Exploration of Extraterritorial Service of Summons under Customs Law

With the onset of globalised world involving cross-jurisdictional decision-making, the investigations undertaken by the various investigating authorities under the aegis of customs law in India has seen substantial development. At present, many multinational corporations have been working with the centralised system under which the employee may or may not be present in the country of implementation. The issue becomes even more important with the remote working set-up instituted by such corporations enabling such employees to monitor operations and make key decisions without actually being present in such jurisdictions.

In the recent past, we have seen summons being issued by investigating agencies like the Directorate of Revenue Intelligence (DRI), Special Intelligence and Investigation Branch (SIIB), amongst others, to multiple multinational corporations in India. It is important to note that in most of the cases, such summons are issued without following the due procedure established in law.

The aim and objective of this article is to analyse the manner of service of summons vis-à-vis procedure mentioned under the prevailing customs law read with public international law. For this purpose, the authors intend to explore the provisions under the prevailing Customs Act, 1962 (Customs Act) and thereafter, explore the ambit of the provisions under the public international law.

I. Introduction

Section 108 read with Section 153 of the Customs Act governs the substantive and procedural aspect of summons in India. Section 108 empowers the Gazette Officer of Customs to summon “any person” considered necessary to give evidence and produce documents in respect of the investigation initiated by him. On the other hand, Section 153 of the Customs Act lays down the modes of service of such summons.

In this regard, Central Board of Excise and Customs (CBEC) presently, Central Board of Indirect Taxes & Customs (CBIC) has issued detailed guidelines vide instruction dated 20-1-2015.¹ The guidelines provide that summons must be issued as a last resort and discourages issuance of summons to top managerial positions for companies or public sector undertakings.² Without digressing from the topic, in practice, such guidelines have not been strictly followed by the investigation agencies.

Here, it is important to note that the aforementioned guidelines fail to comment on the extraterritorial application of the manner of servicing summons issued under Section 108 of the Customs Act. However, owing to intrinsic nature of transactions governed by Customs Act, it can be seen that the intention of the legislature is to extend the application of the provisions of this Act to whole of India and outside India in respect of any offence or contravention committed outside India by any person.³ Prior to Finance Act, 2018, there have been multiple judicial decisions vide which the Supreme Court of India has time and again held that the provisions of Customs Act extend only to whole of India and not beyond.⁴ Even then, by virtue of specific amendment to the Customs Act and taking respite of Article 245(2) of the Constitution, the legislation has been given extraterritorial operation.⁵ Similar powers have been granted to certain authorities under other legislations.⁶ Thus, provisions of Customs Act have an extraterritorial application till the time the contravention of any provisions of the Customs Act have nexus, impact or effect in India.⁷

In other words, summons issued under Section 108 of the Customs Act can be served upon non-resident foreign national in a manner provided under Section 153 of the Customs Act subject to fulfilment of condition of “nexus”, “impact” or “effect”. As mentioned in the beginning, Section 153 of the Customs Act provides for modes of service of summons issued under Section 108. This, inter alia, includes service by way of e-mail. Therefore, service of summons issued under Section 108 of the Customs Act by way of an email to non-resident foreign national amounts to valid service on simplistic reading of the provisions. However, such a route may be prone to litigation when served upon non-resident foreign national taking into consideration the jurisdiction and nationality.⁸

In the light of the foregoing, detailed discussion in respect of the appropriate route for service of summons to non-resident foreign nationals have been made in the following paragraphs.

II. International cooperation and agreement

The manner of service of summons has been laid down under Treaty on Mutual Legal Assistance (MLAT) and Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters as adopted in The Hague, Netherlands on 15-11-1965 (Hague Convention)⁹.

