OPERATION NUMKHOR RAIDS AND LEGAL PROVISIONS

 OPERATION NUMKHOR RAIDS AND LEGAL PROVISIONS

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1. Statutory framework of The Customs Act, 1962

The central statute regulating import or  export, enforcement, seizure, penalties, prosecutions is the Customs Act, 1962 

 Key chapters include:

Chapter XIV (Sections 100–113) — Powers of search, seizure, detention, etc.

Chapter XV (Sections 114–131) — Confiscation, adjudication, appeals

Chapter XVI (Sections 132–140A) — Offences and prosecutions

Sections 141 onward – Miscellaneous, including consequences, powers of courts, etc.

Relevant definitions:

“Smuggling” is defined in Section 2(39) of the Act:

“smuggling in relation to any goods means any act or omission which is an offence under this Act in relation to those goods.” 

“Prohibited goods” is defined in Section 2(33): goods the import or export of which is subject to prohibition, or where the conditions of import/export are not complied with. Violation of conditions may render goods “prohibited.” 

The Act sets out:

Powers of officers of customs to search, seize, detain goods, conveyances, documents, etc.

Adjudication process (show cause notices, appeals, etc.) : 

Confiscation liability (i.e. goods, conveyances used in smuggling) :

Penalties and imprisonment :

Provisions for cognizability, bailability, arrest, especially after amendments :

Given the facts (alleged illegal import, forgery of documents, re-registration), multiple provisions would come into play.

2. Key provisions applicable

Below are the provisions most likely to be engaged in a high-value vehicle smuggling case:

(a) Seizure and detention provisions

Section 110 — Power to detain or seize goods, etc. A customs officer may seize goods or conveyances that are liable to confiscation, or goods which the officer has reason to believe to be liable. (Note: the officer must have reason to believe, not mere suspicion.)

Section 106 — Power to stop, search and examine conveyances, goods, persons, if officer has reason to believe that smuggled goods are being transported. 

Section 115 — Confiscation of conveyance used in carrying smuggled goods: If a vehicle is used for carrying smuggled goods, then in adjudication, it may be ordered to be confiscated, even if the vehicle is otherwise innocent. But the vehicle must have been used, or be being used. Some judgments have held that mere apprehension or possibility of future use is insufficient. 

Section 114 — Power to board conveyances, break open seals, etc.

After seizure, the goods/conveyance may be detained while adjudication proceeds.

Thus when customs suspects that a car is illegally imported or used in smuggling (say, as a carrier of other contraband goods), it can detain / seize it under these provisions, subject to judicial oversight and procedural safeguards.

(b) Confiscation / forfeiture (adjudication)

Section 111 — Goods imported/attempted to be exported in contravention are liable to confiscation.

Section 112 — Confiscation of means of conveyance (vehicle, vessel etc.) used in smuggling of goods or non-compliance.

Section 115 (as above) — Confiscation of conveyance (vehicle) if used in smuggling.

Section 125 — Redemption of goods in certain cases (i.e. goods which are not “prohibited goods”) by paying fine & duty, subject to discretion (but not always available).

Section 137 — No court shall take cognizance of an offence under Sections 132, 133, 134 or 135 except with prior sanction of the Collector (or officer authorised) (i.e. sanction requirement). 

Thus, once seized, the department will issue a show cause notice to the registered owner / possessor / importer, and in adjudication proceedings attempt to confiscate (vehicle or  goods) or impose penalty.

(c) Offences and penalties

Key offences under Chapter XVI:

Section 132 — smuggling of goods (i.e. import/export in violation of provision, concealment, transportation)

Section 133 — obstruction of officers of customs

Section 134 — refusal to be X-rayed or refuse screening / extraction of concealed goods

Section 135 — evasion of duty, fraudulent mis-declaration, etc. This is a central offence for duty evasion / falsification.

Section 135A — “preparation to commit offence” under the Act (if circumstances show intended offence) 

Section 135 reads (in part):

“(1) Without prejudice to any action that may be taken under this Act, if any person is, in relation to any goods, knowingly concerned in (a) mis-declaration of value; (b) fraudulent evasion of duty; (c) fraudulent attempt to evade duty or prohibition or condition; (d) fraudulent use of any exemption or drawback, etc., then he shall be punishable with imprisonment … and fine.” 

As per many explanatory notes, if duty evasion or market value exceeds a threshold (e.g. goods whose market price > ₹1 crore) then more severe punishment may apply. 

In “other cases” (i.e. not falling under the high-value criteria) under Section 135, the term of imprisonment may extend up to 3 years, or fine, or both. For repeated offence, the term may extend to 7 years. 

Also, the Customs (Compounding of Offences) Rules, 2005 allow compounding of certain offences (i.e. settling without prosecution) for offences under Section 135, subject to limits (e.g. up to 10% of market value of goods) and conditions. 

