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.
Section 28 is the recovery provision for duty that has not been levied, has not been paid, has been short-levied or short-paid, or has been erroneously refunded. This article covers the ordinary case: where there is no collusion, wilful mis-statement or suppression of facts, the proper officer has two years to serve a show cause notice and then fixed periods to decide.
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 Explanation 1 by the Finance Act, 2025. The Finance Act, 2023 could not be checked in full; see the section on later Finance Acts below. The five-year case under sub-section (4) is in our companion article on the extended period.
For reasons other than collusion, wilful mis-statement or suppression of facts, the proper officer must serve a show cause notice within two years from the relevant date, after pre-notice consultation. The person may pay before the notice with interest and avoid it. If a notice is served and the amount with interest is paid in full within thirty days, no penalty is levied and the proceedings are deemed concluded. The proper officer then has six months from the date of notice to determine the amount, with extensions allowed in the text. Since the Finance Act, 2025, the "relevant date" also has a clause for duty paid voluntarily on a post-clearance revised entry under section 18A: the date of payment of the duty or interest.
Sub-section (1): the notice, consultation and payment
Where any duty has not been levied or not paid or short-levied or short-paid, or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than collusion or any wilful mis-statement or suppression of facts:
- Clause (a): the proper officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty or interest requiring him to show cause why he should not pay the amount specified in the notice. The words "two years" replaced "one year" with effect from 14 May 2016 under section 120 of the Finance Act, 2016 (28 of 2016), as the footnotes record.
- Proviso to clause (a): before issuing the notice, the proper officer shall hold pre-notice consultation with the person chargeable with duty or interest in such manner as may be prescribed. The footnote shows this proviso was inserted by section 63 of the Finance Act, 2018 (13 of 2018) with effect from 29 March 2018.
- Clause (b): the person chargeable may pay before service of the notice, on the basis of (i) his own ascertainment of the duty or (ii) the duty ascertained by the proper officer, the amount of duty with the interest payable under section 28AA, or the amount of interest not paid or part-paid.
- Proviso to clause (b): the proper officer shall not serve such show cause notice where the amount involved is less than rupees one hundred (inserted by Act 17 of 2013, section 66, with effect from 10 May 2013).
If you have received a notice, or a request for pre-notice consultation, a short consultation with a dispute resolution adviser can help you choose between paying, consulting and contesting.
The rule on pre-notice consultation is supported by the Pre-Notice Consultation Regulations, 2018, which say they are made under clause (e) of sub-section (2) of section 157 read with the proviso to clause (a) of section 28(1); the copy consulted is dated 2 April 2018. Alongside it sits the Customs (Supplementary Notice) Regulations, 2019, dated 18 June 2019 in the copy consulted, which relate to sub-section (7A) below. Their detail is not set out here.
Sub-section (2): the effect of paying first
The person who has paid under clause (b) shall inform the proper officer in writing, who, on receipt, shall not serve any notice under clause (a) in respect of the duty or interest so paid, or any penalty leviable under the Act or the rules in respect of it. The proviso says that where a notice has been served and the proper officer is of the opinion that the amount of duty with interest under section 28AA, or the amount of interest, as specified in the notice, has been paid in full within thirty days from the date of receipt of the notice, no penalty shall be levied and the proceedings against that person and the other persons served are deemed concluded. The proviso was inserted by section 82(a) of the Finance Act, 2015 (20 of 2015) with effect from 14 May 2015.
Sub-section (3): a shortfall in what was paid
If the proper officer is of the opinion that the amount paid under clause (b) falls short of the amount actually payable, he shall issue the notice under clause (a) for the shortfall, and the period of two years is computed from the date of receipt of the information under sub-section (2).
Sub-section (7): stay
In computing the period of two years in clause (a) of sub-section (1), the period during which there was any stay by an order of a court or tribunal in respect of payment of such duty or interest shall be excluded. (The same sentence also covers the five years in sub-section (4).)
Sub-section (7A): supplementary notice
Save as otherwise provided in clause (a) of sub-section (1) or in sub-section (4), the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed, and the provisions of the section apply to it as if it were issued under sub-section (1) or (4). It was inserted by the Finance Act, 2018 with effect from 29 March 2018.
Sub-sections (8) and (9): deciding the amount
Sub-section (8). The proper officer shall, after allowing the person an opportunity of being heard and after considering any representation, determine the amount of duty or interest due from such person, not being in excess of the amount specified in the notice.
Sub-section (9). He shall determine the amount under sub-section (8): (a) within six months from the date of notice, in respect of cases falling under clause (a) of sub-section (1); and (b) within one year from the date of notice, in respect of cases falling under sub-section (4). The words "where it is possible to do so" were omitted by the Finance Act, 2018.
