Introduction:
The Union Budget is more than just an annual financial statement—it is a roadmap that dictates economic priorities, policy shifts, and regulatory overhauls. As Benjamin Franklin wisely said, “In this world, nothing is certain except death and taxes.” In this vein, Budget 2025 has introduced pivotal amendments to the Customs Act, 1962, signaling significant transformations in trade facilitation and compliance frameworks.
This article aims to decipher the fine print of these amendments and assess their real-world impact rather than merely listing clause-wise changes. I hope this analysis will explore the practical implications for the stakeholders viz. importers/exporters/customs brokers/professionals/officials. Let’s delve into the specifics and unpack what Budget 2025 means for the future of customs regulations.
| Customs Act,1962: | |
| Section | 18: Provisional assessment of duty |
| Change | The following amendments have been proposed in the Finance Bill 2025 in Section 18.
(a) in sub-section (1), for the words “the proper officer may direct that the duty leviable on such goods, be assessed provisionally”, the following shall be substituted, namely:― “the proper officer may assess the duty leviable on such goods, provisionally,”; (b) in sub-section (1A), for the words “within such time and in such manner”, the words “in such manner” shall be substituted; (c) after sub-section (1A), the following sub-sections shall be inserted, namely:–– “(1B) The proper officer shall finalise the duty provisionally assessed, within two years from the date of such assessment under sub-section (1): Provided that the Principal Commissioner of Customs or the Commissioner of Customs may, on sufficient cause being shown and for reasons to be recorded in writing, extend the said period to a further period of one year: Provided further that in respect of any provisional assessment pending under sub-section (1) as on the date on which the Finance Bill, 2025 receives the assent of the President, the said period of two years shall be reckoned from the date on which the said Finance Bill receives the assent of the President. (1C) Where the proper officer is unable to assess the duty finally within the time specified under sub-section (1B) for the reason that– (a) an information is being sought from an authority outside India through a legal process; or (b) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or (c) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or (d) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; or (e) the importer or exporter has a pending application before the Settlement Commission or the Interim Board. |
| Impact | > As per the existing provisions, there is no explicit time limit prescribed under the Customs Act,1962. Of course, we have a regulation viz. Customs (Finalisation of Provisional Assessment) Regulations, 2018 which deals with the finalization of provisional assessment. However, the relevant date is reckoned as from the date of intimation by the importer/exporter under regulation 4(7) only. In other words, even though there is two months time limit fixed for finalization under the said regulation, the reckoning date is not calculated from the date of provisional assessment. With this amendment, there is a mandate in the statue itself to finalize the provisional assessment within two years from the date of provisional assessment.
> The said two years time limit may further be extended for one more year by the Principal Commissioner / Commissioner of Customs on sufficient cause being shown. > All the pending provisional assessment cases have to be finalized within two years from the date on which the Finance Bill receives assent from the President of India. > However, there are certain situations, similar to call book category, under which this time limit is not applicable. The proper officer shall intimate the reason for non-finalization within the time limit to the party concerned. > Now the department is under compulsion to complete the investigations in case where the goods are released on the basis of provisional assessment viz. valuation / classification / SVB disputes etc. |
| Section | 18A: Voluntary Revision of entry, post clearance |
| Change | The Finance Bill has proposed to insert a new Section, namely 18A, to enable the importer/exporter to revise the entries made in Bill of Entry / Shipping, post clearance. Section 18A reads as under.
18A. (1) Notwithstanding anything contained in section 149, the importer or exporter of the goods, after the clearance, may revise an entry already made in relation to the goods, in such form and manner, within such time and subject to such conditions as may be prescribed. (2) On revising the entry under sub-section (1), the importer or exporter of the goods shall self-assess the duty. (3) Where the revised entry and self-assessment made under sub-sections (1) and (2) results in– (a) any duty short-levied, not levied, short-paid or not paid, then the same may be paid voluntarily by the importer or exporter of such goods along with the interest under section 28AA. (b) duty paid in excess of that payable on such goods or whole of the duty paid, requiring refund, then, such revised entry shall be deemed to be a claim for refund under section 27. (4) The proper officer may,– (a) verify the revised entry and self-assessment made under sub-sections (1) and (2) in cases selected primarily on the basis of risk evaluation through appropriate selection criteria; (b) (b) re-assess the duty leviable on such goods in cases where the self-assessment under sub-section (2) is not done correctly; (5) No revision of entry shall be made under this section in the following cases, namely:– (a) cases where any audit under Chapter XIIA or search, seizure or summons under Chapter XIII has been initiated and intimated to the importer or the exporter concerned; (b) cases requiring refund where the proper officer has re-assessed the duty under section 17 or assessed the duty under section 18 or under section 84; (c) (c) any other case which the Board may specify by notification in the Official Gazette. |
| Impact | > A new section has been inserted which comes with non-obstinate clause and hence, it has overriding effect of Section 149.
