Refund of duty for Re-export cargo,whether it is drawback under section 74 or refund of duty under section 27 of the Customs Act 1962

This depends on case to case basis for the goods in question.At what stage of Asseement, cleared for Home-consumption or not,whether payment has acquired the characteristics of the duty, whether it is repair or return cargo,whether ,it is temporary import of the machinary,etc,would decide whether it is refund case or drawback case.

The conceptually if the goods are exported goods then it is draw back case and if they are imported goods then it is case of the refund.

what is imported goods?

If goods were not cleared for Home consumption. Then the goods remained Imported goods only .You have to file refund claim for any duty paid on such imported cargo.
But the payment has not acquired the characteristics of the duty and it is deposit in anticipation of duty liability.
The provision of Section 27 are attracted only for Refund of duty and not for Refund of duty deposit. In the present case, the goods were not cleared for Home consumption. No passing of duty incidence can take place, as good never crossed Customs barrier. Even Assessment was not completed.

Whether refund is to be filed directly before the AC/DC(Refund) ??
The eligibility of refund can be decided either by the proper assessing officer or the appellate authority is the current stand of the Customs department.Before the Priya Blue and Flock India cases, all refund claim were filed before the AC/DC(Refund) without going to route of Appellate forum.The main contention is that the equal adjudication authority of Refund cannot sit in the matter decided by the Group AC/DC.The assessment is final and filing a refund claim is a challenge to the assessment order.


But, whether the Assistant Commissioner of Customs (Refund) is the proper adjudication authority for the purpose of a refund claim under Customs Act 1962?

Eligibility of Refund Claim


The Assistant Commissioner of Customs (Refund) is not sitting over the Judgement of equal Quasi-Judicial Authority.The Assistant Commissioner of Customs of Refund section is a different quasi-judicial authority than the Assistant Commissioner of Customs or Deputy Commissioner of Customs of Assessing Group. Both of them have separate jurisdiction for adjudication under the Customs Act 1962.

The Assistant Commissioner of Customs (Refund) exercise power under section 27 of the Customs Act whereas the Assistant / Deputy Commissioner of Customs of the Assessing Group exercise power under section’s 17 and 18 of the Customs Act.

Under the Customs Act, various adjudication authority pass various orders on the basis of same order of assessment for the imported goods. This is illustrated below.

Let us understand who is Adjudication authority.
The Adjudication authority have been defined under section 2 of the Customs Act 1962 as ``
In this Act, unless the context otherwise requires. (1) “Adjudication Authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, (Commissioner (Appeal) or Appellate Tribunal). ``

How is the Customs works? .It is more like sequence assembly operations .

The bill of entry in relation to the imported goods is presented to the Assessing Group. The Assistant / Deputy Commissioner of Customs of the Group may assess under first or second appraisement .
In case of the first appraisement, the Assistant /Deputy Commissioner of Examination gives the examination report. The concerned Assistant /Deputy Commissioner of the Group assess the goods based on the examination report of the Assistant /Deputy Commissioner of the Examination section.

Therefore, even, the Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (Examination) both are equal quasi-judicial authority but the Assistant /Deputy Commissioner (Group) pass order of assessment based on the Assistant /Deputy Commissioner (Examination) report.

Similarly, under second Appraisement, on some occasion, the Assistant /Deputy Commissioner (Group) re-assess the goods based on the Assistant /Deputy Commissioner (Examination) report. This re-assessment of goods may involve change in classification, valuation and adjudication proceedings, as the case may be.

Further, in case of assessment for related party transaction, the Assistant /Deputy Commissioner (Group) assess the goods provisionally under section 18 of the Customs Act. Another adjudication authority is namely Assistant /Deputy Commissioner of the Special Valuation Branch (SVB) who investigate the related party transactional value. Based on the order of Assistant /Deputy Commissioner (SVB), the goods are finally assessed with or without loading of value by the concerned Assistant /Deputy Commissioner (Group). Moreover, the jurisdiction of the order of the Assistant /Deputy Commissioner (SVB) in matter of the particular related party have all India implication. Hence, even though Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (SVB) are equal quasi-judicial authority, the Assistant /Deputy Commissioner (Group) pass the order of assessment based on the order of valuation issued by the Assistant /Deputy Commissioner (SVB).

