Sections 125-127 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 125 lets the adjudicating officer give the owner an option to pay a fine in place of losing goods to confiscation. It sets a ceiling for the fine, adds duty and charges on top, and gives the owner one hundred and twenty days to pay. Sections 126 and 127 are short: confiscated goods vest in the Central Government, and a customs penalty or confiscation does not stop other punishment. This article follows the text on the CBIC portal updated to 30 March 2022.
Where confiscation is authorised, the adjudging officer may give an option to pay fine in lieu for prohibited goods and shall give it for other goods. The fine cannot exceed the market price less, for imported goods, the duty chargeable. The owner is also liable to duty and charges. If the fine is not paid within one hundred and twenty days from the date of the option given, the option becomes void unless an appeal is pending. Confiscated goods vest in the Central Government (section 126), and an award under the Act does not prevent other punishment (section 127).
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.
Section 125(1): the option to pay fine
The opening words apply "whenever confiscation of any goods is authorised by this Act". The officer adjudging the confiscation then gives the owner "an option to pay in lieu of confiscation such fine as the said officer thinks fit". Two classes of goods are treated differently:
| Goods | Officer's duty |
|---|---|
| Goods whose importation or exportation is prohibited under this Act or any other law for the time being in force | The officer may give the option |
| Any other goods | The officer shall give the option |
So for goods that are not prohibited, the option is not a favour but a requirement. For prohibited goods, it is a matter for the officer's discretion. The option goes to the owner of the goods "or, where such owner is not known, the person from whose possession or custody such goods have been seized". The footnote prints that these words were inserted by the Customs (Amendment) Act, 1985 (80 of 1985), with effect from 27.12.1985.
The grounds for confiscation of imported goods under section 111 are covered in our article on confiscation of goods under section 111; section 125 is what follows when an officer adjudges confiscation. If an order offering a fine has been passed in your case, our legal dispute resolution team can help you decide how to respond within the period.
The provisos
First proviso. Where the proceedings are deemed to be concluded under the proviso to section 28(2) or under clause (i) of section 28(6), "in respect of the goods which are not prohibited or restricted, no such fine shall be imposed". The words "no such fine shall be imposed" were substituted with effect from 1-8-2019 by section 78 of the Finance (No. 2) Act, 2019 (23 of 2019), as the footnote prints, and the first proviso itself was substituted for "Provided that" by section 95(i) of the Finance Act, 2018, with effect from 29-3-2018. For the section 28 provisions see our articles on section 28 and the notice for duty not levied and on the extended period of five years.
Second proviso. "Without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon." So the ceiling is the market price, reduced by the duty chargeable where the goods were imported. The proviso to section 115(2), on the fine for conveyances used for hire, is explained in our article on confiscation of conveyances. Section 125 prints no figure for "market price"; this article gives none.
Section 125(2): duty and charges on top
Where a fine in lieu of confiscation is imposed, the owner, or the person referred to in sub-section (1), "shall, in addition, be liable to any duty and charges payable in respect of such goods". The fine does not replace the duty. Example with invented names: Mehra Overseas is given an option to pay a fine for goods that are not prohibited. If it pays the fine, it is still liable to the duty and charges on those goods, which the order will also require it to pay.
Section 125(3): one hundred and twenty days
Sub-section (3) says that where the fine imposed under sub-section (1) "is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending." Three points:
- The period is one hundred and twenty days.
- It runs from the date of the option given, as the text says.
- A pending appeal against the order stops the option from becoming void. The text says "unless an appeal against such order is pending" and prints no more on how that works.
The Explanation deals with orders passed before the date on which the Finance Bill, 2018 received the assent of the President, where no appeal was pending on that date: the option may be exercised within one hundred and twenty days from the date of that assent. The text prints the word "date**" with two asterisks, but the footnotes in the copy consulted carry no matching note, so the date is not stated in the copy; this article gives none. Sub-section (3) and the Explanation were inserted by section 95(ii) of the Finance Act, 2018 (13 of 2018), with effect from 29-3-2018, per the footnote.
Section 126: vesting of confiscated goods
Section 126 has two sub-sections. Sub-section (1): "When any goods are confiscated under this Act, such goods shall thereupon vest in the Central Government." Sub-section (2): "The officer adjudging confiscation shall take and hold possession of the confiscated goods." The word "thereupon" ties the vesting to the confiscation. The section prints no further procedure for disposal.
Section 127: other punishments continue
Section 127 says that the award of any confiscation or penalty under the Act by an officer of customs "shall not prevent the infliction of any punishment to which the person affected thereby is liable under the provisions of Chapter XVI of this Act or under any other law". Chapter XVI contains the offences and prosecutions sections. So a customs penalty or confiscation is not a bar to a prosecution or other punishment under that Chapter or under any other law. This article does not name any other law.
How the three sections fit together
An order of confiscation follows the notice and hearing described in our articles on section 124 and sections 122, 122A and 123. Section 125 then offers the owner a way to keep the goods by paying a fine, section 126 provides for the goods if confiscation stands, and section 127 makes clear that other punishment remains possible. For the appeal path, see Customs appeal process: Commissioner (Appeals), CESTAT and the High Court.
Practical points
- Note the date of the option given and count one hundred and twenty days from it, taking the order's own date wording.
- If an appeal against the order is filed, keep proof that it is pending.
- Ask whether the goods are prohibited or not; for goods that are not prohibited the Act says the officer shall give the option.
- Budget for the fine and also for duty and charges.
Need help with an order offering a redemption fine?
The period to pay and the effect of an appeal are time-sensitive, and the order's wording on the date of the option matters. Our team can help you review the order, compare the fine with the ceiling in section 125 and plan the next step through legal dispute resolution for customs matters.
Key takeaways
- Section 125(1): the officer may give the option for prohibited goods and shall give it for other goods; the fine is fixed by the officer within the ceiling in the second proviso.
- The ceiling is the market price less, for imported goods, the duty chargeable.
- Duty and charges are payable in addition to the fine.
- The option becomes void after one hundred and twenty days from the date of the option, unless an appeal against the order is pending.
- Confiscated goods vest in the Central Government; customs awards do not prevent other punishment.
Read next
- Section 124: show cause notice before confiscation or penalty
- Section 127A: settlement of cases, definitions
- Section 115: confiscation of conveyances
- 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.