> Until now, if any inadvertent error or incorrect self-assessment in BE/SB has to be settled either by way of appeal or filing a request for rectification under Section 149. It is germane to mention here that Section 149 is normally used to correct inadvertent errors only, even though it has the scope to cover duty liability after post clearance. > However, with this new Section, the importer / exporter themselves revise the entry i.e. they themselves make the amendment. And of course, it is subject to the scrutiny and acceptance or re-assessment by the proper officer. > This section excludes the scenarios where the department has already initiated investigation / audit etc. Hence, in such cases, revision is not permitted. This section has also got an enabling mechanism for the Govt. to notify additional grounds / scenarios under which revision is not permitted. > It is needless to mention that in case of short-payment of duty, the importer/exporter, on revision, is liable to pay interest too under Section 28AA. > However, it is worth highlighting that in case of excess payment of duty, the exercise of this revision is deemed to be a claim of refund. |
| Section | 27: Claim for refund of duty |
| Change | The Finance Bill 2025 has proposed to insert a new explanation clause to Section 27, which reads as under.
“Explanation 2.–– For the removal of doubts, it is hereby clarified that the period of limitation of one year in case of claim of refund under clause (b) of sub-section (3) of section 18A or amendment of documents under section 149, shall be computed from the date of payment of such duty or interest. |
| Impact | This is a consequential or a corollary to insertion of new Section 18A. It is made clear that in case of refund under Sec. 18A(3)(b) i.e. refund on account of revision, the time limit will be computed from the date of payment of duty / interest. |
| Section | 28: Recovery of Duty |
| Change | A new clause has been inserted in Section 28, which reads as under.
(ba) in a case where duty is paid under clause (a) of sub-section (3) of section 18A, the date of payment of duty or interest. |
| Impact | It is also a corollary to insertion of new Section 18A. Section 28 provides recovery of duty in certain cases. The time limit to issue SCN under Section 28 is 3 years and 5 years for other than suppression and suppression cases. Hence, it is made clear that in case of demand arising out of the revision of entry made under Section 18A, the date of payment on revision shall be taken as the relevant date for the purpose of issuing SCN. |
| Section | 127A: New Definition inserted for Settlement of Cases. |
| Change | Section 127A provides definition for certain terms related to Settlement of Cases i.e. in respect of the cases filed before the Settlement Commission. In order to align with the amendments made in Sections 127 B and 127C, new definitions have been inserted, namely,-
‘(da) “Interim Board” means the Interim Board for Settlement constituted under section 31A of the Central Excise Act, 1944; (ea) “pending application” means an application filed under section 127B before the 1st day of April, 2025 and fulfils the following conditions, namely:- (i) it has been allowed under section 127C; and (ii) no order under sub-section (5) of section 127C was issued on or before the 31st day of March, 2025 with respect to such application |
| Section 127B: Application for settlement of cases | |
| In section 127B of the Customs Act, after sub-section (5), the following provisos shall be inserted, namely:–
Provided that no application shall be made under this section on or after the 1st day of April, 2025: Provided further that on and from the date of the constitution of the Interim Board, every pending application shall be dealt by it from the stage at which such pending application stood immediately before its constitution. |
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| Section 127C: Procedure on receipt of application under section 127B | |
| In section 127C of the Customs Act, after sub-section (10), the following sub-sections shall be inserted, namely:–
‘(11) On and from the 1st day of April, 2025,– (a) the provisions of sub-sections (2), (3), (4), (5), (5A), (7), (8) and (8A) shall apply to pending applications with the modification that for the words “Settlement Commission”, wherever they occur, the words “Interim Board” shall be substituted. (b) in sub-section (3), for the words “seven days from the date of order”, the words “seven days from the date of receipt of the order” shall be substituted. (c) in sub-section (7), for the word “Bench”, the words “Interim Board” shall be substituted. (d) the provisions of sub-section (10) shall have effect as if for the words “Settlement Commission”, the words “Settlement Commission or the Interim Board” had been substituted. (12) Notwithstanding anything contained in this section, the Interim Board may, within three months from the date of its constitution under section 31A of the Central Excise Act, 1944, for the reasons to be recorded in writing, extend the time limit referred to in sub-section (8A), by such further period not exceeding twelve months from the date of such constitution. |
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| Section127D: Power of Settlement Commission to order provisional attachment to protect revenue. | |
| In section 127D of the Customs Act, after sub-section (2), the following sub-section shall be inserted, namely:–
“(3) On and from the 1st day of April, 2025, the power of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission.”. |
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| Section 127F: Power and procedure of Settlement Commission | |
| In section 127F of the Customs Act, after sub-section (4), the following sub-section shall be inserted, namely:–
(5) On and from the 1st day of April, 2025, the powers and functions of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission |
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| Section 127G: Inspection, etc., of reports | |
| In section 127G of the Customs Act, after the first proviso, the following proviso shall be inserted, namely:–
“Provided further that on and from the 1st day of April, 2025, the functions of the Settlement Commission under this section shall be performed by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission. |
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| Section 127H: Power of Settlement Commission to grant immunity from prosecution and penalty | |
| In section 127H of the Customs Act, after sub-section (3), the following sub-section shall be inserted, namely:–
(4) On and from the 1st day of April, 2025, the power of the Settlement Commission under this section shall be exercised by the Interim Board and the provisions of this section shall mutatis mutandis apply to the Interim Board as they apply to the Settlement Commission. |
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| Impact | > All the above Sections pertain to Settlement Commission and hence, the impact of these sections is discussed together. Now the Govt. has replaced the constitution of Settlement Commission with the newly constituted Interim Board.
