LEVY OF, AND EXEMPTION FROM, CUSTOMS DUTIESCentral

Section 18 of The Customs Act,1962

Provisional assessment of duty.

1 [(1) Notwithstanding anything contained in this Act but without prejudice to the provisions of section 46 2 [and section 50],--

(a)where the importer or exporter is unable to make self-assessment under sub-section (1) of section 17 and makes a request in writing to the proper officer for assessment; or
(b)where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or
(c)where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or
(d)where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry, the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duty provisionally assessed.] 2 [(1A) Where, pursuant to the provisional assessment under sub-section (1), if any document or information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner, as may be prescribed.]

(2)When the duty leviable on such goods is assessed finally 3 [or re-assessed by the proper officer] in accordance with the provisions of this Act, then--
1. (a)in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty 4 [finally assessed or re-assessed, as the case may be,] and if the amount so paid falls short of, or is in excess of 5 [the duty 4 [finally assessed or re-assessed, as the case may be,]], the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be;
2. (b)in the case of warehoused goods, the proper officer may, where the duty 4 [finally assessed or re-assessed, as the case may be,] is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty. 6 [(3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order 3 [or re-assessment order] under sub-section (2), at the rate fixed by the Central Government under section 7 [28AA] from the first day of the month in which the duty is provisionally assessed till the date of payment thereof.]
(4)Subject the sub-section (5), if any refundable amount referred to in clause (a) of sub-section (2) is not refunded under that sub-section within three months from the date of assessment, of duty finally 3 [or re-assessment of duty, as the case may be,] there shall be paid an interest on such un-refunded amount at such rate fixed by the Central Government under section 27A till the date of refund of such amount.]
(5)The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount is relatable to--
1. (a)the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
2. (b)the duty and interest, if any, paid on such duty on imports made by an individual for his personal use;
3. (c)the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
4. (d)the export duty as specified in section 26;
5. (e)drawback of duty payable under sections 74 and 75.]

Summary

Under Section 18 of the Customs Act, 1962, a proper customs officer can order a provisional assessment of duty when the final duty amount cannot be determined immediately.
This provisional assessment can be triggered if an importer or exporter makes a written request because they are unable to complete a self-assessment under Section 17.
It also applies if the customs officer needs to subject the imported or export goods to chemical or other tests, or if they need to carry out further inquiry because necessary documents are missing or incomplete.
To clear the goods under provisional assessment, the importer or exporter must provide security to cover any eventual difference between the provisional duty and the final duty.
If the final assessment shows that the duty paid was too low, the importer or exporter must pay the deficiency plus interest under Section 28AA from the first day of the month of provisional assessment.
If the final assessment shows an excess was paid, the owner is entitled to a refund, and if the refund is delayed beyond three months from the final assessment date, the government must pay interest under Section 27A.

Practical examples

1Ramesh imports a shipment of chemical polymers on November 12, 2025. The customs officer is unsure of the exact classification and decides to send a sample for lab testing. Under Section 18 of the Customs Act, 1962, Ramesh requests provisional assessment, deposits 50,000 rupees as provisional duty, and provides a bank guarantee as security. He clears his goods pending the lab results.

2Priya is exporting organic spices on December 5, 2025, but some of her certificates from the testing laboratory are delayed. Since she is unable to self-assess the goods under Section 17, she submits a written request to the proper officer under Section 18. The officer permits provisional assessment, and Priya clears her cargo for export after submitting a bond as security.

FAQ

1. When can provisional assessment of duty be requested under Section 18 of The Customs Act, 1962?

An importer or exporter can request provisional assessment under Section 18 of The Customs Act, 1962, in writing when they are unable to make a self-assessment under Section 17. It can also be ordered if the proper officer needs to perform chemical or other tests on the goods, or needs to make further inquiries because necessary documents or information are missing or incomplete.

2. What happens if an importer clears warehoused goods under provisional assessment under Section 18 of The Customs Act, 1962, and the final assessment is higher?

Under Section 18 of The Customs Act, 1962, if the goods are warehoused and the final or re-assessed duty is higher than the provisionally assessed duty, the proper officer may require the importer to execute a bond. This bond will bind the importer to pay a sum equal to twice the amount of the excess duty.

3. Is interest payable on unpaid duty under Section 18 of The Customs Act, 1962?

Yes, if the final assessment under Section 18 of The Customs Act, 1962, reveals a deficiency that the importer or exporter must pay, they are liable to pay interest on that outstanding amount. The interest is calculated at the rate fixed under Section 28AA, starting from the first day of the month in which the duty was provisionally assessed up to the date of actual payment.

4. How long does the government have to refund excess duty under Section 18 of The Customs Act, 1962, before interest starts to accumulate?

The government must refund any excess duty paid under Section 18 of The Customs Act, 1962, within three months from the date of final assessment or re-assessment. If the refund is not processed within this three-month window, the government must pay interest on the un-refunded amount at the rate fixed under Section 27A until the refund is actually paid.

Test yourself

1.Under Section 18 of The Customs Act, 1962, if an importer is unable to self-assess the duty on imported goods under Section 17, what must occur before the proper officer can order a provisional assessment?

2.Under Section 18 of The Customs Act, 1962, from which date is an importer liable to pay interest on any duty deficiency discovered during final assessment?

3.Under Section 18 of The Customs Act, 1962, if the final assessment of warehoused goods reveals a duty amount higher than what was provisionally assessed, what security measure can the proper officer require?

4.Under Section 18 of The Customs Act, 1962, if a refund of excess duty paid under provisional assessment is not returned to the importer within three months from the final assessment, how is interest calculated?

5.Under Section 18 of The Customs Act, 1962, how does a provisional assessment interact with the submission of imported goods under Section 46 or export goods under Section 50?

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