Government hiked the limit for prosecution and arrest of alleged tax evaders to Rs 2 crore.
The limit on excise duty evasion leading to arrest and prosecution has been doubled to Rs 2 crore, with the government directing officials to not invoke penal provisions in cases of technical violation of excise rules.
Under the new system and anyone accused of evasion of central excise duty or misuse of CENVAT credit can only be prosecuted or arrested if the amount of evasion is equal to or more than Rs 2 crore.
The Central Board of Excise and Customs explained that the decision to change the rules was done to maintain uniformity in application of rules across the country.
"It has been decided to revise the monetary limit for arrest and prosecution in central excise to maintain uniformity of practice in central excise and service tax," the Board said.
"It is again reiterated that arrest and prosecution should not be resorted to in cases of technical nature, i.e. where the additional demand of duty is based on a difference of opinion regarding interpretation of the law," it added.
Arrests in cases of service tax violation was allowed in 2013, however its scope and application were subsequently limited. The Board said that before arresting a violator, officials must bear in mind that it entails loss of personal freedom and such actions must stand judicial scrutiny.
"This power (to arrest) should be exercised with great responsibility and caution, and only after a careful examination of the legal and factual aspects of the case," it said.
The Board also said that if the conditions for arrest are fulfilled, it does not mean that an arrest should be made. It advised, the officials must only go ahead with an arrest if it is determined that the alleged offender is likely to hamper the course of further investigation by tampering with evidence or attempting to influence witnesses.
"If an alleged offender is cooperating and has deposited at least half of the evaded tax, then the need to arrest may not arise," the Board said.