Quick answer: In Ridhi Sidhi Overseas v. Principal Commissioner of Customs & Ors., decided on 16 September 2026, a Division Bench of the Delhi High Court (Anil Kshetarpal and Shail Jain, JJ.) dismissed a writ petition challenging a Customs Settlement Commission order that appropriated ₹70,20,348 of a ₹85,00,000 voluntary deposit towards differential customs duty for imports falling beyond the five-year extended period prescribed by Section 28 of the Customs Act, 1962. The petitioner, an importer of confectionery items found to have under-invoiced 21 consignments, argued that the appropriation amounted to enforcing a time-barred demand. The Court held that Section 28’s limitation restricts the Department’s statutory power to raise a fresh demand after the period expires, but does not prevent a Settlement Commission from giving effect to an amount the importer had already, and without qualification, admitted as owed and specifically asked to have adjusted against that very liability. The petition was dismissed, and the Settlement Commission’s Final Order dated 26 February 2018 was upheld in its entirety.
Key Takeaways
- Limitation bars a fresh demand, not the appropriation of an already-admitted voluntary payment. Section 28 of the Customs Act, 1962 restricts the Revenue’s statutory power to raise a demand for duty after the prescribed period expires, but it does not disable a Settlement Commission from appropriating, towards that very period, an amount the importer had voluntarily deposited and, in an unretracted statement, specifically asked to have adjusted against the differential duty for the years in question.
- An unretracted admission, left unrebutted in writ proceedings, becomes very difficult to dislodge. Where an importer’s own recorded statement supplies the factual basis for an adjustment, and the importer neither produces that statement before the writ court nor files a rejoinder controverting the Department’s counter-affidavit, the writ court has no material on which to reappreciate the Settlement Commission’s factual findings.
- A cited precedent must be checked against its own facts, not merely its headline proposition. The Court declined to apply C.J. Shah & Co. v. Union of India, which concerned Anti-Dumping Duty, a disputed country of origin, and a payment made expressly “without prejudice” — circumstances materially different from an unqualified, unretracted admission volunteered during a customs valuation investigation.
- Section 127J finality does not oust Article 226, but it does confine the standard of review. A Settlement Commission order can be examined under writ jurisdiction for want of jurisdiction, breach of natural justice, or manifest error of law, but a writ court will not reappreciate the Commission’s factual findings as though sitting in appeal over them.
- The character of a payment made during investigation should be fixed deliberately, not left to later argument. An importer who wants to preserve the right to contest a limitation defence later should ensure any interim payment, and any accompanying statement, is made expressly without prejudice and without specifying how it is to be adjusted — a deposit accompanied by an unqualified admission and a specific adjustment request forecloses that route.
1. Introduction
Section 28 of the Customs Act, 1962 draws a familiar line: the Department may ordinarily demand duty within two years of the relevant date, extended to five years where the short-levy or non-levy arises from collusion, wilful misstatement or suppression of facts. Once that extended period lapses, the statutory machinery for compelling payment lapses with it. But customs investigations rarely end with the Department simply walking away from a stale claim. Importers under investigation frequently make voluntary deposits before any demand crystallises, and their statements — recorded under compulsion of an ongoing inquiry but not always retracted afterwards — often specify, in advance, how those deposits are to be applied. The question that then arises, usually years later when the matter reaches a Settlement Commission or a court, is whether limitation attaches to the deposit itself, or only to the Department’s power to demand what was never voluntarily paid.
Ridhi Sidhi Overseas v. Principal Commissioner of Customs, decided by the Delhi High Court on 16 September 2026, confronts that question directly. An importer of confectionery items, investigated for under-invoicing across 21 consignments spanning three financial years, voluntarily deposited over ₹85 lakh during the investigation and, through its proprietor’s statement, both admitted the full quantum of differential duty and specified how the deposit should be applied. When the Customs Settlement Commission later gave effect to that stated intention — appropriating part of the deposit towards duty for years that fell outside Section 28’s five-year window — the importer challenged the appropriation as an impermissible, back-door recovery of a time-barred demand. This article traces the investigation, the settlement proceedings, and the Court’s reasoning for treating the appropriation of an admitted, voluntary deposit as categorically different from the statutory demand mechanism that limitation actually restrains, before turning to what the decision means for importers navigating a customs investigation and a subsequent settlement application.
