Indian Customs Manual 2023, Refund rules

Posted on 21 April 2023 Category : Indian Customs Manual 2023

- in-original passed in this regard shall

be subjected to review by the Commissioner concerned. The applications of refund of

amount below Rs.50,000/- may be post- audited on the basis of the random selection by

Assistant/Deputy Commissioner (Audit). The selection can be made in such a way that 25%

of the refund applications are post-audited. The applications of refund for amount between

Rs.50,000/- and Rs. 5 lakhs should be compulsorily post-audited. This audit system is aimed

at checking improper sanction and payment of refunds. However, this does not dispense

with the verification of the refund vouchers and the re- conciliation of refunds, which shall

be done by the Chief Account Officers. It may be ensured that where pre-audit is involved,

the same is completed at the earliest so that the disposal of refund applications is not unduly

delayed.

(e) CVC’s instructions: Under authority of Section 8(1)(h) of the CVC Act, 2003 Central

Vigilance Commission (CVC) has issued instructions to bring about greater transparency

and accountability in the discharge of regulatory, enforcement and other public dealings of

the Government organizations. These instructions require that status of individual

applications/matters should be made available on the organization’s website and updated

from time to time so that the applicants are duly informed about the status of their

applications. It is further stated that the manual records maintained for various purposes

may continue. In pursuance of CVC’s instructions, Commissioners of Customs shall

establish a mechanism for maintenance of a comprehensive database in their respective

website, indicating the receipt, acknowledgement, action taken for disposal (either payment

or rejection) of refund applications and those pending at the end of the month. The details

of refund application such as name of the claimant, file number, date of application, amount

of refund claimed, date of its acknowledgement shall be indicated in chronological order by

the date of its receipt. The applications may be serially numbered for each year and shall

be shown in a single list indicating their respective status distinctly. The illustrative status

that could be mentioned for easy understanding of any applicant may include the following:

(i) refund application received but pending for scrutiny and acknowledgement (ii) refund

application acknowledged for its completeness (iii) refund application found incomplete and

returned for rectification of deficiency (iv) refund application rejected by passing a speaking

order (iv) refund application sanctioned, pending verification by audit (v) cheques issued for

refunds sanctioned and paid to applicant/ credited to consumer welfare fund. This is not

exhaustive and any other stage of processing of refund application may also be indicated.

An abstract at the end of the month about the total number of refund applications received,

acknowledged, disposed and pending may also be indicated. This online data base would

be accessible to the trade and public as well as by all Customs officers to enhance

transparency. Further, the status of individual applications for refund of Customs duty shall

be updated from time to time, at least daily, so that the applicants remain duly informed

about the status of their applications. The data may be allowed for display on the website

for three months period from the date of its final disposal and thereafter it can be moved to

the history database.

(f) Monitoring Mechanism: Chief Commissioners/ Directorate General of Performance

Management (DGPM) are to review the position of refunds in their respective zones/ select

zones, to check on the timely sanction of refund applications. If any refund application is

pending for long period, the reasons for the same may be identified by the concerned Chief

Commissioner and action initiated for disposal by reference to the concerned

Commissionerate. DGPM may also access the database of refund applications and maintain

the data in respect of those refund applications pending for long period and action taken

thereon, for reporting to the Board.

[Refer Notifications No.32/95-Cus(NT), dated 26-5-1995 and No.75/2003-Cus(NT), dated 12-9-2003

and Circulars No.59/95-Cus, dated 5-6-1995, No.24/2007-Cus, dated 2-7-2007, No.7/2008-Cus,

dated 28-5-2008, No.22/2008-Cus, dated 19-12- 2008 and CVC Circular No.40/11/06, dated 22-11-

2006 (http://www.cvc.nic.in)]

8 IGST Refund

8.1 Introduction

8.1.1 Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST Act, 2017.

By zero rating, it is meant that the entire supply chain of a particular supply is tax free, i.e., there

is no burden of tax either on the input side or output side.

