Compounding of offences enables settlement of customs offences by payment subject to classification, exclusions, and authority discretion.

Compounding permits settlement of specified customs and central excise offences by payment, with offences classified as technical (compoundable more than once) and substantive or non-technical (compoundable only once). Certain serious offences and applicants are excluded, including those involving narcotics, arms, chemical weapons, penal code violations, protected wildlife, smuggling of prohibited or sensitive goods, matters affecting foreign relations, prior large-value compounding, post-rule convictions, and incomplete applications. Chief Commissioners verify facts, exercise discretion, may compound before or after complaint filing, and require court affidavits and payment procedures where prosecution is pending.

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