2. Case summary and background
The petitioner, Ridhi Sidhi Overseas, is a proprietary concern of Shri Navin Singh. Between 2008-09 and 2010-11, it imported 21 consignments of assorted confectionery items — wafers, cookies and toffees — from M/s Seville Products Ltd., Dubai, through the ports of Nhava Sheva, ICD Tughlakabad and Chennai. The Directorate of Revenue Intelligence, Mumbai Zonal Unit, developed intelligence that importers of such goods were declaring transaction values and Retail Sale Prices lower than the actual values, with the differential remitted to the overseas supplier through non-banking channels. Searches were conducted on 18 October 2013 at the premises of Shri Prakash Menon, the Indian representative of Seville Products, and on 10 February 2014 at the petitioner’s own premises. The searches recovered invoices and statements of account maintained by Seville Products showing values higher than those declared to Customs at the time of clearance.
In statements recorded on 11 February 2014 and 26 June 2015, Shri Navin Singh admitted that the recovered documents reflected the actual value of the imported consignments, that the difference between the actual and declared invoices had been paid through Shri Sumit Khandelwal and Shri Manoj Dugar (directors of M/s Dugar Overseas Pvt. Ltd.), and that the Retail Sale Price declared for the goods had been misdeclared. The investigation quantified the total differential customs duty across the 21 Bills of Entry at ₹1,15,88,712 — of which ₹45,68,364, relating to 8 Bills of Entry, fell within the five-year period from the relevant dates, and ₹70,20,348, relating to the remaining 13 Bills of Entry, fell beyond it. During the investigation, the petitioner voluntarily deposited ₹85,00,000. In his statement of 26 June 2015, Shri Navin Singh admitted the full differential liability of ₹1,15,88,712 and stated that the ₹85,00,000 already deposited should be adjusted towards the differential duty payable for the period 2008-09 to 2010-11 — a period covering both the within-limitation and beyond-limitation Bills of Entry.
A show cause notice dated 21 August 2015 followed, proposing re-determination of the transaction value and Retail Sale Price under Section 14 of the Customs Act read with Rule 3(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007; a fresh demand of ₹45,68,364 for the within-limitation period under the extended period contemplated by Section 28, with applicable interest; appropriation of ₹70,20,348 from the ₹85,00,000 deposit towards the beyond-limitation period; confiscation of the imported goods (though no longer physically available) under Sections 111(d) and 111(m); penalty on Shri Navin Singh; penalty under Section 112(a) on Seville Products Ltd., its CEO Mrs. Prerna Singh, and on Shri Khandelwal and Shri Dugar; and appropriation of the remaining ₹14,79,652 of the deposit towards the within-limitation duty and interest liability. Because the notice was answerable to three different jurisdictional adjudicating authorities, the petitioner applied to the Customs, Central Excise and Service Tax Settlement Commission, Principal Bench, under Chapter XIV-A of the Customs Act, admitting the ₹45,68,364 within-limitation liability together with interest of ₹30,73,905, while disputing its liability for the ₹70,20,348 beyond-limitation amount as barred under Section 28, and seeking waiver of redemption fine and immunity from prosecution and penalty.
By its Final Order dated 26 February 2018, passed under Section 127C(5) of the Customs Act, the Settlement Commission accepted the ₹45,68,364 liability as settled. On the beyond-limitation amount, it held that while Section 28’s limitation restricted the Department’s statutory power to raise a fresh demand, it did not prevent the importer from voluntarily paying the liability, and — relying specifically on Shri Navin Singh’s unretracted statement of 26 June 2015 — appropriated ₹70,20,348 from the ₹85,00,000 deposit towards that amount. The balance of ₹14,79,652 was applied towards the settled within-limitation liability, leaving a balance duty figure the Commission recorded as ₹30,88,712. No redemption fine was imposed, since the goods were neither available nor seized; penalties were imposed on the petitioner and co-applicants, and immunity from prosecution was granted subject to conditions. The petitioner challenged only the appropriation of ₹70,20,348, filing the present writ petition; the challenge, filed in 2018, came to be finally heard and decided in September 2026.