8.1.2 As per Section 16(3) of the IGST Act, 2017, a registered person making a zero-rated supply is

eligible to claim refund in accordance with the provisions of Section 54 of the CGST Act, 2017,

under either of the following options, namely: (i) He may supply goods or services or both under

bond or letter of undertaking, subject to such conditions, safeguards and procedure as may be

prescribed, without payment of integrated tax and claim refund of unutilised input tax credit of

CGST, SGST / UTGST and IGST; or (ii) He may supply goods or services or both, subject to such

conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and

claim refund of such tax paid on goods or services or both supplied.

8.1.3 As per Rule 96 of the CGST Rules 2017, dealing with refund of IGST paid on goods exported out

of India, the shipping bill filed by an exporter shall be deemed to be an application for refund of

integrated tax paid on the goods exported out of India, once both the export general manifest

(EGM) and valid return in Form GSTR-3 or Form GSTR3B, as the case may be, has been fed.

Thus, once the shipping bill and the EGM is filed and a valid return is filed, the application for

refund shall be considered to have been filed and refund shall be processed.

8.1.4 IGST Refund module for exports is operational in ICES since 10.10.2017. As per Rule 96 of the

CGST Rules 2017, dealing with refund of IGST paid on goods exported out of India, the shipping

bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on

the goods exported out of India, once both the export general manifest (EGM) and valid return in

Form GSTR-3 or Form GSTR- 3B, as the case may be, has been filed. Rule 96 further stated that

the information on GSTR 1 shall then be transmitted electronically to Customs and the System

designated by Customs shall process the refund claim.

8.1.5 The IGST refund module has been designed in line with the above rule and has an inbuilt

mechanism to automatically grant refund after validating the Shipping Bill data available in ICES

against the GST Returns data transmitted by GSTN. The matching between the two data sources

is done at Invoice level and if the necessary matching is successful, ICES shall process the claim

for refund and the relevant amount of IGST paid with respect to each Shipping Bill or Bill of export

shall electronically credited to the exporter’s bank account as mentioned with the Customs

authorities.

8.2 Pre-requisites and precautions required to be taken by exporters for successful processing of

refund claims:

i. file GSTR 3B with taxable value for export and IGST paid against exports indicated in

appropriate fields.

ii. file GSTR 1 or Table 6A for the exports made with correct details such as Invoice number,

Taxable value, IGST paid, Shipping Bill number, Shipping Date and Port Code.

iii. ensuring aggregate IGST paid amount claimed in GSTR 1 or Table 6A is not greater than

the IGST paid amount indicated in Table 3.1(b) of GSTR 3B of the corresponding month

iv. use Table 9 of GSTR 1 of the following month to amend the records of previous month so

as to take care of issues mentioned in paras (ii) and (iii) above.

8.3 Ensuring hassle free processing of refund claims:

a) Jurisdictional officers at gateway port may initiate swift penal action against shipping lines/

agents who fail to file either regular or supplementary EGMs electronically for cargo

originating from ICDs.

b) Jurisdictional officers in ICDs should ensure filing of local EGM i.e., train or truck summary,

as the case maybe, immediately after cargo leaves the port, liaising with the jurisdictional

officers at the port for incorporation of Shipping Bills pertaining to the cargo originating in

ICDs, in the EGMs filed at gateway port by the Shipping lines/agents and rectification of

errors in local and gateway EGM, wherever necessary.

c) Jurisdictional officers at gateway port should strictly monitor the EGM pendency and error

reports available in ICES and get the EGM errors resolved in an expeditious manner by

asking the Shipping lines/ agents to file requisite amendments and approving those

amendments on ICES. Errors in shipping bill or in local EGM (i.e., truck or train summary),

the remedial action has to be taken by jurisdictional officer in ICD.

