Noida Customs

Procedure For Refund

PROCEDURE FOR CLAIMING REFUND

A. REFUND OF EXCESS DUTY PAID

1. 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. Section 27 of the Customs Act, 1962 deals with the 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.

3. Any person claiming refund of any duty or interest has to make an application

induplicate in the form as prescribed in the Customs Refund Application (Form)

Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs.

4. 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. (c) Where any duty is paid

provisionally under Section 18 of the Customs Act, 1962 the limitation of one year is

to be computed from the date of adjustment of duty after the final assessment

thereof; 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.

5. The limitation of one year for claiming refund does not apply where any duty

and interest has been paid under protest.

6. 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.

7. 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

.

8. 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; (c) If the buyer who has borne the duty and interest, has not passed

on the incidence of such 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.

9. 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 has to 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 Assistant/Deputy

Commissioner of Customs has to pass the speaking Order-in-Original on the refund

application 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.

10. 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 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.

11. 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.

12. 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.

13. 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, are received by the department and a

simple receipt of having received the ‘refund application’ is issued

immediately. The receipt makes it clear that the application has not been

scrutinized for its completeness. These applications are scrutinized for their

completeness 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 is informed at this stage of initial

scrutiny itself of the initial receipt. This avoids 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, are processed on ‘first-come-first

served’ basis. If refund is due, an order for refund is 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 is passed giving

complete reasons for the order. Further, the order indicates that the aspect of

unjust enrichment has been examined based on the applicable guidelines.

The order also contains 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.

(c) Payment of Refund amount: Where the refund application is admitted,

whether in part or in full, and claimant is eligible for refund the payment is

made to the applicant by crediting in his bank account trough RTGS on the

basis of pre-receipt already obtained from the claimant.

(d)Audit:Pre-audit of refund claims for amount of Rs. 5 lakhs and moreis

conducted by the Assistant/Deputy Commissioner (Audit), in the

Commissionerate Headquarters Office. Thereafter, the Assistant/Deputy

Commissioner(Refunds) passes an order-in-original in respect of the claim.

Thereafter, the orders- in-original passed in this regard are subjected to

review by the Commissioner concerned.

B Refund of Additional Customs Duty (Special Additional Duty-SAD) paid

under section 3(5) of Customs Tariff Act, 1975.

(1) Exemption granted to Additional Customs Duty on imported goods:- By

virtue of Notification No. 102/ 2007 dated 14.09.2007 the Central Government

granted exemption, of the whole of the additional duty of customs leviable thereon

under sub-section (5) of section 3 of the said Customs Tariff Act, if the following

conditions are fulfilled:-

(a) The importer of the said goods shall pay all duties, including the said

additional duty of customs leviable thereon, as applicable, at the time of

importation of the goods ;( Para 7.2 of Board’s Circular No.6/2008 dated

28.04.2008)

(b) The importer shall pay on sale of the said goods, appropriate sales tax or

value added tax, as the case may be; (Para 2(v) of Board’s Circular

No.16/2008 dated 13.10.2008 clarifies that payment of VAT/ST by cash/other

authorized form/input tax credit should be accepted.)

(c) The importer, while issuing the invoice for sale of the said goods, shall

specifically indicate in the invoice that in respect of the goods covered therein,

no credit of the additional duty of customs levied under sub-section (5) of

section 3 of the Customs Tariff Act, 1975 shall be admissible;(Para 7.2 of

Board’s Circular No.6/2008 dated 28.04.2008)

(d) The importer shall file a claim for refund of the said additional duty of customs

paid on the imported goods with the jurisdictional customs officer(Para 4.1 of

Board’s Circular No.6/2008 dated 28.04.2008 and Notification No.93/2008

dated 01.08.2008, Para 2 (i) of Board’s Circular No.16/2008 dated 13.10.2008

clarified that the time limit shall be from the date of payment of duty and not

from the date of finalization of the provisional assessment).

(e) The importer shall, inter-alia, provide copies of the following documents along

with the refund claim:

(i) Document evidencing payment of the said additional duty;

(ii) Invoices of sale of the imported goods in respect of which refund of the

said additional duty is claimed;(Para 4.1 of Board’s Circular No.6/2008 dated

28.04.2008 clarified that the importers would be entitled to refund of duties

only in respect of quantities for which the prescribed documents are made

available and claims submitted within the maximum prescribed time of one

year and unsold stocks would not be eligible for refunds, para 4.2 of the said

Circular also clarified that only a single refund claim in respect of one Importer

in a month irrespective of the number of Bills of Entry processed by the

respective Commissionerate and this has been further amended vide Board’s

Circular No.12/2015 dated 09.04.2015 that the Importer’s may file refund

claim of 4% SAD refund in terms of Notification No. 102/2007 at the Customs

Stations where the imports are made, however, the number of such claims at

a Customs station shall be limited to one in a particular month. Para 2(iii) of

Board’s Circular No.16/2008 dated 13.10.2008 stipulates that the legal

requirement of submission of copies of sale invoices would be fulfilled if the

same is provided in electronic form, Para 2 of Board’s Circular No.15/2010

dated 29.06.2010 stipulates that refund of SAD is available only in case the

imported goods are subsequently sold on payment of VAT, without carrying

out any process)

(iii) Documents evidencing payment of appropriate sales tax or value

added tax, as the case may be, by the importer, on sale of such imported

goods.