(a) Procedure under Hague Convention

In case the alleged dispute is in the nature of civil wrong, the manner of procedure for service of summons under the Hague Convention must be followed by the investigating agency.¹⁰

Similar to MLAT, Article 2 of the Hague Convention provides that the contracting State shall designate “central authority” which have the responsibility to receive requests for service coming from other contracting States and proceed in the manner provided in Articles 3 to 6 of the Convention. In other words, in any civil or commercial matters where there is an occasion to transmit a judicial or extrajudicial document for service abroad, the same must be done through the “central authority” designated under the Convention. In this regard, the contracting States have notified the list of competent authority for undertaking actions under the Convention.¹¹

For instance, India has notified “Ministry of Law and Justice, Department of Legal Affairs, New Delhi” as “central authority” for the purposes of Convention.¹² Similarly, Japan has notified “District Court”¹³ as competent authority for issuance of certificate of service (Article 6) and “Ministry of Foreign Affairs, Japan”¹⁴ as “competent authority” for the purposes of Article 9 functions. Thus, any summons issued for production of evidence/recording of statements in respect of civil disputes such as classification, valuation, etc. must be routed through the notified competent authority of the recipient State.

The only exception to the aforementioned rule of routing summons through the central authority has been laid down under Article 8 of the Hague Convention. This article empowers the contracting State to effect service of judicial documents upon person”without compulsion”directly through its diplomatic or consular agents. However, in this respect multiple countries such as Belgium, Brazil, China, France, India, amongst other countries have made specific reservation by way of declarations.¹⁵ For instance, India has limited the service of judicial documents through diplomatic channels to Indian nationals only.¹⁶ Thus, in case summons are issued directly through diplomatic or consular agents, reservation of recipient State must be checked.

Therefore, the authors are of the considered view that the proper manner of service of summons issued under Section 108 of the Customs Act in respect of civil disputes is by following the procedure laid down under the Hague Convention. This is further necessitated by Article 15 of the Hague Convention read with Article 50 of the Constitution of India, which provides that a judgment shall not be passed by the Judge of the contracting State unless it is established that the document/summons have been delivered to the defendant by the method prescribed under the Hague Convention.

(b) Procedure under MLAT

MLAT unlike Hague Convention, are in the nature of bilateral agreement entered between India and 40 individual countries. These agreements provide mechanism for seeking assistance from contracting States for prevention, investigation, and prosecution in criminal matters.¹⁷

For instance, vide “agreement between the Government of Republic of India and the Government of the United Arab Emirates on Mutual Legal Assistance in criminal matters” (UAE MLAT), India and UAE entered into bilateral agreement to facilitate mutual assistance in the service of summons and other judicial documents in respect of criminal matters.¹⁸ In terms of Article 3 of the UAE MLAT, the requests for assistance shall be made through the notified central authorities only. In this regard, contracting States have notified their respective “central authority”. Under UAE MLAT, “Ministry of Home Affairs” and “Ministry of Interior” have been notified central authority on behalf of India and UAE, respectively.¹⁹

Keeping the aforementioned in mind, on examination of applicability of UAE MLAT to Customs Act, the phrase “criminal matters” has been defined as “investigations, inquiries, trials or other proceedings relating to an offence created by law”.²⁰ It can be seen that this agreement is wide worded to encompass any offence created by law in India, inter alia, includes offences under Customs Act. In other words, summons issued to non-resident foreign nationals of UAE under Section 108 of the Customs Act in respect of offences such as smuggling, etc. must be routed through Ministry of Interior, UAE in terms of UAE MLAT.

Similarly, in case summons are issued against non-resident foreign national for producing evidence or recording of statements in respect of offences under Customs Act, the same must be routed through specific MLAT, entered with that country from which assistance is required.²¹ Thus, the authors are of the considered view that it is only vide the service of summons in the aforementioned manner will be considered as valid service when read with Sections 108 and 153 of Customs Act.

III. Conclusion

In the recent past, there has been a substantive increase in the number of summonses being issued to non-resident foreign nationals. However, owing to the long and tedious process of manner of service of summons to non-resident foreign nationals has resulted in mostly non-compliance of the procedure established by law.

Legally speaking, such service of summons without following due procedure under Hague Convention and MLAT amounts to non-service of summons. Hence, the authors are of the view that such service of summons without following the due procedure may be contested before the appropriate forums. This, inter alia, may include approaching jurisdictional quasi-judicial/ judicial forums against improper service of summons to non-resident foreign nationals. However, such a legal recourse may be subject to facts, circumstances, and other related factors of each individual case.