8.4 Sanction of pending IGST refund claims where the records have not been transmitted from the

GSTN to DG Systems

8.4.1 As an interim measure for those cases where the records have not been transmitted by GSTN to

Customs EDI system, to overcome the problem of refund blockage, subject to undertakings/

submission of CA certificates by the exporters and post refund audit scrutiny, the following

procedure shall be followed:

A. Cases where there is no short payment:

(i) The Customs policy wing would prepare a list of exporters whose cumulative IGST

amount paid against exports and interstate domestic outward supplies, for the period

July 2017 to March 2018 mentioned in GSTR-3B is greater than or equal to the

cumulative IGST amount indicated in GSTR-1 for the same period. Customs policy

wing shall send this list to GSTN.

(ii) GSTN shall send a confirmatory e-mail to these exporters regarding the transmission

of records to Customs EDI system.

(iii) The exporters whose refunds are processed/ sanctioned would be required to submit

a certificate from Chartered Accountant before 31st October 2018 to the Customs

office at the port of export to the effect that there is no discrepancy between the IGST

amount refunded on exports and the actual IGST amount paid on exports of goods

for the period July 2017 to March 2018.

In case there are exports from multiple ports, the exporter is at liberty to choose any

of the ports of export for submission of the said certificate.

(iv) A copy of the certificate shall also be submitted to the jurisdictional GST office

(Central/ State). The concerned Customs zone shall provide the list of GSTINs who

have not submitted the CA certificate to the Board by the 15th November 2018.

(v) Non submission of CA certificate shall affect the future IGST refunds of the exporter.

(vi) The list of exporters whose refunds have been processed as above shall be sent to

DG (Audit)/ DG (GST) by the Board.

B. Cases where there is short payment:

(i) In cases where there is a short payment of IGST i.e. cumulative IGST amount paid

against exports and interstate domestic outward supplies together, for the period of

July 2017 to March 2018 mentioned in GSTR-3B is less than the cumulative IGST

amount indicated in GSTR-1 for the same period, the Customs policy wing would send

the list of such exporters to the GSTN and all the Chief Commissioner of Customs.

(ii) e-mails shall be sent by GSTN to each exporter referred in para (i) above so as to

inform the exporter that their records are held up due to short payment of IGST. The

e--mail shall also advise the exporters to observe the procedure under this circular.

(iii) The exporters would have to make the payment of IGST equal to the short payment

in GSTR 3B of subsequent months so as to ensure that the total IGST refund being

claimed in the Shipping Bill/GSTR-1(Table 6A) is paid. The proof of payment shall be

submitted to Assistant/Deputy Commissioner of Customs in charge of port from where

the exports were made. In case there are exports from multiple ports, the exporter is

at liberty to choose any of the ports of export.

(iv) Where the aggregate IGST refund amount for the said period is upto Rs. 10 lacs, the

exporter shall submit proof of payment (self-certified copy of challans) of IGST

payment to the concerned Customs office at the port of export. However, where the

aggregate IGST refund amount for the said period is more than Rs. 10 lacs, the

exporter shall submit proof of payment (self-certified copy of challans) of IGST to the

concerned Customs office at the port of export along with a certificate from chartered

Accountant that the shortfall amount has been liquidated.

(v) The exporter would give an undertaking they would return the refund amount in case

it is found to be not due to them at a later date.

(vi) The Customs zones shall compile the list of exporters (GSTIN only), who have come

forward to claim refund after making requisite payment of IGST towards short paid

amount and complied with other prescribed requirements.

(vii) The compiled list may be forwarded to Customs policy wing, DG (Audit) and DG

(GST). Customs policy wing shall forward the said list of GSTINs to GSTN. On receipt

of the list of exporters from Customs policy wing, GSTN shall transmit the records of

those exporters to Customs EDI system.