3. Legal analysis
3.1 The issue framed
The Court framed the question narrowly: not whether the Department could, after the Section 28 period expired, initiate a fresh proceeding to recover ₹70,20,348, but whether the Settlement Commission — in proceedings the petitioner itself had invoked — could take into account an amount the petitioner had already voluntarily deposited, and direct its appropriation in the manner the petitioner’s own proprietor had specified. That framing determined the outcome: the petitioner’s submissions largely argued the first question, which the Court agreed the Department could not do, while the Commission’s order in fact turned on the second.
3.2 Distinguishing a statutory demand from an already-admitted voluntary payment
The Court held that the ₹85,00,000 deposit was made voluntarily during investigation, and that Shri Navin Singh’s statement of 26 June 2015 — admitting the total differential duty liability of ₹1,15,88,712 and specifically requesting that the deposit be adjusted against the liability for the period 2008-09 to 2010-11 — supplied the factual basis for the Settlement Commission’s appropriation. The Department, in its counter-affidavit, reiterated this position, quoting the statement’s substance: that Shri Navin Singh had admitted involvement in duty evasion, accepted liability for the full ₹1,15,88,712, and undertaken to pay the outstanding balance. On this footing, the Court held it was not a case of the Revenue unilaterally recovering a time-barred sum after Section 28’s period had run; rather, the Settlement Commission was giving effect to a liability the importer had already admitted and to a deposit the importer had already made and asked to have applied precisely as the Commission applied it. The principle that limitation bars the remedy without necessarily extinguishing the underlying right or liability — a proposition the Department traced to India Cements Ltd. v. Collector of Central Excise, Madras, 1984 (18) E.L.T. 499 (Trib.) — was noted by the Court as relevant background to that distinction, without the Court needing to rest its decision on the full breadth of that proposition, since the narrower point about appropriating an already-made voluntary deposit was sufficient to dispose of the case.
3.3 The evidentiary consequence of an unrebutted record
A significant part of the Court’s reasoning turned on what the petitioner had — and had not — placed before it. The petitioner did not produce the statements of 11 February 2014 or 26 June 2015 to the writ court, and filed no rejoinder to the Department’s counter-affidavit, which had specifically reiterated the substance of the 26 June 2015 statement. The Court held that, in the absence of any material demonstrating that the statement had been retracted or that the Settlement Commission’s factual findings were otherwise incorrect, there was no basis on which a writ court could dislodge those findings. The petitioner’s submission that it had never sought to adjust the ₹70,20,348 amount was met with the Court’s observation that the position taken in the settlement application — disputing that specific liability as time-barred — was a different thing from the request Shri Navin Singh had made during investigation, in his own statement, as to how the deposit should be applied; the Settlement Commission was entitled to act on the latter regardless of the stance later taken in the settlement application.
3.4 Distinguishing C.J. Shah & Co.
The petitioner’s principal authority was C.J. Shah & Co. v. Union of India & Anr., (2018) 359 E.L.T. 22 (Bom.), cited for the proposition that the Revenue cannot recover a demand barred by limitation. The Court declined to apply it, on two grounds appearing on the face of that decision as relied upon by the petitioner. First, the payment considered in C.J. Shah & Co. was made expressly without prejudice to the assessee’s rights and contentions — unlike the unqualified and unretracted admission and adjustment request made by Shri Navin Singh. Second, C.J. Shah & Co. arose out of an Anti-Dumping Duty dispute turning on a contested country of origin — the goods were later found to be of Chinese rather than Taiwanese origin — a materially different factual and legal controversy from a customs valuation case concerning under-invoicing. The Court’s treatment illustrates a recurring feature of customs and indirect tax litigation: a broadly worded proposition extracted from a precedent’s headnote can mislead unless tested against the specific facts — the character of the payment, and the underlying dispute — that produced it.
3.5 The scope of judicial review over a Settlement Commission order
The Court addressed, as a distinct issue, the standard by which a writ court reviews a Settlement Commission order. Section 127J of the Customs Act confers finality on an order of settlement, but the Court held that this statutory finality does not exclude the constitutional jurisdiction under Article 226. That said, the availability of judicial review does not convert the writ jurisdiction into an appellate jurisdiction over the Commission’s factual findings: interference remains available where the Commission has acted without jurisdiction, breached natural justice, committed a manifest error of law, or reached a conclusion wholly unsupported by the record. None of those grounds was made out. The petitioner had itself invoked the Settlement Commission’s jurisdiction under Chapter XIV-A, and the Commission had considered the admission on the within-limitation liability, the objection to the beyond-limitation amount, the voluntary deposit, and Shri Navin Singh’s statements before arriving at its conclusion on appropriation.
