Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
North Block, New Delhi.
2nd December, 2008.
Circular No.20/2008-Customs
To
All Chief Commissioners of Customs / Customs (Prev.).
All Chief Commissioners of Customs & Central Excise.
All Commissioners of Customs / Customs (Prev.).
All Commissioners of Customs & Central Excise.
The Director General of Revenue Intelligence.
The Director General of Central Excise Intelligence.
Subject: Guidelines for compounding of offences under Customs (Compounding of
Offences) Rules, 2005 - regarding.
Sir / Madam,
Please refer to
notification No.118/2008-Customs (N.T) dated 12.11.2008 whereby
certain amendments have been carried out in the Customs (Compounding of
Offences) Rules, 2005. Further, considering the recommendations made by the
Committee on Subordinate Legislation (Rajya Sabha) and to make a meaningful
impact on the Scheme of Compounding of Offences, the following changes have been
made in the scheme of Customs (Compounding of Offences) Rules, 2005 and the
guidelines issued in this regard.
- The compounding amount prescribed under Rule 5 of the said Rules has been
revised downwards. A new proviso has been inserted in this rule, which provides
that if a person has, in respect of same goods, committed offences falling under
more than one category, i.e., Sl.No.1 to 8 of the table specified in this rule
and where amount of duty evasion or amount of drawback or exemption from duty,
or amount of market value of the goods is same for all such offences, then the
compounding amount, in such cases, shall be the amount determined for the
offence for which a higher compounding amount has been prescribed.
- Further, in rule 4, a new provision has been added, whereby it has been
provided that an applicant should pay duty, penalty, and interest before
submission of application for compounding. Correspondingly, the Application Form
has also been amended by inserting Sl.No.12A so as to ensure that the
compounding of offences shall not be allowed unless the aforesaid duty, penalty
and interest thereon are paid by the applicant.
- In view of the recommendations of the Committee, for early disposal of the
applications for compounding, the Board directs that normally the application
for compounding of offences may be disposed of within a period of 3 months from
the date of receipt of such application. In order to ensure such time bound
disposal, it is reiterated that the existing instructions regarding time limit
for launching prosecution should be followed. In straight cases, where the
importer / exporter is caught red handed, prosecution may be launched
immediately after seizure of the goods. In other cases, the process of deciding
about launching of prosecution or otherwise shall be completed within a month of
adjudication of the case. Further, cases of prosecution shall be pursued
seriously with the respective Government Counsels and the Courts.
4.2. The Compounding Authority shall invariably obtain a factual report from the
Reporting Authority within one month of receipt of the application for
compounding, except in deserving cases, where request for extension of the
period have been sought for justifiable reasons (i.e. 1 month). Where an
opportunity of personal hearing requires to be given to the applicant before
passing of an order, the same shall be offered within one month’s time of date
of receipt of report from the Reporting Authority (1 month). After taking into
account the contents of the application and the concerned reports of the
Reporting Authority and submissions (written or oral) made by applicant, the
Compounding Authority may be able to dispose of the case within one month of the
date of personal hearing or obtaining a report whichever is later (1 month). In
any case, even if there are certain difficulties in timely submission of report
or conducting timely personal hearings, the Compounding Authority shall dispose
of the application within an overall time limit of 6 months as provided in para
7 of the guidelines issued in this regard.
- Further, it was decided by the Board that compounding of offences should not
be allowed where there are demonstrable contradictions, inconsistencies or
incompleteness in the case. Accordingly, in the guidelines issued for
compounding of offences under Customs and Central Excise Acts vide Circular
No.54/2005-Cus dated 30.12.2005, the following additional guidelines shall be
added:
“3(v): Any person who has applied for compounding of offence in a case, where
there are apparent contradictions or inconsistencies or incompleteness.”
Adequate publicity may be given about reduction of compounding amount, in
order to make the scheme more popular as to reduce the cases pending in the
Court. Further, in order to make best use of compounding of offence scheme, all
persons against whom prosecution is initiated or contemplated, should be
informed separately in writing, the offer of compounding. Guidelines issued vide
Circular No.54/2005-Cus dated 30.12.2005 shall continue to apply, subject to the
amendments made vide Notification No.118/2008-Customs (NT) dated 12.11.2008 and
the changes mentioned in para 5 above.
- The field formations as well as trade and industry may be suitably informed.
- Hindi version will follow.
Yours faithfully,
(M.M. Parthiban)
Director (Customs)
F.No. 450/67/2003-Cus.IV (Pt)