(viii) The exporters whose refunds are processed/ sanctioned as above would be required

to submit another certificate from Chartered Accountant/ Cost Accountant before 31st

October, 2018 to the same Customs office at the port of export to the effect that there

is no discrepancy between the IGST amount refunded on exports and the actual IGST

amount paid on exports of good for the period July 2017 to March 2018. A copy of the

certificate shall also be submitted to the jurisdictional GST office (Central/ State). The

concerned Customs zone shall provide the list of GSTINs who have not submitted the

CA certificate to the Board by the 15th November 2018.

(ix) Non submission of CA certificate shall affect the future IGST refunds of the exporter.

Post refund audit 4.

C. The exporters would be subjected to a post refund audit under the GST law. DG (Audit) shall

include the above referred GSTINs for conducting Audit under the GST law. The inclusion

of IGST refund aspects in Audit Plan of those units may be ensured by DG (Audit). In case,

departmental Audit detects excess refunds to the exporters under this procedure, the details

of such detections may be communicated to the concerned GST formations for appropriate

action.

D. DG (GST) shall send the list of exporters to jurisdictional GST officers (both Centre / State)

informing that these exporters have taken benefit of the procedure prescribed in this circular.

The jurisdictional GST formations shall also verify the payment particulars at their end

8.5 GST refunds-mechanism to verify the IGST payments for goods exported out of India in certain

cases

8.5.1 Instances of availment of IGST refund using fraudulent ITC claims by some exporters have

been observed by various authorities. Exporters have availed ITC on the basis of ineligible

documents or fraudulently and utilized that credit for payment of IGST on goods exported out of

India. It has also been observed in several cases that there is huge variation between the FOB

value declared in the Shipping Bill and the Taxable value declared in GST Return apparently to

effect higher IGST pay out leading to encashment of credit. It is decided to verify the IGST

payments through the respective GST field formations. The procedure specified in the instruction

15/2017-Cus dated 09.10.2017 stand modified to the extent as under:

A. Identification of Suspicious cases: DG (Systems) shall work out the suitable criteria

to identify risky exporters at the national level and forward the list of said risky exporters

to Risk Management Centre for Customs (RMCC) and respective Chief Commissioners of

Central Tax. DG (Systems) shall inform the respective Chief Commissioner of Central Tax

about the past IGST refunds granted to such risky exporters (along with details of bank

accounts in which such refund has been disbursed).

B. Inserting Alert in the System: RMCC shall insert alerts for all such risky exporters and

make 100% examination mandatory of export consignments relating to those risky

exporters. Also, alert shall be placed to suspend IGST refunds in such cases.

C. Examination of the export goods: Customs officers shall examine the consignment as per

the RMCC alert. In case the outcome of examination tallies with the declaration in the

Shipping Bill subject to no other violation of any of provision of the Customs Act, 1962 or

other laws being observed, the consignment may be cleared as per the regular practice.

D. Suspension of IGST refunds: Notwithstanding the clearance of the export consignments

as per para C above, such Shipping Bills shall be suspended for IGST refund by the

Deputy or Assistant Commissioner of Customs dealing with refund at the port of export.

E. Verification by GST formations: (i)Chief Commissioner of Central Tax shall get the

verification of the IGST refund claims and other related aspects done in accordance with

the Standard Operating procedure to be issued by the GST policy wing. (ii)The GST

formation shall furnish a report to the respective Chief Commissioner of Central Tax within

30 days specifying clearly whether the amount of IGST paid and claimed/ sanctioned as

refund was in accordance with the law or not. (iii) Chief Commissioner of Central Tax shall

compile and forward report of all cases to RMCC and concerned customs port of export

within 5 working days thereafter.

Refer Rule 96 of the CGST Rules 2017, Circular 42/2017- Customs dated 7th November, 2017,

Circular 5/2018- Customs dated 23rd February, 2018, Circular 6/2018- Customs dated 16th March,

2018, Circular 12/2018-Customs dated 29th May, 2018, Circular 33/2018- Customs dated

19.09.2018, Circular 37/2018Customs dated 09.10.2018, Circular 40/2018-Customs dated

24.10.2018

Read more posts from www.howtoexportimport.com to enhance your knowledge about export and import.