Thus, in a case of high-value vehicles, if the facts show deliberate import, forgery, nonpayment of duty, etc., the department will likely invoke Section 135 (and possibly 132) with penalties (and confiscation).

3. Cognizability, arrest power, bailability

This is a crucial area because whether customs officials can arrest without warrant, and whether the offence is cognizable, has been a contested legal issue, especially post amendments.

(a) Historic position & Om Prakash (2011)

In Om Prakash & Anr. v. Union of India, a three-judge bench held that offences under the Customs Act (specifically Sections 132, 133, 135, etc.) are non-cognizable and hence one cannot be arrested without a warrant; also, they were held to be bailable in many cases (if sentence  is less than 3 years).

Accordingly, the Court held that even though the Act confers power to arrest, that power must be exercised within the constraints of non-cognizability under the CrPC. The court reasoned that customs officers do not have greater powers than a police officer in charge of a station.

However, since then, the legislature has introduced amendments (in 2012, 2013, 2019) to the Act, which modified the arrest / cognizability scheme. 

(b) Post-amendment law and the recent Supreme Court decision (2025)

In the recent Supreme Court judgment delivered on 27 February 2025 (Writ Petitions concerning arrest powers under Customs and GST) (see the judgment in W.P.(Crl.) No.336 of 2018 & connected matters) — the Court revisited and overruled or clarified certain aspects of the Om Prakash ratio, in light of legislative amendments. 

Salient points from that judgment:

The amendments in 2012, 2013, 2019 clearly carve out certain offences under the Customs Act as cognizable (i.e. arrestable without warrant) under Section 104(4) of the Act. 

Section 104(4) now provides that offences relating to (i) prohibited goods, (ii) evasion/attempted evasion of duty exceeding ₹50 lakh, (iii) fraudulent drawback/exemption cases (where amount > ₹50 lakh), (iv) fraudulent use of instruments etc., are cognizable. 

Section 104(5) declares that “save as otherwise provided” (i.e. apart from those in 104(4)), other offences are non-cognizable. 

Section 104(6) says that offences punishable under Section 135 involving evasion exceeding ₹50 lakh etc. are non-bailable. 

The Court emphasized that the threshold for arrest under Section 104(1) is “reason to believe”, which is stricter than mere suspicion (such as under Section 41 CrPC). 

The Court held that customs officers must comply with procedural safeguards (in line with CrPC Sections 41B, 41D, 50A, 55A) — e.g. grounds of arrest in writing, right to counsel, informing person, record keeping, etc. 

Thus, after the judgment, in a high-value smuggling case, if the duty evasion or value is above ₹50 lakh (which is almost certain in luxury cars), that offence is cognizable and non-bailable and customs can arrest without warrant provided “reason to believe” is satisfied. 

Hence, in the context of Dulquer / Prithviraj car seizure case, the customs department may rely on these amended provisions to arrest (if necessary).

Therefore:

Is it a cognizable offence?

→ Yes, if the offence falls in the category under Section 104(4) (e.g. evasion of duty in excess of ₹50 lakh). For luxury vehicles, that is likely.

Can customs arrest the RC owner?

→ Yes, if the RC owner is shown to be “concerned” (i.e. responsible, involved) and customs has reason to believe he committed the offence. They must comply with procedural safeguards.

It is not automatic — customs must show reason to believe (i.e. objective grounds) and follow the safeguards.

(c) Discretion and judicial oversight

The Supreme Court judgment also cautions against arbitrary arrests and misuse. The “reason to believe” must be recorded, justified, not fanciful. The arrestee must be informed, allowed counsel etc.

Hence, even in high profile cases, the court can quash illegal arrests / direct release if procedural lapses or lack of basis exist.

4. Liability of the RC owner / whether registration certificate owner can be arrested

One of your questions is whether customs can arrest the RC owner (i.e. the person in whose name the vehicle is registered). The short answer is: Yes, but only if there is evidence linking them to the illegal import / evasion / forgery or that they had knowledge or involvement.

Some key legal points and complications:

Mere registration (RC) does not by itself make someone guilty. The burden lies on the Department to show that the registered owner was “concerned” with the offence (i.e. had knowledge, involvement, or benefit).

In confiscation proceedings (Section 115), a vehicle may be confiscated even if the registered owner claims innocence, but the adjudicating authority must consider any plausible defense (e.g. they were unaware, acted in good faith).

In some analogous contexts (e.g. Excise / transport of contraband), courts have imposed on the RC owner a reverse onus to show that they had no knowledge or reason to suspect that their vehicle was being used illegally (though strictly applying that to customs law is contentious).

