A person arrested for violating provisions of Customs Act where is allowed to import goods at duty-free charges for the purpose of re-exporting it, can now be released on bail. The Bombay High Court recently ruled that a trader who is arrested for importing goods and selling it in the market instead of exporting it should be granted bail instead of sending him to police or judicial custody.
Justice SC Dharmadhikari while releasing Kuresh Rajkotwala, director of M/S Taher Impex Private Limited ruled that Section 135 (1) (ii) of the Customs Act, 1962 is a bailable offence.
Any trader who imports goods for the purpose of manufacturing and then exports finished goods is allowed to import the goods at duty-free rates. This is as the export of his manufactured goods will earn revenue for the country. However, if he fails to export and fraudulently sells the imported goods directly in the market then he is liable for prosecution for violating the Customs Act.
M/s Taher Impex is engaged in import of fabrics since 2004. In this case, the firm allegedly imported huge number of consignments of fabrics were cleared duty free. Thereafter the goods were then taken to Bhiwandi and sold consignments in the local market in cash, violating the provisions of the Customs Act, 1962 and the EXIM policy.
The DRI then registered an offence for allegedly evading duty to the tune of Rs 1.5 crore. However, after the offence was lodged, Rajkotwala voluntarily paid Rs 70 lakh as an ad hoc deposit towards duty forgone on the duty-free clearance.
Rajkotwala was arrested on November 24 and was remanded to judicial custody for 14 days by Additional Chief Metropolitan Magistrate (ACMM) after keeping him in police custody for a day. The following day, the ACMM rejected his bail application after the DRI opposed it on the ground that the probe was still in progress and releasing the accused on bail would hamper the investigation as there was possibility of tampering with the evidence. The DRI also contended that other persons were to be arrested in the case.
After his bail was rejected by the magistrate, his lawyers Sujay Kantawala and Uday Warunjikar approached the Bombay High Court stating that the offence was bailable and hence he should be released on bail.
Despite an earlier high court order of Justice AM Khanwilkar of 2004 wherein an accused in similar offence was released on bail, the ACMM failed to appreciate the arguments and remanded Rajkotwala to custody after rejecting his bail application.
According to the provisions of the Customs Act and the provisions of the Customs Manual issued by the Ministry of Finance, Government of India, the offence is bailable and hence he should be granted bail, argued Kantawala.
Observing that "the offence being bailable, the ACMM was in clear error in denying relief (bail) to the applicant," Justice SC Dharmadhikari released Rajkotwala on bail against cash of Rs 1.5 lakh.
The court also observed that the apprehension of the investigating agency could be taken care of by imposing stringent conditions while granting bail.
While directing him to deposit his passport with the DRI, the court has asked him to attend the DRI office twice in a week. Also, he will have to acquire prior permission from the trial court before traveling in foreign countries. Besides, he cannot change his residence without prior intimation to the DRI. He has also been refrained from making any inducements or threats to witnesses or from tampering with any evidence.
After, Rajkotwala was granted bail two other persons – Gurmeet Singh Kohli, director of Impex and Nirmal Yadav, who was holding Kohli’s Power Of Attorney – arrested for similar offence were also released on bail on December S17 and December 22 respectively.