CBIC Instruction on Provisional Attachment of Bank Accounts under Section 110(5) | July 2024

The CBIC issued Instruction No. 19/2024-Customs on July 22, 2024, regarding the provisional attachment of bank account(s) under Section 110(5) of the Customs Act, 1962.

Field formations’ attention is drawn to the subject mentioned above. Section 110(5) of the Customs Act, 1962, states:

“(5) Where the proper officer, during any proceedings under the Act, is of the opinion that it is necessary to protect the interest of revenue or prevent smuggling, he may, with the approval of the Principal Commissioner of Customs or Commissioner of Customs, provisionally attach any bank account for a period not exceeding six months.

The Principal Commissioner or Commissioner of Customs may, for reasons recorded in writing, extend this period for a further six months and inform the person whose bank account is provisionally attached before the specified period expires.”

In certain cases, the Hon’ble High Courts have emphasized that the provisional attachment order must reflect the proper officer’s opinion on why it is necessary to protect revenue interests or prevent smuggling. Additionally, the written order directing the provisional attachment must be served not only on the bank but also on the bank account holder.

The Board reiterates the need for proper officers to exercise due diligence by thoroughly considering and examining the case facts, including the nature of the offense, the amount of revenue involved, the value of smuggled goods, and the availability of material as evidence. The officer must have a reason to believe that the bank account holder may use the funds if the account is not provisionally attached.

The proper officer’s basis for seeking approval for the provisional attachment must be duly recorded. The formation of opinion should be directly related to protecting revenue interests or preventing smuggling. Written approval from the Principal Commissioner is required, and the power of provisional attachment should not be exercised routinely. The approving authority must carefully examine the case facts to determine if it is appropriate to exercise this power. Before proceeding with any provisional attachment, the evidence must indicate a prima facie case against the bank account holder.

The order directing the provisional attachment must include the basis for the proper officer’s opinion and clearly state the attachment duration, which cannot exceed six months. The order, or its extension, must be addressed to both the bank account holder and the bank. Communication regarding the release or restoration of the bank account must be sent to the bank account holder and the bank upon the expiry of the provisional attachment period.

If an extension of the provisional attachment period is necessary, the Principal Commissioner may extend it for an additional period not exceeding six months, only after providing the bank account holder an opportunity to be heard and recording the reasons for such an extension. The extension order must be issued before the expiry of the initial attachment period.

If the proper officer determines that the bank account is no longer liable for provisional attachment before the attachment period expires, they must, with the Principal Commissioner’s approval, issue a communication to the bank, with a copy to the bank account holder, to release or restore the account.

All communications must bear the Document Identification Number (DIN) as per Board’s Circular Nos. 37/2019-Customs dated 05.11.2019 and 43/2019-Customs dated 23.12.2019.

Since the provisional attachment aims to protect revenue interests and may affect the business of the account holder, efforts should be made to complete the investigation and adjudication promptly, within the attachment period, to recover the due liability of duty/tax, interest, penalty, etc.