In the appellate/ writ context, courts have sometimes held seizure of a vehicle illegal if there is no concrete evidence linking the vehicle to smuggling or wrongful use (i.e. mere suspicion insufficient). For example:

Safir P v. Commissioner of Customs (Kerala HC, 2023): it was held that a vehicle cannot be seized merely on an apprehension that it might be used for smuggling in future. The power of confiscation under Section 115 arises only if the vehicle was actually used or is being used for smuggling, not based on prospective suspicion. 

Kerala HC (Safir case): in that case, the court declared seizure illegal when the department failed to show actual use. 

Hence, if customs arrests the RC owner, that person has remedies (judicial review, bail petitions, challenge to seizure) if the arrest is not properly founded.

Also, from a recent media article: the Supreme Court held that:

“mere possession of imported car not to incur liability of customs duty if vehicle not registered in name: Supreme Court” — i.e. possession is less relevant than ownership / registration under certain circumstances. 

Though this specific pronouncement relates to a boundary (i.e. the possessor vs the known owner) and may not directly apply to smuggling cases, it illustrates that possession and registration interplay is a contested issue.

5. Selected Case Law (Supreme Court / High Courts / Kerala) of relevance : 

Here are some important cases and their relevance:

Case Jurisdiction / Year Key Point / Ratio Relevance : 

Om Prakash & Anr. v. Union of India Supreme Court (2011) Held offences under Customs are non-cognizable; arrests only with warrant; bailability if term < 3 years Landmark precedent, until legislative amendments.

W.P.(Crl.) No.336 of 2018 & connected (2025 Supreme Court) Supreme Court Clarified post-amendment provisions, making certain offences cognizable, non-bailable, requiring “reason to believe,” procedural safeguards Key current authority on arrest powers under customs law. 

Safir P v. Commissioner of Customs Kerala High Court (2023) Held seizure invalid if based on mere apprehension; vehicle must be actually used for smuggling to justify confiscation under Section 115. 

A controlling state-level decision (Kerala) relevant in the present case.

“Sec 115 — Mere apprehension of future use” High Court decision Kerala / Other HC :

Seizure unjustified if based purely on suspicion, not evidence. 

Verdictum

Reinforces the limitation on arbitrary seizure.

Abdul Razak v. UOI

Kerala High Court Held that violation of import conditions can render goods “prohibited” and justify confiscation under Section 125. 

Illustrates how a legal import may turn into prohibited goods for noncompliance.

P.V. Abdul Wahab v. Deputy Commissioner of Customs Kerala High Court A case of wrongful import & forged documents in vehicle import; seizure upheld, burden of proving good faith considered. 

State precedent dealing with illegal vehicle import.

Superintendent of Customs & Central Excise v. Raichand High Court / lower courts Customs officer’s power to seize a vehicle carrying smuggled goods under Section 110. 

Supports departmental power of seizure of vehicle.

These and other decisions provide doctrinal contours: seizure must be based on material information, not mere suspicion; the owner must get a fair hearing; adjudication and confiscation must follow principles of natural justice.

6. Likely legal challenges / defenses & risks

Given the high profile nature, the RC owner (or their counsel) is likely to raise (or already is raising) the following defenses/challenges:

Lack of material / nexus: Customs will have to prove that the vehicle was illegally imported, or used for smuggling or connected to the illicit scheme (via forged docs, dodgy chain, false registration). If that link is weak, the seizure / arrest can be challenged.

Procedural defects: If customs officers fail to follow the mandatory procedural safeguards (e.g. not recording reasons to believe, not informing grounds of arrest, not allowing lawyer, not keeping notes), the arrest or seizure may be liable to be quashed (especially under the 2025 Supreme Court guideline).

Seizure only of goods, not the vehicle: The owner may argue that the vehicle is not itself a “conveyance used for smuggling” (i.e. may be legally innocent) and only the illicit goods (if any) should be confiscated.

Legitimate transfer / import under Transfer of Residence (ToR) rules: The news reports themselves mention that second-hand cars cannot be imported except under the Transfer of Residence rules (used abroad for 3 years, paying duty). A defense might be that the import was claimed under ToR and documentary proof is forthcoming. 

Bona fide buyer / third party purchaser: If the RC owner bought the car in good faith from a seller, without knowledge of smuggling, they may claim protection under principles of innocent purchaser, though in customs law the doctrine is not always generous in this regard.

Statutory limitation / delay: If customs delayed taking action or initiating proceedings, a challenge may be made, though in smuggling cases limitation is less forgiving.

Redemption under Section 125: If the goods are not determined to be “prohibited goods,” the owner might claim release on payment of redemption fine and duty (though in smuggling cases this is often denied by courts). Abdul Razak is relevant here. 

Violation of Article 14 / arbitrariness / fairness: Especially in high profile cases, courts may scrutinize whether the exercise of discretionary powers was arbitrary or unequal.

Presumption of innocence: Until guilt is proven, the owner has rights under criminal procedure (if arrested, etc.).