IGST refund from Indian Customs, Duty refund from Customs in India

Indian Customs Manual 2023 clarifies the following questions on refund of IGST and Duty under Chapter 14 of Customs Manual updated till 31^st December, 2022:

How to get refund of excess duty paid under import in India? Can the excess paid duty against exports be refunded?

I have paid excess duty amount due to lack of Customs Law knowledge. Can I claim for refund?

We could not submit required documents for lesser rate of duty against the imports at the time filing import documents with customs. Can we claim refund against such importer, once documents submit after clearance?

What is the process for refund under re-import? How to get refund on goods returned back to the exporter? What are the formalities to get refund against short landing of goods or shortage of goods than the documents declared.

How to claim refund on pilferage of goods imported?

Based on wrong information provided, the assessable value calculated wrongly and the import duty paid excess than the value actually to be paid. How to claim refund from customs?

We have paid excess interest on duty at the time of our imports. Can we claim refund on such excess paid interest on Duty?

How to claim duty refund against export of goods? What are the process to claim refund of interest on export duty paid under exports?

The customs manual 2023 explains refund of customs duty or IGST or both broadly about Legal provisions, Relevant dates for submission of a refund application, Processing of refund claim, Unjust enrichment, Interest on delayed refund, Expeditious disposal of refund applications and IGST Refund

Legal provisions

Relevant dates for submission of a refund application

Processing of refund claim

Unjust enrichment

Interest on delayed refund

Expeditious disposal of refund applications

IGST Refund

Chapter 14 of Indian Customs Manual 2023 updated till 31^st December, 2023 is extracted below:

Chapter 14: Refunds under Customs and IGST Act

1. Introduction

1.1 On import or export of goods, at times duty may not be required to be paid or be paid in excess of

what was actually leviable. Such non-leviable/excess payment may be due to lack of information

on the part of importer/ exporter or non-submission of documents required for claim of lower value

or rate of duty. Sometimes, such non-leviable/excess payment of duty may be due to re-import,

return back of goods to the exporter, relinquishment of title by the importer, shortage/short landing,

pilferage of goods or even incorrect assessment of duty by Customs. In such cases, refund of

excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has

been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be

claimed.

2. Legal provisions:

2.1 Section 26 of the Customs Act, 1962 deals with the Refund of export duty in certain cases where

on the exportation of any goods any duty has been paid, such duty shall be refunded to the person

by whom or on whose behalf it was paid, if

(a) the goods are returned to such person otherwise than by way of re-sale;

(b) the goods are re-imported within one year from the date of exportation; and

on which the proper officer makes an order for the clearance of the goods.

Where on the importation of any goods capable of being easily identified as such imported goods,

any duty has been paid on clearance of such goods for home consumption, such duty shall be

refunded to the person by whom or on whose behalf it was paid, if-

(a) the goods are found to be defective or otherwise not in conformity with the specifications

agreed upon between the importer and the supplier of goods: Provided that the goods have

not been worked, repaired or used after importation except where such use was

indispensable to discover the defects or non-conformity with the specification;

(b) the goods are identified to the satisfaction of the Assistant Commissioner of Customs or

Deputy Commissioner of Customs as the goods which were imported;

(d) (i) the goods are exported; or

(ii) the importer relinquishes his title to the goods and abandons them to customs; or

(iii) such goods are destroyed or rendered commercially valueless in the presence of the

proper officer, in such manner as may be prescribed and within a period not exceeding thirty

days from the date on which the proper officer makes an order for the clearance of imported

goods for home consumption under section 47:

Provided that the period of thirty days may, on sufficient cause being shown, be extended by the

Principal Commissioner of Customs or Commissioner of Customs for a period not exceeding

three months:

Provided further that nothing contained in this section shall apply to the goods regarding which

an offence appears to have been committed under this Act or any other law for the time being in

force.

