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

Section 28. Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded

Customs Act, 1962

Bare Act

Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded. —

(1) Where any duty has not been levied or not paid or short-levied or short-paid or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the reasons of collusion or any willful mis-statement or suppression of facts,-

(a) the proper officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;

Provided that before issuing notice, the proper officer shall hold pre-notice consultation with the person chargeable with duty or interest in such manner as may be prescribed;

(b) the person chargeable with the duty or interest, may pay before service of notice under clause (a) on the basis of,-

(i) his own ascertainment of such duty; or

(ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part-paid.

Provided that the proper officer shall not serve such show cause notice, where the amount involved is less than rupees one hundred.

(2) The person who has paid the duty along with interest or amount of interest under clause (b) of sub-section (1) shall inform the proper officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty or interest so paid or any penalty leviable under the provisions of this Act or the rules made thereunder in respect of such duty or interest:

Provided that where notice under clause (a) of sub-section (1) has been served and the proper officer is of the opinion that the amount of duty along with interest payable thereon under section 28AA or the amount of interest, as the case may be, as specified in the notice, has been paid in full within thirty days from the date of receipt of the notice, no penalty shall be levied and the proceedings against such person or other persons to whom the said notice is served under clause (a) of sub-section (1) shall be deemed to be concluded.

(3) Where the proper officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of two years shall be computed from the date of receipt of information under sub-section (2).

(4) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,-

(a) collusion; or

(b) any wilful mis-statement; or

(c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or not paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.

(5) Where any duty has not been levied or not paid or has been short-levied or short paid or the interest has not been charged or has been part-paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the importer or the exporter, to whom a notice has been served under sub-section (4) by the proper officer, such person may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty equal to fifteen per cent. of the duty specified in the notice or the duty so accepted by that person, within thirty days of the receipt of the notice and inform the proper officer of such payment in writing.

(6) Where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion-

(i) that the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under sub-section (1) or sub-section (4), shall, without prejudice to the provisions of sections 135, 135A and 140 be deemed to be conclusive as to the matters stated therein and penalty so paid under sub-section (5), on determination under this sub-section, shall also be deemed to be a charge for non-payment of duty; or

(ii) that the duty with interest and penalty that has been paid falls short of the amount actually payable, then, the proper officer shall proceed to issue the notice as provided for in clause (a) of sub-section (1) in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of two years shall be computed from the date of receipt of information under sub-section (5).

(7) In computing the period of two years referred to in clause (a) of sub-section (1) or five years referred to in sub-section (4), the period during which there was any stay by an order of a court or tribunal in respect of payment of such duty or interest shall be excluded.

(7A) Save as otherwise provided in clause (a) of sub-section (1) or in sub-section (4), the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed, and the provisions of this section shall apply to such supplementary notice as if it was issued under the said sub section (1) or sub-section (4).

(8) The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice.

(9) The proper officer shall determine the amount of duty or interest under sub-section (8),-

(a) within six months from the date of notice, [Omitted] in respect of cases falling under clause (a) of sub- section (1);

(b) within one year from the date of notice, [Omitted] in respect of cases falling under sub-section (4).

Provided that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year:

Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued.

(9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that-

(a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or

(b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or

(d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for non determination of the amount of duty or interest under sub-section (8) and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist.

(10) Where an order determining the duty is passed by the proper officer under this section, the person liable to pay the said duty shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately. "(10A) Notwithstanding anything contained in this Act, where an order for refund under sub-section (2) of section 27 is modified in any appeal and the amount of refund so determined is less than the amount refunded under said sub-section, the excess amount so refunded shall be recovered along with interest thereon at the rate fixed by the Central Government under section 28AA, from the date of refund up to the date of recovery, as a sum due to the Government.

(10B) A notice issued under sub-section (4) shall be deemed to have been issued under sub-section (1), if such notice demanding duty is held not sustainable in any proceeding under this Act, including at any stage of appeal, for the reason that the charges of collusion or any wilful mis-statement or suppression of facts to evade duty has not been established against the person to whom such notice was issued and the amount of duty and the interest thereon shall be computed accordingly.

