Section 28B 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 28B says that a person who collects from a buyer any amount in the name of customs duty, beyond the duty actually assessed or paid, must pay that amount to the credit of the Central Government. It also covers amounts collected as "duty of customs" on goods that are wholly exempt or chargeable at nil rate.
This article follows the Customs Act, 1962 as per the text on the CBIC portal updated to 30 March 2022. Later Finance Acts must be checked for changes to this section before you act on it.
Anyone liable to pay duty who has collected more than the duty assessed, determined or paid from the buyer, or who has collected an amount as customs duty on exempt or nil-rated goods from any person, must forthwith pay that amount to the Central Government. If it is not paid, the proper officer can issue a show cause notice and then determine the amount. What is paid is adjusted against the duty payable on finalisation, and any surplus goes to the Fund or is refunded under section 27.
Where the section sits
Section 28B is part of Chapter V, which deals with levy of and exemption from duties. It was inserted by the Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991), as the footnote prints, and sub-sections (1) and (2) to (5) were later substituted or recast by the Finance Act, 2000 and the Finance Act, 2008. The section works alongside sections 28C and 28D, which deal with showing the duty in the price and the presumption that the duty has been passed on. Our article on Sections 28C and 28D covers those.
Sub-section (1): amounts collected from the buyer
The sub-section starts with a "notwithstanding" clause. It overrides any order or direction of the Appellate Tribunal, the National Tax Tribunal or any Court, and any other provision of this Act or the regulations made under it. The copy consulted prints the words "National Tax Tribunal" with the footnote "To be inserted (from a date to be notified)", so they are not treated here as being in force.
The operative rule: every person who is liable to pay duty under this Act and has collected any amount in excess of the duty assessed or determined or paid on any goods under this Act, from the buyer of such goods, "in any manner as representing duty of customs", must forthwith pay the amount so collected to the credit of the Central Government.
If you are unsure whether an invoice line falls within this rule, a short legal consultation can settle it before a notice arrives. Three points to notice:
- The person is the one liable to pay duty. In practice that is usually the importer, but the text speaks of any person liable to pay duty under the Act.
- The amount must be an excess. It is the amount collected over and above the duty assessed, determined or paid.
- The test is how it was collected. The amount must have been collected "as representing duty of customs". A charge that the seller describes as customs duty falls within the section even where no such duty was payable.
Sub-section (1A): exempt and nil-rated goods
Sub-section (1A) widens the rule. It applies to every person who has collected any amount in excess of the duty assessed or determined or paid on any goods, or who has collected any amount as representing duty of customs on goods which are wholly exempt or chargeable to nil rate of duty, from any person in any manner. Such a person must also forthwith pay the amount to the credit of the Central Government.
Compare the two sub-sections:
| Point | Sub-section (1) | Sub-section (1A) |
|---|---|---|
| Who is liable | Every person liable to pay duty under this Act who has collected the excess | Every person who has collected the amount |
| Collected from | The buyer of the goods | Any person, in any manner |
| Covers | Amount in excess of duty assessed, determined or paid | Excess amount, and amount collected as duty on wholly exempt or nil-rate goods |
The footnote shows that sub-section (1A) was inserted by the Finance Act, 2008 (18 of 2008), section 68(i) (w.e.f. 10-5-2008).
Sub-section (2): show cause notice
Where an amount is required to be paid under sub-section (1) or (1A) and has not been paid, the proper officer may serve a notice on the person liable. The notice requires him to show cause why he should not pay the amount, as specified in the notice, to the credit of the Central Government. The word used is "may", so the notice is the officer's choice. The text sets no reply period here.
Sub-section (3): determination
After considering the representation, if any, made by the person on whom the notice is served, the proper officer determines the amount due from the person. The amount determined cannot exceed the amount specified in the notice. The person then must pay the amount so determined. The text prints no number of days for this payment and no separate machinery for recovery in this section.
Sub-section (4): adjustment against duty payable
The amount paid to the credit of the Central Government under sub-section (1), (1A) or (3), as the case may be, "shall be adjusted against the duty payable by the person on finalisation of assessment or any other proceeding for determination of the duty" on the goods referred to in sub-section (1) or (1A). So the deposit is not a penalty. If duty is later found payable, the deposit is set against it.
Sub-section (5): surplus and refund
If any surplus is left after the adjustment in sub-section (4), the surplus is either credited to the Fund or, as the case may be, refunded to the person who has borne the incidence of the amount, in accordance with section 27. That person may apply under section 27 within six months from the date of the public notice to be issued by the Assistant Commissioner of Customs for the refund of the surplus. The sub-section uses the term "the Fund" as printed, without defining it in this section.
Section 27 has its own time limits and conditions. Our article on Section 27 explains how a refund claim works, and the post on customs refund grounds and the claim process gives the general picture for businesses.
A worked example
Orchid Foods imports a consignment and sells it to Kavya Retail. The invoice shows a line "customs duty" that is higher than the duty assessed on the bill of entry. The excess is an amount collected from the buyer as representing duty of customs. Under sub-section (1), Orchid Foods should forthwith pay that excess to the credit of the Central Government. If it does not, the proper officer may serve a notice under sub-section (2). After hearing Orchid Foods, the officer determines the amount, not exceeding the notice amount, and Orchid Foods pays it. If a later proceeding fixes additional duty on the same goods, the deposit is adjusted against it under sub-section (4). If a surplus remains, Kavya Retail, as the person who bore the incidence, can claim a refund under section 27 within six months of the public notice, or the surplus is credited to the Fund.
A second case: a trader quotes "customs duty" to a customer for goods that are wholly exempt. Sub-section (1A) treats that amount as one collected as representing duty of customs on exempt goods and requires it to be paid to the Central Government.
What businesses should do
- Check invoices. A "duty" line should match what the assessment shows. Any excess collected from the buyer is the subject of this section.
- Do not treat a duty line on exempt goods as harmless. Sub-section (1A) catches amounts collected as duty on wholly exempt or nil-rate goods.
- Keep documents for the final assessment. The deposit is adjusted against duty payable on finalisation, so the file should connect the deposit to the goods.
- Watch the six-month window. A buyer claiming a refund of surplus must apply within six months from the date of the public notice.
Need help with duty collected from buyers?
If a notice under section 28B has arrived, or if your invoices carry a duty line you want checked against the assessment, we can review the position with you. Start with our legal consultation service.
Key takeaways
- Section 28B requires amounts collected from a buyer as customs duty, beyond the duty assessed or paid, to be paid to the Central Government forthwith.
- Sub-section (1A) extends this to amounts collected as duty on wholly exempt or nil-rate goods.
- The proper officer may serve a show cause notice and, after considering the reply, determine an amount not above the notice amount.
- The deposit is adjusted against duty payable on finalisation of assessment or other proceedings.
- A surplus goes to the Fund or is refunded under section 27, and the claimant has six months from the public notice.
- The copy prints "National Tax Tribunal" with the note "To be inserted (from a date to be notified)".
Read next
- Sections 28C and 28D: duty shown in the price and presumption of passing on
- Section 28BA and 28BB: provisional attachment and time limit for investigation
- Section 28: show cause notice for duty not levied or short paid
- Customs refund: grounds and claim process
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.