Section 27 of the Customs Act, 1962 deals with the claim for refund of duty and interest. As

provided therein, refund of duty and interest can be claimed either by a person who has paid the

duty in pursuance to an order of assessment or a person who has borne the duty.

2.2 Any person claiming refund of any duty or interest has to make an application in duplicate in the

form as prescribed in the Customs Refund Application (Form) Regulations, 1995, to the

jurisdictional Deputy/Assistant Commissioner of Customs.

3. Relevant dates for submission of a refund application:

3.1 In terms of Section 27 of the Customs Act, 1962 an application for refund is required to be filed

within one year from the date of payment of duty and interest. Normally, the time limit of one year

is computed from the date of payment of duty, however, in following situations, such time limit is

computed differently:

(a) In case of goods which are exempt from payment of duty by an ad-hoc exemption order

issued under Section 25(2) of the Customs Act, 1962 the limitation of one year is to be

computed from the date of issue of such order;

(b) Where duty becomes refundable as a consequence of judgment, decree, order or direction

of the appellate authority, Appellate Tribunal or any court, the limitation of one year is to be

computed from the date of such judgment, decree, order or direction.

limitation of one year is to be computed from the date of adjustment of duty after the final

assessment thereof or in case of re-assessment, from the date of such re-assessment; and

(d) The date of payment of any duty and interest in relation to a person, other than the importer

shall be the date of purchase of goods by such person

3.2 The limitation of one year for claiming refund does not apply where any duty and interest has been

paid under protest.

4. Processing of refund claim:

4.1 The application for refund is required to be filed with documentary or other evidence including

documents relating to assessment, sales invoice and other like documents to support the claim

that the duty and interest was paid in excess, incidence of duty or interest has not been passed

on by him to any other person, and the refund has not been obtained already.

4.2 Where on scrutiny, the application is found to be complete in all respects the Customs issues an

acknowledgement in the prescribed Form. However, in case the application is found to be

incomplete, the Customs will return the same to the applicant, pointing out the deficiency. The

applicant has to then re-submit the application after making good the deficiency.

4.3 The application of refund found to be complete in all respects by Customs, is processed to see if

the whole or any part of the duty and interest paid by the applicant is refundable. In case, the

whole or any part of the duty and interest is found to be refundable, an order for refund is passed.

However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount

found refundable has to be transferred to the Consumer Welfare Fund except in the following

situations when it is to be paid to the applicant:

(a) If the importer has not passed on the incidence of such duty and interest to any other person;

(b) If such duty and interest was paid in respect of imports made by an individual for his personal

use;

duty and interest to any other person;

(d) If amount found refundable relates to export duty paid on goods which were returned to

exporter as specified in Section 26 of the Customs Act, 1962;

(e) If amount relates to Drawback of duty payable under Sections 74 and 75 of the Customs

Act, 1962; and

(f) If the duty or interest was borne by a class of applicants which has been notified for such

purpose in the Official Gazette by the Central Government.

(g) If the duty was paid in excess by the importer before an order permitting clearance of goods

for home consumption is made where such excess payment of duty is evident from the bill

of entry in the case of self-assessed bill of entry or the duty actually payable is reflected in

the reassessed bill of entry in the case of reassessment.

5. Unjust enrichment:

5.1 In terms of Section 27(2) of the Customs Act, 1962 the concerned Assistant/Deputy Commissioner

of Customs has to examine the facts of the case and the material placed before him in order to

determine whether the amount claimed by an applicant is refundable to him or not. Further, the

Assistant/Deputy Commissioner of Customs should go through the details of audited balance

sheet and other related financial records, certificate of the Chartered Accountant etc., submitted

by the applicant in order to decide whether the applicant had not passed on the incidence of the

duty and interest thereon, if any, to any other person. The Order-in-Original passed by the

Assistant/Deputy Commissioner of Customs on the refund application should be a speaking order

providing specific details including the relevant financial records that are relied upon to arrive at a

conclusion whether the burden of duty or interest, as the case may be, has been passed on or

not. Refund orders issued in a routine and casual manner thereby sanctioning the amount but

crediting the same to the Consumer Welfare Fund without going through the factual details of the

case and the due process as provided in the first proviso cannot be considered as a complete and

speaking order.

