1

TOPIC: CONFISCATION OF GOODS ALLEGED TO BE SMUGGLED WITH

ABETTOR AND RELEASING THE SAME

Comments

- Good structure and coherent

- Good research work and to the point
- Proper Analysis of the topic is lacking( Conclusion part)
- Deal with more cases
- Focus on alleged goods to be smuggled as per your topic

TABLE OF CONTENTS:

INTRODUCTION PAGE NUMBER

ABSTARCT 3

INTRODUCTION 4

SEARCH AND DETENTION OF 4

GOODS/ABETTOR

RELEASE OF GOODS/ABETTOR 6

JUDICIAL PRECEDENTS 8

CRITICAL ANALYSIS, SUGGESTION 9

AND CONCLUSION
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BIBLIOGRAPHY 10

TABLE OF CASES

Abdul Razakvs Union Of India 8

CCus (Prev.), Mumbai v. M. Ambala& 8

Co.
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ABSTRACT

Customs Act, 1926 connotes the meaning of confiscation of smuggled goods

as seizing of property which has been in possession or use contrary to the
law. Any government, whether state or central, or their authorized officers
can search for the goods alleged to be smuggled or even the people who by
a reason to believe is considered to be an abettor of the same. Such officers
also have the power of detention. Once the goods which are alleged to be
smuggled are confiscated, the person responsible or abettor is liable for
heavy fines and penalties.

The researcher under different heads has discussed in brief, the search for
the alleged smuggled goods and of the people abetting to smuggle goods.
Further, the possibility on the release of the smuggled goods and that of the
abettor has been discussed under a separate heading.

The researcher further discusses various judicial precedents for a better

understanding of the same followed by conclusion, analysis and researcher
personal suggestions.
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INTRODUCTION

The word confiscation is symbolic of the act of government to seize

property without providing any compensation, mostly as a result of
conviction of a crime, or because possession, or use of property contrary to
the law. It implies appropriation consequential to seizure.1

Any government, whether state or central, or their authorized officers can

search for the goods alleged to be smuggled or even the people who by a
reason to believe is considered to be an abettor of the same. Such officers
also have the power of detention.

Once the goods which are alleged to be smuggled are confiscated, the
person responsible or abettor is liable for heavy fines and penalties. Such
people involved in smuggling and other modus operandi of imports and
exports, in violation of prohibitions/ restrictions in vogue or with intent to
evade duties or fraudulently claim export incentives are liable to serious
penal action under the Customs Act.2

SEARCH AND DETENTION OF GOODS/ ABETTOR

1
Anonymous, Offences and Penal Provisions, link:
http://www.customsandforeigntrade.com/What%20Custom%20manual%20says%20about%20Offences%20Penal
%20Provision%20and%20Show%20Cause%20Notice.pdf, last accessed on 25th July, 2016 at 5:30 p.m.
2
C.P. Goyal, Search, Seizure and arrest, link:
http://www.nacenkanpur.gov.in/admin/media_images/Search,%20Seizure%20%20&%20Arrest%20-
Book%20No.01.pdf last accessed on 25th July, 2016 at 5:39 p.m.
 5

SEARCH Commented [U1]: Why no mention of section 106 and

107??
The term SEARCH has not been defined in law.By the various judicial
pronouncements, search denotes an action of the government machinery to
examine carefully a place, area, person, object etc. with a purpose to find
something which is concealed to evade the government authorities.
However, the procedure of search can be done only under the proper and
valid authority of law officers. Section 100, 105 and 106 of the Customs Act
empowers the proper officer to search a person, premises and conveyances
respectively when there is a reason to believe that there are goods liable to
confiscation or any document relating thereto.
Search of the abettor
Search of a person is conducted by or in presence of the officer empowered
under the law. It is also called personal search of a person. Provisions of
personal search under Central Excise, Customs and Service Tax laws are
tabulated as under:3
Officer
Authority authorized to take Remarks
search

Central Excise NIL NA

Service Tax NIL NA

Proper Officer as
Customs Section 100 of defined under Section Procedure for personal
Customs Act, 2(34) of Customs Act, search has been
1962 1962. prescribed
under section 102 of
3
Anonymous, Offences and Penal Provisions, link: http://www.taxindiaonline.com/RC2/pdfdocs/cm/cm25.pdf ,last
accessed on 26th July, 2016 at 3:39 p.m
 6

The officer of and Customs Act.

above the rank of
Inspector of Customs
& Central Excise,
Preventive Officer,
ExaminingOfficer, The suspected person
IntelligenceOfficer of can be X-Rayed in
DRI & DGCEI is case there is reason to
authorized to search believe that goods
the suspected persons liable to confiscation
entering or leaving are secreted inside
India under Section his/her body. [ Section
100 of Customs Act, 103]
1962.]

