¹[Recovery of ²[duties not levied or not paid or short-levied or short- paid] or erroneously refunded.

SECTION 28.

(1) Where any ³[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 wilful mis-statement or suppression of facts,-

(a) the proper officer shall, within ⁴[two years] from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied ⁵[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;
⁶[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.
⁷[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:

⁸[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 ⁹[two years] shall be computed from the date of receipt of information under sub-section (2)].

(4) Where any duty has not been ¹⁰[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 ¹¹[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 ¹²[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 ¹³[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), ²⁵[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  ¹⁴[two years] shall be computed from the date of receipt of information under sub-section (5).

(7) In computing the period of ¹⁵[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.

¹⁶[(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, ¹⁷[*** ] in respect of cases falling under clause (a) of sub- section (1); 
 
(b) within one year from the date of notice, ¹⁷[*** ] in respect of cases falling under sub-section (4).

¹⁸[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
(c) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; 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.

¹⁹[“(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.]

²⁰[(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 ²¹[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; 

²⁴[“(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;”.]
 
(c) in a case where duty or interest has been erroneously refunded, the date of refund;
 
(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.]

²²[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.]

²³[Explanation 4.—For the removal of doubts, it is hereby declared that in cases where notice has been issued for non-levy, not paid, short-levy or short-paid or erroneous refund after the 14th day of May, 2015, but before the date on which the Finance Bill, 2018 receives the assent of the President, they shall continue to be governed by the provisions of section 28 as it stood immediately before the date on which such assent is received.]

Note :-

1. Substituted by Act 8 of 2011, section 42, for Section 28 (w.e.f. 08-04-2011). Earlier section 28 was amended by Act 25 of 1978, section 6(w.e.f. 1-7-1978), by Act 21 of 1984, section 37(w.ef.11-5-1984), by Act 80 of 1985, section 3(w.e.f 27-12-1985), by Act 18 of 1992, section 109(2) (w.e.f. 14-5-1992), by Act 22 of 1995, section 56(w.e.f. 26-5-1995) by Act 10 of 2000, section 79 (w.e.f. 12-5-2000), by Act 14 of 2001, section 103(w.e.f. 11-5-2001), by Act 32 of 2003, section 109(w.e.f. 14-5-2003), by Act 29 of 2006, section 22(w.e.f. 13-7-2006). Section 28, before substitution by Act 8 of 2011, stood as under:
“28. Notice for payment of duties, interest, etc. - (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,-

(a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year;

(b) in any other case, within six months,

from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short- levied or part 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 where any duty has not been levied or has been short-levied 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 employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words 'one year' and 'six months', the words 'five years' were substituted:

Explanation.-Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be.

(1A) When any duty has not been levied or has been short-levied 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 willfulmis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, to whom a notice is served under the proviso to sub-section (1) by the proper officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under Section 28AB and penalty equal to twenty-five per cent. of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice.

(2) The proper officer, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined:

Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice is served under sub-section (1) shall, without prejudice to the provisions of Sections 135, 135A and 140, be deemed to be conclusive as to the matters stated therein:

Provided further that, if such person has paid duty in part, interest and penalty under sub-section (1A), the proper officer shall determine the amount of duty or interest not being in excess of the amount partly due from such person.

(2A) Where any notice has been served on a person under sub-section (1), the proper officer,--

(i) in case any duty has not been levied or has been short-levied, or the interest has not been paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any willfulmis-statement or suppression of facts, where it is possible to do so, shall determine the amount of such duty or the interest, within a period of one year; and

(ii) in any other case, where it is possible to do so, shall determine the amount of duty which has not been levied or has been short-levied or erroneously refunded or the interest payable which has not been paid, part paid or erroneously refunded, within a period of six months,
from the date of service of the notice on the person under sub-section (1).

(2B) Where any duty has not been levied or has been short-levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest, may pay the amount of duty or interest before service of notice on him under sub-section (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing, who, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the duty or the interest so paid:

Provided that the proper officer may determine the amount of short-payment of duty or interest, if any, which in his opinion has not been paid by such person and, then, the proper officer shall proceed to recover such amount in the manner specified in this section, and the period of 'one year' or 'six months' as the case may be, referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.

Explanation 1.-Nothing contained in this sub- section shall apply in a case where the duty was not levied or was not paid or the interest was not paid or was part paid or the duty or interest was erroneously refunded by reason of collusion or any willfulmis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter.

Explanation 2.-For the removal of doubts, it is hereby declared that the interest under Section 28AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the proper officer, but for this sub- section.
(2C) The provisions of sub-section (2B) shall not apply to any case where the duty or the interest had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President.

(3) For the purposes of sub-section (1), the expression 'relevant date' means,

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

(b) in a case where duty is provisionally assessed under Section 18, the date of adjustment of duty after the final assessment thereof;

(c) in a case where duty or interest has been erroneously refunded, the date of refund;

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

2. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(a), for “duties not levied or short- levied”. (w.e.f. 14-08-2016)

3. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(b)(i) for “duty has not been levied or has been short-levied”. (w.e.f. 14-08-2016)

4.  Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(b)(ii)(A), for “one year”. (w.e.f. 14-08-2016).

5.  Inserted by the Finance Act, 2016, Act 28 of 2016, section 120(b)(ii)(B) (w.e.f. 14-08-2016).

6. Inserted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018)

7. Inserted by Act 17 of 2016, section 66 (w.e.f. 10-5-2013).

8. Inserted by Act 20 of 2015, section 82(a) (w.e.f. 14-5-2015).

9. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(c), for “one year” (w.e.f. 14-08-2016).

10. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(d)(i) for “levied or has been short levied”. (w.e.f. 14-08-2016).

11. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(d)(ii), for “so levied”(w.e.f. 14-08-2016).

12. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(e), for “duty has not been levied or has been short- levied” (w.e.f. 14-08-2016).

13. Substituted by Act 20 of 2015, section 82(b), for “twenty-five percent”. (w.e.f. 14-05-2015).

14. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(f), for “one year”(w.e.f. 14-08-2016).

15. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(g), for “one year”(w.e.f. 14-08-2016).

16. Inserted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018).

17. Omitted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018) the words “where it is possible to do so”.

18. Inserted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018).

19. Inserted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018).

20. Inserted by Customs (Amendment & Validation), 2011 (Act 14 of 2011), section 2(w.e.f. 16-9-2011).

21. Substituted by the Finance Act, 2016, Act 28 of 2016, section 120(h), for “not levied”(w.e.f. 14-08-2016).

22.  Inserted by Act 25 of 2016, section 82(c) w.e.f. 14-05-2016).

23. Inserted by Finance Act, 2018(13 of 2018), section 63 (w.e.f.29.03.2018).

24. Inserted by the The Finance Act, 2025 dated 29.03.2025  

25. Substituted by the Finance Act, 2026 dated 01.02.2026