Sections 140-140A explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 140 makes a company, and the persons in charge of it, answerable when the company commits an offence under Chapter XVI of the Customs Act. It also reaches directors, managers, secretaries and other officers where the offence is due to their consent, connivance or negligence. Section 140A then restricts the use of probation provisions for persons convicted under the Act, unless the person is under eighteen years of age.
This article reads the sections as per the text on the CBIC portal updated to 30 March 2022 (the Act as amended up to the Finance Act, 2022). Please check later Finance Act changes to these sections before acting.
Where the offender is a company, every person who was in charge of, and responsible to, the company for the conduct of its business at the time, and the company itself, is deemed guilty and can be proceeded against, unless that person proves the offence was committed without his knowledge or that he exercised all due diligence. Directors, managers, secretaries and other officers are also deemed guilty where the offence is with their consent or connivance or is attributable to their negligence. Section 140A: probation provisions do not apply to a person convicted under the Act unless under eighteen.
Section 140(1): the company and the persons in charge
Section 140(1) applies "if the person committing an offence under this Chapter is a company". Chapter XVI is the chapter on offences and prosecutions, from section 132 to section 140A. Two groups are deemed guilty and liable to be proceeded against and punished accordingly:
- the company; and
- every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company.
The test for the second group has two limbs: "in charge of" and "responsible to the company for the conduct of business". Holding a title is not the stated test; the words describe the role at the time of the offence.
The proviso: two ways out
The proviso to sub-section (1) says nothing in the sub-section renders such a person liable to the punishment provided in the Chapter if he proves:
- that the offence was committed without his knowledge; or
- that he exercised all due diligence to prevent the commission of the offence.
The burden of proof is on the person: the text says "if he proves". The proviso is a defence available to the persons in charge under sub-section (1). It is printed under sub-section (1) and says nothing about sub-section (2).
If you hold a management role in a company that imports or exports, the practical lesson is to keep a record that shows the steps you took: written instructions to staff and agents, review of filings, and escalation of exceptions. Our legal dispute resolution team can help you review the position if a notice names you personally.
Section 140(2): consent, connivance or negligence
Sub-section (2) begins "Notwithstanding anything contained in sub-section (1)". It applies where an offence under the Chapter has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company. That director, manager, secretary or other officer "shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly".
Compare the two sub-sections:
| Point | Sub-section (1) | Sub-section (2) |
|---|---|---|
| Who | The company, and every person in charge of and responsible to it for the conduct of its business at the time | Any director, manager, secretary or other officer |
| Trigger | The offence was committed by the company | The offence is proved to be with consent or connivance, or attributable to negligence |
| Burden | The person may prove no knowledge or all due diligence (proviso) | The text says "it is proved" that consent, connivance or negligence is present |
| Result | Deemed guilty and liable to be proceeded against and punished | Also deemed guilty and liable to be proceeded against and punished |
Note that "negligence" appears in sub-section (2). The text does not define it. A person who is not in charge of the business, such as a secretary or other officer, can therefore be reached under sub-section (2) if the conditions are proved.
The Explanation: "company" and "director"
The Explanation to section 140 says:
- (a) "company" means a body corporate and includes a firm or other association of individuals; and
- (b) "director", in relation to a firm, means a partner in the firm.
This is important for small businesses. A partnership firm or an association of individuals is covered by the word "company" for this section, and the partners are "directors". The section is therefore not restricted to incorporated companies.
An example. Gupta and Sons, a partnership firm, is accused of an offence under Chapter XVI. Under the Explanation, the firm counts as a "company" and each partner counts as a "director". A partner who looked after only the accounts, and who proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent it, can rely on the proviso to sub-section (1). Whether the partner was in charge of and responsible for the business at the time is a question of facts.
Where section 140 fits in the chapter
Section 140 is a rule about who is liable, not a separate offence. The offences are in sections 132 to 136; see our articles on sections 132 to 134 and section 135. Prosecution requires sanction under section 137; see our article on section 137. Section 138A's presumption of culpable mental state applies to prosecutions for offences that require one.
Section 140A: probation provisions
Section 140A is headed "Application of section 562 of the Code of Criminal Procedure, 1898, and of the Probation of Offenders Act, 1958". Sub-section (1) says nothing contained in section 562 of the Code of Criminal Procedure, 1898 (5 of 1898), or in the Probation of Offenders Act, 1958 (20 of 1958), shall apply to a person convicted of an offence under the Act unless that person is under eighteen years of age.
Sub-section (2) says sub-section (1) has effect notwithstanding anything contained in section 135(3).
The footnotes show that section 140A was inserted by the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1973 (36 of 1973), section 11, with effect from 1 September 1973, and that the Code of Criminal Procedure, 1898 is now to be read as the Code of Criminal Procedure, 1973 (Act 2 of 1974). The copy still prints the older Code. Please check the current procedural and penal law for the corresponding provision.
What can be read from the text:
- The rule is a restriction: those provisions "shall not apply" to a convicted person unless under eighteen.
- The age line is "under eighteen years of age".
- Section 140A(2) links to section 135(3), which lists reasons that are not special and adequate for a sentence below one year; see our article on section 135.
The text does not describe what the probation provisions offer, and this article adds nothing about them.
Need help if you are named in a customs complaint as a director or partner?
If a complaint names a company and its management, the roles, records and instructions of each person matter. Our team can help you read the allegations against section 140 and plan your response. Speak to us through legal dispute resolution.
Key takeaways
- Section 140(1): the company and every person in charge of and responsible to it for the conduct of business at the time are deemed guilty.
- The proviso: a person can show the offence was without his knowledge, or that he exercised all due diligence.
- Section 140(2): directors, managers, secretaries and other officers are also deemed guilty where consent, connivance or negligence is proved.
- "Company" includes a firm or other association of individuals; "director" of a firm means a partner.
- Section 140A: probation provisions do not apply to a convicted person unless under eighteen years of age.
Read next
- Section 139: presumption as to documents
- Section 137: cognizance and compounding of offences
- Section 135: evasion of duty or prohibitions, punishment
- Customs compliance checklist for importers
Disclaimer: Based on the Customs Act, 1962 as published on the CBIC Tax Information Portal, updated to 30 March 2022 (amended up to the Finance Act, 2022), as consulted on 2 October 2026. Finance Acts of 2023 and later, and the current rules, regulations and notifications, should be checked. This article is general information, not legal advice; check the official text before acting.