The Adjudicating Authority's powers, scope, and jurisdiction in the

Customs Act of 1962.

Section 2(1) lays down that any authority competent to give any order or decision under this
Act, except the Board, Commissioner (Appeals), or Appellate Tribunal, is an "adjudicating
authority."1

Section 122 of the Act2 — This section is included in Chapter IVX of the Act and deals with
the adjudication of confiscation and fines, as well as prescribing monetary limits for various
Customs officials when confiscating items and imposing penalties. The section's plain
language suggests that it is based on the value of the goods subject to seizure, yet the Board
Circular only applies to those goods.

Adjudication's Purpose and Basic Contours

The adjudication of violations under the Customs Act of 1962 is one of the most significant
functions of Customs officials, who adjudicate/determine offences/contraventions. It aims to
ensure that the claimed infringement does not result in a revenue loss by imposing an
appropriate penalty and redemption fine following an adjudication. On the other hand, it
ensures that an innocent person is not punished unnecessarily, and that if the sentence is
greater than merited by the nature of the offence, it does not jeopardize the government's
relationship with stakeholders. If, on the other hand, a true criminal avoids the law's
punishment, it may encourage the conduct of crimes to the disadvantage of both the
government and the individual. If a real criminal gets away with breaking the law, it may
encourage others to do the same, to the harm of both the government and the honest tax
payers. Authorities performing quasi-judicial functions have a responsibility to explain their
existence and maintain public trust by instilling confidence in the adjudicatory process. The
public has a right to know that a corrective process is in place and operating. It continues on
the premise that justice should not only be served, but also appear to be served. These
responsibilities place a heavy burden on customs officers who have been given the authority
to adjudicate and confiscate goods to use it with extreme caution and care, free of prejudice
or bias, so that the innocent do not suffer injustice and the real offender does not escape the
punishment prescribed by law.
1
CUSTOMS ACT, 1962 [ Act No. 52 of Year 1962 dated 13th. December, 1962]
2
ibid
Officers of Customs have adjudication powers

The Customs Act of 1962 (‘Act' for short) contains Section 122, which governs the
adjudication of confiscation and penalties imposed under Chapter XIV of the Act. The
following officers have the authority to decide on confiscation or punishment cases:

Assistant Commissioner of Customs/Deputy Commissioner of Customs – If the value of the

goods liable for confiscation does not exceed 5 lakhs (with effect from 01.04.2012); Principal
Commissioner of Customs/Commissioner of Customs/Joint Commissioner of Customs –
Without limit; Principal Commissioner of Customs/Commissioner of Customs/Joint
Commissioner of Customs – Without limit; Principal Commissioner of
Customs/Commissioner of Customs/Joint Commissioner of Customs.3

If the value of the commodities eligible for confiscation does not exceed 50,000/-, a Gazette
Officer of Customs lower in rank than the Assistant Commissioner of Customs/Deputy
Commissioner of Customs may be used (with effect from 01.04.2012).4

Proper Officer – Adjudication

Another point that arises frequently is whether the officers adjudicating the case are
competent and whether they are proper officers. It is mentioned in this respect that if the case
to be determined falls inside the plain language of the Circular, then there is no ambiguity
regarding proper officer. In the matter of Commissioner of Customs vs. Sayed Ali5, the Apex
Court stated and observed that only such a Customs Officer has been assigned the specialized
powers of assessment and re-assessment of duty in the jurisdictional area where the import
involved has been done, by either the Board.

Furthermore, when no duty, drawback, or export duty incentive is issued for adjudication, but
the matter to be adjudicated involves value, the problem of Proper Officer is scrutinized.

Quasi-Judicial Officers within the Department

The departmental officers adjudicate the cases, and in this role, they operate as quasi-judicial
officers. It is a key function of the police, and it places a tremendous burden on officers who
have been given adjudication powers to use them with extreme prudence and care, free of

3
Adjudication Under Customs Act, 1962, CAinIndia.org, November, 20th 2015, Accessed on August 18, 2021
(https://www.cainindia.org/news/11_2015/adjudication_under_customs_act_1962.html)
4
Mr. M. GOVINDARAJAN, Adjudication Under Customs Act, 1962, Tax Management India. Com, November
20, 2015, (https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6535)
5
CIVIL APPEAL NOS. 4294-4295 OF 2002
prejudice or bias. It is critical to know and comprehend the facts of the case, the claimed
violation, and to appropriately apply the sections and rules of Customs law or
Notifications/circulars that may be applicable to the facts of each case. It is important to
avoid applying the inappropriate portions of the act to a matter that is subject to other legal
regulations.

Burden of proof

Section 123 states that if any commodities to which this section relates are taken under this
Act in the reasonable belief that they are smuggled goods, the burden of demonstrating that
they are not smuggled goods is on the person who has the duty of proving that they are not
smuggled goods. In any other case, on the person, if any, who claims to be the owner of the
goods so seized; and if any person, other than the person whose possession the goods were
seized, claims to be the owner thereof, also on such other person; in any other case, on the
person, if any, who claims to be the owner of the goods so seized.

