Section 18 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 18 lets the proper officer assess duty provisionally, on the importer's or exporter's furnishing security, when the final figure cannot yet be fixed. Once the duty is finally assessed, the amount paid is adjusted, and the sub-sections on interest and refund say who pays what.
This article follows the text on the CBIC portal updated to 30 March 2022 (the Act as amended up to the Finance Act, 2022), and then adds the changes made to this section by the Finance Act, 2025. The Finance Act, 2023 could not be checked in full; see the section on later Finance Acts below.
In four situations the proper officer may assess the duty provisionally, if the importer or exporter furnishes such security as the officer deems fit for the deficiency, if any, between the provisional and final duty. Since the Finance Act, 2025 the proper officer must finalise the provisional assessment within two years (extendable by one more year for sufficient cause, with five stated situations in which the clock starts only when the reason ceases). After final assessment or re-assessment, the amount paid is adjusted: the importer or exporter pays the shortfall or gets a refund. Interest runs on a shortfall from the first day of the month of provisional assessment, and on an unrefunded amount after three months.
Sub-section (1): when provisional assessment is available
Sub-section (1) applies notwithstanding anything in the Act, but without prejudice to sections 46 and 50. The proper officer may assess the duty leviable provisionally in any of four cases. (As printed in the CBIC copy the words were "may direct that the duty leviable on such goods, be assessed provisionally"; the Finance Act, 2025 substituted "may assess the duty leviable on such goods, provisionally".)
| Clause | Situation |
|---|---|
| (a) | The importer or exporter is unable to make self-assessment under section 17(1) and makes a request in writing to the proper officer for assessment |
| (b) | The proper officer deems it necessary to subject the imported or export goods to any chemical or other test |
| (c) | The importer or exporter has produced all the necessary documents and furnished full information, but the proper officer deems it necessary to make further enquiry |
| (d) | Necessary documents have not been produced or information has not been furnished, and the proper officer deems it necessary to make further enquiry |
Provisional assessment is available only if the importer or exporter furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed and the duty provisionally assessed. So provisional assessment is a trade: the goods can move on a provisional figure against security for the possible difference.
The footnotes record that sub-section (1) was substituted by Act 8 of 2011 with effect from 8 April 2011, and that the words "and section 50" were inserted by section 61 of the Finance Act, 2018 (13 of 2018) with effect from 29 March 2018. The older wording is not the rule.
If you are weighing whether to ask for provisional assessment, or you have been placed on it and want to understand your security, a legal consultation can help you work through the position. Our post on provisional assessment under customs covers the practical side.
Sub-section (1A): documents and finalisation
Where, pursuant to the provisional assessment, any document or information is required by the proper officer for final assessment, the importer or exporter shall submit it within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner, as may be prescribed. The footnote shows this sub-section was inserted by the Finance Act, 2018 with effect from 29 March 2018.
The Finance Act, 2025 changed the last words: for "within such time and in such manner" it substituted "in such manner". So the manner of finalisation is still prescribed, but the time for the officer to finalise is now fixed in the Act itself, in the new sub-section (1B). The Customs (Finalisation of Provisional Assessment) Regulations, 2018 are the regulations on the subject; the copy consulted is dated 4 August 2018 and says it is made under section 157 read with section 18. Its detail is not set out here, and it was written before the 2025 change, so check it against the amended section.
Sub-sections (1B) and (1C): two years to finalise, and when the clock waits
Sub-section (1B), inserted by the Finance Act, 2025, says the proper officer shall finalise the duty provisionally assessed within two years from the date of the assessment under sub-section (1). Two provisos follow:
- The Principal Commissioner of Customs or the Commissioner of Customs may, on sufficient cause being shown and for reasons to be recorded in writing, extend the period by a further one year.
- For a provisional assessment that was pending under sub-section (1) on the date the Finance Bill, 2025 received the assent of the President, the two years are reckoned from that assent date. The gazette prints the Act's assent date as 29 March 2025.
Sub-section (1C) deals with cases where the proper officer cannot assess finally within that time because:
| Clause | Reason |
|---|---|
| (a) | Information is being sought from an authority outside India through a legal process |
| (b) | An appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal, the High Court or the Supreme Court |
| (c) | An interim order of stay has been issued by the Appellate Tribunal, the High Court or the Supreme Court |
| (d) | The Board has, in a similar matter, issued a specific direction or order to keep the matter pending |
| (e) | The importer or exporter has a pending application before the Settlement Commission or the Interim Board |
In those cases the proper officer must inform the importer or exporter of the reason for non-finalisation. The time in sub-section (1B) then applies not from the date of the provisional assessment but from the date when the reason ceases to exist. Clause (e) ties this section to the settlement scheme, which now works through the Interim Board; see our article on section 127A.
A related new section, 18A, lets an importer or exporter revise an entry after clearance. One of its bars is that a refund cannot be sought that way where the officer has assessed the duty under section 18; see our article on section 18A, voluntary revision of entry after clearance.
Sub-section (2): adjustment after final assessment
When the duty is assessed finally or re-assessed by the proper officer, then:
- (a) Goods cleared for home consumption or exportation: the amount paid is adjusted against the duty finally assessed or re-assessed. If the amount paid falls short of, or is in excess of, that duty, the importer or exporter pays the deficiency or is entitled to a refund, as the case may be.
