Customs Audit Regulations 2018 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Customs Audit Regulations, 2018 tell importers, exporters, custodians and warehouse licensees what to expect when customs audits them under section 99A of the Customs Act, 1962: what records to keep, how an auditee is chosen, how the audit is run, how long it may take and what the penalty is for non-cooperation. They were made under section 157(k) read with section 99A and section 158(2)(ii), in supersession of the On-site Post Clearance Audit Regulations, 2011, except as respects things done before.
This article reads them as amended up to the CBIC text updated 24 May 2018 (no amending notification was found up to 3 October 2026). Later notifications should be checked, because this is the text as published.
An auditee must preserve and make available, in a timely manner, true and correct records for a minimum of five years. Selection is primarily based on risk evaluation. Customs may audit in its own office or, with not less than fifteen days' advance notice, at the auditee's premises, and must complete a premises audit within thirty days, extendable to sixty days by the Commissioner in writing. Objections must be shared before the report; contravention carries a penalty which may extend to fifty thousand rupees.
Commencement (regulation 1)
Regulation 1 names the regulations and brings them into force on the date of publication in the Official Gazette. The enabling provision for the audit itself is section 99A of the Customs Act.
Definitions (regulation 2)
| Term | What it covers |
|---|---|
| Audit | Examination or verification of any declaration, record, entry, document, import or export licence, authorisation, scrip, certificate, permission and similar, books of account, test or analysis reports and any other document relating to imported goods, export goods or dutiable goods. It may include inspection of sample and goods, if available, and, where necessary, drawing of samples |
| Auditee | A person subject to audit under section 99A, including an importer, exporter, custodian approved under section 45, licensee of a warehouse, and any other person concerned directly or indirectly in clearing, forwarding, stocking, carrying, selling or purchasing imported, export or dutiable goods |
| Audit report | The findings after the audit, with the objections raised by the proper officer and the auditee's explanation, if any |
| Books of account | Ledgers, day-books, cash books, account-books and other account-related records in written, printed or electronic form |
| Electronic records | Data or record stored in any form relevant for audit under section 99A |
| Premises | The registered office, branch office, warehouse, factory or any other premises where goods, books of account, records of transactions or related documents are ordinarily kept by the auditee |
The auditee definition is wide. It reaches not only importers and exporters but also a clearing agent, a transporter or a trader who handles the goods. Anyone in the chain may be an auditee.
The auditee's duties (regulation 3)
3(1) Preserve and produce. The auditee shall preserve and, on request by the proper officer, make available in a timely manner for audit true and correct information, records including electronic records, documents or accounts maintained in compliance with the Act, rules, regulations or any other law, for a minimum period of five years in relation to imported goods, export goods or dutiable goods.
3(2) Assist and do not obstruct. The auditee shall render assistance to the proper officer and his team and shall in no case refuse or obstruct them in the discharge of their official duty.
If your business has to preserve records under several laws, the longest period governs your records policy; this regulation sets five years as the minimum for the audit purpose. A related information-return obligation is explained in the sister article on the Customs Furnishing of Information Rules, 2017.
Selection (regulation 4)
A records review before an audit starts is often the most useful preparation; our compliance documentation team can run one.
The selection of the auditee, or of import or export declarations, for audit is primarily based on risk evaluation through appropriate selectivity criteria. The regulation does not publish the criteria.
Conducting the audit (regulation 5)
| Sub-regulation | What the proper officer may or must do |
|---|---|
| 5(1) | Conduct the audit either in his office or, in certain cases, at the auditee's premises |
| 5(2) | Where considered necessary, request the auditee to furnish documents, information or record, including electronic record, relevant to the audit |
| 5(3) | Give not less than fifteen days' advance notice to conduct audit at the auditee's premises |
| 5(4) | Where considered necessary, inspect the goods at the premises or ask the auditee to produce a sample, if available |
| 5(5) | Inform the auditee of the objections, if any, before preparing the audit report, to give an opportunity to offer clarifications with supporting documents |
| 5(6) | If the auditee agrees with the findings, he may make voluntary payments of duty, interest or other sums due, in part or in full, and the officer records them in the audit report |
| 5(7) | Where the officer has asked for information, document, record or sample, it is mandatory to inform the auditee of the outcome of the audit |
| 5(8) | Complete a premises audit within thirty days from the date of starting; the jurisdictional Commissioner may extend to sixty days by an order in writing |
Example: Chambal Auto Parts Private Limited receives a notice that officers will audit its factory records. The notice must give not less than fifteen days. Officers arrive on the notified date, the audit is expected to be completed within thirty days of that start, and the Commissioner may extend to sixty days by written order. Before the report is made, the company is told of the objections and may respond with documents. If it accepts a finding that some duty was short paid, it can pay voluntarily and the payment is recorded in the report.
The thirty-day and sixty-day periods apply to audits conducted at the auditee's premises. The regulation sets no time limit for an audit conducted in the officer's own office.
Assistance of professionals (regulation 6)
If the proper officer, having regard to the nature and complexity of the audit, thinks it must be done with the assistance of a professional such as a Chartered Accountant, Cost Accountant or an expert in computer science or information technology, he may do so with the previous approval of the Principal Commissioner or Commissioner of Customs. The regulation lets the department bring in expertise; it is not a right of the auditee to bring its own professional, though nothing in the regulations stops an auditee from taking advice on its response.
Penalty (regulation 7)
An auditee who contravenes any provision, abets such contravention or fails to comply with any provision with which it was his duty to comply is liable to a penalty which may extend to fifty thousand rupees. Failing to keep records for five years, refusing to produce them or obstructing officers are the obvious risks.
Need help preparing for a customs audit?
If you have received an audit communication or want a records review before one arrives, our compliance documentation team can map your five-year record trail and prepare the explanations and supporting papers.
Key takeaways
- Keep true and correct records, including electronic records, for at least five years.
- Selection is primarily risk-based.
- Premises audits need not less than fifteen days' notice, and must be completed within thirty days (extendable to sixty days by the Commissioner in writing).
- Objections must be shared before the audit report; voluntary payment is recorded in the report.
- Where information was sought, the outcome must be communicated.
- The penalty may extend to fifty thousand rupees.
Read next
- Pre-Notice Consultation Regulations, 2018 and Customs (Supplementary Notice) Regulations, 2019
- Section 99A of the Customs Act: customs audit of importers and exporters
- Customs Furnishing of Information Rules, 2017
- Regulations 17-20 of the MOOWR (no. 2) Regulations, 2019: records, audit, penalty
Disclaimer: Based on the customs regulations named above as published on the CBIC Tax Information Portal or in the Gazette and, for sets amended since 2023, the amending notifications (read through a TaxClue consolidated reading text; no official consolidated text exists), as consulted on 3 October 2026. Later notifications, fees and the Customs Act, 1962 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.