Customs Act, 1962 Section 142 — Recovery of sums due to Government

Customs Act, 1962  ·  Recovery of sums due to Government

Customs Act, 1962 Section 142 7 Amendments CBIC Source
Type Section
Legislation Customs Act, 1962
Amendments 7

Plain-English Explanation

Plain English Summary

Overview

Section 142 of the Customs Act, 1962 outlines the various methods the government can employ to recover outstanding customs duties, penalties, or any other sums owed under the Act. It grants customs officers broad powers to recover these dues, ensuring compliance and revenue collection.

Who Does This Apply To?

This section applies to:

  • Any person or entity liable to pay sums under the Customs Act, 1962. This includes importers, exporters, and others who owe duties, taxes, or penalties.
  • Customs Officers, specifically the Proper Officer, Assistant/Deputy Commissioner of Customs, and Principal Commissioner/Commissioner of Customs, who are authorized to initiate and execute recovery proceedings.
  • Third parties who owe money to the defaulting person or hold money on their behalf.
  • Successors to a business or trade where the predecessor owes outstanding customs dues.

How It Works

The Customs Act provides the following methods for recovery:

  • Deduction from Money Owed:

    • The Proper Officer can deduct the outstanding amount from any money owed to the defaulter that is under the control of the customs department.
    • They may also ask other officers to make this deduction.

  • Detention and Sale of Goods:

    • The Assistant/Deputy Commissioner of Customs can seize and sell goods belonging to the defaulter that are under customs control. The proceeds from the sale are used to cover the outstanding amount.

  • Recovery as Land Revenue:

    • If the above methods fail, the Assistant/Deputy Commissioner of Customs can issue a certificate to the Collector of the district where the defaulter owns property, resides, or conducts business.
    • The Collector then recovers the amount as if it were an arrear of land revenue.

  • Distraint and Sale of Property:

    • With authorization from the Principal Commissioner/Commissioner of Customs, the Proper Officer can seize movable or immovable property belonging to the defaulter.
    • The property is detained until the amount is paid. If the amount remains unpaid for 30 days, the property can be sold to recover the dues.

  • Recovery from Third Parties:

    • The Proper Officer can issue a notice to any person owing money to the defaulter, or holding money on their behalf, requiring them to pay the owed amount directly to the Central Government.
    • Failure to comply with this notice makes the third party a defaulter themselves.

  • Recovery from Successors:

    • If a business with outstanding dues is transferred, the assets of the successor business can be attached and sold to recover the predecessor's debt, with written approval from the Principal Commissioner/Commissioner of Customs.

Important Conditions & Exceptions

  • Liability Extends to Interest & Penalties: The section covers not just the principal duty amount, but also any interest, penalties, or other charges associated with it.
  • Bond Obligations: If a bond or instrument executed under the Customs Act stipulates recovery of dues under this section, it can be used as a basis for recovery, regardless of other available methods.
  • Successor Liability Requires Approval: Attachment of successor's assets requires written approval from the Principal Commissioner or Commissioner of Customs.

Practical Example

ABC Importers fails to pay customs duty of ₹5,00,000 on imported machinery. The Assistant Commissioner of Customs first attempts to deduct this amount from a pending refund of ₹1,00,000 due to ABC Importers. Since a balance of ₹4,00,000 remains unpaid, the Assistant Commissioner issues a notice to XYZ Bank, where ABC Importers has a fixed deposit of ₹6,00,000, instructing the bank to remit ₹4,00,000 to the government. XYZ Bank complies.

Key Amendments

No major amendments since enactment.

(1) Where any sum payable by any person1 under this Act including the amount required to be paid to the credit of the Central Government under section 28B2 is not paid, -
(a)the proper officer may deduct or may require any other officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of customs; or
(b)the Assistant Commissioner of Customs or Deputy Commissioner of Customs3 may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the Assistant Commissioner of Customs or Deputy Commissioner of Customs3 or such other officer of customs; or
(c)) if the amount cannot be recovered from such person in the manner provided in clause (a) or clause (b) -4
(i)the 4Assistant Commissioner of Customs or Deputy Commissioner of Customs3 may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue; or4
(ii) the proper officer may, on an authorisation by 4Principal Commissioner of Customs or Commissioner of Customs5 and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus, if any, to such person:4Assistant Commissioner of Customs or Deputy Commissioner of Customs3 may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue; or
(ii)the proper officer may, on an authorisation by Principal Commissioner of Customs or Commissioner of Customs5 and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus, if any, to such person:]
Provided that where the person (hereinafter referred to as predecessor), by whom any sum payable under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by the proper officer, after obtaining written approval from the 6Principal Commissioner of Customs or Commissioner of Customs5, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change.6Principal Commissioner of Customs or Commissioner of Customs5, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change.]
(d)(i) the proper officer may, by a notice in writing, require any other person from whom money is due to such person or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held, or at or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;7
(ii)every person to whom the notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before the payment is made, notwithstanding any rule, practice or requirement to the contrary;7
(iii)in case the person to whom a notice under this section has been issued, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Chapter shall follow.7
(2)Where the terms of any bond or other instrument executed under this Act or any rules or regulations made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.

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Frequently Asked Questions

What types of sums payable under the Customs Act, 1962 can be recovered under Section 142?

