Customs Act, 1962 › Chapter V — Levy of, and Exemption from, Customs Duties

Section 25. Power to grant exemption from duty

Customs Act, 1962

Bare Act

Power to grant exemption from duty. —

(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon.

(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.

(2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

(3) An exemption under sub-section (1) or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty.

Explanation. -"Form or method", in relation to a rate of duty of customs, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable.

(4) Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette.

(4A) Where any exemption is granted subject to any condition under sub-section (1), such exemption shall, unless otherwise specified or varied or rescinded, be valid upto 31st day of March falling immediately after two years from the date of such grant or variation:

Provided that in respect of any such exemption in force as on the date on which the Finance Bill, 2021 receives the assent of the President, the said period of two years shall be reckoned from the 1st day February, 2021.

Provided further that nothing contained in this sub-section shall apply to any such exemption granted to, or in relation to,—

(a) any multilateral or bilateral trade agreement;

(b) obligations under international agreements, treaties, conventions or such other obligations including with respect to United Nations agencies, diplomats and international organisations;

(c) privileges of constitutional authorities;

(d) schemes under the Foreign Trade Policy;

(e) the Central Government schemes having validity of more than two years;

(f) re-imports, temporary imports, goods imported as gifts or personal baggage;

(g) any duty of customs under any law for the time being in force, including integrated tax leviable under sub-section (7) of section 3 of the Customs Tariff Act, 1975, other than duty of customs leviable under section 12. [Omitted] (6) Notwithstanding anything contained in this Act, no duty shall be collected if the amount of duty leviable is equal to, or less than, one hundred rupees.

(7) The mineral oils (including petroleum and natural gas) extracted or produced in the continental shelf of India or exclusive economic zone of India as referred to in section 6 and section 7, respectively, of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (80 of 1976), and imported prior to the 7th day of February, 2002 shall be deemed to be and shall always be deemed to have been exempted from the whole of the duties of customs leviable on such mineral oils and accordingly, notwithstanding anything contained in any judgement, decree or order of any court, tribunal or other authority, no suit or other proceedings in respect of such mineral oils shall be maintained or continued in any court, tribunal or other authority.

(8) Notwithstanding the exemption provided under sub-section (7), no refund of duties of customs paid in respect of the mineral oils specified therein shall be made.

