(1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, sub-section (2), not being an instrument chargeable ¹[with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, he shall adopt the following procedure:—
(a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamp, or that it is not so chargeable, as the case may be;
(b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of five rupees; or, if he thinks fit, ²[an amount not exceeding] ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees:
Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.
(2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.
(3) Where an instrument has been sent to the Collector under section 38, sub-section (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.

STATE AMENDMENTS

Uttarakhand.—
Amendment of section 40.—After sub-section (1), the following sub-sections shall be inserted, namely:—
"(1-A) The Collector shall also require, alongwith the amount of deficit Stamp Duty of penalty required to be paid under clause (b) of sub-section (1), the payment of a simple interest at the rate of one and half percent per mensem on the amount of deficit stamp duty calculated from the date of the execution of the instrument till the date of actual payment;
Provided that the amount of interest under this sub-section shall be recalculated if the amount of deficit stamp duty is varied on appeal or revision or by any order of a competent court or authority.
(1-B) The amount of interest payable under sub-section (1-A) shall be added to the amount due and be also deemed for all purposes to part of the amount required to be paid.
(1-C) Where realization of the deficit stamp duty reminded stayed by any order of any court or authority and such order of stay is subsequently vacated, the interest referred to in sub-section (1-A) shall be payable also for any period during which such order of stay remain in operation.
(1-D) Any amount paid or deposited by, or removed, or refundable to a person under the provisions of this Act, shall first be adjusted towards the deficit stamp duty or penalty outstanding against him and the excess, if any, shall then be adjusted towards the interest, in any, due from him."
[Vide Uttarakhand Act 1 of 2016, s. 6]

1. Subs. by Act 19 of 1958, s. 6, for "with a duty of one anna or half an anna " (w.e.f. 1-10-1958).
2. Ins. by Act 15 of 1904, s. 6.