Sections 70-72 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.
Sections 70 to 72 deal with what happens when warehoused goods are short on delivery or leave a warehouse the wrong way. Section 70 lets an officer remit duty on natural loss of volatile goods, section 71 says warehoused goods may leave only as the Act provides, and section 72 lets the proper officer demand the full duty, with interest, fine and penalties, where goods are improperly removed or not accounted for. This article explains them as printed in the text on the CBIC portal updated to 30 March 2022.
Duty on a natural-loss deficiency in specified volatile warehoused goods may be remitted by the Assistant Commissioner or Deputy Commissioner of Customs (section 70). Warehoused goods may not leave a warehouse except on clearance for home consumption or export, removal to another warehouse, or as otherwise provided (section 71). If goods are removed in contravention of section 71, stay beyond the permitted period, or are not duly accounted for, the proper officer may demand the full duty plus interest, fine and penalties, and may detain and sell the owner's goods if he does not pay (section 72).
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 may have changed these sections, so check them before acting.
Where these sections fit
Goods in a bonded warehouse under Chapter IX are held without payment of import duty on the strength of a bond. These three sections protect the revenue while the goods are inside. The general scheme is described in our overview of customs bonded warehouses under sections 57 to 73. The exits that the Act does allow are in our article on sections 68 and 69.
If you operate a bonded facility, our page on the private bonded warehouse licence explains how we can support you.
Section 70: allowance in case of volatile goods
Section 70 is headed "Allowance in case of volatile goods". It has two sub-sections.
Sub-section (1). When warehoused goods to which the section applies are, at the time of delivery from a warehouse, found to be deficient in quantity on account of natural loss, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may remit the duty on such deficiency. The words "Assistant Commissioner of Customs or Deputy Commissioner of Customs" were substituted with effect from 11-5-1999 by section 100 of the Finance Act, 1999 (27 of 1999).
Sub-section (2). The section applies to such warehoused goods as the Central Government, having regard to the volatility of the goods and the manner of their storage, may specify by notification in the Official Gazette.
Three things follow from the wording:
- The power is discretionary: the officer "may" remit.
- The deficiency must be on account of natural loss, and it is judged at the time of delivery from the warehouse.
- The section reaches only goods the Central Government has specified. Which goods and what quantities are not stated in the Act. This article gives none.
Example. Northgate Spirits Pvt Ltd warehouses a liquid that evaporates in storage. If the goods are among those specified by notification, and a deficiency caused by natural loss is found at delivery, the officer may remit duty on that deficiency. If the shortage is not natural loss, section 70 gives no relief and section 72 may come into play.
Section 71: goods not to be taken out except as provided
Section 71 is a single sentence. No warehoused goods shall be taken out of a warehouse except on clearance for home consumption or export, or for removal to another warehouse, or as otherwise provided by the Act. The word "export" was substituted for "re-exportation" with effect from 14-5-2016 by section 134 of the Finance Act, 2016 (28 of 2016).
The section works as a gate rule. The lawful exits are:
| Exit | Where it is dealt with |
|---|---|
| Clearance for home consumption | Section 68 |
| Clearance for export | Section 69 |
| Removal to another warehouse | Section 67 |
| "As otherwise provided by this Act" | Other provisions of the Act |
Anything outside these exits is a contravention of section 71, which is the first trigger in section 72.
Section 72: goods improperly removed from a warehouse
Section 72(1) lists cases in which the proper officer may demand, and the owner shall forthwith pay, the full amount of duty chargeable on the goods together with interest, fine and penalties payable in respect of them.
| Clause | Case |
|---|---|
| (a) | Warehoused goods are removed from a warehouse in contravention of section 71 |
| (b) | Warehoused goods have not been removed at the expiry of the period for which section 61 permits them to remain in the warehouse |
| (c) | Omitted |
| (d) | Goods covered by a bond executed under section 59 have not been cleared for home consumption or export and are not duly accounted for to the satisfaction of the proper officer |
Clause (c) is printed as omitted; the footnote says it was omitted with effect from 14-5-2016 by section 135 of the Finance Act, 2016. The old clause is not the rule. In clause (d) the text refers to section 59 with the words "or section 59A" omitted. Section 59A is itself printed as omitted in this copy.
The amount demandable is the full amount of duty chargeable on account of such goods together with "interest, fine and penalties". The Act does not here state a rate of interest or any amount of fine or penalty; those are found elsewhere or are fixed by notification.
Sub-section (2): detention and sale. If any owner fails to pay an amount demanded under sub-section (1), the proper officer may, without prejudice to any other remedy, cause to be detained and sold, after notice to the owner, such sufficient portion of his goods, if any, in the warehouse as the officer may deem fit. The words "any transfer of the goods notwithstanding" mean that a transfer of the goods does not stop this step. The words "deem fit" replaced "select" with effect from 14-5-2016.
Example. Redfern Imports Pvt Ltd leaves bonded goods in a warehouse beyond the period permitted under section 61 and does not remove them. The proper officer may demand the full duty with interest, fine and penalties. If Redfern does not pay, other goods of Redfern in the warehouse may, after notice, be detained and sold in sufficient portion.
Practical steps to avoid a section 72 demand
- Track the permitted period for each lot in the warehouse and clear or transfer the goods before it ends.
- Keep stock records that account for every unit, including natural loss, so that clause (d) is met "to the satisfaction of the proper officer".
- Never move goods out except through a route in section 71.
- Where a shortage is due to natural loss of specified volatile goods, apply for remission under section 70 at the time of delivery.
If a demand is raised, the proper response may involve a hearing and adjudication; see Section 111 confiscation of goods for the confiscation provisions that the site already covers, and the cancellation of bonds in sections 73 and 73A.
Need help with warehouse compliance?
A demand under section 72 usually starts with a gap in records or a missed period. Our team can review how a bonded unit tracks stock, periods and removals. See the private bonded warehouse licence page to begin.
Key takeaways
- Section 70 remission applies only to goods the Central Government has specified, and only for natural-loss deficiency found at delivery.
- Section 71 allows removal only for home consumption, export, transfer to another warehouse or as otherwise provided.
- Section 72(1) lets the proper officer demand full duty with interest, fine and penalties in three live cases.
- Under section 72(2), unpaid demands can lead to detention and sale of the owner's goods in the warehouse after notice.
- Later Finance Acts may have changed these sections; check before acting.
Read next
- Sections 68 and 69: clearance of warehoused goods
- Sections 73 and 73A: bond cancellation and custody
- Customs Bonded Warehouse: Sections 57 to 73
- Customs Bonded Warehouse: types and procedure
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.