3.6 What remains unresolved, and whether the reasoning survives changes to the forum
The Court was careful to confine its holding to the specific factual situation before it — the appropriation of an amount already voluntarily deposited and admitted — and stated expressly that the finding should not be understood as diluting or extending the statutory limitation period under Section 28. The decision does not purport to hold that a Settlement Commission, or an adjudicating authority generally, may treat any payment made during investigation as an unconditional admission regardless of the terms on which it was made; the outcome turned specifically on the unretracted, unqualified character of the admission and the request for adjustment. It is also worth noting, as background rather than as part of the Court’s reasoning, that the erstwhile Customs, Central Excise and Service Tax Settlement Commission was itself wound down for fresh applications with effect from 1 February 2021 under the Finance Act, 2021, with pending applications transferred to Interim Boards for Settlement constituted for that purpose. That structural change to the forum does not affect the substance of the Court’s reasoning on the Section 28 distinction, which rests on the general relationship between a statutory limitation on demand and the treatment of an already-made voluntary payment — a distinction equally relevant to an Interim Board exercising the same Chapter XIV-A jurisdiction, or indeed to any adjudicating authority confronted with a similar voluntary deposit.
4. Practical significance
For importers under DRI or DGGI investigation, the decision underscores that the character of a voluntary deposit, and of any accompanying statement, is fixed at the time it is made — not at the time a limitation defence is later raised. An importer who wishes to preserve the ability to contest appropriation of a deposit towards a period it considers time-barred should ensure, at the point of payment, that the deposit is made expressly without prejudice to its rights and contentions, and that any accompanying statement does not specify, unconditionally, how the amount is to be adjusted across different periods. Once a statement admits the full quantum of liability and requests a particular adjustment, and that statement is not later retracted, a Settlement Commission — and a reviewing court — will treat the resulting appropriation as giving effect to the importer’s own instruction rather than as an exercise of the Department’s time-barred demand power.
The decision also carries a distinct litigation-conduct lesson. Having chosen to file a writ petition rather than accept the Settlement Commission’s order, the petitioner needed to displace the Commission’s factual findings; instead, it neither placed the underlying statements before the Court nor filed a rejoinder to the Department’s counter-affidavit reiterating their substance. Counsel handling a challenge to a Settlement Commission or similar quasi-judicial order should treat the writ petition as an occasion to affirmatively controvert the record relied upon below — silence or omission at that stage will ordinarily be read as leaving the impugned findings undisturbed, since a writ court reviewing such an order is not positioned, and generally unwilling, to reappreciate a factual record the petitioner has not put in issue.
More broadly, the decision is a caution for advocates advising clients during a customs investigation before any settlement application is contemplated. Statements recorded under Section 108 of the Customs Act carry consequences well beyond the investigation stage: an unretracted admission of quantum, coupled with an unconditional instruction on how a deposit should be applied, can bind the deponent’s position even where a later Settlement Commission application, or writ challenge, seeks to characterise part of that same liability as time-barred. Advisers should treat the framing of any voluntary payment and accompanying statement, at the investigation stage, as itself a strategic decision with downstream consequences for limitation defences that might otherwise be available.
Finally, for taxpayers relying on the general proposition that “limitation bars recovery,” the decision is a reminder to test any cited authority against its own facts before relying on it — a Bombay High Court decision on Anti-Dumping Duty and a disputed country of origin, involving a without-prejudice payment, does not automatically transfer to a customs valuation dispute involving an unqualified, unretracted admission. The same caution applies in reverse: taxpayers who do make payments during investigation without prejudice, and without specifying an adjustment, retain a materially stronger position to contest appropriation of those amounts towards a time-barred period than one who, like the petitioner here, leaves an unretracted and unconditional admission on the record.
