How do I respond to a customs show cause notice, and how does a customs appeal work?

Short answer

A customs demand must be raised within two years, or five where there is collusion, wilful misstatement or suppression. Paying duty and interest before the notice closes most non-fraud cases. Appeals go to the Commissioner (Appeals) within 60 days with a 7.5% pre-deposit, and then to CESTAT within three months, with the pre-deposit raised to 10% in all, capped at ₹10 crore at each stage.

The show cause notice (section 28)

Case	Time limit for the notice	Paying before or after the notice
Normal (no fraud)	2 years from the relevant date	Pay duty and interest before the notice, and no notice is issued for that amount
Collusion, wilful misstatement or suppression	5 years	Duty, interest and 15% penalty before the notice; 25% within 30 days of the notice

For normal cases, the department usually holds a pre-notice consultation first. Use it: many disputes on classification and valuation are settled there.

The order is to be passed, where possible, within 6 months (normal) or 1 year (fraud) of the notice. Interest on short-paid duty runs under section 28AA.

Replying

Get the relied-upon documents listed in the notice.
Reply point by point, on facts, classification or valuation, with the tariff, notifications, board circulars and judgments.
Attend the personal hearing, or ask for an adjournment in writing.
If you agree with part of the demand, pay that part with interest, to limit the dispute.

Appeals

Stage	Time limit	Pre-deposit
Commissioner (Appeals) (section 128), against orders of officers below Commissioner	60 days, extendable by 30 days	7.5% of duty, or of penalty where only penalty is disputed
CESTAT (section 129A)	3 months from the order	10% (including what was paid at the first stage)
High Court	On a substantial question of law	—
Supreme Court	Directly from CESTAT in rate and valuation cases	—

Pre-deposit is capped at ₹10 crore at each stage. Once it is paid and the appeal is filed, recovery of the balance is stayed. Interest is paid on the pre-deposit if you win.

Practical points

Keep classification and valuation positions consistent across ports and shipments.
Settle clerical errors through amendment or re-assessment requests rather than letting them become demands.
Small and procedural matters are often better settled than litigated; disputes on rate or valuation that recur are worth taking up.

Legal basis

Sections 28, 28AA, 128, 129A and 129E, Customs Act, 1962
Pre-Notice Consultation Regulations, 2018

Official sources

By CA Ameesh Gupta, FCA, DISA (ICAI) | Last reviewed: 8 November 2026. General information, not advice on your facts: the law changes and outcomes depend on the details of each case.