Centre raises thresholds for prosecutions, arrests under Customs Act

However, thresholds will not apply for offences relating to fake currency notes, arms, ammunitions and explosives, antiques, art treasures, wildlife items and endangered species of flora and fauna

The government has raised the thresholds for prosecutions and arrests under the Customs Act to ₹50 lakh from ₹20 lakh for smuggling and illegal imports of goods in baggage, and from ₹1 crore to ₹2 crore for cases involving commercial fraud. 

The changes have been notified through two circulars issued by the Central Board of Indirect Taxes and Customs under the Department of Revenue on Tuesday. 

However, these value-related thresholds will not apply for offences relating to fake currency notes, arms, ammunitions and explosives, antiques, art treasures, wildlife items and endangered species of flora and fauna. “In such cases, arrest, if required, on the basis of facts and circumstances of the case, may be considered irrespective of value of offending goods involved,” the official communique to Customs field formations said.

“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,” explained Abhishek Jain, partner (indirect tax) at KPMG in India.  “In an effective justice system, prosecution and arrest should be initiated only in situations involving substantial duty evasion,” he added.

Apart from increasing the threshold monetary limit for arrests, prosecution and bail, the circulars also provided a more illustrative list of scenarios where offences can lead to arrest, which would help reduce litigation and bring greater clarity for importers as well as officials, said Saurabh Agarwal, tax partner at EY.