Customs Act, 1962 — Chapter V: Levy of, and Exemption from, Customs Duties
28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded
(1) Where duty has not been levied/paid, short-levied/short-paid, or erroneously refunded, or interest not paid/part-paid/erroneously refunded, for reasons other than collusion, wilful mis-statement or suppression of facts: (a) the proper officer shall, within two years from the relevant date (after pre-notice consultation as prescribed), serve a show-cause notice; (b) the person may pay the amount, on his own ascertainment or the officer’s, before such notice (no notice needed if the amount is under ₹100).
(2)-(3) The person who pays must inform the officer in writing; if the officer considers the amount paid in full within thirty days of the notice, no penalty is levied and proceedings are deemed concluded; if it falls short, a notice issues for the shortfall, with the two-year period computed from the date of that information.
(4) Where non-levy/short-levy/erroneous refund is by reason of collusion, wilful mis-statement or suppression of facts by the importer, exporter, agent or employee, the proper officer shall, within five years of the relevant date, serve a show-cause notice.
(5)-(6) On such a notice, the person may pay the duty (in full or part), interest under section 28AA, and a penalty of 15% of the duty, within thirty days, informing the officer in writing; if paid in full the proceedings are deemed concluded (without prejudice to sections 135, 135A and 140); if short, a further notice issues, with the two-year period running from the date of that information.
(7)-(7A) In computing the two-year or five-year periods, any period of court/tribunal stay is excluded; supplementary notices may be issued as prescribed and are treated as issued under sub-section (1) or (4).
(8)-(9A) The proper officer, after a hearing, determines the duty/interest due (not exceeding the amount in the notice) within six months (for sub-section (1) cases) or one year (for sub-section (4) cases) of the notice, extendable by a senior officer for a further like period; failure within the extended period concludes the proceeding as if no notice had issued. Determination may be deferred while a similar appeal is pending before the Tribunal/High Court/Supreme Court, an interim stay is in force, the Board has directed the matter kept pending, or the Settlement Commission has admitted an application — the time then runs from when that reason ceases.
(10)-(10B) The person must pay the amount determined with interest; if a refund order under section 27(2) is later reduced on appeal, the excess refunded is recovered with interest under section 28AA; a notice under sub-section (4) is deemed issued under sub-section (1) if the charge of collusion/mis-statement/suppression is not established.
(11) Officers appointed under section 4(1) before 6 July 2011 are deemed to have always had, and to have been, the proper officers with power of assessment under section 17 for the purposes of this section.
Explanation 1: “relevant date” means (a) the date of the clearance order, in non-levy/short-levy/no-charge-of-interest cases; (b) the date of final assessment/re-assessment, for provisional duty under section 18; (c) the date of refund, for erroneous refunds; (d) the date of payment, in other cases.
