Customs (Finalisation of Provisional Assessment) Regulations- 2025 Versus SVB proceedings- The Legal contours

The Customs (Provisional Assessment) Regulations, 2025, mark a significant step forward in streamlining and enhancing the transparency of customs procedures in India. These regulations, notified by the Central Board of Indirect Taxes and Customs (CBIC) through Notification No. 55/2025-Customs (N.T.) on September 12, 2025, replace the earlier Customs (Finalisation of Provisional Assessment) Regulations, 2018. This blog provides a detailed overview of the key provisions, timelines, and implications of the new regulations.

What is Provisional Assessment?

Provisional assessment under Section 18 of the Customs Act, 1962, allows the clearance of goods when the final assessment of duty cannot be completed due to the unavailability of full information or documents. The updated regulations aim to bring predictability, efficiency, and transparency to the process of finalizing such assessments.

Key Changes Introduced by the Finance Act, 2025

The Finance Act, 2025, introduced several amendments to Section 18 of the Customs Act, 1962, which form the foundation of the new regulations. These include:

Time Limit for Finalization: A two-year time limit has been prescribed for the finalization of provisional assessments, extendable by the Principal Commissioner or Commissioner of Customs for sufficient cause.
Pending Cases: For cases pending as of March 29, 2025 (the date of enactment of the Finance Act, 2025), the two-year time limit will be counted from this date.
Grounds for Extension: In certain cases, the two-year time limit will apply from the date when the reasons for the delay cease to exist.

Salient Features of the Customs (Provisional Assessment) Regulations, 2025 

The new regulations provide a detailed framework for the finalization of provisional assessments. Here are the key highlights:

1. Time Limits for Submission of Documents 

Importers or exporters must submit the required documents or information within 14 months from the date of provisional assessment.
If the documents are not submitted within this period, the proper officer will finalize the assessment based on the available records, ensuring adherence to the principles of natural justice.

2. Finalization of Pending Cases

For cases pending as of March 29, 2025, the time limit for submission of documents or conclusion of enquiries is 14 months from this date, i.e., by May 29, 2026.

3. Finalization Timeline

The proper officer must finalize the provisional assessment within three months of receiving the required documents or concluding the enquiry.
Extensions of up to two months at a time may be granted, but the overall finalization must occur within two years from the date of provisional assessment.

4. Exceptions to the Two-Year Limit

In cases involving legal or procedural delays (e.g., appeals, stay orders, or pending applications before the Settlement Commission), the two-year limit will apply from the date the reason for the delay ceases to exist.

5. Payment of Duty During Pendency

Importers or exporters may voluntarily pay the duty amount they ascertain during the pendency of the provisional assessment. This amount, along with applicable interest, will be adjusted against the final assessment.

6. Speaking Orders

The proper officer must issue a speaking order while finalizing the assessment. If the final assessment differs from the provisional assessment, the principles of natural justice must be followed.

7. Refunds and Adjustments 

If the final assessment results in a refund, it will be processed as per the provisions of Section 18(4) and 18(5) of the Customs Act, 1962.
If additional duty is payable, the importer or exporter must pay the differential amount along with interest.

8. Closure of Provisional Assessments

Upon finalization, bonds and securities furnished during the provisional assessment will be canceled or re-credited, provided there are no pending dues.

9. Recovery of Dues 

If any amount remains unpaid for more than 90 days after finalization, it will be adjusted from the security or recovered under Section 142 of the Customs Act, 1962.

10. Applicability to Project Imports 

The regulations also apply to provisional assessments undertaken under Project Imports.

Unified Multi-Purpose Electronic Bond 

The regulations align with the provisions of Circular No. 04/2025-Customs, which introduced the Single Unified Multi-Purpose Electronic Bond. This bond allows importers or exporters to furnish a single, all-India bond instead of transaction-wise bonds across different ports, simplifying compliance.

Monitoring and Compliance 

Cases pending for finalization beyond 17 months from the date of provisional assessment must be reported to the Commissioner of Customs for effective monitoring.
Commissioners will personally oversee such cases to ensure adherence to timelines or decide on extensions.

Penalties for Non-Compliance 

Failure to comply with the provisions of the regulations may result in penalties under Section 158(2)(ii) of the Customs Act, 1962, in addition to other legal actions.

SVB & Provisional assessments Finalization 2025 Regulation

Legal hierarchy (hard rule):

Notification No. 55/2025-Cus (N.T.) dated 12-09-2025 issues the Customs (Finalisation of Provisional Assessment) Regulations, 2025 under S157 r/w S18 of the Customs Act. As delegated legislation, these Regulations override any circular in case of conflict.
Circulars (including 05/2016-Customs and 22/2025-Customs) are administrative instructions and cannot trump a statutory regulation.

Special vs general (tie-breaker within circulars):

Applying generalia specialibus non derogant, SVB guidance is the “special law” for related-party valuation; any general instruction on provisional assessment must yield to it unless displaced by a Regulation. Clause 8.2 of Circular 05/2016 expressly directs that assessments be kept provisional during the currency of SVB enquiries.

How the 2025 Regulations fit with SVB work:

The 2025 Regulations set binding timelines and the manner of finalisation for all provisional assessments (pending and future):
• documents sought → normally 2 months (+ limited extension, but overall cap of 14 months),
• enquiry to be completed within 14 months,
• finalisation within 3 months thereafter, extendable but with a long-stop of 2 years (with limited tolling where, e.g., there is a Board direction to keep matters pending or a court stay/parallel appeal).
Although the Regulations don’t name “SVB”, an SVB inquiry is plainly an “enquiry” for Regulation 5 purposes; hence SVB must be wrapped up within the enquiry timeline, and only then should the provisional assessment be finalised under Regulation 8.

Practical rule to apply:

During SVB: keep assessments provisional (per the special SVB instruction in cl. 8.2 of 05/2016).
For closure: comply with the Regulations, 2025 timelines/steps (they prevail as a matter of hierarchy). Where SVB is the reason for provisional assessment, treat it as the “enquiry” under Reg. 5; finalise under Reg. 8 after SVB concludes — unless a Reg. 8(2) exception applies (e.g., Board direction to hold, court stay, etc.).

Bottom line on “which prevails”:

Notification 55/2025 (Regulations, 2025) prevails over any circular.
Between circulars, the special SVB instruction in Circular 05/2016 (cl. 8.2) prevails over general provisional-assessment instructions to the extent both operate, but always subject to the 2025 Regulations.

Conclusion

The Customs (Provisional Assessment) Regulations, 2025, represent a significant step toward modernizing customs procedures in India. By introducing clear timelines, robust mechanisms for finalization, and provisions for transparency, the regulations aim to enhance the efficiency of the provisional assessment process. Importers, exporters, and customs officers must familiarize themselves with these changes to ensure smooth compliance.

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Source: CBIC, Ministry of Finance, Govt. of India

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