> The Settlement Commission is not going to receive any new applications from the date of 01.04.2025; > And even the pending cases will be dealt by the Interim Board from the stage at which such pending cases stood immediately before “Interim Board” is constituted. > In other words, the existing Settlement Commission is abolished. > It is understood, from newly inserted Section 31A of CEA, that the Govt. may constitute one or more Interim Boards for settlement of cases. > Every Interim Board shall consist of three members of the rank of Chief Commissioner or above. > There is no indication that this Interim Board may function as a separate forum like Settlement of Commission, instead it may function like Committee of Chief Commissioners for the purpose of Settlement of Cases. > In case of any difference of opinion among the members of Interim Board, the decision will be arrived by the opinion of the majority. > The existing Settlement Commission shall cease to function w.e.f. 01.04.2025. |
| Other significant provisions in the Budget pertaining to EXIM | |
| MSME | The investment and turnover thresholds for classifying MSMEs have been significantly raised, with the investment limit increased by 2.5 times and the turnover limit by 2 times |
| Well performing MSMEs in the export sector will now be eligible for term loans of up to ₹20 crore, aimed to fuel their business growth and expansion | |
| Export Incentives | The Footwear and Leather sectors are set to benefit from the expansion of the Focus Product Scheme, a strategic move aimed at boosting exports to the tune of ₹1.1 lakh crore |
| The Handicrafts Sector has received a significant boost, with the export period extended from 6 months to 1 year, and the possibility of an additional 3-month extension if needed. Additionally, 9 new items have been included in the duty-free input list, further supporting the sector’s growth and global competitiveness | |
| Crust Leather has been granted a 20% export duty exemption, a move designed to provide crucial support to small-scale tanners and exporters, enhancing their competitiveness in the global market. | |
| Ease of Doing in Export Sector | Establishment of an Export Promotion Mission, jointly spearheaded by the Ministries of Commerce, MSME, and Finance, aimed at:
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| Launch of ‘BharatTradeNet’ (BTN) – a unified digital platform for trade documentation and financing solutions | |
| Development of a national framework to encourage Global Capability Centres (GCCs) in Tier-2 cities to strengthen trade infrastructure | |
| Strengthening air cargo infrastructure and warehousing to facilitate the export of high-value perishable horticulture produce | |
Conclusion:
Among the various amendments introduced in Budget 2025, the provision allowing exporters and importers to independently revise their Shipping Bill/Bill of Entry stands out as a progressive reform. This reflects the government’s commitment to enhancing ease of doing business across all possible areas.
I have made a sincere effort to decode and simplify these amendments to the best of my ability. However, as with any evolving legal framework, interpretations may vary. Readers are encouraged to refer to the official text of the Finance Bill 2025 for precise details and clarifications. Since healthy discussions and diverse viewpoints enrich our collective understanding, I warmly welcome any insights, differing perspectives or feedback from the readers.
Happy Learning!!!
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Disclaimer: (i) The views expressed in this article are strictly confined to the author’s personal views, only. (ii) The author disclaims all liability in respect of any action taken or not taken based on this article)
| Name of the Author | A. SIVA |
| Post | Superintendent of Customs, Tuticorin |
Author Bio
Thanks Mr Siva for your informative note on Customs and Trade related Noted on Budget 2024. We in Tuticorin need to dive deep and encourage knowledge based environment to be informed citizens and Decision makers in Nation Building.,