Refund of Custom Duty
As the importer is required to pay the custom duty at the time of import. There can be a situation when the excess duty is paid by the importer due to wrong classification of product or any other reason, then the custom law allows the importer to claim the refund of such excess duty paid. In this article we will make a detailed discussion regarding how the refund can be claimed in the event of excess duty paid.
Situations under which the custom duty can be excess paid:
The excess payment can be done due to following reasons:
An exemption was available on said product but due to lack of knowledge custom duty is paid on such goods.
Adoption of incorrect HSN code of said product.
Good’s valuation is not done properly which leads to over valuation which results in excess payment of duty.
The provisions related to refund of custom duty are contained in Section 27 of Customs Act, 1962. As per these provisions, the application is to be filed by any person to the Assistant Commissioner of Customs or Deputy Commissioner of Customs for claiming the refund of any duty or interest which is paid by him or borne by him.
Time limit for claiming refund:
The refund application must be made within one year from the date of payment
of the duty. Provided further that the limitation of one year shall not apply
where any duty or interest has been paid under protest.
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:
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;
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.
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;
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.
Processing of refund claim:
If, on receipt of any such application, the Assistant Commissioner of
Customs or Deputy Commissioner of Customs is satisfied that the whole or any
part of the duty and interest paid on such duty is refundable to the applicant,
then he may make an order accordingly and 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;
(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.
Interest on delayed refunds:
If any duty ordered to be refunded to an applicant is not refunded within 3
months from the date of receipt of application, the interest @ 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 the 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.
Refund of import
duty in certain cases:
Any duty paid on clearance of imported goods for home consumption 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
subject to the condition that such 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 specifications.
(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;
(c) the importer does not claim drawback under any other provisions of this Act;
and
(d) the goods are exported or the importer relinquishes his title to the goods
and abandons them to customs or such goods are destroyed or rendered
commercially valueless in the presence of the proper officer,
Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.