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4. In response to such submissions, Learned Authorised Representative
for the respondent department Mr. Manoj Kumar argued in support of the rea-
soning and rationality found in the order passed by the Commissioner of Cus-
toms but conceded that the Commissioner had not dealt with the jurisdictional
issue while confirming penalties under Section 112 of the Customs Act on the
appellants.
5. I had heard the arguments at length on the other day and perused
the case record.
6. The issue of jurisdiction of Customs Act and its application to the
appellant is primarily challenged in the present appeal, besides the legality of the
order of the Commissioner. Though the issue appears to be small it has wide
ramifications. No Municipal law can ever be extended beyond the territorial
boundaries of a country including its continental self and exclusive economic
zone, whether or not there is express provision in the Act or statute to stretch the
same beyond the country’s territory since the same would amount to encroach-
ment upon the territorial authority of other State. It is therefore, defined in the
Statute of the country that the said Act has its application within the territorial
limits of the country. Likewise in case of penal statute, it is clearly defined that
the “act or its violation” should have its effect and consequence within the terri-
torial limit of the said country. If violation of provision of statute is committed
within the said country, then the consequence in conformity to the legal provi-
sion of the country would ensue, no matter the violator is a resident of the coun-
try or an alien. It is, therefore, necessary to determine if the “act or its omission”
committed is in violation of law and accordingly to punish the violator and not
to determine if such violation has been committed by a legal person based in the
country or not.
7. Sovereign country asserts extra-territorial jurisdiction in criminal
laws though the principal basis of jurisdiction over crime is the territorial princi-
ple which permits a State in control of its territory to prescribe, adjudicate and
enforce its law in the territory. The crime is said to be committed even partly in a
State’s territory when any essential constituent element itself is consummated
there. Therefore, when an offence’s adverse effect endangers a State’s security or
Government’s function, extra-territorial jurisdiction is enforced. Customs law
from an international Criminal law prospective requires a consideration of the
classification between Crime law and administrative law and the same is re-
quired to be placed under the administrative penal law though in a legal sense it
is not penal but nevertheless retributive (Gist has been borrowed from the article
titled “Criminal and Quasi-Criminal Customs Enforcement among the U.S., Can-
ada and Mexico” written by Bruce Zagaris and David R. Stepp.)
8. In a nut shell, the discussion above would reflect the principle that
whether violation of an act has an adverse effect to the State’s interest, the same
violation is to be dealt by the State itself and the violator is to be penalised irre-
spective of his/her nationality or place of residence. It is in this prospective, the
jurisdiction of sovereign State is to be understood though the general under-
standing of jurisdiction is based on the nationality of the perpetrator since na-
tionals of a State remained under the sovereignty and owe their allegiance to it
even though they are free to travel and reside outside its territory. It is in this
contest that Foreign Exchange Regulation Act, 1973 prescribing application of it
to all citizens of India residing outside India and to branches, agencies situated
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