Customs Act 1962: Supreme Court’s Split verdict


Dated: 06.05.23

Customs Act 1962: Supreme Court Delivers Split Verdict on Jurisdiction Of Settlement Commission In Relation To Goods Under Section 123

The Supreme Court, on Thursday, delivered a split verdict in respect to the issue -whether jurisdiction of Settlement Commission under Section 127B of the Customs Act, 1962 can be invoked in relation to goods to which Section 123 applies.

While considering the conflicting judgments of the Bombay High Court and the Delhi High Court a Division Bench comprising Justice Krishna Murari and Justice Sanjay Karol expressed divergent views. Supporting the law laid down by the Bombay High Court, Justice Murari opined that in cases of seizures of smuggled goods within the customs areas, Section 123 of the Customs Act would not be applicable and the accused can make application to Settlement Commission under Section 127B. Justice Karol opined that the bar in Section 127B precludes filing an application for settlement in relation to goods to which Section 123 applies [for example gold and watches are specified under S.123]. 

Observations by the Supreme Court

Justice Krishna Murari: Section 123 of the Customs Act contemplates that if an accused is caught in the act of smuggling goods, the burden of proof is reversed, and the accused is to prove their innocence. Justice Krishna Murari noted that discharge of burden of proof can only happen in cases where there is a reasonable possibility of the accused being innocent. He was of the opinion that in cases where the seizures are within the customs area Section 123 becomes redundant. He agreed with the view taken by the Bombay High Court.

Justice Sanjay Karol: He referred to the bar in Section 127B which states that no application shall be made concerning goods to which Section 123 applies. He noted the proviso specifies that certain categories of goods, including the ones mentioned in Section 123 are barred from the jurisdiction of the Settlement Commission. Section 127B, he added, categorically lists out the circumstances under which an application can be made to a Settlement Commission. Noting that all offences under the Act cannot be settled, he said, “such an interpretation would allow a person importing goods without declaration to evade confiscation and criminal prosecution by simply taking recourse under Section 127B.”

[Case Title: Yamal Manojbhai v. Union of India And Ors. Writ Petition (Crl) No. 55 of 2023]


Download the judgement below:

SC Judgement



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The views expressed in the update are strictly personal, based on our understanding of the underlying law. We are not responsible for any injury, loss or cost arising to any person who refers this update and acts or refrains from any act accordingly. We would suggest that a detailed legal advice must be sought before relying on this update.

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