Section 112 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.
Section 112 imposes a penalty on a person whose act or omission makes imported goods liable to confiscation under section 111, or who deals with such goods knowing or having reason to believe they are liable to confiscation. It sets five penalty heads, depending on whether the goods are prohibited, dutiable or misdeclared in value, each with a ceiling and a five-thousand-rupee floor in the comparison, and a reduced penalty of twenty-five per cent where the duty and interest are paid within thirty days. This article explains the section as printed in the text on the CBIC portal updated to 30 March 2022.
A person is liable to a penalty if (a) he does or omits any act that would make goods liable to confiscation under section 111, or abets it, or (b) he acquires possession of or deals in any way with goods he knows or has reason to believe are liable to confiscation under section 111. The penalty depends on the goods: prohibited goods (up to the value of the goods or five thousand rupees, whichever is greater), dutiable goods (up to ten per cent of the duty sought to be evaded or five thousand rupees, whichever is higher), goods with a higher declared value (up to the difference or five thousand rupees, whichever is greater), and combinations. If duty and interest are paid within thirty days of the order, the penalty is twenty-five per cent of that determined.
The text consulted is the CBIC copy last updated on 30 March 2022 (the Act as amended up to the Finance Act, 2022). Later Finance Acts may have changed this section, so check it before acting.
Where section 112 fits
Section 112 opens the penalty part of Chapter XIV, "Confiscation of goods and conveyances and imposition of penalties". It works with section 111, which lists the improperly imported goods liable to confiscation; see our post on confiscation of goods under Section 111. The export-side counterparts are section 113 and section 114. For an overview of the whole run of penalty sections, see our post on penalties under sections 112 to 117.
If a notice under section 112 has been received, our legal dispute resolution team can help you prepare a reply.
Who is liable: clauses (a) and (b)
| Clause | Person liable |
|---|---|
| (a) | Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act |
| (b) | Any person who acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 |
Clause (a) turns on the act or omission and covers abetment. Clause (b) turns on dealing with the goods plus knowledge or reason to believe. The text does not say that the person must be the owner or the importer. This article does not re-explain the clauses of section 111.
The five penalty heads
The person "shall be liable" as follows.
| Head | Goods | Penalty as printed |
|---|---|---|
| (i) | Goods in respect of which any prohibition is in force under the Act or any other law | A penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater |
| (ii) | Dutiable goods, other than prohibited goods, subject to the provisions of section 114A | A penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher |
| (iii) | Goods for which the declared value (the value stated in the entry, or in the declaration under section 77 for baggage) is higher than the value thereof | A penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater |
| (iv) | Goods falling both under (i) and (iii) | A penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest |
| (v) | Goods falling both under (ii) and (iii) | A penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest |
A few points on reading the table.
- Ceilings, not fixed amounts. Each head says "not exceeding". The adjudicating authority fixes the amount within the ceiling.
- Five thousand rupees. In each head it appears as one of the figures from which the greater, higher or highest is taken.
- Head (ii) is "subject to the provisions of section 114A". That section covers short-levy or non-levy of duty by collusion or wilful mis-statement or suppression of facts, and is explained in section 114A.
- Heads (iv) and (v) deal with goods caught by two heads at once.
The footnotes show that head (i) was substituted by the Finance Act, 2001 (14 of 2001) with effect from 11.05.2001, head (ii) by the Finance Act, 2015 (20 of 2015) with effect from 14.05.2015, head (iii) was inserted in 1973, and heads (iii) to (v) were amended in 2001. The earlier wording is not the rule and is not explained here. The footnote marks for the amounts are attached to the words "not exceeding", as printed.
The proviso: twenty-five per cent where duty is paid in thirty days
Under head (ii) the proviso says that where the duty as determined under sub-section (8) of section 28 and the interest payable under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the penalty liable under the section shall be twenty-five per cent. of the penalty so determined.
| Element | Text |
|---|---|
| What must be paid | The duty determined under section 28(8) and the interest payable under section 28AA |
| Within what period | Thirty days from the date of communication of the order of the proper officer determining the duty |
| Result | The penalty payable is twenty-five per cent of the penalty so determined |
The proviso is attached to head (ii). The text does not say that it reaches heads (i), (iii), (iv) or (v). The rate of interest under section 28AA is outside this article.
Example 1 (head (ii)). Orchid Electronics Pvt Ltd imports dutiable goods and, on the proper officer's determination, duty has been short paid. If the penalty under head (ii) is determined and the company pays the duty and the interest within thirty days from the date of communication of the order determining the duty, the penalty payable becomes twenty-five per cent of the penalty determined.
Example 2 (head (iii)). Zenith Traders declares goods at a value higher than their actual value in the entry. Head (iii) provides for a penalty not exceeding the difference between the declared value and the value thereof, or five thousand rupees, whichever is the greater.
How section 112 relates to other penalty sections
Two cross-references are in the text consulted. Head (ii) is "subject to the provisions of section 114A". And section 114A itself says that where a penalty has been levied under it, no penalty shall be levied under section 112 or section 114. So the two cannot both apply to the same case. The wider picture of penalties for false documents and similar conduct is in section 114AA.
What the section does not say
- It does not say how the value of the goods or the "value thereof" is determined; the valuation provisions apply.
- It does not say that the penalty is mandatory in any amount: each head is a ceiling.
- It does not set out the procedure for imposing a penalty; the adjudication provisions apply.
- It does not carry the reduced-penalty proviso into heads other than (ii).
Practical points
- Identify the head. Whether the goods are prohibited, dutiable, misdeclared in value, or a combination decides the ceiling.
- Read the declared value. Head (iii) compares the declared value with the value; keep valuation papers ready.
- Watch the thirty-day window. The reduced penalty under the proviso depends on payment within thirty days from the date of communication of the order.
- Check section 114A. Head (ii) is subject to it, and section 114A bars a section 112 penalty where it applies.
- Remember clause (b). Even persons who only deal with goods, knowing or having reason to believe they are liable to confiscation, can be liable.
Need help with a penalty notice?
A section 112 penalty depends on the head, the ceiling and the thirty-day window. Our team can help you read the notice against the text and plan a reply. See our legal dispute resolution page.
Key takeaways
- Section 112 penalises acts or omissions that make goods liable to confiscation under section 111, abetment, and knowing dealing with such goods.
- Penalty depends on the goods: prohibited, dutiable other than prohibited, goods with a declared value higher than the value, or combinations.
- Each head sets a ceiling, with five thousand rupees as one of the figures compared.
- Under head (ii), payment of duty and interest within thirty days of the order reduces the penalty to twenty-five per cent of that determined.
- Head (ii) is subject to section 114A.
- Later Finance Acts may have changed this section; check before acting.
Read next
- Section 113: confiscation of goods attempted to be improperly exported
- Section 114: penalty for attempt to export goods improperly
- Section 114A: penalty for short-levy or non-levy of duty
- Penalties under the Customs Act: sections 112 to 117
Disclaimer: Based on the Customs Act, 1962 as published on the CBIC Tax Information Portal, updated to 30 March 2022 (amended up to the Finance Act, 2022), as consulted on 2 October 2026. Finance Acts of 2023 and later, and the current rules, regulations and notifications, should be checked. This article is general information, not legal advice; check the official text before acting.