Section 28 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.
Sub-section (4) of section 28 lets the proper officer go back five years, instead of two, where duty was not levied, not paid, short-levied, short-paid or erroneously refunded by reason of collusion, wilful mis-statement or suppression of facts. This article covers sub-sections (4), (5), (6), (10A), (10B) and (11) and Explanations 2 to 4. The ordinary two-year case is in our companion article on the show cause notice.
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 change made to sub-section (6)(i) by the Finance Act, 2026. The Finance Act, 2023 could not be checked in full; see the section on later Finance Acts below.
Where the cause is collusion, wilful mis-statement or suppression of facts by the importer, exporter, agent or employee, the proper officer must serve notice within five years from the relevant date. A person served may pay the duty, interest and a penalty equal to fifteen per cent of the duty within thirty days. Since the Finance Act, 2026, the penalty so paid, on determination under sub-section (6), is also deemed to be a charge for non-payment of duty. If a notice under sub-section (4) is held not sustainable because those charges are not established, it is treated as issued under sub-section (1) and the duty and interest are computed accordingly.
Sub-section (4): the five-year notice
Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest requiring him to show cause why he should not pay the amount specified in the notice.
Three features. First, the cause is specific: collusion, wilful mis-statement or suppression of facts, each listed separately. Second, the act must be by the importer or exporter, or an agent or employee of either, so the sub-section reaches conduct by staff and agents. Third, the relevant date is the one in Explanation 1 of the section, which our companion article sets out.
If you face a five-year notice, the question of whether the allegation of collusion, mis-statement or suppression can be sustained often decides the case. A dispute resolution consultation can help you test that before you reply.
| Point | Ordinary case, sub-section (1) | Extended case, sub-section (4) |
|---|---|---|
| Cause | Any reason other than collusion, wilful mis-statement or suppression of facts | Collusion, wilful mis-statement or suppression of facts |
| Notice within | Two years from the relevant date | Five years from the relevant date |
| Time to decide | Six months from the date of notice | One year from the date of notice |
| Payment option within thirty days | Duty and interest; no penalty | Duty, interest and penalty equal to fifteen per cent |
Sub-section (5): paying within thirty days
A person to whom a notice has been served under sub-section (4) may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty equal to fifteen per cent of the duty specified in the notice or the duty so accepted by that person, within thirty days of the receipt of the notice, and inform the proper officer of the payment in writing.
The penalty base is "the duty specified in the notice or the duty so accepted by that person", so a person who accepts only part of the duty pays fifteen per cent on the accepted portion. The footnote shows the figure "fifteen per cent" was substituted by section 82(b) of the Finance Act, 2015 (20 of 2015) with effect from 14 May 2015. The interest follows section 28AA; see our article on section 28AA.
Sub-section (6): what the payment does
Where the importer, exporter, agent or employee has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest, and on determination, if he is of the opinion:
- (i) that the duty with interest and penalty has been paid in full, the proceedings in respect of that person and the other persons to whom notice is served under sub-section (1) or (4) shall, without prejudice to sections 135, 135A and 140, be deemed to be conclusive as to the matters stated therein and the penalty so paid under sub-section (5), on determination under this sub-section, shall also be deemed to be a charge for non-payment of duty (the words in bold were added by the Finance Act, 2026, section 147); or
- (ii) that the amount paid falls short of the amount actually payable, the proper officer shall issue the notice under clause (a) of sub-section (1) for the shortfall, and the period of two years is computed from the date of receipt of information under sub-section (5).
The words "without prejudice to sections 135, 135A and 140" keep those provisions alive even where the proceedings are deemed conclusive; this article does not describe them. The Finance Act, 2026 addition means the fifteen per cent penalty paid under sub-section (5) is not treated as separate from the duty case: on determination it is deemed to be a charge for non-payment of duty. The clause does not say what follows from that label in other provisions, so read it with the provision you are dealing with.
Sub-section (10A): refund modified on appeal
Notwithstanding anything in the Act, where an order for refund under sub-section (2) of section 27 is modified in any appeal and the amount of refund so determined is less than the amount refunded, the excess amount so refunded shall be recovered along with interest thereon at the rate fixed by the Central Government under section 28AA, from the date of refund up to the date of recovery, as a sum due to the Government. For the refund provision, see our article on section 27.
