CIRCULAR No. 29/2007-Cus.,

 Dated: August 21, 2007

F.No. 605/42/2007-DB

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject: Guidelines for compounding of offences under Customs (Compounding of Offences) Rules, 2005-regarding-

The undersigned is directed to refer to Customs (Compounding of Offences) Rules, 2005 and guidelines issued for compounding of offences vide Circular 54/2005-Cus dated 30.11.2005.

2. The field formations have sought clarifications in respect of following issues in administering Customs (Compounding of Offences) Rules, 2005 ,-

(i) Where in a single case where there are several persons liable for prosecution, whether compounding can be allowed to few applicants who are applying under the Customs (Compounding of Offences) Rules, 2005.

(ii) Clarification of the phrase “Upto twenty percent of market value of the goods or Rupees ten lakhs whichever is higher” mentioned in Rule 5 of the said Rules.

3.    The issue has been examined. As per Rule 6 of the Customs (Compounding of Offences) Rules, 2005, any person who has made the application for compounding of offence and has made full and true disclosure of facts relating to the case, is given immunity from prosecution for any offence under the Customs Act, 1962 with respect to the case covered by the compounding of offence. The compounding authority grant such immunity based on the guidelines issued for compounding vide Circular No. 54/2005-Cus dated 30.11.2005. Since the filing of application under compounding rules is the individual option of the person to avoid prosecution, other persons involved in the case/ offence and who have not filed the application would not be given immunity from prosecution. In such situation, remaining persons would face regular proceedings of the department for adjudication/ prosecution/ appeal.

4.    As regards the usage of phrase ‘Upto twenty percent of market value of the goods or Rupees ten lakhs whichever is higher’ in Rule 5 of the Customs (Compounding of Offences) Rules, 2005, it is stated that the use of word “upto” indicates that the Compounding Authority, after taking into account the contents of his application, may prescribe the compounding amount which may be Rs. Ten lacs or any amount upto 20% of the market value of goods, whichever is higher. Thus wherever 20% of the market value of the goods is higher than Rs. 10 lacs, the compounding authority may prescribe the compounding amount anywhere between 10 lacs to 20 % of the market value of the goods. The determination of compounding amount would, interalia, take into account the gravity of offence and the degree of involvement of the applicant.

5.  Above clarifications may be brought to the notice of all concerned. In case of any doubt, reference may be made to the Board. The guidelines shall be implemented with immediate effect.

F.No.450/ 67/ 2003-Cus.IV

(Anupam Prakash)
Under Secretary to the Government of India

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