Identically, all the refund claim, drawback claim and project finalisation cases are settled only after the concurrence of the Assistant /Deputy Commissioner in charge of Audit. Therefore, the Assistant /Deputy Commissioner, who are passing refund order, settling drawback claim and finalizing the project import are of same level quasi-judicial authority as the Assistant /Deputy Commissioner in charge of the Audit. All such orders are not amounting res Judicata.

The Assistant Commissioner of refund section is proper quasi-judicial authority in case of refund claim as per rules and relevant section of the Customs Act 1962. Any person can file refund claim where he has paid excess duty in pursuance of an order of assessment or borne by him. Therefore, refund claim can be filed after the order of assessment. There is a time limit to do so.

As far as eligibility of refund claim is considered, the Assistant Commissioner (Refund) may seek opinion from the concerned Assistant /Deputy Commissioner (Group), as done, at the time of assessment by the Assistant /Deputy Commissioner (Group), based on report of Assistant /Deputy Commissioner (Examination), Assistant /Deputy Commissioner (SVB) and Assistant /Deputy Commissioner (Audit), as the case may be.

It is arbitrary and discriminatory to ask to take appellate forum without processing refund claim as per provision of the Customs Act 1962.

Under Section 122 of the Customs Act 1962, there are three class of adjudication authorities for confiscation and penalties namely a Gazetted officer of Customs lower rank than an Assistant Commissioner of Customs (AC), than Assistant /Deputy Commissioner and lastly Commissioner of Customs or a Joint commissioner of customs, based on value of goods liable for confiscation.

But for assessment of goods and passing refund order, there is no value limit for Assistant /Deputy Commissioner of the Customs.

Various orders and decisions are passed by respective Assistant /Deputy Commissioner, being adjudication authority under various sections of the Customs Act 1962. At times, order passed by an Assistant /Deputy Commissioner becomes input for other Assistant /Deputy Commissioner orders. As in the instant case, the order of assessment passed by Assistant /Deputy Commissioner (Group) is input for Assistant /Deputy Commissioner (Refund) to process claim. In another words, if there is no order of assessment, then no refund claim to process. Hence, refund claim is based on order of assessment and not on the Order-in-Appeal. The refund claim based on Order-in-Appeal does not suffer any time limit under section 27 of the Customs Act 1962 based on duty payment date .

Ground for Refunds
On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such 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 excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs.

who can claim Refund
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. Section 27 of the Customs Act, 1962 refers in this regard.

The refund of any 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.

Procedure to claim Refund
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.

Time limitation to file Refund
Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in 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, application for refund can be made before the expiry of one year from the date of payment of duty and interest.
2. 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.
3. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.
Relevant dates for submission of a refund application:
4. As stated above, application for refund is required to be filed within six months from the date of payment of duty and interest and in case of any import made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital, application for refund is to be filed within one year from the date of payment of duty and interest. However, the limitation of one year or six months, as the case may be, does not apply where any duty and interest has been paid under protest. Normally, the time limit of six months or 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 sub-section (2) of section 25 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of issue of such order;
(b) Where any duty is paid provisionally under section 18 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of adjustment of duty after the final assessment thereof;
(c) 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 :
5. 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. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, 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 imports were 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 has returned to exporter as specified in section 26;
(e) if amount relates to drawback of duty payable under section 74 and 75;
(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 refund :
6. 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, an interest @ 15% 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.
7. 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.
8. 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.
(Reference : The Customs Refund Application (Form) Regulations, 1995 issued vide notification no. 34/95(NT)-Customs, dated 26/5/1995, Notifications no. 32/95(NT)-Customs, dated 26/5/1995. Circular No. 59/95-Cus., dated 5/6/1995)

Many times excess duty is paid to the Customs department.As per law, the government has to collect neither less duty nor more duty from any person than the legally due.If any excess duty is paid to the goverment than the same is refundable.Intrest is also paid if the refund of duty is delayed than the legally prescribed time.

Refund of customs duty is govrerned by the section 27 of the Customs Act 1962.