DETENTION Commented [U2]: The Act referred to is appreciated.

The Central Government or the State Government or any officer of the

Central Government, not below the rank of a Joint Secretary to that
Government, specially empowered for the purposes of Section 3 by that
Government, or any officer of a State Government, not below the rank of a
Secretary to that Government, specially empowered for the purposes of this
section by that Government, may, if satisfied, may prevent a person from
smuggling goods or abetting of the smuggled goods. When any order of
detention is made by a State Government or by an officer empowered by a
State Government, the State Government shall, within ten days, has to
forward to the Central Government a report in respect of the order.4 This
provision is based on the concept of Preventive Detention and is also given
explicitly in our constitution as the necessary evil, and laws exist under
Article 22 for the same for reasons related to security of the state and
maintenance of public order.

4
THE CONSERVATION OF FOREIGN EXCHANGE AND PREVENTION OF SMUGGLING ACTIVITIES ACT, 1974, link:
http://finmin.nic.in/law/cofeposa.pdf, last accessed on 26th July, 2016 at 2:49 p.m
 7

Confiscation
Confiscation of goods used for concealing smuggled goods : The goods used
for concealing smuggled goods are also liable to confiscation as per Section
119 of the Customs Act.
Confiscation of smuggled goods notwithstanding any change in form, etc :
Smuggled goods may be confiscated even if its form has been changed. In
case the smuggled goods with other goods in such a manner that the goods
cannot be separated then the whole of goods are liable to be confiscated as
per specific provisions in Section 120 of the Customs Act.
Confiscation of sale proceeds of smuggled goods: There may be situations
when the smuggled goods are sold off. In such a situation, the sale-proceeds
thereof are also liable to confiscation (Section 121).

Adjudication Proceedings

Section 122 provides for adjudication of confiscation and penalties imposed

under the Act. The following Officers are empowered to adjudicate
confiscation or penalty-

Principal Commissioner of Customs/Commissioner of Customs/Joint

Commissioner of Customs Without limit.
Assistant Commissioner of Customs/Deputy Commissioner of Customs
If the value of the goods liable for confiscation does not exceed 2
lakhs .
Gazetted Officer of Customs lower in rank than the Assistant
Commissioner of Customs/Deputy Commissioner of Customs If the
value of the goods liable for confiscation does not exceed 10,000.

Section 122A provides that the Adjudicating Authority shall, in any

proceedings give an opportunity of being heard to a party in any proceeding,
if the party so desires. The Adjudicating Authority is given power to give
time to the parties to the proceedings from time to time if sufficient cause is
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shown for this purpose. The hearing may be adjourned for reasons to be
recorded in writing. Such adjournment is restricted to only for three times.

RELEASE OF THE GOODS/ABETTOR Commented [U3]: Deal with the powers of the
authorities to prosecute the smuggler if any.

Discuss the Adjudication proceedings. I see no

reference to any section regarding the same.
Prosecution powers

To tackle the menace of smuggling and other serious economic offences

including commercial frauds effectively, apart from penal action in
departmental adjudication, the Customs Act, also provides for criminal
prosecution action. The persons involved can be arrested and prosecuted in
a Court of Law.

Release of the detention order

Without prejudice to the provisions of section 21 of the General Clauses Act,
1897 (10 of 1897), a detention order may, at any time, be revoked or
modified. The revocation of a detention order does not bar the making of
another detention order against the same person.

Temporary release of the detained persons

Any concerned authority can issue temporary release for a specified period
to the detained person without any condition or upon some condition, on
defiance of which, the release shall be cancelled.

