Summary: The Indian Customs Department has introduced electronic processing of customs refund applications to streamline compliance and enhance efficiency, as outlined in Circular No. 05/2025 dated February 17, 2025. This initiative covers refunds under Sections 26 and 27 of the Customs Act, 1962, such as export duty refunds for returned goods, exemptions granted under special orders, and refunds following judicial decisions. The ICEGATE portal now facilitates filing refund applications, reassessment requests, and tracking application status. Key features include immediate generation of a unique reference number (ARN), scrutiny and acknowledgment of applications within 10 days, and electronic communication of decisions. Refunds will be credited directly to applicants’ registered bank accounts, ensuring faster disbursement. Audit procedures have also been revised, discontinuing concurrent audits and shifting to selective post-audits. This transition aims to enhance transparency, reduce manual intervention, and improve overall compliance management. While manual applications will be accepted until March 31, 2025, online submissions are encouraged for quicker processing and better monitoring through MIS reports available to customs officers.
As we are moving forward in the era of Artificial Intelligence and digitization, there are a lot of manual interventions involved under the compliance practice at Indian Customs. The Finance and Commerce ministry in their communication at different forums have promised to move the major compliance portion on digital platforms by mid-2026.
In line with the reform measures aimed at simplification, digitization and making the process efficient and effective, one of the important aspects for automation for refund procedure under Customs is introduced by way of a recent Circular No. 05/2025 dated 17 Feb 2025.
This automation of refund refers to the eligible refunds in terms of Section 26 and 27 of the Customs Act, 1962. Scenarios covered are reproduced as under:
Refund of export duty in cases of:
– goods are returned otherwise than by way of re-sale;
– the goods are re-imported within one year from the date of exportation;
Other miscellaneous cases such as:
– Exemptions granted under special orders.
– Refunds resulting from judgments or directions by authorities.
– Provisionally paid duties, with refunds processed after final assessment or reassessment.
– Refunds on duty borne by buyers or duties paid by individual importers for personal use; etc.
Currently such refund applications require all communications manually including, filing of application, getting SCN / deficiency, final order, etc. wherein it was difficult for both the assessee and department to readily verify / receive the status of pendency for such applications. Also, the said provisions required for compulsory concurrent audit (pre-audit) in case of refund of more than Rs. 5 lakh, post-audit in the case refund for amount between Rs 50,000/- and Rs. 5 lakh and post-audit on random selection basis in the case refund of amount is below Rs 50,000/-.
Now to enhance transparency and for electronic disbursal of refunds, an online processing and disbursal application has been developed and is enabled on the ICEGATE portal. Key aspect relating to the process is reproduced as under:
| Key Aspect | Details |
| Filing Refund Application | To be filed on ICEGATE Portal, accompanied by supporting documents as per the Customs Refunds Application (Form) Regulations, 1995. |
| Re-assessment of Bill of Entry | If re-assessment is needed before a refund, applicants can request it via ICEGATE. After re-assessment, a pre-filled refund application form will be available for filing. |
| Bank Account Details | Refund amounts will be credited to the bank account registered in the Customs Automated System. Applicants should verify and update their bank details before filing. |
| Unique Application Reference Number (ARN) | Upon successful filing of the refund application, a Unique Application Reference Number (ARN) is generated immediately before scrutiny by the Proper Officer. |
| Scrutiny of Application | The Proper Officer will scrutinize the application and inform any deficiencies within 10 days of ARN issuance on the ICEGATE dashboard, ensuring all queries are sent at once. |
| Acknowledgment Generation | If there are no deficiencies or they are rectified, an acknowledgment number will be generated by the Proper Officer on the Portal and made available to the user. |
| Communication of Decisions | Any show-cause notice for rejection or order for refund sanction/rejection will be communicated electronically through ICEGATE, including examination aspects related to unjust enrichment. |
| Audit Process Changes | The concurrent audit of refund claims is discontinued; post-audit will be implemented for electronic processing of refunds, with selection criteria finalized by DG-Audit in consultation with DG ARM. |
| Refund Amount Credit Process | Upon sanctioning of refunds, amounts will be electronically credited to the applicant’s bank account via the PFMS system. The process for crediting to the Consumer Welfare Fund remains unchanged. |
| Application Status Tracking | Applicants can check the status of their applications on the ICEGATE Dashboard. |
| Monitoring Reports for Customs Officers | Management Information System (MIS) reports regarding refund pendency are available for customs officers to ensure efficient and transparent monitoring. |
It is important to note that as a transitional measure, both manual and online refund application modes will be available till 31.03.2025. However, no manual refund application shall be accepted after 31st March, 2025, unless the same is allowed by the concerned Pr. Commissioner/ Commissioner of Customs, for the reasons to be recorded in writing.
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