5. Conclusion
Ridhi Sidhi Overseas does not disturb the settled position that Section 28 of the Customs Act bars the Department from raising a fresh demand for duty after the prescribed period, including its five-year extended period for cases of collusion, wilful misstatement or suppression. What it clarifies is that this bar operates on the Department’s own power to demand — it does not reach back to unwind an appropriation the Settlement Commission makes of an amount the importer has already, voluntarily and without qualification, admitted as owed and asked to have applied against exactly that liability. The distinction is narrow but consequential, and it places the practical burden squarely on importers and their advisers to control, at the time any voluntary payment is made during investigation, the terms on which that payment is offered.
The decision also reinforces the limited compass of writ review over Settlement Commission orders: Section 127J’s finality does not close the door to Article 226, but a petitioner seeking to walk through that door must actually contest the record below — producing the statements in question, filing a rejoinder, and identifying a jurisdictional defect, a breach of natural justice, or a manifest error of law — rather than simply reasserting, before the writ court, an argument that the Commission has already weighed and rejected on the facts. For practitioners advising importers at the investigation stage, the case is best read alongside the practical significance discussed above: the moment to protect a limitation defence over a voluntary deposit is when the deposit is made and the statement recorded, not years later before a Settlement Commission or a court.
Authorities
Considered and distinguished by the Court
- C.J. Shah & Co. v. Union of India & Anr., (2018) 359 E.L.T. 22 (Bom.) — relied upon by the petitioner for the proposition that the Revenue cannot recover a demand barred by limitation; distinguished by the Court on the ground that the payment there was made without prejudice and the case concerned Anti-Dumping Duty and a disputed country of origin, materially different from an unqualified, unretracted admission in a valuation dispute.
Noted as relevant background
- India Cements Ltd. v. Collector of Central Excise, Madras, 1984 (18) E.L.T. 499 (Trib.) — relied upon by the Department for the proposition that expiry of limitation bars the remedy without, by itself, extinguishing the underlying right; noted by the Court as relevant to the distinction it drew, without being treated as independently decisive.
Legislation and rules considered
| Instrument | Provisions | Source |
|---|---|---|
| Customs Act, 1962 | Sections 14, 28, 111(d), 111(m), 112(a), 127C(5), 127J, Chapter XIV-A | https://www.indiacode.nic.in/ |
| Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 | Rule 3(1) | https://www.indiacode.nic.in/ |
| Constitution of India | Article 226 | https://www.indiacode.nic.in/ |
| Finance Act, 2021 | Discontinuation of the Settlement Commission for Customs and Central Excise applications filed on or after 1 February 2021, and constitution of Interim Boards for Settlement for pending applications | Noted as background; not considered by the Court |
Judgment
Ridhi Sidhi Overseas v. Principal Commissioner of Customs & Ors., W.P.(C) 3391/2018 and CM APPL. 13405/2018, High Court of Delhi at New Delhi (Anil Kshetarpal and Shail Jain, JJ.), judgment reserved 7 September 2026, pronounced 16 September 2026 — https://indiankanoon.org/doc/192861035/
FAQ
Does Section 28 of the Customs Act prevent a Settlement Commission from appropriating a voluntary deposit towards duty for a period beyond the five-year extended limitation? Not where the importer has already, voluntarily and without qualification, admitted the liability and specifically asked for the deposit to be adjusted against it. The Delhi High Court held that Section 28 restricts the Department’s power to raise a fresh demand after the period expires, but does not prevent a Settlement Commission from giving effect to the importer’s own unretracted admission and adjustment request.
Can an importer later argue that a voluntary deposit made during investigation should not be appropriated towards a time-barred period? Only if the deposit and any accompanying statement were framed to preserve that position — for instance, made expressly without prejudice and without specifying how the amount should be adjusted. Once an unretracted statement admits the full liability and requests a particular adjustment, a Settlement Commission and a reviewing court are likely to treat the resulting appropriation as giving effect to the importer’s own instruction.
How far can a writ court go in reviewing a Customs Settlement Commission’s order? Section 127J of the Customs Act gives a settlement order finality, but that does not exclude Article 226 jurisdiction. However, a writ court will not reappreciate the Commission’s factual findings as an appellate authority would; it will interfere only for want of jurisdiction, breach of natural justice, manifest error of law, or a conclusion wholly unsupported by the record — and only if the petitioner has placed material before it capable of establishing such a defect.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.