Remission of Duties: formula sheet

Key formulas

Section 13: pilfered goods

Pilferage after unloading and before clearance/warehouse order ⇒ no duty, unless goods are restored to the importer

Applies to imported goods only, and only before the proper officer's order for home consumption or warehousing.

Section 23(1): lost or destroyed goods

Loss (not by pilferage) or destruction before clearance for home consumption, proved to the officer ⇒ duty shall be remitted

The officer is the Assistant Commissioner or Deputy Commissioner of Customs. The word is 'shall', so remission follows once satisfied.

Section 23(2): relinquishment

Owner relinquishes title before order under Section 47 or Section 60 ⇒ no duty

Not allowed for goods where an offence appears to have been committed under the Act or any other law.

Section 22(2): damaged goods

Duty payable = Duty before damage × (Value of damaged goods ÷ Value before damage)

Value of damaged goods is fixed by the proper officer or by sale at public auction or tender, at the owner's option. Gross sale proceeds are deemed the value.

Section 68 proviso: warehoused goods

Owner may relinquish title before clearance order on paying penalties payable, then no duty

Not allowed where an offence appears to have been committed.

Relinquishment rule, Section 23(2)

Owner relinquishes title BEFORE order under s.47 (home consumption) or s.60 (warehousing) ⇒ no duty payable

Timing is the test. After either order is made, section 23(2) is no longer available.

Proviso to Section 23(2)

Offence appears to have been committed ⇒ relinquishment NOT allowed

Applies to offences under the Customs Act or any other law for the time being in force.

Remission, Section 23(1)

Goods lost (not by pilferage) or destroyed before clearance for home consumption + satisfaction of AC/DC ⇒ duty remitted

Without prejudice to section 13. Pilferage is dealt with under section 13.

Warehoused goods, Section 68 second proviso

Relinquish before clearance order + pay penalties payable ⇒ no duty

For goods already in a warehouse, the owner must pay penalties that may be payable. Again, not allowed where an offence appears to have been committed.

Section 26A comparison

Duty paid and goods cleared ⇒ refund only if conditions met, including relinquishment/export/destruction within 30 days of the section 47 order

Refund application within six months from the relevant date. Extension of the 30 days: up to three months by the Commissioner on sufficient cause.

Conditions for applying section 28AAA

Instrument obtained by collusion / wilful mis-statement / suppression of facts + utilised by a person other than the person to whom it was issued

Both limbs are needed. The fraud may be by the person, his agent or employee.

Who pays

Duty recovered from the person to whom the instrument was issued

The duty is deemed never exempted or debited. Action against the importer under section 28 is not barred.

Interest

Interest at the rate fixed under section 28AA, from date of utilisation of the instrument to date of recovery of duty

Interest is payable in addition to duty. The show cause is for the duty amount specified in the notice (excluding interest). The order may determine duty, interest or both, not exceeding the amount in the notice.

Show cause notice and reply

Notice by proper officer; 30 days from receipt of notice to show cause; hearing; order not exceeding the amount in the notice

Duty and interest are determined after considering the reply.

Repayment

Repay within 30 days of receipt of the order, with interest due

If not repaid, recovery is under section 142(1).

Bar where section 28 order exists

Order determining duty under section 28 passed ⇒ no order to recover that duty under 28AAA

This prevents double recovery of the same duty.

Provisional attachment (section 28BA)

Proper officer, with previous approval of Principal Commissioner/Commissioner, by written order; ceases after 6 months; Principal Chief Commissioner/Chief Commissioner may extend for reasons recorded in writing, total extension not exceeding 2 years (so at most 6 months + 2 years)

Available during pendency of proceedings under section 28, 28AAA or 28B, against any property belonging to the person on whom the notice is served.

Abatement on damaged goods (Section 22(2))

Duty payable = Duty on undamaged goods × (Value of damaged goods ÷ Value before damage)

Duty bears the same proportion to original duty as damaged value bears to original value.

Section 22 conditions

(a) damage before or during unloading; (b) non-warehoused goods damaged after unloading but before examination under section 17, by accident without wilful act, negligence or default; (c) warehoused goods damaged before home clearance, same fault condition

The officer must be satisfied. Officer is Assistant or Deputy Commissioner of Customs.

