Indirect Tax Laws and Practice · Remission of Duties

Remission of Customs Duty on Lost, Destroyed or Damaged Goods

Updated 11 October 2026 · Fact-checked

Remission means import duty is not payable on goods that are lost, destroyed or pilfered before clearance for home consumption. Section 13 covers pilferage, Section 23(1) covers loss or destruction, and Section 22 gives proportionate abatement for damage. Check the stage of the goods, the cause of loss, and who bears fault.

Understand Remission of Duty on Goods Lost, Destroyed or Damaged

Import duty is leviable on goods meant for home consumption. But goods can be lost, stolen or destroyed after they land and before the proper officer clears them. It would be unfair to charge duty on goods the importer never received. The Act therefore gives relief in set situations.

The key line is clearance for home consumption (or deposit in a warehouse). Relief under Sections 13 and 23 applies only before that point. Once goods are cleared and duty paid, these sections do not help.

Section 13 (pilferage): If imported goods are pilfered after unloading and before the proper officer orders clearance for home consumption or deposit in a warehouse, the importer is not liable to duty on them. The exception: if the pilfered goods are restored to the importer, duty is payable.

Section 23(1) (lost or destroyed): If it is shown to the satisfaction of the Assistant Commissioner or Deputy Commissioner of Customs that goods have been lost (other than by pilferage) or destroyed before clearance for home consumption, the officer shall remit the duty. Section 13 is kept separate, so pilferage goes to Section 13 and other loss goes to Section 23.

Section 22 (damage): This is not full remission. If goods were damaged or deteriorated, duty is abated in proportion to the fall in value. Section 23(2) is a different route: the owner may relinquish title before clearance and then pays no duty. It is not available for goods involved in an offence.

Key rules to remember

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.

How to solve Remission of Duty on Goods Lost, Destroyed or Damaged questions

Use this order for any question on loss, destruction, pilferage or damage of imported goods.

1Fix the stage. Find whether the goods are before the clearance order for home consumption (or warehouse deposit), in a warehouse, or already cleared.
2Identify the event: pilferage, other loss, destruction, or damage. Each has a different section.
3Pilferage: apply Section 13. No duty, unless the goods are restored to the importer.
4Loss other than pilferage, or destruction: apply Section 23(1). Duty is remitted if the officer is satisfied. Note the need to prove it.
5Damage: apply Section 22. Compute duty by the ratio of damaged value to original value. Check the conditions on fault for after-unloading damage.
6Check if the owner prefers to relinquish title under Section 23(2) or Section 68, and test the offence bar.
7State the result clearly: duty nil, duty abated to a figure, or duty fully payable, with the section as reason.

Quickest way: Section-picker shortcut

When to use it: For MCQs and short case questions where you must choose the right section quickly.

Stolen before clearance: Section 13.
Lost or destroyed (not stolen) before clearance: Section 23(1).
Damaged: Section 22 and a proportion sum.
Owner gives up the goods before clearance: Section 23(2), or Section 68 proviso if warehoused.
Goods already cleared and duty paid and defective: not these sections. Think Section 26A refund.
Offence involved: relinquishment is barred.

Common mistakes in Remission of Duty on Goods Lost, Destroyed or Damaged

Applying Section 23 to pilfered goods.
Pilferage feels like loss.
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.
Students ignore the time limit in the section.
Fix: Remission applies only before clearance for home consumption (or before the warehouse deposit order for pilferage). Always mark the stage first.
Forgetting that restored pilfered goods attract duty.
Students remember only the exemption.
Fix: Section 13 excepts goods restored to the importer after pilferage. Duty is payable on those.
Treating damage as full remission.
All three sections look like relief.
Fix: Section 22 gives only proportionate duty. Use Duty × damaged value ÷ original value.
Allowing relinquishment for goods involved in an offence.
The proviso is overlooked.
Fix: Both Section 23(2) and the Section 68 proviso bar relinquishment where an offence appears to have been committed.

Worked examples

Example 1

Mehta Traders imports machinery. Duty assessed is ₹4,00,000. Before the proper officer made any clearance order, goods worth part of the consignment were stolen from the port shed. The goods were never recovered. Does Mehta Traders pay duty on the stolen goods? Would your answer change if they were recovered and handed back to Mehta?

Show the solution

Stage: goods were unloaded and no order for clearance had been made, so the Section 13 window applies.
Event: theft, which is pilferage.
Rule: under Section 13, the importer is not liable to duty on pilfered goods.
Unrecovered goods: no duty on them.
If restored: Section 13 excepts goods restored to the importer after pilferage, so duty becomes payable.

Answer: No duty on the stolen goods while they are not recovered. If the goods are restored to Mehta Traders, duty is payable on them.

Example 2

Sharma Exports imports a consignment whose duty before damage is ₹2,40,000. Before it was unloaded, the goods were damaged at sea. The value before damage was ₹10,00,000. The officer ascertains the damaged goods' value at ₹6,00,000. Find the duty payable.

Show the solution

Event: damage before unloading in India, which falls under Section 22(1)(a). No fault test applies to this clause.
Formula: duty = duty before damage × value after damage ÷ value before damage.
Compute: ₹2,40,000 × 6,00,000 ÷ 10,00,000.
= ₹2,40,000 × 0.6 = ₹1,44,000.

Answer: Duty payable is ₹1,44,000. Abatement is ₹96,000.

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.

Practice questions from Remission of Duties

Remission of Duty on Goods Lost, Destroyed or Damaged: frequently asked questions

What is the difference between Section 13 and Section 23 of the Customs Act?

Section 13 deals only with pilferage after unloading and before clearance, and gives no duty liability unless goods are restored. Section 23(1) deals with other loss or destruction before clearance, and the officer remits duty once satisfied.

Is remission the same as abandonment of goods?

No. Remission under Section 23(1) is relief because goods are lost or destroyed. Relinquishment under Section 23(2) is a choice by the owner to give up title before clearance, after which no duty is payable.

Who decides remission of duty under Section 23?

The Assistant Commissioner of Customs or Deputy Commissioner of Customs. The importer must show the loss or destruction to that officer's satisfaction.

Can duty be remitted after goods are cleared for home consumption?

Not under Sections 13 or 23. Both apply before clearance. Defective goods already cleared may qualify for a refund under Section 26A, subject to its conditions.