Customs Act, 1962 Section 27 — Claim of refund duty
Customs Act, 1962 · Claim of refund duty
Plain-English Explanation
Overview
Section 27 of the Customs Act, 1962, outlines the procedure and limitations for claiming refunds of customs duties or interest that have been overpaid or erroneously paid. This section is crucial for importers, exporters, and other parties involved in customs transactions, ensuring a mechanism for recovering excess payments while safeguarding government revenue.
Who Does This Apply To?
This section applies to any person who has paid customs duty or interest and believes they are entitled to a refund, including:
- Importers
- Exporters
- Buyers who have borne the incidence of duty
- Any other class of applicants as notified by the Central Government.
How It Works
The refund mechanism under Section 27 operates as follows:
- Application: Any person claiming a refund of duty or interest paid by or borne by them must submit an application to the Assistant Commissioner of Customs or Deputy Commissioner of Customs. The application must be in the prescribed form and manner.
- Time Limit: The application must be filed within one year from the date of payment of such duty or interest. However, this limitation does not apply if the duty or interest was paid under protest.
- Documentation: The application must be accompanied by documentary evidence establishing that the duty or interest was collected from or paid by the applicant, and that the burden of the duty or interest was not passed on to another person. Section 28C contains a reference to documents that may be required.
- Verification and Order: The Assistant Commissioner of Customs or Deputy Commissioner of Customs examines the application and supporting documents. If satisfied that a refund is due, an order is issued accordingly. The refunded amount is credited to the Consumer Welfare Fund, except in specific circumstances.
- Direct Payment to Applicant: The refund is paid directly to the applicant (instead of the Fund) if it relates to:
- Duty/interest paid by the importer or exporter, who has not passed on the incidence to any other person.
- Duty/interest on imports made by an individual for personal use.
- Duty/interest borne by the buyer, who has not passed on the incidence to any other person.
- Export duty as specified in Section 26.
- Drawback of duty payable under Sections 74 and 75.
- Duty paid in excess before clearance for home consumption where such excess payment is evident in the bill of entry or reassessed bill of entry.
- Any other class of applicants notified by the Central Government, provided the incidence of duty has not been passed on.
Important Conditions & Exceptions
- Condition 1: The applicant must prove that they have not passed on the incidence of the duty or interest to any other person, as per Section 27(1A). This is a crucial aspect for the refund to be granted directly to the applicant.
- Condition 2: If the refund amount claimed is less than ₹100, it will not be refunded.
- Exception: The one-year time limit for filing a refund application does not apply if the duty or interest was paid under protest.
- Special Time Limits: For goods exempt from duty by a special order under Section 25(2), the one-year limit is computed from the date of that order. If the duty refund is a consequence of a judgment or order by an appellate authority or court, the limit is computed from the date of that judgment or order. For provisional assessments under Section 18, the limit runs from the date of final assessment or reassessment.
Practical Example
ABC Importers paid ₹50,000 as customs duty on a consignment of electronic components. Later, they discovered that the components were eligible for a concessional rate of duty under a specific notification, which would have reduced the duty to ₹30,000. ABC Importers files a refund application under Section 27 within six months of paying the duty, providing evidence that they had not passed on the extra ₹20,000 duty to their customers. If the Customs officer is satisfied with the evidence, ABC Importers will receive a refund of ₹20,000 directly.
Key Amendments
No major amendments since enactment. (However, there have been several amendments over the years to provisos and clauses within the section, refining specific aspects of the refund process.)
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
Who can claim a refund of duty under Section 27 of the Customs Act, 1962?
Any person who has either paid the duty or borne the duty can claim a refund under Section 27. This includes importers, exporters, and even buyers who have borne the incidence of the duty and haven't passed it on to others as stated in Section 27(1) and Section 27(2)(a)-(c).
What is the time limit for filing a refund claim under Section 27 of the Customs Act, 1962?
The application for a refund must be filed with the Assistant Commissioner or Deputy Commissioner of Customs within one year from the date of payment of the duty or interest. However, this limitation of one year does not apply if the duty or interest was paid under protest as mentioned in Section 27(1).
What documents are required to be submitted along with the refund application under Section 27 of the Customs Act, 1962?
The application must be accompanied by documentary or other evidence to establish that the amount of duty or interest, for which the refund is claimed, was collected from or paid by the applicant. Additionally, it must be proven that the incidence of such duty or interest has not been passed on to any other person. Section 27(1A) and Section 28C refer to these documentary requirements.
What happens to the refund amount if the claim is approved under Section 27 of the Customs Act, 1962?
If the Assistant Commissioner or Deputy Commissioner of Customs is satisfied that a refund is due, the amount is generally credited to the Fund. However, the refund is directly paid to the applicant if it relates to duty paid by the importer/exporter who has not passed on the incidence, duty on imports for personal use, or duty borne by the buyer who has not passed on the incidence as outlined in Section 27(2).
How is the 'date of payment of duty or interest' determined for claiming a refund under Section 27 of the Customs Act, 1962?
For the importer, the date of payment is the actual date of payment of duty. However, for a person other than the importer, the 'date of payment of duty or interest' is construed as the 'date of purchase of goods' by such person, according to Explanation 1 of Section 27(1).
What is the minimum amount of refund claim that can be made under Section 27 of the Customs Act, 1962?
