Customs Act offences: Guidelines for legal proceedings revised

The guidelines, dated August 16, specify that Rs 50 lakh would be the monetary threshold in case of baggage and outright smuggling, while it will be Rs 2 crore for commercial fraud. The previous thresholds were Rs 20 lakh and Rs 1 crore, respectively.

While the Act does not specify any value limits for exercising the powers of arrest, it is clarified that arrest in respect of an offence, should be effected only in “exceptional situations”, the CBIC said. Specifying such exceptional situations, the CBIC said they include cases involving unauthorised importation in baggage/cases under Transfer of Residence Rules, where the market value of the goods is Rs 50 lakh or more or cases of outright smuggling of high value goods such as precious metal, restricted items or prohibited items or goods or offence involving foreign currency where the value of offending goods is Rs 50 lakh or more.

Further, cases related to importation of trade goods (i.e. appraising cases) involving wilful mis-declaration in description of goods/concealment of goods, or import of restricted or prohibited items where the market value of the offending goods is Rs 2 crore or more would attract arrest under customs act. Cases involving fraudulent duty evasion of Rs 2 crore or more too attract arrest provision.

Saurabh Agarwal, tax partner, EY, said, “This move will help in reducing litigation and bringing in better clarity for both importers & the customs department.”

Abhishek Jain, partner—indirect tax, KPMG in India, said in an effective justice system, prosecution and arrest should be initiated only in situations involving substantial duty evasion. “Pursuant to the revised monetary limits being prescribed by the government, going forward, while the civil proceedings would continue for duty, interest and penalty recovery, prosecution and arrest would be initiated in cases where the financial severity is high,” Jain said.