(2) Illustrative List of Documents to be filed for 4% SAD refund claims:-

(i) Refund Application (Part-A, B & C) as per Public Notice No.91/95 dated

06.06.95 and proper proforma with declaration. (Proforma-I)

(ii) Duplicate Bill of Entry (Importer’s Original Copy) with copies of invoice and

Bills of Lading

(iii) Document evidencing payment of Special Additional Duty (SAD) - Original

TR-6 challan.

(iv) Calculation / Worksheet (Annexure-A) (Proforma-II)(Public Notice

No.53/2010)

(v) Self Declaration (Annexure-B) (Proforma-III)(Public Notice No.43/2008 JNCH

dated 06.06.2008)

(vi) Original Sales Invoices of the imported goods in respect of which refund of

the said SAD is claimed, along with list containing Invoice No., Date, Amount

of ST/VAT paid on imported goods for which Refund is claimed -(Annexure-
C)(Proforma-IV)(Public Notice No.43/2008 JNCH dated 06.06.2008)

(vii) Original Chartered Accountant Certificate (Annexure-S) (Proforma-V) (Public

Notice No.53/2010).

(vii) All original challans evidencing payment of Sales Tax /VAT with

detailsofinvoices

(ix). Copy of Invoices in Electronic form (including in the form of CD) (Annexure-
I)(Proforma-VI)(Public Notice NO. 04/2009 JNCH dated 02.02.2009).

(x) Authorization for payment of refund amount directly to Bank Account

Proforma-VII)(Board’s Circular No.18/2010-Customs dated 08.07.2010.

(x). All relevant documents to substantiate their claim for Unjust enrichment.(The

Board vide its Circular No: 6/2008 dated 28.04.2008 has clarified that considering

the voluminous transactions and the documents involved from import to sale, it was

felt that it would be expedient to allow the importer to submit a certificate from the

statutory auditor/Chartered Accountant who certifies the annual accounts of the

Importer, that the burden of 4% CVD has not been passed on by the Importer to the

buyer and to fulfil the requirement of unjust enrichment. To fulfil the requirement of

unjust enrichment the Board vide circular No: 6/2008 dated 28.04.2008 and 16/2008

dt.13.10.2008 allowed the Importer to produce a certificate from the statutory

auditor/Chartered Accountant who certifies the annual accounts of the Importer to

the effect that the burden of 4% CVD has not been passed on by the Importer to the

buyer. The Board vide its Circular No: 6/2008 dated28.04.2008 required the Importer

to make a self-declaration along with a refund claim to the effect that the burden of

4% CVD has not been passed on by the Importer to any other person.)

(3) Processing of SAD Refund Claims at JNCH:

(i) The STA/TA posted to the Centralized Refund Cell (CRC) shall receive the SAD

Refund Claim. On submission, the STA/TA shall ensure that the said claim is

accompanied by the documents mentioned at Para B (2) above.

(ii) On receipt of the SAD Claim, the STA/TA shall give an acknowledgement. In case of

non-production of any of the documents listed above, the claim shall be returned with

the following advice “The SAD Claim submitted is incomplete due to non-
submission of the following documents:

(1)

(2)

(3)

Therefore, the same is being returned herewith.”

(iii) The Number of Bills of Entry for which SAD refund claim has been filed shall be

endorsed on the refund claim application and also entered in the receiving register by

the concerned TA/STA. The TA/STA then shall put up the SAD refund claims

received during the day along with receiving register to the concerned DC/AC for his

dated signature on all the SAD refund applications and on the daily receipt

register.Thereafter, the TA/STA shall distribute the SAD refund claims to the

Examiner/Superintendent/Appraiser as per the work allocation in the unit. The

Examiner/Superintendent/Appraisershall endorse the receipt of these claims in the

register. The Examiner/Superintendent/Appraisershall select the claim for

processing strictly on First-in First-out basis. The SAD refund claim documents have

to be properly scrutinized for its correctness by the concerned

Examiner/Superintendent/Appraiserand its correctness or otherwise should be

endorsed on the note sheet and brief facts. The checks regarding availability of all

documents required for SAD refund claims correctness of details namely date of

filing, date of TR6, date of sale and date of payment of VAT/ST/CST and quantity

imported and sold shall be the responsibility of the

Examiner/Superintendent/Appraiser. In case any discrepancy is noticed, a

Deficiency Memo shall be issued to the Importer. If no reply is received within a

reasonable period of time (not more than 4 weeks), a final reminder shall be

issued/personal hearing shall be granted and the case to be decided on merits

expeditiously.