Sub-section (10B): the fallback
A notice issued under sub-section (4) shall be deemed to have been issued under sub-section (1), if the notice demanding duty is held not sustainable in any proceeding under the Act, including at any stage of appeal, for the reason that the charges of collusion or any wilful mis-statement or suppression of facts to evade duty have not been established against the person to whom the notice was issued, and the amount of duty and the interest thereon shall be computed accordingly.
This is a safety net for the department, not for the importer. Even if the extended-period charge fails, the notice is treated as one under sub-section (1), and the amount is recomputed. How that interacts with the two-year period in sub-section (1)(a) is not spelled out in the text, so a notice that is outside two years but inside five should be reviewed with care. Sub-sections (10A) and (10B) were inserted by the Finance Act, 2018 (13 of 2018) with effect from 29 March 2018.
Sub-section (11): officers appointed before 6 July 2011
Notwithstanding anything to the contrary in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section. The footnote shows it was inserted by the Customs (Amendment and Validation) Act, 2011 (14 of 2011), section 2, with effect from 16 September 2011. It is a validating provision for past acts.
Explanations 2 to 4
- Explanation 2: any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 received the assent of the President continues to be governed by section 28 as it stood immediately before that assent.
- Explanation 3: proceedings where a notice under sub-section (1) or (4) had been issued but no order under sub-section (8) had been passed before the date on which the Finance Bill, 2015 received assent, shall, without prejudice to sections 135, 135A and 140, be deemed to be concluded if payment of duty, interest and penalty under the proviso to sub-section (2) or under sub-section (5) is made in full within thirty days from that assent. This was inserted by the Finance Act, 2015.
- Explanation 4: in cases where notice was issued for non-levy, short-levy, non-payment, short payment or erroneous refund before the 29th day of March, 2018, being the date of commencement of the Finance Act, 2018, the notice continues to be governed by section 28 as it stood immediately before that date. The copy prints "(13 of 2018)" after the date rather than after the Act, which is a printing slip. The footnote shows Explanation 4 was substituted with effect from 29 March 2020 by section 108 of the Finance Act, 2020 (12 of 2020).
These Explanations are transitional rules for older cases. They matter only where a notice dates from before those cut-off dates.
A worked example with invented names
A proper officer alleges that Trident Overseas Pvt. Ltd. and its customs agent mis-described a product in a bill of entry, resulting in short-payment of duty. The officer serves notice under sub-section (4) within five years from the relevant date. Within thirty days, Trident pays part of the duty it accepts, the interest under section 28AA on it, and a penalty of fifteen per cent of the accepted duty, and informs the officer in writing. If the officer finds the payment complete, the proceedings are deemed conclusive. If the officer finds a shortfall, a fresh notice under sub-section (1)(a) can issue for the shortfall, with the two-year period running from the date the information was received. If Trident instead contests, and the final authority holds that suppression is not established, sub-section (10B) treats the notice as one under sub-section (1) and the duty and interest are computed accordingly.
Changes made by later Finance Acts
| Finance Act | What changed | What the gazette prints about commencement |
|---|---|---|
| Finance Act, 2026 (No. 4 of 2026), section 147 | Sub-section (6), clause (i): after "conclusive as to the matters stated therein" the words "and penalty so paid under sub-section (5), on determination under this sub-section, shall also be deemed to be a charge for non-payment of duty" are added | No date is printed in the clause. The Act received the assent of the President on 30 March 2026 |
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 an extended period notice?
An allegation of collusion or suppression changes the stakes: five years of duty, interest and a possible penalty. Our dispute resolution team can help you assess the allegation, the thirty-day payment option and your reply.
Key takeaways
- The notice period is five years from the relevant date where duty is affected by collusion, wilful mis-statement or suppression of facts by the importer, exporter, agent or employee.
- Within thirty days, the person can pay duty, interest and a penalty of fifteen per cent of the duty specified or accepted.
- Full payment makes the proceedings conclusive, without prejudice to sections 135, 135A and 140, and (since the Finance Act, 2026) the penalty paid is deemed to be a charge for non-payment of duty; a shortfall can be the subject of a fresh notice within two years of the information.
- A sub-section (4) notice that fails on the charge of collusion or suppression is deemed issued under sub-section (1).
- The Explanations preserve older law for cases pending at earlier Finance Act dates.
Read next
- Section 28: show cause notice for duty not levied or short-paid
- Section 28AA: interest on delayed payment of duty
- Section 28AAA: recovery of duty where an instrument was obtained by fraud
- Penalties Under Customs Act: Section 112-117
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. The change made by the Finance Act, 2026 is 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.