Govt may introduce one-time amnesty scheme to resolve Customs disputes

The Union government is considering introducing a one-time amnesty scheme in the FY26 Budget to be presented on February 1, similar to the Vivad Se Vishwas scheme for income tax, to resolve pending Customs disputes, a senior government official said on condition of anonymity.

 

“The proposed ‘Amnesty Scheme under Customs’ aims to facilitate the settlement of past dues, offering relief to the industry by reducing the burden of litigation. Under the scheme, importers may receive relief for disputes related to the Customs Act, which could include partial waiver of the duty in dispute, depending on the amount involved, as well as a complete waiver of interest and penalties,” the source said.

 

The official said around 35,000 customs cases, involving over around Rs 50,000 crore are currently pending across various courts. 

“The implementation of an amnesty scheme could significantly reduce this backlog, boosting government revenue while providing much-needed relief to businesses," he added.

 

“One-time opportunity to settle past disputes has been offered to industry under income tax, erstwhile excise duty and service tax and more recently under GST laws. Over a period of time, a lot of disputes have arisen under customs laws as well relating to classification, exemption, and valuation,” said Pratik Jain, partner, PWC India.

 

Jain noted that a similar dispute resolution scheme under customs, which has been a long-standing demand of industry, not only can garner decent revenue for the government but would also substantially reduce the burden on courts.

 

“To ensure broad participation, in the customs amnesty scheme, the eligibility criteria should be simple, reasonable with minimal conditions, encouraging the industry to adopt it for reducing litigation, for as many cases as possible. By addressing even individual issues in multi-issue litigations, the scheme can provide much-needed relief and support businesses in moving forward with reduced pending litigations,” said Harpreet Singh, partner, Indirect Tax, Deloitte.

 

Under this scheme, holders of certain authorisations who failed to meet export obligations (EO) can regularise their cases by paying the customs duties that were exempted, proportional to the unfulfilled EO, along with an interest that is capped at 100 per cent.

 

The Directorate General of Foreign Trade introduced a one-time amnesty scheme on April 1, 2023 for exporters to close the pending authorisations under the Advance Authorisation (AA) and Export Promotion Capital Goods (EPCG) schemes. The last date of payment under the Amnesty Scheme was March 31, 2024.

 

While the Amnesty Scheme for AA and EPCG applies to disputes under the Foreign Trade Policy, the industry is now anticipating a similar scheme under the Customs Act to address broader issues related to Customs duty payments.

 

According to the government data, an amount of approximately Rs 954 crore as duty/interest has been recovered under the scheme for AA and EPCG.