CBIC Issues Guidelines on Provisional Attachment of Bank Accounts Under Section 110(5) of Customs Act

The Central Board of Indirect Taxes & Customs (CBIC) has issued Instruction No. 19/2024-Customs, dated July 22, 2024, to provide clarity and guidelines on the provisional attachment of bank accounts under Section 110(5) of the Customs Act, 1962. This provision is a critical tool for protecting revenue interests and preventing smuggling activities. Here’s a detailed overview of the guidelines and their implications.

What Does Section 110(5) of the Customs Act, 1962 Say? 

Section 110(5) empowers the proper officer to provisionally attach a bank account for a period not exceeding six months if it is deemed necessary to protect revenue interests or prevent smuggling. This attachment requires the written approval of the Principal Commissioner or Commissioner of Customs. The period can be extended for an additional six months, provided reasons are recorded in writing and the account holder is informed before the initial period expires.

Key Guidelines Issued by CBIC

The CBIC has emphasized the importance of due diligence and procedural compliance while exercising the power of provisional attachment. Below are the key directives:

Formation of Opinion: The proper officer must thoroughly examine the facts of the case, including the nature of the offense, the amount of revenue involved, or the value of smuggled goods. The officer must also assess whether the bank account holder might utilize the funds if the account is not attached. The reasons for forming this opinion must be recorded in detail.
Approval Process: The written approval of the Principal Commissioner or Commissioner is mandatory. The approving authority must carefully examine the facts to ensure the case warrants the exercise of this power.
Issuance of Written Order: The order for provisional attachment must clearly outline the basis for the officer’s opinion and specify the duration of the attachment. It must be addressed to both the bank account holder and the concerned bank.
Extension of Attachment Period: If an extension is required, the Principal Commissioner must provide the account holder an opportunity to be heard and record the reasons for the extension in writing. The extension order must be issued before the expiry of the initial attachment period.
Release of Bank Account: If the proper officer determines that the account is no longer liable for attachment, communication must be sent to the bank and the account holder to release or restore the account.
Document Identification Number (DIN): All communications related to provisional attachment must bear a DIN, as per CBIC’s Circulars Nos. 37/2019-Customs and 43/2019-Customs.
Timely Investigation and Adjudication: Since provisional attachment can impact the business operations of the account holder, CBIC has directed field formations to complete investigations and adjudications promptly, ensuring the purpose of attachment is achieved within the specified period.

Implications for Businesses 

Provisional attachment of bank accounts is a significant measure that can disrupt business operations. However, the guidelines ensure that this power is exercised judiciously and transparently. Businesses must be aware of their rights, including the opportunity to be heard before an extension is granted and the requirement for detailed reasoning in the attachment order.

Conclusion

The CBIC’s instructions aim to strike a balance between protecting revenue interests and safeguarding the rights of individuals and businesses. By adhering to these guidelines, field formations can ensure that the power of provisional attachment is exercised responsibly and effectively.

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Source: CBIC, Ministry of Finance, Govt. of India

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