(11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section.

Explanation 1. — For the purposes of this section,"relevant date" means,-

(a) in a case where duty is not levied or not paid or short-levied or short-paid, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods;

(b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof or re-assessment, as the case may be;

(ba) in a case where duty is paid under clause (a) of sub-section (3) of section 18A, the date of payment of duty or interest;

(d) in any other case, the date of payment of duty or interest.

Explanation 2. — For the removal of doubts, it is hereby declared that any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of section 28 as it stood immediately before the date on which such assent is received.

Explanation 3. — For the removal of doubts, it is hereby declared that the proceedings in respect of any case of non-levy, short-levy, non-payment, short-payment or erroneous refund where show cause notice has been issued under sub-section (1) or sub-section (4), as the case may be, but an order determining duty under sub-section (8) has not been passed before the date on which the Finance Bill, 2015 receives the assent of the President, shall, without prejudice to the provisions of sections 135, 135A and 140, as may be applicable, be deemed to be concluded, if the payment of duty, interest and penalty under the proviso to sub-section (2) or under sub-section (5), as the case may be, is made in full within thirty days from the date on which such assent is received.

Explanation 4 - For the removal of doubts, it is hereby declared that notwithstanding anything to the contrary contained in any judgment, decree or order of the Appellate Tribunal or any Court or in any other provision of this Act or the rules or regulations made thereunder, or in any other law for the time being in force, in cases where notice has been issued for non-levy, short-levy, non-payment, short payment or erroneous refund, prior to the 29th day of March, 2018 (13 of 2018), being the date of commencement of the Finance Act, 2018, such notice shall continue to be governed by the provisions of section 28 as it stood immediately before such date.

Explanation in plain English

Section 28 is how customs recovers duty that was not paid, was short-paid or was wrongly refunded. In ordinary cases, the officer must issue a show cause notice within two years, after a pre-notice consultation. Where there was collusion, wilful mis-statement or suppression of facts, the limit is five years. A person can pay the duty and interest before a notice, or soon after it, to avoid or reduce the penalty. A customs broker cares because this is the most common demand provision in customs practice.

The normal limit is two years and the extended limit is five years, both from the relevant date.
A pre-notice consultation is required before a normal-case notice.
After voluntary payment, the person must inform the proper officer in writing.
If voluntary payment falls short, a notice can follow for the balance, with two years counted from the date of information.