Value of damaged goods (Section 22(3))

At the owner's option: (a) valued by the proper officer, or (b) sold by public auction, tender or, with consent, otherwise; gross sale proceeds are deemed the value

The choice belongs to the owner, not the officer. Gross proceeds, not net.

Lost or destroyed goods (Section 23(1))

Lost (not by pilferage) or destroyed before clearance for home consumption → duty remitted

Subject to Section 13 and to satisfaction of the officer.

Pilferage (Section 13)

Pilfered after unloading and before order for clearance or warehouse deposit → no duty, unless goods are restored to the importer

If the pilfered goods are later restored to you, duty is payable on them.

Relinquishment (Section 23(2))

Owner may relinquish title before order under section 47 or section 60 → no duty

Not allowed where an offence appears to have been committed.

Quick revision

• Section 23(1): duty is remitted on imported goods lost (not by pilferage) or destroyed before clearance for home consumption.
• Section 23(2): the owner may relinquish title before an order under section 47 or 60, and then owes no duty.
• Relinquishment is not allowed for goods where an offence appears to have been committed.
• Section 22: if the officer is satisfied the conditions are met, damaged or deteriorated goods are charged duty in the proportion of damaged value to value before damage.
• Section 22 value can be set by the proper officer or by sale at public auction or tender, at the owner's option.
• Section 22 covers damage or deterioration before or during unloading. It also covers damage after unloading but before examination under section 17 (before clearance for warehoused goods), through an accident not due to wilful act, negligence or default of the importer or owner, his employee or agent.
• Section 26A refund needs defective or non-conforming goods, identification, no drawback claim, and export, abandonment of title, or destruction in the presence of the proper officer within thirty days.
• Section 26A: the thirty days run from the section 47 order for clearance for home consumption. The Principal Commissioner or Commissioner may extend them by up to three months on sufficient cause shown. The refund application is due within six months of the relevant date.
• No Section 26A refund for perishable goods or goods past their shelf life.
• Section 28A: the Central Government may, by notification, stop recovery of duty not levied or short-levied due to a general practice.
• Section 28AAA: duty on a fraudulently obtained instrument is recovered from the person to whom it was issued, with interest from the date of utilisation.
• Section 28AAA: no recovery order if an order determining the duty has already been passed under section 28.

Common mistakes

• Applying Section 23 to pilfered goods. Fix: Section 23(1) says loss 'otherwise than as a result of pilferage'. Pilferage is under Section 13.
• Granting remission after the clearance order for home consumption. Fix: Remission applies only before clearance for home consumption (or before the warehouse deposit order for pilferage). Always mark the stage first.
• Treating relinquishment as available at any time, even after the clearance order. Fix: Anchor on the phrase 'before an order for clearance under section 47 or deposit under section 60'. After it, think section 26A or drawback.
• Allowing relinquishment where the goods are liable to confiscation or an offence appears to have been committed. Fix: Always scan the facts for misdeclaration, prohibited goods or any other offence before applying the rule.
• Recovering the duty from the person who used the instrument. Fix: Under 28AAA, duty is recovered from the person to whom the instrument was issued. The importer can be dealt with under section 28.
• Applying 28AAA when the issuee himself used the instrument. Fix: Check both limbs. Utilisation must be by a person other than the person to whom it was issued.
• Applying Section 23 to pilfered goods. Fix: Section 23(1) excludes loss by pilferage. Pilferage goes to Section 13.
• Deducting auction expenses before taking value of damaged goods. Fix: Section 22(3)(b) deems the gross sale proceeds as the value.

Exam tips

• Write the section number and the key condition in the first line. Examiners award marks for the right section.
• Always state the stage: before or after clearance for home consumption.
• In case scenarios, look for words like stolen, fire, sank, or restored. They tell you which section applies.
• For Section 22 sums, show the proportion formula and each step.
• If the scenario hints at smuggling or an offence, flag that relinquishment and refund routes are barred.
• In MCQs, the trap is almost always timing. Check whether the section 47 or section 60 order has been made.
• If the facts mention misdeclaration, prohibited goods or any suspected offence, the answer is that relinquishment is not allowed.
• For long answers, state the rule, the proviso and the effect, then apply them to the facts and conclude clearly.