- (b) Warehoused goods: the proper officer may, where the duty finally assessed or re-assessed is in excess of the duty provisionally assessed, require the importer to execute a bond binding himself in a sum equal to twice the amount of the excess duty.
The words "or re-assessed" were added by Act 8 of 2011, as the footnotes show. The bond in clause (b) is a protection for the revenue where goods remain in a warehouse; it is for twice the excess, not the whole duty.
Sub-section (3): interest on the shortfall
The importer or exporter is liable to pay interest on any amount payable to the Central Government consequent to the final assessment order or re-assessment order under sub-section (2), at the rate fixed by the Central Government under section 28AA, from the first day of the month in which the duty is provisionally assessed till the date of payment. The footnotes show the sub-section was inserted by Act 29 of 2006 with effect from 13 July 2006, and that the reference to section 28AA was substituted by the Finance Act, 2018 for "28AB", with the footnote saying it is deemed to have been substituted retrospectively from 8 April 2011. The rate itself is fixed by notification within the range printed in section 28AA; see our article on section 28AA.
Sub-section (4): interest on delayed refund
The sub-section opens, in the copy, with "Subject the sub-section (5)" (the word "to" is missing); read it as "subject to sub-section (5)". If any refundable amount referred to in clause (a) of sub-section (2) is not refunded within three months from the date of assessment of duty finally or re-assessment of duty, as the case may be, interest is payable on the un-refunded amount at the rate fixed by the Central Government under section 27A, till the date of refund. Our article on section 27A gives the range the Act prints.
Sub-section (5): who gets the refund
The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or exporter if the amount is relatable to:
- duty (and interest on it) paid by the importer or exporter if he had not passed on the incidence to any other person;
- duty (and interest on it) on imports made by an individual for his personal use;
- duty (and interest on it) borne by the buyer, if he had not passed on the incidence to any other person;
- the export duty specified in section 26;
- drawback of duty payable under sections 74 and 75.
If none of these applies, the refundable amount goes to the Fund referred to in the Act. The five categories echo the ones in section 27, which our article on section 27 explains.
A worked example with invented names
Surya Pharma Pvt. Ltd. imports a chemical, and the proper officer wants a laboratory test before the duty can be settled. Under clause (b) of sub-section (1), the officer directs provisional assessment if Surya furnishes security that the officer deems fit. The goods are cleared on the provisional duty. Later the duty is finally assessed at a higher figure; Surya pays the shortfall and, under sub-section (3), interest at the rate fixed under section 28AA from the first day of the month in which provisional assessment was made. Had the final duty been lower and the refund not been paid within three months, interest at the section 27A rate would run on the unrefunded amount.
Changes made by later Finance Acts
| Finance Act | What changed | What the gazette prints about commencement |
|---|---|---|
| Finance Act, 2025 (No. 7 of 2025), section 92(a) and (b) | Sub-section (1): "may direct that the duty ... be assessed provisionally" becomes "may assess the duty ... provisionally"; sub-section (1A): "within such time and in such manner" becomes "in such manner" | No date is printed in the clause. The Act received the assent of the President on 29 March 2025 |
| Finance Act, 2025, section 92(c) | New sub-sections (1B) (finalise within two years; one further year on sufficient cause) and (1C) (five reasons that postpone the start of the period) | No date in the clause; the second proviso to (1B) uses the date the Finance Bill, 2025 received assent. Assent: 29 March 2025 |
The Finance Act, 2023 amendments to the Customs Act could not be checked in full, because only an extract of that Act was available. Check the current text on the CBIC portal before relying on any clause of this section.
Need help with a provisional assessment?
Provisional assessment ties up security and can run for some time before it is finalised; since the Finance Act, 2025 the officer has two years (plus a possible one more) to finalise it. If you want to plan the security, the documents and the finalisation, our legal consultation service can help.
Key takeaways
- The proper officer may assess provisionally in four cases, (a) to (d), if security is furnished.
- Since the Finance Act, 2025 the proper officer must finalise a provisional assessment within two years, extendable by one year by the Principal Commissioner or Commissioner for reasons recorded in writing (sub-section (1B)).
- Under sub-section (1C) the period starts only when the reason ceases, where information is sought abroad, a similar appeal or a stay is pending, the Board has directed the matter to be kept pending, or a settlement application is pending.
- The manner of finalisation, and the time for submitting documents, are still prescribed by regulations.
- On final assessment the amount paid is adjusted: pay the shortfall or receive the refund; for warehoused goods a bond of twice the excess may be required.
- Interest on a shortfall runs from the first day of the month of provisional assessment at the section 28AA rate.
- An unrefunded amount attracts interest after three months at the section 27A rate.
- The copy prints sub-section (4) with a missing word ("Subject the sub-section (5)").
Read next
- Section 17: self-assessment, verification and re-assessment of duty
- Section 27A: interest on delayed refunds
- Section 28AA: interest on delayed payment of duty
- Provisional Assessment Under Customs: When and How
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. The changes made by the Finance Act, 2025 are added from its gazette text; the Finance Act, 2023 could not be checked in full, and the current rules, regulations and notifications should be checked. This article is general information, not legal advice; check the official text before acting.