Arrest provisions under various civil laws have always acted as good deterrence against different kinds of offences. But these powers in the hands of enforcement authorities can also be misused causing not only harassment to genuine law abiding citizens, but also embarrassment to the government. Customs law in India is not very different from any other law, in this regard. In the last two years, Ministry of Finance has been serious in not only recovering tax dues but also in making the arrest and prosecution provisions stricter. While last year some of the offences under Customs law were made cognizable, this year, Budget 2013 proposes to make certain offences non-bailable. This write-up discusses some of these provisions to see whether these changes/proposals are clear enough.
Changes in law
Finance Bill, 2012 contained proposals to make certain offences under the Customs law cognizable and non-bailable. Offences punishable for a term of imprisonment of three years or more under Section 135 of Customs Act, 1962 were to be made cognizable and non-bailable. There was another proposal for introduction of provisions for non-grant of bail without hearing the public prosecutor in cases of offences liable for imprisonment of three years or more under the above said Section. But, the Finance Act, 2012 ultimately made only specified offences, namely, offences relating to prohibited goods or of evasion/attempted evasion of duty exceeding Rs. 50 lakh, as cognizable. All offences, however, remained bailable. This year, Budget 2013 attempts to revive the proposals of last year by seeking amendments to make certain offences punishable under Section 135 as non-bailable.
Clause 65 of the Finance Bill, 2013 proposes to make offences punishable under Section 135 relating to,
(i) evasion/attempted evasion of duty exceeding Rs. 50 lakh; or
(ii) prohibited goods notified under Sections 11 and 135(1)(i)(C); or
(iii) goods of value exceeding Rs. 1 crore not declared in accordance with the provisions; or
(iv) where there is fraudulent availment/attempt to avail drawback or exemption from duty which exceeds Rs. 50 lakh, as non-bailable offences, by way of amendment to Section 104.
All other offences under the Customs Act will remain bailable.
Analysis
It may be noted that in respect of first category the amendment is clear as similar offence is also cognizable and also figures in Section 135(1)(a). For the second category, if the goods are notified under Section 135 maximum punishment of 7 years has been provided and in other cases, imprisonment can be awarded upto 3 years. Here also, the last year’s idea of making all offences with imprisonment terms of more than 3 years as cognizable and non-bailable fits in. Activities in relation to other prohibited goods are presently cognizable and will remain bailable.
Third category of offence which is being made non-bailable is the offence relating to import or export of any goods which have not been declared in accordance with the provisions of the Customs Act and where the market price of the goods exceeds Rs. 1 crore. Here we note that the phrase ‘not been declared in accordance with the provisions’ is very general and hence may have wider implications. Section 135(1)(a) provides specifically only mis-declaration of value as one of the offence. Clause (b) of the above section however states that offences having liability of confiscation under Section 111 are also covered and Section 111(m) provides for confiscation of any goods which do not correspond in respect of value or in any other particular with the entry (bill of entry) made under the Customs Act.
Question which now arises is whether simple cases of mis-classification, in other words a classification not accepted as right by the department, will also qualify for ‘not corresponding to any other particular’ and be liable for confiscation and consequently be non-bailable even when evasion or fraud is not involved? There are precedents holding that mis-classification is not mis-declaration and hence not liable for confiscation [2012 (283) E.L.T. 556 (Tri. - Mumbai)]. Therefore this offence may not be covered under Section 135 and hence there is no question of arrest, etc. Generally, arrest and prosecution provisions are intended for gross evasion cases only or for cases involving fraud, etc. These provisions should not be used to harass law abiding importers and exporters in genuine cases involving interpretation [2012 (285) E.L.T. 379 (Tri. - Del.)]. As noted earlier, these provisions have widespread effect and hence there is a need to make them clearer.
Offences of fraudulently availing or of attempting to avail drawback or any exemption from duty (if drawback amount or exemption exceeds Rs. 50 lakh) belong to the fourth category proposed to be made non-bailable. Here we note that wordings of this clause are similar to clause (d) of sub-section 135(1) read with sub-clause 135(1)(i)(D). These provisions in Section 135 however state the offence to be, ‘fraudulent availment of or attempts to avail of drawback or any exemption from duty provided under this Act in connection with export of goods’. The words ‘in connection with export of goods’ are not present in the new provisions, so offence of fraudulently availing any exemption i.e. also in relation with import of goods is now being made non-bailable.
Fraudulent availment of any exemption can also be covered under the first category of evasion or attempt to evade. Then what was the reason for specifying the same under a separate category? There is a general proposition that legislature does not waste words and if something is said, it has its meaning and value. It is also said that each word used in the enactment must be allowed to play its role howsoever significant or insignificant the same may be in achieving the legislative intent and promoting legislative object [2012 (279) E.L.T. 321 (S.C.)]. Notes on clauses and Explanatory Memorandum or the D.O. Letter issued along with the Budget papers are also not of much help in this regard. Should we understand this proposal to mean that fraudulent availment of exemption is not evasion per se? If this is the case, then fraudulent availment of exemption may not even be cognizable, as only offences relating to prohibited goods and of evasion exceeding Rs. 50 lakh are cognizable. We surely cannot have different meanings and scope of word ‘evasion’ for the purpose of different sub-sections of Section 104.
Conclusion
Arrest and prosecution provisions are very serious matters since the person is deprived of valuable fundamental rights. There is a need to draft the provisions clearly, leaving no room for any misinterpretation or misunderstanding. Proposing a particular change, then withdrawing the same to provide for something else and then again going back to another version of the earlier proposals, portray lack of attention and seriousness in law making. Let us hope the present proposals are clarified soon.
[The author is an Assistant Manager, Knowledge Management Team, Lakshmikumaran & Sridharan, New Delhi]