The Customs Act specifies that if the amount of refund claimed is less than rupees one hundred, the same shall not be refunded, as stated in the third proviso to Section 27(1). This implies that refund claims should be for amounts greater than or equal to ₹100 to be considered valid.
How does a judgment from an appellate authority impact the limitation period for claiming a refund under Section 27 of the Customs Act, 1962?
If the duty becomes refundable as a result of a judgment, decree, order, or direction from an appellate authority, Appellate Tribunal, or any court, the one-year limitation period is computed from the date of such judgment, decree, order, or direction. This is specifically mentioned in Section 27(1B)(b).
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Time Limit for Refund Application | Application for refund must be made to the Assistant/Deputy Commissioner of Customs within one year from the date of payment of duty or interest. |
| Refund Application Form and Manner | Refund application must be submitted in the prescribed form and manner as specified by the customs authorities. |
| Documentary Evidence Required | The application must be supported by documentary evidence proving that the duty/interest was collected or paid by the applicant and the incidence hasn't been passed on. |
| No Passing On of Incidence | Refund will only be granted if the applicant proves that the incidence of duty or interest has not been passed on to any other person. |
| Refund relatable to Importer/Exporter | The amount of duty and interest refunded by the Assistant Commissioner of Customs or Deputy Commissioner of Customs, be paid to the applicant, if such amount is relatable to the importer or exporter if he has not passed on the incidence. |
| Exemption from Time Limit (Duty Under Protest) | The one-year limitation does not apply if the duty or interest was paid under protest. |
| Minimum Refund Amount | No refund will be granted if the amount claimed is less than rupees one hundred. |
| Time Limit in case of judgement decree order. | Where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction |
Amendment History
Substituted by Act 40 of 1991, section 10, for section 27(w.e.f. 20-9-1991). Earlier section 27 was amended by Act 25 of 1978, section 5 (w.e.f. 1-7-1978) and by Act 26 of 1988, section 78(w.e.f. 13-5-1988).
Substituted by Act 8 of 2011, section 41, for sub-section (1) (w.e.f. 8-4-2011 ). Earlier sub-section (1) was amended by Act 55 of 1991, section 2(i)(w.e.f. 23-12-1991) by Act 22 of 1995, sections 50 and 54(w.e.f. 26-5-1995), by Act 33 of 1996, section 60 (w.e.f. 28-9-1996), by Act 21 of 1998, section 100 (w.e.f. 1-8- 1988), by Act 27 of 1999, section 100(w.e.f. 11-5-1999) and by Act 22 of 2007, section 96 (w.e.f. 11-5-2007). Sub-section(1) before substitution by Act 8 of 2011, stood as under: "(1) Any person claiming refund of any duty- (i) paid by him in pursuance of an order of assessment; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs or the Deputy Commissioner of Customs- (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital before the expiry of one year; (b) in any other case before the expiry of six months, from the date of payment of duty and interest, if any, paid on such duty in such form and manner as maybe specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the document referred to in section 28C) as the applicant may furnish to establish that the amount of duty and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the on incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person; Provided that where an application for refund has been made before the commencement of Central Excises and Customs laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provision of sub-section(2): Provided further that the limitation of one year or six months as the case may be shall not apply where any duty or interest, if any paid on such duty has been paid under protest: Provided also that in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 25, the limitation of one year or six months, as the case may be, shall be computed from the date of issue of such order: Provided also that where the duty becomes refundable as a consequence of judgement, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year or six months, as the case maybe, shall be computed from the date of such judgement, decree, order or direction. Explanation I - For the purposes of this sub-section, "the date of payment of duty and interest, if any, paid on such duty, in relation to person, other than the importer, shall be construed as "the date of purchase of goods" by such person. Explanation II - Where any duty is paid provisionally under section 18, the limitation of one year or six months, as the case may be, shall be computed from the date of adjustment of duty after the final assessment thereof."
Inserted by Act 17 of 2013, section 65 (w.e.f. 10-5-2013)
Substituted by Act 27 of 1999, section 100, for "Assistant Commissioner of Customs" (w.e.f. 11-5-1999). Earlier the words "Assistant Commissioner of Customs" were substituted by Act 22 of 1995, section 50, for the words "Assistant Collector of Customs (w.e.f. 26-5-1995)
Substituted by Act 55 of 1991, section 2(ii), for "duty" (w.e.f. 23-12-1991)
Inserted by Act 32 of 2003, section 108 (w.e.f. 14-5-2003)
Substituted by Finance Act, 2016, section 119(i), for-sub-section (4). Earlier sub-section (4) was inserted by Act 21 of 1988, section 99(w.e.f. 1-8-1988) and was amended by Act 20 of 2002, section 119 (b) (w.e.f. 11-5-2002). Sub-section (4), before substitution by the Finance Act, 2016, stood as under: "(4) Every notification issued under sub-section (1) or sub-section (2A) shall,- (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi."
Inserted by Finance Act, 2017(7 of 2017), section 92 (w.e.f. 31-03-2017)
To be inserted (from a date to be notified) by s. 30 read with Schedule to the National Tax Tribunal Act, 2005 (49 of 2005).
Renumbered by s. 94 as "Explanation 1" of the Finance (No.7) Act, 2025.
Inserted by s. 94 of the Finance (No.7) Act, 2025.