The Central Board of Excise and Customs will suggest amendment of laws after the Supreme Court said that arrests under Customs Act and Central Excise Act are bailable.

Department officials said that the September 30 SC order has considered that all offences under the two Acts involve only duty evasion. The aspect of money laundering and national security that arises from cases of smuggling has not been appreciated by the SC, officials said.

The SC, while hearing a group of petitions challenging arrest, said that offences under the two Acts are non-cognizable and hence bailable.

Officials said that they make arrests only in cases of mis-declaration causing money laundering. ''When there is a dispute on the interpretation of the existing laws to arrive at the duty, we do not arrest. It's more of a technical issue,'' a customs official said.

The bigger issue involves national security and prevention of smuggling. ''For instance, the SC order allows fake currency smugglers caught by the Customs to be released on bail immediately. The fake currency will damage the economy and also fund the terror network,'' the official added.

The SC order is also applicable to smugglers arrested with contraband, arms, ammunition, explosives, goods falling under endangered categories. Officials said that undervaluation and overvaluation of trade transactions are linked to hawala, money laundering and black money generation. The Financial Action Task Force, an inter-governmental body aimed at combating money laundering and terrorist funding, has said that trade-based money laundering is dominant across the globe.

Last month, officials found a case of money laundering in the exports or banned red sanders declared as permissible goods like guava pulp and plastic. ''The real value of the red sanders is sent by the Dubai-based buyers through hawala. The amount runs into a few hundred crores,'' a Directorate of Revenue Intelligence official said. They said that the secret manufacture and clearance of goods without paying central excise duty is not a simple case of evasion but creates a parallel economy.

Officials said the SC, at one point in its order, has treated the Customs Act and Central Excise Act on the same platform but considered it differently while hearing another set of arguments.