Adjudicatory Functions Under Customs Act,1962- Adjudication of offences

Objective and Basic Contours of Adjudication: Adjudication of offences under the Customs Act 1962 are important functions of the officers of Customs to adjudge/determine offences/contravention. It seeks to ensure that no revenue loss is caused by the alleged contravention by the imposition of an appropriate penalty and redemption fine after an adjudication.  At the other hand, it also ensures that an innocent person shall not be punished unwarranted or if the punishment is more than warranted by the nature of offence, it may undermine the trust between the government and the stakeholders. If on the other hand, a real culprit escapes the punishment provided by law, it may tend to encourage commission of offences to the detriment of both of the government and the honest tax payers. The authorities exercising quasi-judicial function are duty bound to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The public is entitled to have assurance that process of correction is in place and working. It proceeds on the line that justice not only be done but appears to be done. These functions, therefore, cast a heavy responsibility on the customs officers invested with the powers of adjudication and confiscation of goods to use it with utmost care and caution, free from any prejudice or bias, so that the innocent does not suffer any injustice done to him and the real offender does not escape the punishment provided by law. Let us examine the things under various key issues.

Departmental Officers as Quasi-Judicial Officers

The adjudication is done by the departmental officers, and in this capacity they act as quasi judicial officers. It is an important function of the officers and casts heavy duty on the officers bestowed with the powers of adjudication to use it with utmost care and caution, free from any prejudice or bias. It is important to know and understand the facts of the case, alleged contravention processing them properly and to apply correctly the sections and rules of Customs law or Notifications/circulars that may be relevant to the facts of each case. Care should be taken to ensure that wrong sections of acts are not applied to a case which attracts some other provisions of law.

Circulars/Instruction Issued by CBEC for Uniformity

Besides ensuring uniformity across the length and breadth of the country, Board time to time issue circulars and instructions, these instructions seek to achieve two objectives (a) that the principles of natural justice are fully observed in substance and in form, and (b) that an offender does not escape due to technical and/or procedural glitch.

All officers charged with the function of adjudication of offences and confiscation of goods under the Act and Rules mentioned thereunder  must, therefore, follow these instructions so that any lapses, wherever they exist, in the mode and procedure of adjudication are avoided. These instructions are supplemental to, and should be read in conjunction with the Customs Act, 1962 and the rules framed thereunder and other.

Adjudication Powers-Monetary limits of Customs officers revised vide Circular No. 24/2011-Cus., dated 31-5-2011.

This is pressed into action into three situations firstly when there is an application of Section 28 of the Customs Act, 1962, secondly during  export of goods under drawback and thirdly during wrong availment of Export Promotion Schemes.

The power of adjudication under Customs Act, 1962.

 Board vide Circular No.24/2011 dated 31.05.2011 has prescribed the Powers of adjudication of the officers of Customs by reviewing the monetary limits prescribed for adjudication of cases by Additional /Joint Commissioners of Customs and it has been decided to enhance the powers of adjudication of these officers. Accordingly, under Section 28 of the Customs Act, 1962, the powers of adjudication of various categories of officers shall be as per the said Circular.

In the case of baggage, the Additional Commissioner or Joint Commissioner shall continue to adjudicate the cases without limit, since such cases are covered by the offences under Chapter XIV and it is necessary to expeditiously dispose off the cases in respect of passengers at the airport.

Definition of Commissioner includes Additional Commissioner

As per definition under section 2(8) of the Customs Act, 1962, Commissioner of Customs includes an Additional Commissioner of Customs except for the purpose of appeal and revision. Therefore, respective Commissioners may review the status of cases pending for adjudication, which fall within the powers of Commissioners only, and depending on the workload may consider allocating some of these cases to Additional Commissioners working under their charge to ensure speedier disposal.

Other Statutory legal provisions

As per section 2(1) of Customs Act, 1962: “adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal:

Section 122 of the Act  –  This  section falls in Chapter IVX and deals with adjudication of confiscation and penalties and prescribes monetary limit for different officers of Customs for confiscation of goods and imposition of penalty. Plain reading of the wording of the section suggests that it proceeds on value of the goods liable for confiscation whereas the said Board Circular is applicable on amount of duty, drawback amount and amount of duty incentive.

Proper Officer For Adjudication

Another question which rises time and again is regarding the competency of the officers adjudging  the case and whether they are Proper Officer, in this regard it is stated that if the case to be decided fall under clear words of Circular then there is no ambiguity regarding proper officer. The issue arises when neither the Proper Officers is declared in Board Circular nor by Notification No.40/2012 dated 2.5.2012 issued by the Central Board of Excise and Customs. In the context of the definition of proper officer under section 2(34) of the Customs Act, the Apex Court in the case of Commissioner of Customs vs. Sayed Ali reported in 2011 (265) E.L.T.17 (SC)  held and observed that it is only such a Customs Officer, who has been assigned the specific functions of assessment and re-assessment of duty in the jurisdictional area where the import concerned has been effected, by either the Board or Commissioner.

Further, issue of Proper Officer comes for scrutiny when neither duty/drawback/ export duty incentive are issue for adjudication but cases which is to be adjudicated is involving value. For example goods of X value is being exported under free shipping bill, wherein no export incentive or drawback is involved then aid cannot be taken of the Board Circular because  it is seen that it can be applied for export incentive or drawback amount. In such situation recourse must be taken to Section 122 of the Act.

