Apang, one of India's longest serving chief ministers, was arrested from outside the office of the SIC here around midday Tuesday and was later produced before the sessions court in Assam's Lakhimpur town.
"I am innocent and absolutely not involved in the PDS scam. This is nothing but a political conspiracy to tarnish my image and hence I would seek a probe by the CBI (Central Bureau of Investigation)," Apang told journalists outside the court premises.
The SIC was constituted by the state government, ruled by the Congress, to probe the Rs.1,000 crore PDS scam under the direct supervision of Gauhati High Court.
"Apang was arrested based on material evidence and statements given by the other accused," SIC investigating officer, M.S. Chauhan, said.
The probe began following a public interest litigation (PIL) filed by chairperson of Arunachal Citizens' Rights (ACR) Bamang Tegu and public leader Domin Loya on June 13, 2004.
Apang was the chief minister during the period when the scam took place. The scam was in the form of false and fraudulent transport subsidy bills which were cleared without financial concurrence, besides inflated bills for procuring items.
"I am happy that our claims and allegations about the scam have been vindicated although we did not name anyone while filing the PIL," Tegu told IANS.
"We hope the investigations would reach its logical end and many more political bigwigs and other high profile people would come within the SIC net."
The Arunachal Pradesh Police Vigilance department had earlier named 40 people, including Apang and several bureaucrats and businesspeople, as accused in the multi-crore PDS scam.
Apang dominated politics in Arunachal Pradesh during the past 25 years - 22 years as chief minister - although he lost the assembly elections in 2009.