Unjust enrichment implies when a man unreasonably gets an advantage by shot, mix up or another's mishap for which the one improved has not paid or worked and ethically and morally ought not keep. A man who has been unreasonably enhanced to the detriment of another must lawfully restore the unjustifiably kept cash or advantages. Uncalled for advancement is a fair principle connected without an agreement and used to keep one individual from being shamefully improved to another's detriment.

6. Interest on delayed refund:

6.1 The Customs has to finalize refund claims immediately after receipt of the refund application in

proper form along with all the documents. In case, any duty ordered to be refunded to an applicant

is not refunded within 3 months from the date of receipt of application for refund, interest that is

currently fixed @ 6% is to be paid to the applicant. The interest is to be paid for the period from

the date immediately after the expiry of 3 months from the date of receipt of such application till

be date of refund of such duty. For the purpose of payment of interest, the application is deemed

to have been received on the date on which a complete application, as acknowledged by the

proper officer of Customs, has been made.

6.2 Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any

Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the

order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may

be is deemed to be an order for the purpose of payment of interest on delayed refund.

6.3 The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and

no interest is payable in respect of deposits such as deposits for project imports, security for

provisional release of goods etc.

7. Expeditious disposal of refund applications:

7.1 The procedure to ensure expeditious disposal of Customs duty refund applications and to enhance

transparency in refund disbursement is as follows:

(a) Receipt and acknowledgement of all refund applications: All refund applications made under

Section 27 of the Customs Act, 1962 whether by post or courier or personal delivery, shall

be received by the department and a simple receipt of having received the “refund

application” shall be issued immediately. The receipt should make it clear that the

application has not been scrutinized for its completeness. These applications are required

to be scrutinized for their completeness within 10 working days of their receipt, for giving

acknowledgement by the Proper Officer as per the Customs Refund Application (Form)

Regulations, 1995. Hence, if any deficiency is found in the application or any document is

required by the department, the same shall be informed at this stage of initial scrutiny itself

within 10 working days of the initial receipt. This will avoid any chance for raising repeated

queries to the applicant, in a piece-meal manner and bring certainty in dealing with refund

applications.

(b) Processing of refund applications and their disposal: Application found complete in all

respects after scrutiny, shall be processed on first-come-first served basis. If refund is due,

an order for refund is required to be passed in terms of Section 27(2) of the Customs Act,

1962 or where the claim for refund is found liable to be rejected, as the case may be, a

speaking order shall be passed giving complete reasons for the order. Further, the order

should indicate that the aspect of unjust enrichment has been examined based on the

applicable guidelines. The order should also contain the findings of adjudicating authority

on the documents produced in support of the claim and the basis for determining the amount

as either refundable to the claimant or payable to the Consumer Welfare Fund or the claim

not being admissible.

claimant is eligible for refund, the Assistant/Deputy Commissioner of Customs may ensure

that payment is made to the party within 3 days of the order passed after due audit, if any.

In all such cases refund amount shall be paid to the applicant by a cheque drawn on the

authorised bank with which the sanctioning authority maintains account. After the cheque is

signed, it shall either be delivered to the claimant or his authorised representative personally

or sent to him by Registered Post, Acknowledgement Due at Government cost, on the basis

of pre-receipt already obtained from the claimant.

(d) Audit: Pre-audit of refund claims (other than those to be post-audited) will be conducted by

the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office.

Thereafter, the Assistant/Deputy Commissioner of Group/ Division will pass an order-inoriginal in respect of the claim. Thereafter, the orders

Indian Customs Manual 2023, Refund rules

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