Para 14.4.7 — CAM
Original Rule Text
14.4.7 REFUNDS AND DUTY DRAWBACK UNDER CUSTOMS
14.4.7.1 On import or export of goods, at times duty may be paid in excess of what was actually leviable. 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. An application for refund is required to be filed within six months from the date of payment of duty and interest.
14.4.7.2 After scrutiny of the application, the competent authority passes the refund order and issues cheque to the beneficiary payable at the nominated bank authorized for payments of Refunds.
14.4.7.3 The Duty Drawback seeks to rebate duty or tax chargeable on any imported/excisable materials and input services used in the manufacture of export goods. In case of exports under electronic Shipping Bill, the Shipping Bill itself is treated as the claim for Drawback. At Customs locations wherever the EDI system has been introduced, the whole process of filing Bill of Entry/Shipping Bill, duties assessment, challan generation, duty payment, processing of drawback claims etc. are done through the ICES/ICEGATE system.
14.4.7.4 On approval of the drawback payment by the competent Customs officer, the drawback data sheet is generated in the ICEGATE system which is sent to the Authorized Banks Central server. A hard copy of the data sheet with a cheque is also sent by the officer to the local bank branch authorized for drawback payment. The bank credits the beneficiaries account as per the data sheet.
14.4.7.5 The Payment scrolls for the Refund and Drawback payments are sent by the bank to the PAO. The Departmental officer also sends the weekly list of payments of refunds and drawbacks to the PAO for accounting.
14.4.7.6 Accounting Entries
(i) The PAO on receipt of abstract of drawback/refund payments from concerned Customs Officer (Drawback) will make the following accounting entry:
0037 Customs (-) Cr 8670 Cheques and Bills Cr.
(ii) On receipt of Daily Payment Scroll from FPB, the PAO will make the following accounting entry for the amounts shown in the paid scrolls:
8670 Cheques & Bills (-) Cr. 8658 Public Sector Bank Suspense Cr.
(iii) On receipt of Put Through Statement of RBI, Principal Accounts Office will make following entries:
8658-Public Sector Bank Suspense (-) Cr. 8675-Deposits with RBI Cr.
What This Means
When importers or exporters pay more customs duty than actually owed, they can claim a refund under Section 27 of the Customs Act, 1962. The application must be filed within six months of the duty payment. Duty Drawback is a separate mechanism that rebates duties on materials used in manufacturing export goods, and for electronic Shipping Bills, the bill itself serves as the drawback claim. All refund and drawback payments are processed through the ICEGATE system and accounted for by the PAO using prescribed journal entries.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Customs duty refund applications must be filed within 6 months of payment date
- 2Duty Drawback rebates duty/tax on imported or excisable materials used in manufacturing export goods
- 3For electronic Shipping Bills, the bill itself is treated as the drawback claim — no separate application needed
- 4Banks credit beneficiary accounts based on ICEGATE data sheets and send payment scrolls to the PAO
- 5Accounting entries flow through Major Head 0037 (Customs), 8670 (Cheques & Bills), 8658 (PSB Suspense), and 8675 (Deposits with RBI)
Practical Example
An exporter ships goods worth Rs 50 lakh and pays Rs 2 lakh in customs duty on imported raw materials used in manufacturing. After export, the Shipping Bill filed electronically through ICEGATE automatically triggers a Duty Drawback claim. The competent Customs officer approves the drawback, the ICEGATE system generates a data sheet, and the authorized bank credits the exporter's account. The PAO records the payment under MH 0037 Customs.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the time limit for filing a customs duty refund application?▼
How is a Duty Drawback claim filed for electronic Shipping Bills?▼
What accounting entries does the PAO make for drawback/refund payments?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.