Penalty in case of volntary payment of customs duty -revision of BOE

[Sudhir M]

Hi All, my client wants to pay differential customs duty voluntary due to TP adjustment. The question is whether penalty will be levied while paying differential customs duties voluntary paid by the client. - Pls answer as per the current provisions i.e., pre Budget 2025 and post that also

[YAGAY andSUN]

Under the Customs Act, 1962, if a person voluntarily pays the customs duty along with the applicable interest before the issuance of a show-cause notice, they are generally not liable for penalties. Section 28(1)(b) of the Act allows such voluntary payment, and upon informing the proper officer, no further notice or penalty is typically imposed.

However, if the non-payment or short-payment of duty results from collusion, willful misstatement, or suppression of facts, penalties may still apply, even if the duty and interest are paid voluntarily thereafter.

Therefore, while voluntary payment of customs duty and interest can prevent penalties, it's crucial to ensure that the underpayment isn't due to fraudulent or willful misconduct to avoid potential penalties.

AI Summary

Voluntary Customs Duty Payment Before Notice May Avoid Penalties Unless Fraud Involved Per Customs Act, 1962. A client intends to voluntarily pay the differential customs duty due to a transfer pricing adjustment and seeks to know if penalties will apply. According to the Customs Act, 1962, if the duty and applicable interest are paid voluntarily before a show-cause notice is issued, penalties are typically not imposed. However, if the underpayment is due to collusion, willful misstatement, or suppression of facts, penalties may still apply despite voluntary payment. It's important to ensure that the underpayment is not due to fraudulent actions to avoid potential penalties.