Compounding of offences permits settlement by payment, subject to prescribed exclusions and limits, and leads to abatement of proceedings.

Compounding allows the Competent Authority to settle offences under the Act by accepting a prescribed compounding amount payable to the Central or State Government, subject to exclusions; compounding is permitted only after payment of tax, interest and penalty, and prescribed minima and maxima apply. On payment of the determined compounding amount, no further proceedings under the Act shall be initiated in respect of the same offence and any criminal proceedings already initiated shall abate.

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