Sections 118-121 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.
Sections 118 to 121 are four short provisions that extend confiscation beyond the offending goods themselves. Section 118 reaches the package and the other goods in it, section 119 reaches goods used to conceal smuggled goods, section 120 reaches smuggled goods that have changed form or been mixed with others, and section 121 reaches the sale-proceeds. This article follows the text on the CBIC portal updated to 30 March 2022.
If goods in a package are liable to confiscation, the package and the other goods in it are also liable. Goods used for concealing smuggled goods are also liable, but "goods" here does not include a conveyance. Smuggled goods may be confiscated notwithstanding any change in form, and where they are mixed so they cannot be separated, the whole is liable, subject to a proviso for an owner without knowledge. Sale-proceeds of smuggled goods are liable to confiscation where the seller knew or had reason to believe the goods were smuggled.
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 are not in that copy; check any later change to these sections before acting.
How these sections sit with section 111
Section 111 lists the cases in which improperly imported goods are liable to confiscation; our article on confiscation of goods under section 111 covers it, and this article does not repeat it. Sections 118 to 121 widen the reach. They answer four questions: what about the package, what about goods used to hide other goods, what about goods that have been altered or mixed, and what about the money received on sale.
For importers, exporters and logistics teams, these sections matter at the point of a seizure: the officer may proceed against more than the single item in doubt. If you face such a notice, our legal dispute resolution team can help you read it and plan a reply.
Section 118: packages and their contents
Section 118 has two clauses.
- Clause (a), imports. Where any goods imported in a package are liable to confiscation, "the package and any other goods imported in that package shall also be liable to confiscation".
- Clause (b), exports. Where goods are brought in a package within the limits of a customs area for the purpose of exportation and are liable to confiscation, "the package and any other goods contained therein shall also be liable to confiscation".
The consequence is that one offending item in a carton can bring the carton and everything else in it within the confiscation power. The text says "liable to", so it creates liability, not an automatic order. Printing note: the text prints "withinthe" as one word in clause (b).
Example with invented names: Anaya Traders imports a carton holding 100 spare parts, among which a few items are prohibited. If those items are liable to confiscation, the carton and the other parts in it are also liable to confiscation under clause (a). Clause (b) works the same way for an export carton brought into a customs area.
Section 119: goods used for concealing smuggled goods
Section 119 says that "any goods used for concealing smuggled goods shall also be liable to confiscation". The Explanation limits it: "In this section, 'goods' does not include a conveyance used as a means of transport."
So a false-bottomed crate, a hollowed-out machine used to hide other goods, or packing material built to conceal is within the section. A vessel, aircraft or vehicle used as transport is outside section 119 because of the Explanation. Conveyances have their own section, covered in our article on section 115 and confiscation of conveyances.
Section 120: change in form and mixing
Section 120 has two sub-sections.
Sub-section (1). "Smuggled goods may be confiscated notwithstanding any change in their form." Melting, repacking, processing or cutting does not take the goods out of reach.
Sub-section (2). Where smuggled goods are mixed with other goods in such manner that they cannot be separated from the other goods, "the whole of the goods shall be liable to confiscation". The proviso then gives relief: where the owner of the goods proves that he had no knowledge or reason to believe that they included any smuggled goods, "only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation".
| Situation | Result under section 120 |
|---|---|
| Smuggled goods changed in form | May be confiscated notwithstanding the change |
| Mixed with other goods, cannot be separated | Whole of the goods liable |
| Same, and owner proves no knowledge or reason to believe | Only the part equal in value to the smuggled goods |
The burden under the proviso is on the owner: the words are "proves". The proviso asks for both "no knowledge" and no "reason to believe".
Example: Devika Bullion Ltd buys a lot of metal that has been blended with smuggled metal so the two cannot be separated. The whole lot is liable. If Devika proves it had no knowledge or reason to believe that smuggled metal was included, only a part equal to the value of the smuggled metal is liable.
Section 121: sale-proceeds
Section 121 says that "where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation." The test is the seller's knowledge or reason to believe at the time of the sale. The thing liable is money, the proceeds of the sale. The section does not say what happens to a seller who had no such knowledge, and this article does not fill that gap.
What comes after the liability
None of the four sections carries its own procedure. Chapter XIV requires adjudication under section 122 and notice under section 124 before an order of confiscation; see our articles on adjudication and burden of proof and the show cause notice. Where confiscation is authorised, the officer's power to give an option to pay a fine in lieu is in section 125, covered in the article on redemption fine and vesting. For penalties see Penalties under the Customs Act, sections 112 to 117.
Practical points
- Check every package before it goes to a customs area, since one offending item can bring the package and its other contents within section 118.
- Keep purchase records showing from whom and when you bought goods; the proviso to section 120(2) and section 121 both turn on knowledge or reason to believe.
- Where goods are blended or processed, keep batch records, since section 120 reaches goods that have changed form.
Need help with a notice about packages, mixed goods or sale proceeds?
Notices under these sections often depend on what the owner knew and what records exist, so the first step is a careful reading of the notice and your papers. Our team can help you prepare the reply through legal dispute resolution for customs matters and plan the hearing.
Key takeaways
- Section 118: the package and the other goods in it are liable when goods in a package are liable.
- Section 119: goods used to conceal smuggled goods are liable; a conveyance is outside this section.
- Section 120: change in form does not help; mixed goods are liable as a whole, except as the owner proves under the proviso.
- Section 121: sale-proceeds are liable where the seller knew or had reason to believe the goods were smuggled.
Read next
- Sections 116 and 117: penalty for not accounting for goods and the residual penalty
- Sections 122 and 123: adjudication and burden of proof
- Sections 125 to 127: redemption fine and vesting of goods
- Confiscation of goods under section 111
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.