Section 142 allows for the recovery of *any* sum payable under the Customs Act, 1962, including amounts required to be paid to the credit of the Central Government under Section 28B. This broadly includes customs duties, penalties, fines, interest, and any other charges or fees levied under the Act.

What are the different methods available to Customs officers for recovering dues under Section 142 of the Customs Act, 1962?

Under Section 142, Customs officers have several options for recovering outstanding amounts. These include deducting the amount from money owed to the defaulter, detaining and selling goods belonging to the defaulter, recovering as arrears of land revenue through the District Collector, and distraining movable or immovable property (requiring authorization). A recent amendment also allows for recovery from third parties owing money to the defaulter.

Under what circumstances can the Customs department recover dues from the assets of a predecessor in business, as per Section 142?

If a person owing money under the Customs Act transfers or disposes of their business, the proper officer, with written approval from the Principal Commissioner or Commissioner of Customs, can attach and sell the goods, materials, and other assets in the possession of the successor. This provision, outlined in the proviso to Section 142, ensures that dues aren't evaded through business transfers.

What is the procedure for recovering customs dues as arrears of land revenue under Section 142(c)(i) of the Customs Act, 1962?

If recovery through deduction or sale of goods fails, the Assistant/Deputy Commissioner of Customs will prepare a certificate with the due amount. This certificate is sent to the District Collector where the defaulter has property or resides/works. The collector then recovers the amount as if it were unpaid land revenue.

What powers does the Customs officer have regarding third parties who owe money to the defaulter, according to Section 142(d)?

Section 142(d) empowers the Customs officer to issue a written notice to any person who owes money to the defaulter, or who holds money on their account. The notice requires the third party to pay the owed amount directly to the Central Government, up to the extent of the customs dues. Failure to comply with this notice makes the third party liable.

What is the time limit for selling distrained property to recover dues under Section 142(c)(ii) of the Customs Act, 1962?

According to Section 142(c)(ii), if any part of the amount payable or the costs associated with the distress (including keeping the property) remains unpaid for 30 days after the distress, the Customs officer can sell the distrained property. The proceeds are used to satisfy the outstanding amount and costs, with any surplus returned to the defaulter.

Is there a limitation period prescribed for the recovery of customs dues under Section 142 of the Customs Act, 1962?

While Section 142 itself doesn't explicitly specify a limitation period, general principles of limitation apply. Legal precedent suggests that the department should initiate recovery proceedings within a reasonable time from the date the amount became due, or the demand was finalized. However, the specific time frame can depend on the nature of the dues and any applicable regulations outside the Customs Act.

Key Conditions & Requirements

ConditionDetails
Unpaid sum payable under the Customs Act This section applies when a person fails to pay any sum due under the Customs Act, including amounts payable under Section 28B.
Deduction from money owing to the defaulter The proper officer can deduct the unpaid amount from any money owed to the defaulter that is under the control of customs officers.
Detaining and selling goods of the defaulter Customs officers can recover the amount by detaining and selling goods belonging to the defaulter that are under their control.
Certificate to District Collector for land revenue recovery If recovery via deduction or sale of goods fails, the Assistant/Deputy Commissioner can send a certificate to the District Collector to recover the amount as land revenue.
Distraint of movable/immovable property With authorization from the Commissioner, customs officers can distrain movable or immovable property of the defaulter until the amount is paid.
Sale of distrained property after 30 days If the amount remains unpaid for 30 days after the distraint, the property can be sold to recover the amount and costs.
Recovery from successor in business If a business is transferred and sums are outstanding, the assets of the successor can be attached and sold with approval from the Commissioner to recover the predecessor's dues.
Notice to third party owing money to defaulter Customs can issue a notice to any person owing money to the defaulter, requiring them to pay the amount to the government.

Amendment History

1234567Superscript numbers in the text mark amended passages — click them to jump here. Click "↑ view in text" to jump back.
1
1995↑ view in text

Substituted by the Finance Act, 1995 (22 of 1995), sec. 66(a), for certain words (w.e.f. 26.5.1995). Earlier those words were amended by Act 49 of 1991, sec. 120(3) (w.e.f. 27.9.1991).

2
2000↑ view in text

Inserted by the Finance Act, 2000 (10 of 2000), sec. 88 (w.e.f. 12.5.2000).

3
1999↑ view in text

Substituted by the Finance Act, 1999 (27 of 1999), sec. 100, for "Assistant Commissioner of Customs" (w.e.f. 11.5.1999). Earlier the words "Assistant Commissioner of Customs" were substituted by Act 22 of 1995, sec. 50, for the words "Assistant Collector of Customs" (w.e.f. 26.5.1995).

4
1995↑ view in text

Substituted by the Finance Act, 1995 (22 of 1995), sec. 66(b), for clause (c) (w.e.f. 26.5.1995).

5
2014↑ view in text

Substituted by the Finance (No.2) Act, 2014 (25 of 2014), sec. 78, for "Commissioner of Customs" (w.e.f. 6.8.2014). Earlier the words "Commissioner of Customs" were substituted by Act 22 of 1995, sec. 50, for the words "Collector of Customs" (w.e.f. 26.5.1995).

6
2004↑ view in text

Inserted by the Finance (No.2) Act, 2004 (23 of 2004), sec. 72 (w.e.f. 10.9.2004).

7
2013↑ view in text

Inserted by the Finance Act, 2013 (17 of 2013), sec. 79 (w.e.f. 10.5.2013).

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