Lending a non-transferable IEC for prohibited imports does not shield the holder from criminal liability.

The petitioner, proprietor of M/s. Kesari Distributors and holder of an Import Export Code (IEC), was arrested on 19 June 2026 and remanded to judicial custody in connection with R.R. No. 11 of 2026 for alleged offences under Sections 132 and 135 of the Customs Act, 1962.

He contended that he had permitted one Rajiv Bohra to use his IEC on a commission basis, as allegedly customary in the import-export trade, and that any misdeclaration was attributable solely to Rajiv Bohra.

The prosecution alleged that, with the petitioner’s connivance, the IEC was used to import prohibited and misdeclared goods, including 16,50,000 pocket lighters valued at approximately ₹3.30 crore, assorted silver jewellery valued at approximately ₹12.08 crore, and other goods lacking mandatory BIS certification or regulatory compliance.

It further alleged that the petitioner had deleted call records, WhatsApp chats and images, while the investigation into financial trails, overseas networks and hawala routes remained pending.

The petitioner consequently sought bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

Whether the petitioner, as the IEC holder, could avoid criminal liability by contending that his IEC had been permitted to be used by a third party on a commission basis?

Whether, considering the alleged large-scale import of prohibited and misdeclared goods, the nascent stage of investigation and the possibility of tampering with evidence or witnesses, the petitioner was entitled to bail under Section 483 of the BNSS?

The Court applied Sections 132 and 135 of the Customs Act, 1962, concerning the alleged customs offences, and Section 483 of the BNSS, governing the High Court’s power to grant bail.

It relied on Policy Circular No. 6 (RE-2013)/2009-2014 dated 16 September 2013, issued by the Ministry of Commerce and Industry, which treats the IEC as non-transferable and provides that use of an IEC by anyone other than its holder violates Section 7 of the Foreign Trade (Development and Regulation) Act, 1992.

The Court considered the Kerala High Court decision in The Proprietor v. The Commissioner of Customs, 2011 SCC OnLine Ker 1927, but distinguished it on the basis that the present case involved alleged connivance in the import of prohibited goods through misdeclaration.

Bail principles require consideration of the seriousness and ramifications of the offence, the stage of investigation, and the risks of evidence tampering and witness interference.

The Court rejected the petitioner’s foundational argument that permitting a third party to use his IEC was merely a trade practice and did not attract criminal liability.

It held that, since the 2013 Policy Circular, an IEC is a non-transferable statutory authorisation and its use by a third party is itself contrary to Section 7 of the Foreign Trade (Development and Regulation) Act, 1992.

The Kerala precedent did not assist the petitioner because it concerned importation on behalf of third parties, whereas the prosecution case here alleged the petitioner’s connivance in misdeclaring and importing prohibited articles.

The Court further considered the substantial quantity and value of the goods, the alleged prohibition on importing pocket lighters, the absence of regulatory compliance for other goods, and the alleged deletion of electronic evidence.

Since the investigation was at an early stage and authorities were tracing financial transactions, overseas connections and hawala routes, the Court found a real possibility of interference with witnesses or evidence if bail were granted.

In balancing personal liberty against the alleged large-scale smuggling and customs-duty evasion, the Court held that the circumstances did not justify bail at that stage.

Given the seriousness of the allegations, the early stage of investigation and the risk of tampering with evidence or witnesses, the bail application was dismissed.

However, the petitioner was granted liberty to file a subsequent bail application before the Principal Sessions Court.