One of the early challenges that Central Board of Indirect Taxes and Customs faced was the identification of kingpins or masterminds behind smuggling or trafficking of prohibited contraband. A major step towards overcoming this challenge was the introduction of Section 109A in the Customs Act, 1962, authorizing the proper officer to undertake Controlled Delivery of specified consignments in India or to a foreign country. The new Controlled Delivery (Customs) Regulations which came into force on the 12th of July 2022 is another important step in the same direction.1
The CBIC which is a part of the Department of Revenue under the Ministry of Finance, Government of India has been empowered under Section 157(1) read with Section 109A of the Customs Act, 1962 to make the said regulations.
As per the report published by Directorate of Revenue Intelligence (DRI) there has been a rise in smuggling of illicit items within India and to other countries mainly through India’s porous international borders.2 These regulations will allow a customs officer at the ports to earmark both export and import consignments for controlled delivery on “reasonable belief” that it is “suspect” and can monitor the movement.
The regulations are especially important because controlled deliveries are used, among others, to trace the flow of illicit goods to determine their true sources, transit routes and destination. It enables the mapping of complete criminal schemes as well as structures of organized groups.
What is Controlled Delivery?
“Controlled Delivery” means the procedure of allowing consignment of such goods to pass out of, or into, the territory of India with the knowledge and under the supervision of proper officer for identifying the persons involved in the commission of an offence or contravention under this Act.3
Kind of goods are included under the regulations:
The term “goods” are defined in the Regulations4 to be pertinent to the issue of controlled delivery as the same has not been defined under the Customs Act,1962 and these include:
“one or more of the following kind of substances contained in a consignment whether their nature, quantity or description is correctly declared or not, namely: –
- narcotic drugs, psychotropic substances, precursor chemicals, controlled substances or their substituents;
- gold in all forms, including its jewellery;
- silver in all forms, including its jewellery;
- precious and semi- precious stones;
- liquor and other intoxicating drinks;
- currency and negotiable instruments including counterfeits;
- cigarettes, tobacco and tobacco products;
- wildlife products; and
- antiques and antiquities.”
The Regulations5 define the term “suspected consignment” as the consignment of the goods referred to in clause (c) including the baggage of a passenger which is liable to confiscation under the Act or any other law for the time being in force and in respect of which controlled delivery is being undertaken under these regulations.
Power to undertake delivery:
Customs Act6 gives powers to Proper Officer or any other officer authorized by him in this behalf to undertake controlled delivery of any consignment of such goods and in such manner as may be prescribed to-
- any destination in India; or
- a foreign country, in consultation with the competent authority of such country to which such consignment is destined.
Manner to undertake controlled delivery:
In order to carry out controlled delivery as required by Section 109A of the Customs Act, the following regulations have been put forth:
- Filing of an initial report of suspect consignment:
A report as per FORM-I (annexed to the Regulations) proposing to undertake controlled delivery of a suspect consignment must be filed by the proper officer (as per Customs Act) reasonable belief, that a suspect consignment, is being imported into or exported out of India, in the form of the baggage or otherwise.7
- Permission to carry out controlled delivery
This report must be presented to the specified authority which as per the Regulations is: The Principal Additional Director General or Additional Director General of the Directorate General of Revenue Intelligence8 who then, after careful assessment, grants permission to the concerned officer to carry out controlled delivery of the suspect consignment.9
- Tracking & Tracing of suspect consignment:
The proper officer may, if necessary, affix any marks or install any special investigative tools, such as devices for track-and-trace monitoring of the suspect consignment, during the controlled delivery operation. The officer also has a duty to undertake the said action without impacting or tampering with the nature of the said consignment to the best of their ability.10
- Approval of specified authority for tracking the consignment:
The tracking and tracing can be done only after receiving approval from the specified authority to conduct controlled delivery.11
- Issuance of general authorization in Form II:
It also adds that when authorising the controlled delivery of the suspicious consignment, the specified authority may also issue a general authorization in FORM-II (as per annexure to the Regulations) which may be presented on demand to any other enforcement agency established by law which intends to seize the suspect consignment. The said enforcement agencies are those under the control of the Government of India, any State Government, Union territory, or a foreign country.12
- Completion of controlled delivery at a time and place:
When the proper officer finds the person who is reasonably suspected of being involved in the conduct of an offence or contravention connected to the suspect consignment, the controlled delivery may then be completed at that time and place.13
- Termination of controlled delivery at a time and place:
If the competent authority has reason to believe that she or he, the panchas, or any other person, is likely to face a grave and immediate threat to their lives, the proper officer may terminate the controlled delivery at any time with the approval of the specified authority.14
- Completion/Termination of suspect consignment destined for a foreign destination:
When a suspect consignment is the subject of a controlled delivery that is being made to a foreign country, the controlled delivery will be deemed complete or terminated at the time and place that the suspect consignment leaves the customs stations in India for a foreign country.
The proper officer is required to report to the specified authority when the controlled delivery is finished or terminated, as applicable.
When a suspect shipment is destined to a foreign country, the specified authority is required to notify the competent authority of such foreign country of the completion or termination after receiving the report of the proper officer.15
- Submission of report after completion/termination of controlled delivery:
Upon completion or termination of the controlled delivery, as the case may be, the proper officer shall submit a report to the specified authority in that regard.16
- Informing competent foreign authority of completion/termination of controlled delivery:
Where the suspect consignment is destined to a foreign country, the specified authority shall inform the competent authority of such foreign country of such completion or termination.17
Application to other officers:
Lastly, the manner to undertake controlled delivery specified under these regulations shall mutatis mutandis be applicable to any other officer authorised by the proper officer under section 109A of the Act for undertaking such controlled delivery.18
These regulations will have minimal impact on the export-import business and instead will help in tracking illicit activities in contravention with the Customs Act, 1962.
- Customs Act, 1962, § 157, No. 52, Acts of Parliament, 1962 (India).
- Central Board of Indirect Taxes and Customs – Notification, New Delhi, 12th July, 2022, No. 59/2022-Customs (N.T.