Closing Customs Disputes Sans 'Stigma': Understanding Amendment To Customs Section 28(6)

The Union Budget 2026 signals a continued shift towards trust-based regulation and faster dispute closure across indirect tax administration. Amongst the reforms proposed in the Finance Bill, 2026 ('Finance Bill'), proposal for amendment to Section 28(6) of the Customs Act, 1962 ('Customs Act') is a notable change.

The Taxation Laws (Amendment) Act, 2006 introduced amendments to Section 28 of the Customs Act, allowing assesses to make voluntary payment of duty even in cases involving fraud or mis-statement. This amendment was intended to give trade a means to settle disputes at an early stage¹. In this backdrop, the proposed amendment to sub-section (6) of Section 28, marks a significant welcome. While preserving the existing quantum and timelines under the voluntary payment route, the amendment recharacterizes "penalty" paid under Section 28(5) as a "charge for non-payment of duty", thereby removing the long-standing stigma associated with the term.