Protection of action taken in good faith

As per section 138A of the Customs Act, the culpable (guilty conscience or
mensrea) on the part of the accused person shall be presumed and it will be
for the accused to proof that he had no deliberation with respect of alleged
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offence. When the presumption of culpable mental state is drawn under this
provision, that presumption includes intention, motive, knowledge, belief as
well as reason to belief. The presumption could be deemed as rebutted only
if the proof is beyond reasonable doubt not merely when its existence is
established by a preponderance of probability.
The owner of such goods has to prove that he had no knowledge or reason
to believe that they included any smuggled goods.5

Release of the smuggled goods

Once the exporting goods have been confiscated, (as per the section 125 of
Custom Act) the officer may provide the owner with the option to pay
redemption fine in lieu of confiscation. However, if importation or
exportation of goods is not prohibited, the option to pay redemption fine
shall be given to the owner of goods.6

JUDICIAL PRECEDENTS Commented [U4]: Couldve analyzed few more cases.

Since the objective (from abstract) is to get a better
understanding on the topic.

Abdul Razak vs Union Of India7

The appellant who landed from the Middle East (Riyadh) in a flight on
02/02/1996 without declaring any goods that attracts customs duty passed
through the green channel at the Karipur Airport, Kozhikkode. The Customs
officers intercepted the appellant at the gate and examined the goods that

5
Anonymous, Offences and Penal Provisions, link:
http://www.customsandforeigntrade.com/What%20Custom%20manual%20says%20about%20Offences%20Penal
%20Provision%20and%20Show%20Cause%20Notice.pdf, last accessed on 15th July, 2016 at 5:30 p.m.
6
Anonymous, Provisions relating to illegal import, illegal export, confiscation, penalty & allied provision, link:
http://www.icaiknowledgegateway.org/littledms/folder1/30707revised-vol2sm-customfinalnew-idtl-cp12.pdf, last
accessed on 26thjuly, 2016 at 2:30 p.m.

7
MANU/KE/2039/2011
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the appellant had brought along with him from abroad. It was seen that the
appellant tried to smuggle out over 8 KGs of gold (69 gold biscuits of 10
tolas each) by concealing it in emergency light, mixie, grinder, car horns etc.
The Customs authorities seized the smuggled goods i.e. gold and recorded
statement from the appellant under Section 108 of the Act.
The smuggled gold seized by the Customs Department were confiscated in
adjudication proceedings later, wherein the appellant's claim for release of
the gold on payment of redemption fine and duty and personal penalty was
rejected by the Department.
It was held that the appellant, as a matter of right, cannot claim release of
the goods on payment of redemption fine and duty. Even though gold as
such is not a prohibited item and can be imported, such import is subject to
lot of restrictions including the necessity to declare the goods on arrival at
the Customs Station and make payment of duty at the rate prescribed.

Commissioner of Customs (Prev.) Mumbai vs. M Ambalal & Co

Ambalal & Co. had smuggled rough diamonds into the country clandestinely
without payment of duty. The Department issued a notice to Ambala & Co.
proposing confiscation of the diamonds under clause (d) of section 111 of
the Customs Act, 1962 and imposing penalties on various persons
concerned. However, the said goods were unconditionally exempted from
payment of import duty vide an exemption notification. So, Ampala & Co.
claimed the benefit of the said exemption notification. The Department,
however, refused to grant the benefit of exemption meant for imported
goods to smuggled goods.
Supreme Court held in this case that smuggled goods confiscated and
redeemed on payment of fine in lieu of confiscation would not be allowed to
avail of an exemption because the goods are smuggled goods and therefore
are not imported goods. The Court said the following: We are of the view
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that smuggled goods will not come within the definition of imported goods
for the purpose of the exemption notification, for the reason, the Act defines
both the expressions looking at the different definitions given to the two
classes of goods: imported and smuggled, and we are of the view that if the
two were to be treated as the same, then there would be no need to have
two different definitions.8

Blue Dart Express Pvt. Ltd. vs Commissioner Of Customs on 19

March, 1999
In this case the tribunal observed that redemption fine in lieu of confiscation
is not a fine as understood in criminal jurisprudence. Redemption fine is not
a penalty in that sense. It is only an option to the person to pay an amount
in lieu of confiscation. It contains no penal connotation.
"To Confiscate" means to appropriate private property to public treasury.
Thus after confiscation the goods becomes a property of the government
and the government can deal with it as it wants. Through option of
redemption fine, government offers to some person to take ownership of the
goods. Redemption fine is not a penalty and it has no penal connotation.

