Customs Act, 1962 Section 28a — Power not to recover duties not levied or short-levied as a result of general practice
Customs Act, 1962 · Power not to recover duties not levied or short-levied as a result of general practice
Plain-English Explanation
Overview
Section 28A of the Customs Act, 1962 grants the Central Government the power to not recover customs duties that were either not levied or were short-levied due to a generally prevalent practice. This section provides relief in situations where a consistent, accepted understanding of the law led to underpayment of duty, preventing hardship for importers and exporters.
Who Does This Apply To?
This section primarily applies to:
- Importers and exporters who may have benefited from a general practice that resulted in lower or no customs duty being levied.
- Customs officers who are responsible for levying and collecting duties, but who followed a generally prevalent practice.
- The Central Government, which holds the power to issue notifications under this section.
How It Works
The process outlined in Section 28A unfolds as follows:
- Establishment of a General Practice: The Central Government must be satisfied that there was a generally prevalent practice regarding the levy (or non-levy) of duty on imported or exported goods. This practice must have been consistently followed.
- Liability to Duty: The goods in question must, in reality, be liable to either:
- Duty, where the practice was not to levy it, or
- A higher amount of duty than was actually levied due to the practice.
- Notification by the Central Government: If the above conditions are met, the Central Government may (it's discretionary) issue a notification in the Official Gazette. This notification directs that the duty payable (or the excess duty payable) on those goods, but for the said practice, shall not be required to be paid.
- Refund Mechanism (Sub-section 2): If duty was paid (or excess duty paid) that would not have been paid had the notification been in force, a refund can be claimed. This refund is governed by Section 27(2) of the Customs Act, 1962.
- Refund Application: To claim the refund, the claimant must apply to the Assistant Commissioner of Customs or Deputy Commissioner of Customs using the form specified in Section 27(1).
- Time Limit for Refund Application: The application must be made within six months from the date the Central Government's notification was issued.
Important Conditions & Exceptions
- Condition 1: The existence of a "generally prevalent practice" is crucial. This implies a consistent and widespread understanding, not an isolated instance. This is a critical factor examined by courts.
- Condition 2: The Central Government's decision to issue a notification is discretionary. Even if a generally prevalent practice is proven, the Government is not obligated to waive the duty.
- Exception: Section 28A doesn't apply if the non-levy or short-levy was due to fraud, collusion, or willful misstatement or suppression of facts.
Practical Example
Imagine a company, "Tech Importers Ltd.", has been importing specialized computer parts. For several years, customs authorities at multiple ports consistently classified these parts under a specific tariff heading attracting a 5% basic customs duty. A recent audit reveals that the parts should have been classified under a different heading attracting a 15% duty. However, the 5% levy was a "generally prevalent practice."
If the Central Government is satisfied about the prevalence of this practice, it can issue a notification under Section 28A directing that the additional 10% duty (the difference between 15% and 5%) shall not be recovered from Tech Importers Ltd. for past imports.
Further, if Tech Importers Ltd. had paid the 15% duty before the notification was issued (perhaps after an initial assessment but before Section 28A was invoked), they could claim a refund of the excess 10%, provided they apply within six months of the notification.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What is the purpose of Section 28A of the Customs Act, 1962, and how does it benefit importers/exporters?
Section 28A provides a mechanism where the Central Government can waive the recovery of customs duties not levied or short-levied due to a generally prevalent practice. This benefits importers/exporters by protecting them from retrospective tax demands based on a revised interpretation of customs regulations, offering certainty where a consistent practice has been followed. It also allows for refunds of excess duties paid in certain circumstances per Section 27(2).
Under what conditions can the Central Government issue a notification under Section 28A to waive recovery of customs duties?
The Central Government can issue a notification under Section 28A when satisfied that a general practice exists regarding the levy (or non-levy) of duty on imported or exported goods and that, according to this practice, duty was not levied or was levied at a lower rate than legally required. Both conditions (a general practice and resulting non-levy or short-levy) must be met before the notification can be issued under Section 28A(1).
If a notification is issued under Section 28A, can importers claim a refund of duty already paid that wouldn't have been due if the notification was in effect?
Yes, if a Section 28A notification is issued, importers can claim a refund of the duty (or excess duty) paid that would not have been payable if the notification had been in force. The refund is processed according to Section 27(2), but Section 28A(2) specifies that the refund application must be filed with the Assistant/Deputy Commissioner of Customs within six months from the date of the notification's issuance, as per the proviso to Section 28A(2).
What constitutes a 'general practice' for the purposes of Section 28A of the Customs Act, 1962?
The Customs Act does not explicitly define 'general practice.' However, it typically refers to a consistent and widespread understanding and application of customs procedures, classifications, or valuations across customs formations or within a specific trade sector, accepted by both customs authorities and importers/exporters over a considerable period. It should be something more than isolated incidents or practices limited to a single customs house.
Does Section 28A protect importers from penalties or interest on duties not paid due to a 'general practice' later deemed incorrect?
Section 28A primarily addresses the recovery of the principal amount of duty not levied or short-levied. While it doesn't explicitly mention penalties or interest, the intent is to protect importers/exporters relying on established practices. However, the extent of protection against penalties and interest would depend on the specific wording of the Section 28A notification and the circumstances of the case, and cannot be guaranteed.
What is the time limit for filing a refund claim under Section 28A(2) after a notification is issued?
The time limit for filing a refund claim under Section 28A(2) is six months from the date of the notification's issuance. The application must be made to the Assistant Commissioner of Customs or Deputy Commissioner of Customs in the prescribed form, as referred to in Section 27(1), as mandated by the proviso to Section 28A(2).
Where can I find notifications issued under Section 28A of the Customs Act, 1962?
Notifications issued under Section 28A are published in the Official Gazette of India. These notifications can typically be accessed through the websites of the Central Board of Indirect Taxes and Customs (CBIC) or other government portals that publish official gazette notifications. Consulting legal databases and professional tax advisors can also help in identifying relevant Section 28A notifications.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| General Practice regarding levy of duty exists | A practice was, or is, generally prevalent regarding levy of duty (including non-levy thereof) on imported or exported goods. |
| Goods liable to duty or higher duty | The goods were, or are, liable to duty where the practice was non-levy, or liable to a higher amount of duty than what was levied as per practice. |
| Central Government Satisfaction | The Central Government must be satisfied about the existence of a general practice and the liability of goods to duty or a higher duty. |
| Notification in Official Gazette | The Central Government must issue a notification in the Official Gazette directing that the unlevied or short-levied duty due to the practice shall not be required to be paid. |
| Refund claim under Section 27(2) | If a notification is issued, duty already paid (or excess paid) shall be dealt with according to Section 27(2) of the Customs Act. |
| Time Limit for Refund Application | Application for refund of duty (or excess duty) must be made within six months from the date of notification issuance. |
| Application to Customs Officer | The refund application must be submitted to the Assistant Commissioner of Customs or Deputy Commissioner of Customs. |
| Application Form | The refund application must be in the form referred to in sub-section (1) of section 27. |
Amendment History
Inserted by Act 25 of 1978, section 7 (w.e.f. 1-7-1978)
Section 28A renumbered as sub-section(1), thereof by Act 29 of 1988, section 3 (w.e.f. 01-7-1988)
Substituted by Act 40 of 1991, section 11, for sub-section (2) ( w.e.f. 20-9-1991). Earlier sub-section (2) was inserted by Act 29 of 1988, section 3 (w.e.f. 1-7-1988)
Substituted by Act 27 of 1999, section 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, section 50, for the words "Assistant Collector of Customs (w.e.f. 26-5-1995)