CBIC hikes monetary threshold for penalising offences under Customs Act

The CBIC has issued revised guidelines for prosecution, arrest and bail for offences under Customs Act and hiked the monetary threshold for penalising such violations.

The guidelines of the Central Board of Indirect Taxes and Customs (CBIC) dated August 16 specifies that Rs 50 lakh would be the monetary threshold in case of baggage and outright smuggling, while for commercial fraud it will be Rs 2 crore. The threshold so far was 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.

Also, 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 the Customs Act.

Beside, cases involving fraudulent duty evasion of Rs 2 crore or more too attract arrest provision under the Act.

Abhishek Jain, Partner Indirect Tax, KPMG in India, said that 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.

Saurabh Agarwal, Tax Partner, EY, said CBIC by way of release of circulars has not merely increased the threshold monetary limit for arrest, prosecution and bail but has also provided more illustrative list of scenarios where offences can lead to arrest. ''This move will help in reducing litigation and bringing in better clarity for both importers and the customs department,'' Agarwal added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)