CBEC revises arrest, prosecution norms

Its circulars prescribe threshold limits, due sanction from senior officers, procedures to be followed, monitoring disciplines and procedure for withdrawal of complaints

The Central Board of Excise and Customs (CBEC) has revised the monetary limits for arrest and its guidelines for prosecution in matters relating to offences punishable under Customs, Central Excise and Service Tax laws. Its circulars (dated October 23) prescribe threshold limits, due sanction from senior officers, procedures to be followed, monitoring disciplines and procedure for withdrawal of complaints.

In Customs matters, the CBEC says arrest in respect of an offence should be effected only in exceptional situations. These include unauthorised importation under baggage rules where the value of the goods involved is Rs 20 lakh or more; smuggling of high-value goods such as precious metals, restricted items or prohibited items; wilful mis-declaration in description of goods, concealment of goods, where the value of the offending goods is Rs 1 crore or more; and fraudulent availment of drawback or any exemption from duty if the amount of drawback or exemption from duty is Rs 1 crore or more. These threshold limits would not apply in case of habitual offenders or cases involving offences relating to arms, ammunition and explosives, antiques, art treasures, etc. Similar threshold limits have been laid down for launching prosecution proceedings also. In excise and service tax matters also, arrest and prosecution may be made in cases where the evasion of excise duty or service tax or the misuse of Cenvat credit is Rs 1 crore or more.

The latest instructions say prosecutions should not be launched as a matter of routine and/or in cases of technical nature, where the additional claim for duty is based solely on a difference in interpretation of the law. Before launching any prosecution, the department should have sufficient evidence to prove the person, individual or company, against whom prosecution is being considered, had definite knowledge of the offence or had fraudulent intention of committing the offence. In case of public limited companies, prosecution should not be launched indiscriminately against all directors of the company - it should be restricted to those who have taken active part in committing the offence relating to smuggling, customs duty evasion, or mis-declaration of value, quantity etc. The CBEC wants senior officers to go through the relevant case files thoroughly and ascertain that reasonable evidence exists about the definite involvement of different partners/directors/executives/officials against whom prosecution is contemplated.

Considering the higher standard of proof required in criminal prosecutions where cases have to be established beyond reasonable doubt, the circulars emphasise the importance of proper evaluation of evidence collected to meet the test of ability to prove the allegations beyond reasonable doubt. Decision for launching prosecution should be taken on a case-to-case basis considering various factors such as nature and gravity of offence, quantum of duty or tax evaded or Cenvat credit wrongly availed and the nature as well as quality of evidence collected. Where someone is convicted, the department should pray the court to allow publication of the name of the offender, says CBEC.

The revised guidelines should drive the staff at the operating levels to investigate thoroughly, gather credible evidences and then proceed with prosecution in appropriate cases.

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