This applies to gold and gold-based products, watches, and any other class of items that the
Central Government specifies in the Official Gazette.

The following are the numerous case laws involving various issues in adjudication

Taking assistance

The High Court of Bombay held in ‘Lakhanpal National Limited V. Union of India' 6that it
would be permissible for the Collector of Customs to enlist the help of an authorized
representative. The High Court believes that the petitioners will not be harmed in any way.
Several Advocates are representing the petitioners. In contrast, the Collector must deal with a
number of difficult questions, and if he felt it necessary to enlist the help of an authorized
representative in the facts and circumstances of the presence case, the High Court found no
illegality.

Cross examination

The witnesses whose testimony were relied on under Section 108 of the Customs Act before
Gazette Officers of the Customs and the opinion of Chief Guest were relied on in the show
cause notice in ‘Swiber Offshore Construction Private Limited V. Commissioner of Customs,
Kandla.'7 The importer's request to summon them for cross examination under Section 138B

6
1967 AIR 1507, 1967 SCR (3) 114
7
2013 (11) TMI 1232 - CESTAT AHMEDABAD
was rejected because there was no objective development of opinion based on the
information on record to conclude that the circumstance described in Section 138B(1)(a)
entitled to cross examination denial. The Tribunal ruled that the request's refusal was
unreasonable.

Show cause notice

A proposal to impose a penalty under Section 112 of the Customs Act for breach of Section
13(2) of FERA read with Section 11 ibid in ‘Sidhharth Shankar Roy V. Commissioner of
Customs, Mumbai'8 would remain outside the scope of Section 50 of FERA and, for that
matter, outside the scope of the Director of ED's show cause notice. The customs department
issued an unique show cause notice to each other. As a result, an order in original issued by
the DD of ED under Section 51 of FERA and an order in original issued by the
Commissioner of Customs in adjudication of a corresponding show cause notice under
Section 124 of the same would occupy mutually exclusive domains. The argument that the
order issued by the Dy. Director of ED is binding on the Commissioner of Customs and that
the latter should have simply relied on the former's judgement is unacceptably weak.

Jurisdiction

The show cause notice was issued by one Commissioner of Customs (Adj) in ‘Amba Expo
Fab V. Commissioner of Customs (Import), Nhava Sheva'9, but he did not give any order.
Commissioner of Customs (Import), Nhava Sheva, issued the contested order, stating that he
has the authority to adjudicate the contested show cause notice. Notification No. 112/2005-
CUS is a notification issued by the Ministry of Health and Human Services of the United.
The challenged show cause notice has been assigned to Commissioner of Customs (Import),
Nhava Sheva for adjudication, however this is nowhere stated in the Notification. The
Tribunal ruled that the contested order was issued without jurisdiction and that it should be
overturned.

Section 154 of the Customs Act requires a correction

The adjudicating authority is not authorized to issue any later corrigendum to the order that
has already been passed and issued (Board Circular 32 No.502/68/99-CX dated 16.12.1999).
If a significant change in the order is required after it has been issued and it is not a clerical,
arithmetical, or typographical error, recommendations for review may be submitted to the
8
2011 (8) TMI 579 - CESTAT, MUMBAI
9
2012 (12) TMI 395 – CESTAT MUMBAI
appropriate authorities rather than relying on a corrigendum. Because there is no time limit
for revising the order, a corrigendum can be issued at any time after the order has been
issued. Corrigenda and decisions can be issued by such officers or their successors in respect
of any order.

Ex-Parte Order

Ex-parte order refers to the passing of an order in the absence of the noticee. The problem
arises when the noticee fails to appear in court despite being given a sufficient opportunity
for a personal hearing. The adjudication authority may grant a maximum of three Personal
Hearings under Section 122A, although this is optional and not necessary. Hearings can be
deferred up to three times if the noticee has demonstrated good cause for not attending the
hearing. When requesting a hearing postponement, the noticee can sometimes use dilatory
methods. When adjourning a case, the adjudicating authority must use his discretion in a
judicial manner.

Proposal in the Union Budget

Clauses (b) and (c) of Section 122 may be substituted by way of amendment in the Union
Budget of 2017-18 to determine the monetary limitations for adjudication of cases by officers
below the rank of Joint Commissioner by issuance of notification. The Commissioner and
Joint Commissioner's adjudication powers, which are unrestricted by the mandate of clause
(a) of Section 122, have remained unaffected. Prior to this suggestion, the monetary limit for
Deputy/Asst Commissioner adjudication was Rs 5 lakhs, and the monetary limit for
Superintendent/Appraising Officer adjudication was Rs 50,000/-.