THRESHOLD LIMIT FOR PROSECUTION, ARREST AND BAIL UNDER CUSTOMS ACT, 1961

[Mr. M. GOVINDARAJAN]

Prosecution under Customs Act

Prosecution may be launched against any person including legal person in respect of the offences covered under any of the following-

• Section 132 – False declaration, false documents;
• Section 133 – Obstruction of officers of customs;
• Section 134 – Refusal to be X-rayed;
• Section 135 – Evasion of duty or prohibitions;
• Section 135A – Preparation;
• Section 136 – Offences by Officers of Customs.

The decision for launching prosecution should be taken in cases which fulfill the requirement of the provisions of any of the sections 132,133,134, 135, 135A or 136 of the Customs Act, 1962 after a careful consideration of the nature of offence, the role of the person concerned and evidence available to substantiate the guilty knowledge/mens rea.

Threshold limit for prosecution

The guidelines for prosecution under Customs Act, 1962 was issued vide Order No.  711/16/84-CUS (AS) dated 21.05.1990 and 20.02.1992.  The said guidelines were revised vide Circular dated 22.06.1999.  Again the said guidelines were revised vide Circular No. 27/2015, dated 23.10.2015.  The said guidelines were also revised by the Department vide Circular No. 12/2022, dated 16.08.2022.  The threshold limits were revised now and then for the eligibility of prosecution under the Customs Act.  The following table shows the threshold limit as decided during 2015 and 2022-

Table

Sl. No.	Description	Year	Threshold limit
1	Cases involving unauthorized importation in baggage/cases under Transfer of Residence Rules,	2015 2022	Rs.20 lakhs or more Rs.50 lakhs or more
2	Outright smuggling of high value goods such as precious metal, restricted items or prohibited items notified under section 11 of the Customs Act, 1962 or goods notified under section 123 of the Customs Act, 1962 or foreign currency	2015 2022	Rs.20 lakhs or more Rs.50 lakhs or more
3	In cases related to importation of trade goods (i.e. appraising cases) involving- (a) willful mis-declaration in value/description; (b) concealment of restricted goods or goods notified under section 11 of the Customs Act, 1962, where market value of the offending goods	2015 2022	Rs.1 crore or more Rs. 2 crores or more
4	In cases related to fraudulent evasion or attempt at evasion of duty under the Customs Act 1962, if the amount of duty evasion	2015 2022	Rs. 1 crore or more Rs.2 crores or more
5	In cases related to fraudulent availment of drawback or attempt to avail of drawback or any exemption from duty provided under the Customs Act 1962, in connection with export of goods, if the amount of drawback or exemption from duty	2015 2022	Rs.1 crore or more Rs. 2 crores or more
6	In cases related to fraudulent evasion or attempt at evasion of duty under the Customs Act 1962, if the amount of duty evasion	2022	Rs.2 crores or more
7	In cases related to exportation of trade goods (i.e. appraising cases) involving,- willful mis-declaration in value/description; concealment of restricted goods or goods notified under section 11 of the Customs Act, 1962,	2015 2022	Rs. 1 crore or more Rs.2 crores or more
8	Obtaining an instrument from any authority by fraud, collusion, willful misstatement or suppression of facts and utilization of such instrument where the duty relatable to utilization of the instrument	2022	Rs. 2 crores or more
9	cases involving non-declaration of foreign currency by foreign nationals and NRIs (normally visiting India for travel/business trips etc.) detected at the time of departure from India,	2022	Rs. 50 lakhs or more

In all cases where sanction for prosecution is accorded after the issuance of this Circular (16.08.2022), the same shall be dealt in accordance with provisions of this Circular irrespective of the date of offense.  The cases where prosecution has been sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the provisions of this Circular.

Arrest and Bail

Persons involved in customs related offence cases who may be liable to prosecution should not be arrested in routine unless exigencies of certain situations demand their immediate arrest.   Prior to prosecution, arrest (s) may be necessary to ensure proper investigations and penal action against the person (s), as otherwise the person involved in the offence may hamper investigations or disappear from the scene/area - such as in cases involving outright smuggling by Sea/Air/Land route.

The arrest should be made only when it is intended to prosecute the offenders and the monetary limits or conditions provided for prosecution would apply equally to arrests.

Threshold limit to arrest

The Customs Act does not specify any value for exercising the power of arrest.  The circular No. 13/2022-Customs, dated 16.08.2022 prescribes the threshold limit for arrest.  The circular clarified hat arrest in respect of an offence, should be effected only in exceptional situations which may include-

• cases involving unauthorized importation in baggage/ cases under Transfer of Residence Rules, where the market value of the goods involved is Rs. 50 lakhs or  more;
• cases of outright smuggling of high value goods such as precious metal, restricted items or prohibited items or goods notified under section 123 of the Customs Act, 1962 or offence involving foreign currency where the value of offending goods is Rs. 50 lakhs or more;
• cases related to importation of trade goods (i.e. appraising cases) involving willful mis-declaration in description of goods/concealment of goods/goods covered under section 123 of Customs Act, 1962 with a view to import restricted or prohibited items and where the market value of the offending goods is Rs. 2 crores or  more;
• cases involving fraudulent evasion or attempt at evasion of duty involving Rs 2  crores  or more;
• cases involving fraudulent availment of drawback or attempt to avail of drawback or any exemption from duty provided under the Customs Act, 1962, in connection with export of goods, if the amount of drawback or exemption from duty is Rs. 2 crores or more;
• cases related to exportation of trade goods (i.e. appraising cases) involving-

• willful mis-declaration in value / description;
• concealment of restricted goods or goods notified under section 11 of the Customs Act, 1962, where market value of the offending goods is Rs. 2 crores or more;

•  cases involving obtaining an instrument from any authority by fraud, collusion, willful misstatement or suppression of facts and utilization of such instrument where the duty relatable to such utilization of the instrument is Rs. 2 crores or more;

The above criteria of value mentioned would not apply in cases involving offences relating to items i.e. FICN, arms, ammunitions and explosives, antiques, art treasures, wild life 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.