Section 11 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.
Once a penalty is imposed under the Act and not paid, section 11(5) to (9) says how it can be recovered, what happens to the Importer-exporter Code, and when goods and conveyances can be confiscated and released. All these sub-sections come from the substitution of section 11 in 2010. This article is written from the 2010 text, as per the Act as enacted in 1992 read with the 2010 Amendment Act.
An unpaid penalty can be recovered by deduction from money owed to the person, through customs officers, by detaining or selling goods, and, failing those, through the Collector as an arrear of land revenue or by detaining and selling property. The Code may be suspended until the penalty is paid. Goods, with their packing, and conveyances are liable to confiscation on contravention, and may be released on redemption charges equal to market value.
What the 1992 section said
In 1992 the recovery sub-section said that a penalty not paid "may ... be recovered as an arrear of land revenue" and that the Code could be suspended until the penalty was paid. Confiscation and release were in two further sub-sections. The 2010 Act replaced these with the longer set below. The 2010 Act was brought into force by notification; the date is not in the sources consulted. If a recovery step has already been taken against you, an early legal consultation can help you see which mode is being used.
Section 11(5): the modes of recovery
A penalty "may, if it is not paid by any person, be recovered by any one or more of the following modes". The list is in two layers: clauses (a) to (c) first, and clause (d) only "if the amount cannot be recovered" by those.
| Clause | Mode | Key words |
|---|---|---|
| (a) | Deduction by the Director General's own officers | The Director General may deduct, or require any officer subordinate to deduct, the amount from any money owing to the person which is under the control of that officer |
| (b) | Deduction by customs officers | The Director General may require any officer of customs to deduct the amount from money owing to the person under that officer's control, as if payable under the Customs Act, 1962 |
| (c) | Detaining or selling goods | The Director General may require the Assistant Commissioner or Deputy Commissioner of Customs or any other customs officer to recover by detaining or selling goods (including goods connected with services or technology) belonging to the person under that officer's control, as if payable under the Customs Act, 1962 |
| (d)(i) | Collector's certificate | The Director General or an authorised officer sends a signed certificate to the Collector of the District where the person owns property, resides or carries on business, and the Collector recovers it "as if it were an arrear of land revenue" |
| (d)(ii) | Detention and sale of property | The Director General or authorised officer (including a customs officer exercising Customs Act powers), in accordance with rules, detains any movable or immovable property of the person until the amount is paid; if any part of the amount or the cost of keeping remains unpaid for thirty days after the distress, the property may be sold, costs recovered and the surplus returned |
The gazette prints "Deputy Commissioner or Customs" in clause (c) for "Deputy Commissioner of Customs". The Customs Act, 1962 is another Act; the reader should check the current law for the provisions applied "as if" the amount were payable under it. Our introduction to the Customs Act is the place to start.
Example: Bharat Metals Ltd has a penalty of Rs 5,00,000 (an invented figure) outstanding. Under clause (a) the Director General may deduct from any money owing to Bharat Metals that is under the control of a subordinate officer. If money sits with a customs officer, clause (b) applies. If Bharat Metals has goods in customs custody, clause (c) allows detention or sale. Only if those fail does clause (d) bring in the Collector or the sale of property after thirty days.
Section 11(6): bonds and other instruments
Where "the terms of any bond or other instrument executed under this Act or any rules made thereunder" say that an amount due under it may be recovered in the manner of sub-section (5), the amount "may, without prejudice to any other mode of recovery, be recovered" under that sub-section. A bond given to secure compliance with a licence condition (see rule 6) can thus be enforced this way if it says so.
Section 11(7): suspension of the Code
"Without prejudice to the provisions contained in this section, the Importer-Exporter Code Number of any person who fails to pay any penalty imposed under this Act, may be suspended by the Adjudicating Authority till the penalty is paid or recovered, as the case may be." The gazette prints "without" with a small initial letter. This is a separate route from the suspension in section 8; see our article on section 8. Non-payment can therefore stop trading as well as lead to recovery.
Section 11(8): confiscation
"Where any contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy has been, is being, or is attempted to be, made", the goods (including goods connected with services or technology), "together with any package, covering or receptacle and any conveyances", shall, "subject to such conditions and requirements as may be prescribed, be liable to confiscation by the Adjudicating Authority".
Three points. Confiscation covers goods, their packing and conveyances. It covers contraventions that "have been", "are being" or "are attempted", so a stopped shipment can be confiscated. And the word is "liable": confiscation is a power exercised by the Adjudicating Authority after the notice required by section 14, not automatic. The conditions are in rules 17 and 18; see our article on rules 17 and 18.
Section 11(9): release on redemption
Goods or a conveyance confiscated "may be released by the Adjudicating Authority, in such manner and subject to such conditions as may be prescribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be".
Release is discretionary ("may"), subject to prescribed conditions, and the redemption charge is fixed by reference to market value. Section 15 treats redemption charges like a penalty for appeal: an appeal against an order imposing a penalty or redemption charges is not entertained unless the amount is deposited, subject to waiver for undue hardship; see section 15.
How the pieces fit
| Stage | Provision |
|---|---|
| Notice and hearing | Section 14 |
| Penalty fixed | Section 11(2) or (3) |
| Unpaid penalty recovered | Section 11(5) and (6) |
| Code suspended until payment | Section 11(7) |
| Goods and conveyances confiscated | Section 11(8) |
| Release on redemption charges | Section 11(9) |
| Conditions for confiscation and release | Section 19(2)(h) and (i); rules 17 and 18 |
Need help with recovery, confiscation or redemption?
If goods have been detained or a recovery certificate has arrived, speed and the right paperwork matter. Our legal consultation service can help you review the order, the redemption position and any appeal. Later amendments to the Act, the Rules and the Policy should be checked.
Key takeaways
- An unpaid penalty can be recovered by deduction, through customs officers, by detaining or selling goods, and then through the Collector or by detaining and selling property.
- Bonds can carry the same recovery route if they say so.
- The Adjudicating Authority may suspend the Code until the penalty is paid or recovered.
- Goods, packing and conveyances are liable to confiscation for contravention, including attempts.
- Release on redemption charges equals market value; appeal against such charges needs a deposit, subject to waiver.
Read next
- Section 11(1) to (4): contravention, penalty and settlement
- Rules 17 and 18: confiscation and redemption of goods and conveyances
- Section 15: appeal against adjudication orders
- Confiscation of goods under the Customs Act, section 111
Disclaimer: Based on the Foreign Trade (Development and Regulation) Act, 1992 as enacted read with the Amendment Act of 2010, and on the Foreign Trade (Regulation) Rules, 1993 as notified read with the Amendment Rules of 2015, as consulted on 2 October 2026. Later amendments, the current Foreign Trade Policy and the Handbook of Procedures should be checked. This article is general information, not legal advice; check the official text before acting.