Custom law violation may be non-bailable offence soon

NEW DELHI: The finance ministry is considering a proposal to give more power to its anti-evasion machinery by making violation of customs laws a non-bailable offence as part of a larger plan to build stiff deterrents.

A Supreme Court judgement had weakned the case of tax authorities, which ruled noncognizable customs, central excise duty evasions and other offences are bailable. Non-cognizable offences are those where a warrant is needed for arrest. There have been similar rulings in various high courts subsequently.

“A number of court judgments have questioned the powers of investigating agencies... there is a belief that situation needs to be rectified and agencies empowered,” said a customs department official. The directorate of revenue intelligence, the premier investigating agency that deals largely with import duty evasion, had also taken up the issue with the Central Board of Excise and Customs.

An amendment could be expected in the budget if the proposal gets the go-ahead from finance minister Pranab Mukherjee. The official said a greater clarity is needed as the agency plays a key role in guarding the country’s borders from imports of prohibited substances like drugs, arms and ammunitions and economic warfare through illegitimate imports.

The agency's role has become even more crucial after certain customs offences such as over-invoicing and under-invoicing were made a predicate offence under the country's anti-money laundering law.

Some offences under the customs law face imprisonment of up to seven years. The government has been on an overdrive to check black money and tax evasion and is looking at ways to tighten laws and give more powers to tax authorities to act against such offences.

The role of Directorate of Revenue Intelligence has become increasingly important on the back of government’s special drive against black money and tax evasion as the agency keeps tabs on trade mispricing, one of the common methods to take black money overseas and vice versa. The recent over $9 billion recast of export numbers had also led to speculation of trade mispricing being responsible for inflated numbers.

However, experts advise prudence and say only select offences should attract harsher punishment. “It makes sense to empower customs by making certain offences non-bailable. The selection of such offences, however, needs to be prudent and linked to the gravity of injury to the country and the economy,” said Bipin Sapra, partner, Ernst & Young.

Detection of trade mispricing and frauds jumped by 55% to over .`1,200 crore in 2010-11. A US-based think tank, Global Financial Integrity, had said earlier that about $89 billion moved out of India through mispriced trade over 2004-08.