TaxTMI 
TaxTMI 
A high-value demand lands on your desk. Several crores. Your instinct is either to pay or to fight it out in court. But hold on. Before you do either, there's something worth evaluating first.
The section matters. More than you'd think.
Your notice says Section 28(1) or 28(4). Seems like a technical detail. It's actually your whole defense strategy.
Section 28(1): routine cases. Misclassification. Undervaluation. Procedural slip-ups. These are the everyday stuff Customs comes after.
Here's your play: anything they demand beyond two years from your import date? Challengeable. That's a hard stop. You can defend that position.
Section 28(4): This is where they allege fraud. Wilful misstatement. Suppression of facts. The serious stuff.
Two key differences. One, they can go back five years instead of two. But here's the other side: they have to prove the fraud actually happened. If they can't make that stick-if they don't have solid evidence of actual misrepresentation-the whole demand collapses.
That's your second play.
Most importers don't leverage this distinction. They see a notice and assume they're stuck. Game over.
But there's more to consider.
You might end up paying the duty. Sometimes that's the right call-settle it and move on. But here's what gets missed:
That IGST component you paid as part of the Customs duty? You can claim it as an input tax credit. Clean claim under Sections 16 and 17 of the CGST Act. Rule 36(4) of the CGST Rules supports it.
Will GST authorities challenge it at the first level?
They often do. But here's what matters: you can defend it. GSTAT. High Court. The appellate forums are where this gets reversed.
If you have a live Customs notice right now-whether it's Section 28(1) or 28(4)-this distinction alone could shift your liability calculation. The IGST credit recovery could bring back meaningful cash.
Worth a conversation with your compliance team before you respond to the notice.
What's your approach been on notices like this?
That Customs notice in your hand isn't as final as it looks.
Pradeep Reddy Unnathi Partners
Customs demand classification and igst credit determine limitation, evidentiary burden, and input tax treatment. Customs demand notices require careful classification between Section 28(1) and Section 28(4), because the applicable provision affects limitation and defence strategy. Routine demands involving misclassification, undervaluation, or procedural errors fall under Section 28(1), while fraud, wilful misstatement, or suppression of facts under Section 28(4) extends the look-back period and requires proof of actual misrepresentation. The discussion also notes that IGST paid as part of customs duty may be claimed as input tax credit under Sections 16 and 17 of the CGST Act, supported by Rule 36(4) of the CGST Rules. (AI Summary)