Given the intense scrutiny and media coverage, the courts may demand high evidentiary stringency from customs.

7. Application to the Dulquer / Prithviraj seizure case: What likely is being invoked and risks

Based on the media reports:

Customs is alleging that luxury vehicles have been smuggled from Bhutan with forged documents, misuse of Indian Army / US Embassy seals, false registration, tampering of Parivahan database, etc. 

The reported scheme is that cars were either imported in “completely knocked down (CKD)” condition, or driven in as tourists (and not exported), or hidden in containers. 

After import, they were re-registered using forged documents in various states, including border states, perhaps to avoid detection. 

Customs claims many cars were also used to smuggle gold or drugs (i.e. the vehicle was a conveyance in other smuggling). 

The scale is large (36 cars seized initially, perhaps 150–200 more in the net).

Given the high value, the customs department is likely invoking:

Section 110 for seizure of vehicles as conveyances liable to confiscation

Section 115 for confiscation of conveyances if used in smuggling

Section 135 (or Section 132) for penalty / criminal prosecution for evasion, false documentation, fraud

Use of Section 104(4) / (6) to treat it as a cognizable, non-bailable offence (given the value is very likely beyond ₹50 lakh)

Possibly compounding might be considered, but given the scale and public interest, they may not offer compounding easily.

Show cause / adjudication proceedings, eventually confiscation orders, possibly appeals to CESTAT / High Court

From the defense side, the RC owners will likely argue:

They will demand proof of illegal import (bill of entry, customs clearance)

They may assert they imported under legitimate ToR rules

They may contend they were bona fide purchasers

They will scrutinize whether customs had sufficient grounds (reason to believe) at the time of seizure / arrest

They may challenge arrest (if made) on procedural grounds

They may seek release of the vehicle or bail.

Given the 2025 Supreme Court decision, any arrest must comply with procedural safeguards and be based on a solid “reason to believe.”

Also, the earlier Kerala HC decision in Safir is significant: a Kerala court may be more sensitive to overreach in vehicle seizures in the state, and thus may press customs to justify the seizure properly. 

8. Summary: What are the answers to your specific questions?

Under what provisions is customs seizing those vehicles imported illegally?

The likely legal basis is under Section 110 (seizure / detention of goods/conveyance liable to confiscation) and Section 106 (search of conveyance). For adjudication / confiscation, Sections 111, 112, 115 may be invoked (for confiscation of goods and means of conveyance). For penal proceedings, Sections 132 / 135 (smuggling / evasion / fraud) and perhaps 135A (preparation) may be used.

What is the punishment?

For offences under Section 135 (evasion of duty / fraud etc.), imprisonment may extend up to 3 years, or fine, or both. For repeated / high value offences, up to 7 years may apply. 

If the evasion / value is large enough (above thresholds), more severe penalties (cognizable, non-bailable status) will apply.

In addition, confiscation of the vehicle, fine equal to illegal gain, etc. The court may also order publication of the conviction (Section 135B) and other ancillary consequences.

Is it a cognizable offence?

Yes — under the amended law (post 2012/2019), certain customs offences (specifically dealing with high value duty evasion, fraud, prohibited goods) are cognizable under Section 104(4). Given the likely value (luxury cars), it is highly probable the case qualifies. 🟢 The recent Supreme Court decision affirms this interpretation. 

Can customs arrest the RC owners?

Yes, provided that there is reason to believe (objectively justifiable) that the RC owner was involved in or “concerned” with the offence (import fraud, misdeclaration, knowledge or complicity). The arrest must satisfy procedural safeguards (grounds of arrest, informing person, right to counsel, etc.). Under the amended law, for offences under Section 135 exceeding threshold, the arrest would be non-bailable. The RC owner has remedies (judicial review, bail application, discharge application) if procedural or substantive defects exist.

9. Concluding observations & caveats

The legal regime governing customs arrest, seizure, and confiscation has evolved over the years. The 2025 Supreme Court judgment is pivotal in balancing enforcement power with protection of individual liberty.

In high profile cases like the Dulquer / Prithviraj vehicle seizure, the customs will need to build a strong evidentiary case (bill of entry, chain of import, forensic analysis of documents, registration history, ownership trail).

The RC owner (or defense) will likely challenge procedural lapses, adequacy of reason to believe, sufficiency of nexus, claims of innocence, delay, and constitutional safeguards.

Even if the vehicle is confiscated, the owner may try to salvage some relief under Section 125 (if the goods are deemed non-prohibited), but courts are often conservative in allowing that in smuggling cases.

Given that courts (especially in Kerala) have in past insisted that seizure must be based on actual use / evidence, not mere suspicion, the customs must ensure the record is properly made.

BY :

SALIL KUMAR.P

ADVOCATE

KOZHIKODE=673001

PH :8075113965