Customs duty evasion: Fin Min proposes to reduce penalty

Payable penalty shall be 15% instead of the present 25%

Government proposes to reduce the penalty levied in cases involving fraud and other means to evade customs duty by 10%.

Section 28 of the Customs Act, 1962, is being amended to provide that in cases involving fraud, collusion, wilful mis-statement or suppression of facts with the intent to evade payment of duty. The amount of penalty payable shall be 15% instead of the present 25%.

The amendment is part of the Finance Bill, 2015, which is yet to be passed by Parliament.

Sections 112 and 114 of the Customs Act which, respectively, provide for penalty for improper import and export of goods, are also being amended by insertion of new clauses to provide for a penalty of up to 10% of the duty sought to be evaded or Rs 5,000, whichever is higher, it says.

The Centre has also proposed to rationalise imposition of penalty on central excise duty and service tax evasions by fraud and other means.

In case of any wilful evasion of central excise duty, a penalty equal to the duty evasion shall be payable, the Finance Bill says.

"Penalty shall be hundred% of Service Tax amount involved in such cases; a reduced penalty equal to 15% of the Service Tax amount is to be paid if Service Tax, interest and reduced penalty is paid within 30 days of service of notice in this regard," it says.

There will be no penalty imposed on an assessee if the customs, excise duties or service tax are not properly levied, if those amounts along with interest are paid within 30 days of issuance of show-cause notices. The penalty waiver, being brought in three statutes in the Finance Bill will not, however, be applicable in cases of fraud, collusion or wilful mis-statements.