(iv) The SAD refund claims up Rs.1 lakh are to be attended by the Examiner posted in

CRC Section of all chapters, whereas the claims above 1 lakh are to be processed

by the Superintendent/Appraiser posted in the CRC Section.

(v) The SAD refund claim above Rs.5 lakh are to be processed by the

Superintendent/Appraiser posted at CRC Section for pre-auditing before sanctioning

in accordance with Board’s Circular No.24/2007 dated 02.07.2007. After pre-auditing

the claim, the same shall be sanctioned by DC/AC-CRC.

(vi) In respect of SAD refund claim above Rs.5 lakhs the concerned Superintendents and

Appraising Officerposted at CRC shall put up the note on verification and brief facts

of the case to the DC/AC, CRC. The DC/AC, CRC shall examine the case and give

their recommendation and mark the claim file to DC/AC, IAD of JNCH for pre-
auditing. All the files marked for pre-audit shall be forwarded to IAD by the STA/TA

under proper receipt, twice a day. The IAD shall pre-audit the claim paper after

verifying the correctness of the document submitted with the claim, its validity etc. as

provided in the Notification No.102/2007 and Board Circular No.06/2008, 16/2008 as

amended from time to time and correctness of calculation of First-in First-out basis.

The officers posted in IAD must ensure that the claims are audited on First-in First-
out basis. After pre-auditing the DC/AC CRC shall approve the draft Order-in-
Original. Proper record of receipted refund claims for pre-auditing and their

subsequent disposal shall be properly recorded in a register maintained in the IAD

Section.

(vii) After pre-auditing the DC/AC CRC shall approve the draft Order-in-Original.

The approved draft order-in-original duly signed by the concerned DC/AC shall be

forwarded to Appraising (Main) for allocating Order number. The concerned

Superintendents and Appraising Officerposted at CRC as per competency shall

prepare the Refund Order against the draft O-in-O. Thereafter, the STA shall give the

Refund Order number. Thereafter, the refund file shall be put up to DC/AC CRC for

signing the final order-in-original and refund order and for order of issuance of RO

and Order-In-Original. The STA will issue both the order-in-original against the

Order-in-Original simultaneously. Thereafter, the TA/STA shall give the refund order

number. The refund file with final copy of Order-in-Original and Refund Order duly

signed by the concerned Superintendent/Appraiser shall be put up to DC/AC CRC for

signature and issuance. After approval and signature of AC/DC on the Order-in-
Original and Refund Order, the STA/TA will issue both the Order-in-Original and

Refund Order on the same day.

(viii) Finally, the refund claim file along with all original documents particularly the

RTGS detail of the claimant shall be forwarded to Cash Section for disbursal through

NEFT/RTGS. The claim should be duly received in the cash section of JNCH in the

register of SAD Refund Sections. The SAD claims received shall be processed for

disbursal through RTGS on FIFO basis.

(Office Order No.S/26-Misc-01/13-14 CRC IV (28) JNCH of July 2014)

(4) Sale of imported goods by Importer through consignment

agent/stockiest:-In case of sale of imported goods by importer through consignment

agent/stockist, refund of 4% CVD would be granted subject to the condition that the

consignment agent/stockist has been authorized to sell the imported goods in terms

of the agreement entered into between the importer and consignment agent/stockist

and that each of the sale invoices issued by the consignment agent/stockist indicates

that the sale is made by him on behalf of the importer in the capacity of consignment

agent/stockist. (Public Notice NO. 04/2009 JNCH dated 02.02.2009).

(5) Accredited Clients registered with Customs:- In respect of Accredited

Clients registered with Customs in terms of Circular No.42/2005-Customs dated

24.11.2005 (ACP clients), the amount of 4% CVD refund shall be sanctioned in full,

on preliminary scrutiny of the following documents: (a) TR-6 Challans (in original) for

CVD payment; (b) VAT/ST payment Challans (in original); (c) summary of sale

invoices; and (d) certificate of statutory Auditor / Chartered Accountant, for

correlating the payment of ST/VAT on the imported goods with the invoices of sale

and also to the effect that the burden of 4% CVD has not been passed on by the

importer to the buyer. The procedure for pre-audit for ACP clients has been done

away with and detailed scrutiny will be done only at the stage of post-audit. The

refund claims will be sanctioned within the maximum time period of 30 days from the

date of submission of refund claim (Board’s Circular No.18/2010-Customs dated

08.07.2010).

