The Petitioner is, however, permitted to have advocate accompanying him at visible but not audible distance during his interrogation by the officers of Respondent No.1 (investigating agency) and recording of his statement shall be videographed.

Summary

Issues:
1. Compounding of offence under section 135 of the Customs Act, 1962.
2. Procedure for determining customs duty and compounding offences.
3. Adjudication authority for quantifying customs duty.
4. Investigation progress and need for directions.

Analysis:

Issue 1: Compounding of offence under section 135 of the Customs Act, 1962
The petitioner was alleged to have committed an offence under section 135 of the Customs Act, 1962, which is compoundable under subsection (3) of section 137. The petitioner had already applied for compounding the offence. The court granted bail to the petitioner and emphasized the compoundable nature of the offence, allowing the investigation to continue while directing cooperation from the petitioner.

Issue 2: Procedure for determining customs duty and compounding offences
The petitioner's counsel highlighted Customs Act provisions and Customs (Compounding of Offences) Rules, 2005, specifically Rule 4, which outlines the procedure for quantifying customs duty and compounding offences. The Adjudicating Authority, in this case, the Commissioner (Preventive), was tasked with determining the customs duty, followed by compounding by the Chief Commissioner of Customs. The court agreed that the petitioner's request for direction on adjudicating customs duty for compounding was reasonable.

Issue 3: Adjudication authority for quantifying customs duty
The court noted that under section 137 of the Customs Act, 1962, the offence can be compounded before or after filing proceedings. It emphasized that the Authorities must entertain and determine applications for compounding offences as per statutory provisions and prescribed rules, rejecting objections to entertaining the petitioner's application.

Issue 4: Investigation progress and need for directions
While acknowledging the ongoing investigation, the court emphasized that sufficient time had passed since the offence registration, allowing the investigation to continue. However, it upheld the petitioner's right to seek directions for adjudicating customs duty for compounding. The court ordered the petitioner to cooperate with the investigation and outlined the procedure for adjudication and compounding, confirming the interim bail granted earlier.

In conclusion, the court's judgment focused on the compoundable nature of the offence under the Customs Act, the procedure for determining customs duty and compounding offences, the authority responsible for quantifying customs duty, and the balance between allowing the investigation to proceed and addressing the petitioner's application for compounding.