The first proviso says that where the proper officer fails to determine within the specified period, any officer senior in rank to him may, having regard to the circumstances under which he was prevented, extend the period in clause (a) by a further six months and the period in clause (b) by a further one year. The second proviso says that where the proper officer fails to determine within the extended period, the proceeding is deemed to have concluded as if no notice had been issued. Both provisos were inserted by the Finance Act, 2018.
| Case | Notice within | Decide within | Extension by senior officer | If not decided |
|---|---|---|---|---|
| Sub-section (1)(a) | Two years from the relevant date | Six months from the date of notice | A further six months | Deemed concluded as if no notice had been issued |
| Sub-section (4) (see companion article) | Five years from the relevant date | One year from the date of notice | A further one year | Same |
Sub-section (9A): when the clock waits
Notwithstanding sub-section (9), where the proper officer is unable to determine the amount because (a) 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; (b) an interim order of stay has been issued by any of them; (c) the Board has, in a similar matter, issued a specific direction or order to keep the matter pending; or (d) the Settlement Commission has admitted an application made by the person concerned, he shall inform the person of the reason, and the time in sub-section (9) then runs not from the date of notice but from the date when the reason ceases to exist.
Sub-section (10): payment of the amount determined
Where an order determining the duty is passed, the person liable shall pay the amount determined along with the interest due, whether or not the amount of interest is specified separately. The interest rate is dealt with in our article on section 28AA.
Explanation 1: the relevant date
For the purposes of section 28, "relevant date" means:
- (a) where duty is not levied or not paid or short-levied or short-paid, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods;
- (b) where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment or re-assessment, as the case may be;
- (ba) (inserted by the Finance Act, 2025) in a case where duty is paid under clause (a) of sub-section (3) of section 18A, the date of payment of duty or interest;
- (c) where duty or interest has been erroneously refunded, the date of refund;
- (d) in any other case, the date of payment of duty or interest.
The two years are counted from these dates. For the provisional assessment case, see our article on section 18; for the new clause (ba), see our article on section 18A, voluntary revision of entry after clearance.
A worked example with invented names
A proper officer finds that Sahyadri Metals Pvt. Ltd. paid less duty on a clearance made on 12 August of a year, with no suggestion of collusion, wilful mis-statement or suppression. The relevant date is the date of the order for clearance. After pre-notice consultation, the officer must serve the notice within two years from that date. Sahyadri may instead pay the duty and the interest under section 28AA before service and inform the officer in writing; the officer then does not serve a notice for the amount paid. If a notice is served and Sahyadri pays the full duty and interest within thirty days, no penalty is levied and the proceedings are deemed concluded. If the officer does not decide within six months, a senior officer may extend by six months; if there is still no decision, the proceedings are deemed concluded.
Changes made by later Finance Acts
| Finance Act | What changed | What the gazette prints about commencement |
|---|---|---|
| Finance Act, 2025 (No. 7 of 2025), section 95 | Explanation 1 (relevant date): new clause (ba), where duty is paid under section 18A(3)(a), the date of payment of duty or interest | No date is printed in the clause. The Act received the assent of the President on 29 March 2025 |
| Finance Act, 2026 (No. 4 of 2026), section 147 | Sub-section (6)(i): penalty paid under sub-section (5) is also deemed to be a charge for non-payment of duty (covered in our companion article on the extended period) | No date is printed in the clause. Assent 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 a customs show cause notice?
A notice has short windows: thirty days to pay and close it without penalty, and a hearing later on. If you have one in hand, our dispute resolution team can help you review the relevant date, the limitation and your reply.
Key takeaways
- The proper officer has two years from the relevant date to serve a notice where there is no collusion, wilful mis-statement or suppression of facts.
- Pre-notice consultation must precede the notice, in the prescribed manner.
- Payment before the notice, with section 28AA interest, stops the notice for the amount paid.
- Full payment within thirty days of receiving a notice means no penalty and the proceedings are deemed concluded.
- The determination period is six months from the date of notice, extendable once by a senior officer, after which the proceeding is deemed concluded.
- The periods can wait where the reasons in sub-section (9A) arise.
- Since the Finance Act, 2025, where duty is paid voluntarily under section 18A(3)(a), the relevant date is the date of payment of the duty or interest (clause (ba)).
Read next
- Section 28: extended period of five years for collusion or suppression
- Section 28AA: interest on delayed payment of duty
- Section 28A: duty not recovered because of general practice
- 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, 2025 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.