(6) Return of Original Duplicate copy of Bill of Entry and corresponding

TR-6 Challan to the Importer on sanctioning of 4% SAD refund claim:-At the

time of filing of the claim, importers have to submit a set of photocopies of these

documents i.e. Duplicate bills of entry and corresponding TR 6 challans along with

originals. On receipt of refund claims by hand, the original documents and their

photocopies shall be endorsed with a stamp “Refund claim submitted on ...........

and original document verified ” with date. The processing officer i.e. the Appraising

Officer or Superintendent shall sign beneath the stamp. After this, the originals shall

be handed back to the importer/ authorised representative. As a proof of receipt of

original documents, the photocopies shall be signed by the importer/ authorised

representative after verification of his identity. Such photocopies shall be treated as

relevant documents for the purpose of processing the refund claim, audit and review.

In case of refund claims submitted by post, photocopies of the documents have to be

submitted along with the Originals. The originals shall be returned by post after

making abovementioned endorsements .The endorsed photocopies shall be kept in

file.This endorsement in itself shall be deemed as defacement of the original bill of

entry for the purpose of the Para (ii) of CBEC Circular No. 16/2008 dated 13th

October,2008. The procedure to be followed is detailed in Public Notice No.60/2012

JNCH dated 07.11.2012.

(7) Disposal of refund claims of 4% SAD in respect of goods assessed on

provisional basis:-As per Boards Circular No.6/2008Cus dtd.28.04.08, the limitation

of time under Sec.27 is not applicable with regard to refund of SAD. The time limit

prescribed for the purpose of SAD refund claims is one year from the date of

payment of the duty, as incorporated vide Notfn.No.93/2008-Cus dtd.01.08.2008 in

the notification no102/2007-Cus dated 14.09.2007. Hence the date of payment of

SAD amount is the relevant date of payment, and not the date of finalization of the

provisional assessment. Therefore, the claimant would be eligible for the refund only

if the claim is filed within one year from the date of actual payment of SAD i.e the

date of payment of duty at the time of clearance of imported goods. In view of the

above facts and circumstances, it is decided to dispose SAD refund claims despite

the fact that the assessment continues to be provisional for one reason or the other,

without awaiting for finalization of assessments.The procedure is detailed in Public

Notice No.44/2009 JNCH dated 16.07.2009.

(8) LOSS OF DOCUMENTS:In case of loss of documents or the claimant

importers are unable to produce the original documents for various reasons in

genuine cases where reasons for absence of original Bill of Entry or the TR-6 challan

are explained by the importer and the particulars are verified from the EDI System,

the refund claims may be sanctioned by the Astt./Dy. Commissioner, after obtaining

an indemnity bond from the importer in this regard.(Facility Notice No.05/2010

JNCH dated 27.01.2010).

C. ORGANISATIONAL STRUCTURE OF CENTRAL REFUND SECTIONS.

The work of processing of refund claims is centralised in Nhava Sheva-I

Commissionerate by creating the Central Refund Cell (CRC). The CRC is consisted

of the following sections.

(i) CRC-1(A), 1(B) & 1(C) (NON-SAD REFUND SECTION)

This section is entrusted with the work of processing the refund claims (all

claims other than SAD refund) pertaining to Duties of Import, Duties of Export, Cess,

Interest, Refund of RF and PP, Revenue Deposits, Security Deposits,

Unaccompanied Baggage duty etc and any consequential refunds based on tribunal

and court directions.

(ii) CRC-SAD-I (NHAVA SHEVA-III)

This section is entrusted with the work ofprocessing of refund application of

Refund of Additional Customs Duty (Special Additional Duty-SAD) paid under

section 3(5) of Customs Tariff Act, 1975 pertaining to Chapters 01 to 38.

(iii) CRC-SAD-II (NHAVA SHEVA-I)

This section is entrusted with the work ofprocessing of refund application of

Refund of Additional Customs Duty (Special Additional Duty-SAD) paid under

section 3(5) of Customs Tariff Act, 1975 pertaining to Chapters 39 to 53.

(iv) CRC-SAD-III (NHAVA SHEVA-I)

This section is entrusted with the work ofprocessing of refund application of Refund

of Additional Customs Duty (Special Additional Duty-SAD) paid under section 3(5) of

Customs Tariff Act, 1975 pertaining to Chapters 54 to 76.

(vi) CRC-SAD-IV (NHAVA SHEVA-III)

This section is entrusted with the work ofprocessing of refund application of Refund

of Additional Customs Duty (Special Additional Duty-SAD) paid under section 3(5) of

Customs Tariff Act, 1975 pertaining to Chapters 77 to 98.