Judgments on Section 25

  • Van Oord India Pvt Ltd vs Customs Ahmedabad — CESTAT, 13 Nov 2025. Physical non-availability of goods is no bar to confiscation under Section 111 or redemption fine under Section 125, but the fine must be commensurate with the duty benefit actually accrued, and a Section 114AA penalty…
  • Noble Resources And Trading India… vs Union Of India — Supreme Court of India, 14 May 2025. A departmental circular cannot enlarge the exclusionary clause of a statutory exemption notification, and where an expression like 'agricultural product' is undefined, the common parlance and dictionary meaning apply,…
  • Hemant Bohra vs Commissioner Of Customs-Nhava Sheva -… — CESTAT, 26 Aug 2024. Drawback provisions being an incentive-oriented scheme for augmenting exports, procedural requirements such as Rule 13(1)(a) documentation and Section 149 shipping bill amendment must receive a liberal construction and…
  • Shm Shipcare P Ltd vs Mumbai-Air Cargo Import — CESTAT, 16 Feb 2024. Manufacture in a customs bonded warehouse under Sections 58 and 65 is a duty-deferment scheme: import duty on raw materials consumed in the final product is payable only on clearance of the final product under Section…
  • Union Of India vs Cosmo Films Limited — Supreme Court of India, 28 Apr 2023. A tax exemption is a concession, not a right: there is no constitutional entitlement to refund or exemption, a concession can be withdrawn at any time, and conditional exemption notifications (including the pre-import…
  • Sundaresh Bhatt vs Central Board Of Indirect Taxes And… — Supreme Court of India, 26 Aug 2022. Once the Adjudicating Authority (NCLT) approves the Liquidator's decision to sell the movable/immovable assets of the corporate debtor in liquidation by adopting a particular mode of sale, there is no provision in the…
  • Larsen And Toubro Limited vs Union Of India — Gujarat High Court, 20 Mar 2019. Goods issued from a bonded warehouse for manufacture under Section 65 are subsumed in the manufacturing process, so their retention in the warehouse beyond one year without extension does not breach Section 61(2)(ii)…
  • Commnr. Of Customs (Import), Mumbai vs M/S. Dilip Kumar And Company — Supreme Court of India, 30 Jul 2018. An exemption notification must be construed strictly, the burden of proving applicability lies on the assessee, and where there is ambiguity in an exemption notification the benefit of such ambiguity must be interpreted…
  • M/S Sbec Sugar Limited & Anr vs Union Of India & Ors — Supreme Court of India, 7 Feb 2011. Where warehoused goods are not cleared under Section 68 within the permitted or extended bond period, they are deemed improperly removed under Section 72(1)(b), duty being payable at the rate applicable on the date of…
  • C C- Vijayawada Customs- Preventive vs M/S. Reliance Industries Limited — CESTAT, 4 Sep 2026. An exemption notification must be construed on its plain wording—no words or conditions not used in it can be read in, and where it ex facie applies, its benefit cannot be denied by importing restrictions from another…
  • Commisioner Of Gst&Ce(Salem) vs Agni Steels Private Limited — CESTAT, 3 Sep 2026. Conditions or restrictions contained in Central Excise exemption notifications cannot be implied into or superimposed upon Customs notifications, which must be interpreted strictly, and CVD paid under Section 3(1) of…
  • Cc (Nhava Sheva-General) Mumbai vs Emerson Process Management (India) Pvt… — CESTAT, 2 Sep 2026. Where a disputed levy rests on interpretation of an exemption notification, the importers acted under departmental instructions and approvals with full disclosure, the extended period of limitation under Section 28(4)…
  • Baker Hughes Oilfield Services India Pvt Ltd vs Customs Authority For Advance Rulings And Anr — Delhi High Court, 19 Aug 2026. A re-import exemption presupposes sufficient continuity between the export and the return; where the original concessional transaction has concluded with export to an FTWZ/SEZ, a subsequent movement into the DTA under a…
  • The Principal Commissioner Of Customs vs M/S. Gimpex Limited — Telangana High Court, 11 Aug 2026. Where an exemption/policy provision is genuinely ambiguous and the importer proceeds on an interpretation later upheld by High Courts, there is no intent to evade duty, and the extended period of limitation under the…
  • Sameer Industries vs Kandla — CESTAT, 10 Jul 2026. There is no bar on the simultaneous imposition of penalty on a partnership firm and its partner under the Customs Act, 1962, provided the partner's active knowledge and involvement in the acts leading to contravention…
  • Tonira Pharma Ltd vs The Union Of Inida — Gujarat High Court, 18 Jun 2026. Excise duty paid on clearing goods into the DTA cannot be adjusted or abated against customs or anti-dumping duty liability, the two levies being distinct in nature with no statutory provision permitting such…
  • Sree Koppammal Cotton Spinning Mills Pvt. Ltd. vs Tuticorin — CESTAT, 27 Apr 2026. Once an EODC or EPCG instrument has been issued by the DGFT and has not been cancelled or suspended by the competent authority under the FTDR Act, the customs authorities cannot go behind it or confirm duty demands and…
  • Birla Century vs Bharuch — CESTAT, 2 Mar 2026. The Foreign Trade Policy bar on simultaneously availing SHIS and TUFS binds only the original status holder in respect of its own exports and cannot defeat the entitlement of a transferee of SHIS scrips to import…
  • The Commissioner Of Customs vs Shri Regin.P — Madras High Court, 10 Feb 2026. An advance authorisation holder who diverts duty-free imports to unauthorised units and cannot produce true and proper accounts cannot claim compliance with the exemption notification, while a customs broker who merely…
  • Frunuts Exim Llp vs Commissioner Of Customs-Nhava Sheva - V — CESTAT, 27 Jan 2026. 'Actual use' conditions attach to 'pre-export' import schemes and are redundant for post-export, transferable DFIA imports, and exemption cannot be denied without a speaking order under section 17(5) of the Customs Act,…

All 48 judgments