Bussa Oversea v. C L Mahar, Asst. C.C. Bombay9

Division Bench of the Mumbai High Court held that once goods are cleared
for home consumption from customs, they cease to be imported goods and
hence they are not liable to confiscation.

Section 111 of the Customs Act is applicable only to the imported goods.
Section 2(25) of the Customs Act defines "imported goods" as, "imported
goods means any goods brought into India from a place outside India but
does not include goods which have been cleared for home consumption."

8
2010(260)ELT487(SC)
9
2004(163)E.L.T. 304 (Bom)
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Thus confiscation can be assailed on this ground also. Under customs Act,
only imported goods can be confiscated. As per the definition of "imported
goods" under Section 2(25) of the Customs Act, goods cleared for home
consumption does not remain imported goods.

J.S. Parkar v. V.B. Palekar10

It was held that the loss upon confiscation of goods for infraction of law
suffered by the assessee must be regarded as a loss falling on him income
character other than the trader.

CIT v. Piara Singh11

Wherein the Honble Court held that the loss even from the illegal business
can be allowed as a deduction.

Soni Hinduji Kushalji & Co. v. CIT12

Wherein contraband gold of Rs. 56,978 was seized by the customs officer. In
the said case, the assessee was dealing in gold. The loss on confiscation was
disallowed on the ground that it is not incidental to the business of the
assessee.

CRITICAL ANALYSIS, SUGGESTION AND CONCLUSION Commented [U5]: Since your topic is confined to only
confiscation of smuggled goods (dealing with sections
119 to 127), it is expected that you deal with these
provisions properly. Except for section 125, analysis of
other sections is not seen.
Customs Act, 1926 connotes the meaning of confiscation of smuggled goods
as seizing of property which has been in possession or use contrary to the
law. Persons involved in smuggling and other modus operandi of imports and
exports, in violation of prohibitions/ restrictions in vogue or with intent to
evade duties or fraudulently claim export incentives are liable to serious

10
[1974] 94 ITR 616 (Bom.)
11
[1980] 124 ITR 40
12
[1973] 89 ITR 112 (AP)
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penal action under the Customs Act. The offending goods can be confiscated
and heavy fines and penalties imposed. The following paras briefly indicate
the provisions in law for seizure,confiscation of goods, imposition of
penalties by adjudication. Provisions of law not required but analysis is
preferred
Therefore,Any government, whether state or central, or their authorized
officers can search for the goods alleged to be smuggled or even the people
who by a reason to believe is considered to be an abettor of the same. Such
officers also have the power of detention.

However, such goods or detained persons can be released on various

grounds such as protection of action in good faith, or, at the option of the
authorized officer, or cancellation of detention order, etc.

The presumption of good faith could be deemed as rebutted only if the

accused proves innocence beyond reasonable doubt not merely when its
existence is established by a preponderance of probability.As I researcher, I
would suggest that the there should be given the benefit of doubt to the
accused people. It is very difficult to prove the presumption false beyond
reasonable doubt. Because of this, may people who are unable to prove their
innocence beyond reasonable doubt, can be held guilty, and, henceforth
punished. As our principle of law say, hundreds of people may go free but
one innocent shall not be punished. Commented [U6]: As far as the research is concerned
good reference has been made. But you should get
into the technical aspects and discuss them. Very less
reference to sections of the Act has been made.
BIBLIOGRAPHY

http://www.taxindiaonline.com/RC2/pdfdocs/cm/cm25.pdf
http://finmin.nic.in/law/cofeposa.pdf
http://www.nacenkanpur.gov.in/admin/media_images/Search,%20Sei
zure%20%20&%20Arrest%20-Book%20No.01.pdf
 14

http://www.customsandforeigntrade.com/What%20Custom%20manua
l%20says%20about%20Offences%20Penal%20Provision%20and%20S
how%20Cause%20Notice.pdf
http://www.icaiknowledgegateway.org/littledms/folder1/30707revised-
vol2sm-customfinalnew-idtl-cp12.pdf