Principles of Natural Justice

Adjudication proceedings shall be conducted by observing principles of natural justice. The principles of natural justice must be followed by the authorities at all levels in all proceedings  and the order passed in violation of the principles of natural justice is liable to be set aside by Appellate Authority. Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice. Natural justice is not codified law purely based on principles of substantial justice and judicial spirit. It has no fixed definition or specific connotation and will depend on the circumstances of each individual case. It has certain cardinal principles, which must be followed in every proceeding. Judicial and quasi-judicial authorities should exercise their powers fairly, reasonably and impartially in a just manner and they should not decide a matter on the basis of an enquiry unknown to the party, but should decide on the basis of material and evidence on record. Their decisions should not be biased, arbitrary or based on mere conjectures and surmises.

Principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed there under. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case, must depend to a great extent on the fact and circumstances of that case, the frame-work of the statute under which the enquiry is held. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression ‘civil consequences’ encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life.

Audi Alteram Partem

The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. The Show Cause Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. The order should not travel beyond the SCN. However, if a new ground is required to be considered, the same could be done by way of putting the party to notice subject to law of limitation.  Further, time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of this kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice.

Reasoned Order

Secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. This has been uniformly applied by courts in India and abroad. The Supreme Court in the case of S.N. Mukherjee v. Union of India [(1990) 4 SCC 594], while referring to the practice adopted and insistence placed by the Courts in United States, emphasized the importance of recording of reasons for decisions by the administrative authorities and tribunals. It said “administrative process will best be vindicated by clarity in its exercise”.

Why Reasoned Order is Required

To enable the Courts to exercise the power of review in consonance with settled principles, the authorities are advised of the considerations underlining the action under review. In exercise of the power of judicial review, the concept of reasoned orders/actions has been enforced equally by the foreign courts as by the courts in India. The administrative authority and tribunals are obliged to give reasons, absence whereof could render the order liable to judicial chastise. It is the reasoning alone, that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach.

 Then alone administrative authorities and tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice. By practice adopted in all Courts and by virtue of judge made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and proper reasoning is the foundation of a just and fair decision.

 In cases where the Commissioner or any other departmental adjudicating authority makes a confidential enquiry or receives secret sources of information and such secret information is to be used as a guide for further investigation and no material can be relied on to support a finding unless the party has an opportunity to rebut the conclusion that flows from said material or bring forward other material. All adjudicating officers should, therefore, bear in mind that no material should be relied in the adjudication order to support a finding against the interests of the party unless the party has been given an opportunity to rebut that material. Whenever an order is struck down as invalid being in violation of principles of natural justice, there is no final decision of the case and fresh proceedings are left upon.

 Adjudication procedure under Section 122-. It requires that the Adjudicating authority shall, give an opportunity of being heard to a party in a proceeding, if the party so desires. The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to above, grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing. However, no such adjournment shall be granted more than three times to a party during the proceeding.


The right to cross-examination is not an absolute right and the question whether the petitioner was entitled to cross-examination is a question which may largely depend on the facts of the case. Hence, the adjudicating authority shall take a decision on requests for cross-examination is a question which may largely depend on the facts of the case and circumstances of each case. Cross examination of witnesses, whose statements are relied upon in the proceedings, shall be allowed if there is any request in this regard from the defendant. The question whether the petitioner was entitled to cross-examination is a question which may largely depend on the facts and it is for the Tribunal to adjudicate while deciding the appeal finally. This is not an absolute right. However, it is seen that in most of the cases wherein there is denial of cross examination to the defendant, matter alone on this ground was made de-novo or remanded back to lower authorities for fresh proceedings.

Corrigendum under Section 154 of the Customs Act

Adjudicating authority is not empowered to issue any subsequent corrigendum making material changes in the order already passed and issued (Board’s Circular 32 No.502/68/99-CX dated 16.12.1999). Where any significant change in the order becomes necessary after the order has been issued which cannot be termed as clerical or arithmetical or typographical mistake, proposals for review may mooted to appropriate authority instead of taking recourse to corrigendum. Since no time is prescribed for correcting the order, therefore any time, corrigendum can be issued for after issuance of order, notice. Corrigendum in respect of any order, decisions can be issued by the such officers or his successors.

Ex-Parte Order

Passing of order  in case of non-appearance of noticee is called ex-parte order . The situation arises when noticee failed to attend the proceedings inspite of grant of sufficient opportunity of personal hearing. As per Section 122A,maximum  three Personal Hearing can be granted by the adjudication authority but the same is  discretionary and not mandatory. If the noticee has shown sufficient cause for not attending the hearing, then hearing can be deferred but not more than three times. Sometimes dilatory tactics is applied by the noticee while requesting for postponement of hearing. The adjudicating authority has to apply his discretion judicially at the time of adjourning  the case.

Proposal in the Union Budget

In the Union Budget of 2017-18 in respect of Section 122, it is proposed that clause (b) and (c) may be substituted by way of amendment to fix the monetary limits for adjudication of cases by Officers below the rank of Joint Commissioner by issuance of notification. Power of adjudication of Commissioner and Joint Commissioner which is without limit by mandate of clause (a) of Section 122 has remain intact. Before this proposal monetary limit for adjudication of Deputy/Asstt Commissioner is Rs 5 lakhs and for Superintendent/Appraising Officer  is Rs 50,000/-

##More Worthwhile Reads on this Blog:

Scope of Penalty for Escape of Duty U/S 28(1) of C.A.1962

Mens Rea Under Customs Act,1962

Recovery of Drawback Amount Under Rule 18 of Drawback Rules 2017

Repeal And Saving in Statutory Space

Recording of Statements U/s 108 of Customs Act


Leave a Reply

Your email address will not be published. Required fields are marked *