Judgments on Section 28

Rissala Electric Motors P Ltd vs Principal Commissioner, Customs… — CESTAT, 13 Oct 2026. An incomplete or knocked-down import that, as presented, has the essential character of the complete article is classifiable as the complete article under Rule 2(a) of the General Rules for the Interpretation, but a…
Pmi Electro Mobility Solution Pvt Ltd vs Principal Commissioner, Customs… — CESTAT, 12 Oct 2026. Where imported goods availing a conditional end-use exemption are in fact used in the manufacture of the specified final product and never leave the premises in which they were received, the benefit cannot be denied…
Bharat Luxindo Agrifeeds Pvt Ltd vs The Additional Commissioner Of… — Madras High Court, 17 Sep 2026. A mere difference of opinion on classification or the benefit of an exemption notification, where the importer fully disclosed the goods and the claim, does not justify the extended period under Section 28(4).
Commissioner Of Central Excise Aurangabad vs M/S Millennium Beer Industries Ltd.,… — Bombay High Court, 3 Sep 2026. In revenue matters, the principle of consistency requires that the Revenue must not take inconsistent stands in similarly circumstanced cases.
Vishnu Chemicals Ltd vs Principle Of Commissioner Of Customs… — CESTAT, 3 Sep 2026. Fulfilment of export obligation under an Advance Authorisation cannot erase an actual breach of the pre-import condition, but for imports from 13.10.2017 to 09.01.2019 interest, confiscation, redemption fine and penalty…
Shree Grotex Trade Links Pvt Ltd vs Cc Sea Ch - Iii — CESTAT, 3 Sep 2026. Where Customs itself obtained test reports on identical goods and consistently accepted the importer's declared classification, no deliberate or blameworthy conduct can be attributed to the importer, and the extended…
M.M. Ceramics & Ferro Alloys vs Union Of India & Ors — Delhi High Court, 2 Sep 2026. An importer's truthful declaration under Section 46(4)—including the RVC particulars in a Certificate of Origin—is a substantive statutory obligation, and the power under Section 28 to recover duty escaped by…
Imperial Fibres Pvt Ltd vs Mundra — CESTAT, 31 Aug 2026. The extended period under Section 28(4) of the Customs Act cannot be invoked, and a beneficial exemption cannot be denied, where the department's delayed, partial and unauthenticated foreign verification of Certificates…
Vrunda International vs Customs Ahmedabad — CESTAT, 17 Aug 2026. Preferential/FTA duty benefit cannot be denied, nor duty, confiscation or penalty confirmed, on suspicion or third-party verification alone — the department must verify the importer's own Certificate of Origin from the…
Balaji Niryat Pvt Ltd vs Kolkata-Port — CESTAT, 22 Jul 2026. Preferential tariff treatment under a trade agreement cannot be denied merely because the overseas supplier failed to cooperate in an origin verification, where the Certificates of Origin covering the importer's own…
Rajasthan Metals vs Union Of India & Ors — Delhi High Court, 28 Apr 2026. Unincorporated treaty provisions cannot override national law, and Customs authorities retain full jurisdiction under Section 28 of the Customs Act, 1962 to issue show cause notices alleging fraud, misrepresentation or…
Mahesh Agarwal Partner vs Cc Sea Ch - Ii — CESTAT, 13 Mar 2026. Where higher-value parallel documents are recovered from the importer's own possession and corroborated by voluntary Section 108 admissions and extra-commercial payments, declared transaction value may be rejected, the…
Wipro Ge Healthcare Pvt Ltd vs Mumbai-Air Cargo Import — CESTAT, 19 Feb 2026. A judgment or order of a Court/Tribunal is not 'additional evidence' or 'documentary evidence' under Rule 5 of the Customs (Appeals) Rules, 1982 or Section 149 of the Customs Act, and an appellate authority, empowered…
Mukesh Kumar vs Commissioner Of Customs (Ii), Chennai — CESTAT, 17 Feb 2026. Penalties under sections 112(b) and 114AA of the Customs Act can be imposed only where mens rea or active involvement is established, and retracted statements recorded u/s 108 cannot sustain duty demands unless tested…
Indras Agencies Pvt Ltd vs Commissioner Of Customs - Chennai Ii… — CESTAT, 2 Dec 2025. A DFIA/duty credit scrip actually issued by DGFT, even if the exporter obtained it by misrepresentation, is merely voidable and remains valid until cancelled; a bona fide transferee without knowledge of the fraud has…
M/S Xiaomi Technology India Private… vs Commissioner Of Customs Air… — CESTAT, 14 Nov 2025. Royalty and licence fee paid by an importer under agreements with IPR holders, not disclosed to the customs authorities, is includible in the assessable value under Rule 10(1)(c) of the Customs Valuation Rules, 2007,…
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…
Manasa Impex Services vs Commissioner Of Customs And Central Excise, Coimbatore) With — CESTAT, 21 Aug 2025. A customs broker's failure to perform duties under CHALR attracts disciplinary action under CHALR alone; a penalty under section 114 of the Customs Act requires proof of abetment or active collusion — involvement beyond…
P C Jain vs Kolkata-Port — CESTAT, 15 May 2025. A charge of undervaluation cannot be sustained on diary entries and statements alone without independent evidence such as NIDB data, market enquiry or contemporaneous higher values, and an adjudication in which…
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,…

All 150 judgments