1. Refund of Excess Duty Paid
- Occurs when duty is paid more than what was legally required.
- Common causes: incorrect classification, wrong valuation, or misapplication of duty rates.
2. Refund Due to Re-Import of Exported Goods
- If goods exported are returned (e.g., rejected by buyer), the export duty paid can be refunded.
- Must be re-imported within one year and application filed within six months of clearance order.
3. Refund for Defective or Non-Conforming Goods
- If imported goods are found defective or not as per agreed specifications.
- Conditions:
- Goods must not be used or altered (except for testing).
- Must be exported, abandoned, or destroyed within 30 days of clearance.
4. Refund Due to Short Landing or Pilferage
- If goods are lost or pilfered before clearance, duty paid on those goods can be refunded.
- Requires proper documentation and verification by customs.
5. Refund of Interest Paid on Excess Duty
- If excess duty was paid along with interest, the interest component is also refundable.
6. Refund Under Section 27 of Customs Act
- General provision for claiming refund of duty or interest.
- Application must be filed within six months from the date of duty payment (or one year for individuals, government, or charitable institutions).
7. Refund Due to Incorrect Assessment
- If customs reassess the duty and find the original assessment was incorrect, the excess paid can be refunded.
8. Refund for Duty Paid on Abandoned Goods
- If the importer relinquishes title and abandons goods to customs, duty paid may be refunded.
📝 How to Claim a Refund
- File a Customs Refund Application in duplicate (as per Customs Refund Application Form Regulations, 1995).
- Submit to the jurisdictional Deputy/Assistant Commissioner of Customs.
- Include:
- Assessment documents
- Sales invoices
- Proof of excess payment
- Declaration that duty incidence hasn’t been passed on to another party
📘 Refund Sections under Customs Act, 1962
| Section | Title | Purpose |
|---|---|---|
| Section 26 | Refund of Export Duty | Refunds duty paid on exported goods if they are returned or re-imported within one year, and not resold. Application must be filed within six months of clearance order. |
| Section 26A | Refund of Import Duty | Refunds duty on imported goods if they are defective, not as per specifications, and either exported, abandoned, or destroyed within 30 days of clearance. Can be extended up to 3 months. |
| Section 27 | Claim for Refund of Duty | General provision for claiming refund of excess duty or interest paid. Must apply within one year from the date of payment, unless paid under protest. |
| Section 27A | Interest on Delayed Refunds | If refund under Section 27 is delayed beyond three months from the date of application, interest is payable to the applicant. |
💰 Types of Duty Drawback Refunds
1. Section 74 – Duty Drawback on Re-export of Imported Goods
This applies when imported goods are re-exported in their original or used condition.
- Refund Amount: Up to 98% of the customs duty paid at import
- Conditions:
- Goods must be identified as the same ones imported
- Must be re-exported within 2 years of duty payment
- If used before re-export, refund is reduced based on depreciation
- Extension: Time limit may be extended by the CBIC on sufficient cause
2. Section 75 – Duty Drawback on Export of Manufactured Goods
This applies when imported materials are used in manufacturing or processing goods that are then exported.
- Refund Basis:
- All Industry Rate (AIR): Predefined rates for common goods
- Brand Rate: Custom rate for exporters not covered under AIR
- Conditions:
- Goods must be exported
- Must maintain proper documentation of input materials
- IGST is not refunded under this section
🧾 Key Differences Between Section 74 & 75
| Feature | Section 74 | Section 75 |
|---|---|---|
| Goods | Re-exported as-is or used | Exported after manufacturing |
| Refund % | Up to 98% | Based on AIR or Brand Rate |
| Identification | Required | Not required (end product differs) |
| IGST Refund | Eligible | Not eligible |
📝 Important Notes
- Application must be filed within 2 years from the date of duty payment (Section 74) or as per export documentation timelines (Section 75)
- Documentation is critical: Bills of Entry, shipping bills, invoices, and proof of export
- Drawback not allowed for certain goods (e.g., used apparel, exposed films) as per Notification No. 19/65-Cus