Indirect Tax Laws · Refund

Claim for Refund of Customs Duty (Section 27)

Updated 5 October 2026

Section 27 of the Customs Act, 1962 lets a person who paid customs duty and interest, or bore it, claim a refund from the proper officer (Assistant or Deputy Commissioner of Customs). Apply in the prescribed form within one year of payment, with proof. The limit does not apply to payment under protest. Unjust enrichment applies.

Understand Claim for Refund of Customs Duty (Section 27)

Customs duty is sometimes paid in excess. The assessment may be wrong, the rate may be lower than charged, or an exemption may apply that you missed. Section 27 is the route to get that money back. It is the general refund provision for duty and interest paid under the Act.

Any person who paid duty and interest, or who bore it, may apply. If you claim as the person who bore the duty, you must show that you bore it. The application can cover the duty and the interest paid on it. The rank of the assessing officer does not decide who can claim. The unjust enrichment test applies to the refund.

The claim is not automatic. You must apply in the prescribed form and manner to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs). The time limit is one year from the date of payment of duty and interest. For provisional assessment, the explanation to the section counts the year from the date of adjustment of duty after final assessment.

Two points change the time limit:

Where the duty and interest were paid under protest, the one-year limit does not apply. The proviso to Section 27(1) says the limitation does not apply where any duty and interest has been paid under protest. For a self-assessed Bill of Entry, the assessment must first be reassessed or appealed before a refund can be sanctioned.
Where an order of the Commissioner (Appeals), the Appellate Tribunal or any court is stayed, the period of the stay is excluded from the one-year limit.

The officer must decide the claim within the time Section 27(1A) allows, which is three months from the date of receipt of the application. Interest under Section 27A arises where duty ordered to be refunded under Section 27(2) is not refunded within three months from the date of receipt of the application.

You must also prove that the burden of duty was not passed on to anyone else. This is the unjust enrichment test. If you recovered the duty from your buyers, the refund does not go to you. It is credited to the Consumer Welfare Fund, except in the cases Section 27(2) lists. For example, these include refund of export duty, duty on imported goods that are exported out of India, drawback, duty borne by the buyer who has not passed on the incidence to another person, and duty borne by a notified class of applicants. An applicant who bore the duty and did not pass it on is the ordinary claimant who passes the test. He is not a special exception. Study these listed cases in the separate topic on unjust enrichment and the Consumer Welfare Fund. If the officer is satisfied that the whole or part of the duty is refundable, he passes an order to that effect, subject to Section 27(2).

In exams, treat this as a four-part topic: who can claim, by when, how to apply, and what the officer does. Add the unjust enrichment point and the interest link (Section 27A) and you cover most questions.

Key rules to remember

Who may claim: Any person who paid duty or interest, or who bore it → may apply for refund of duty and interest; A person claiming as the one who bore the duty must show that he bore it. The unjust enrichment test applies to the refund. The rank of the assessing officer is not the test.
Time limit: Application within 1 year from date of payment of duty and interest; Counted from the date of payment, not the date you discovered the error.
Payment under protest: Where any duty and interest has been paid under protest → the one-year limit does not apply (proviso to Section 27(1)); Look for 'under protest' in the facts before you test the time limit. For a self-assessed Bill of Entry, the assessment must first be reassessed or appealed.
Stay order: Order of the Commissioner (Appeals), Appellate Tribunal or any court stayed → period of the stay is excluded from the one year; Exclude only the period for which the stay operated.
Provisional assessment: Duty paid provisionally → one year runs from the date of adjustment of duty after final assessment; Not from the date of the provisional payment.
Authority: Application to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs); He sanctions the refund by order if satisfied that the duty or part of it is refundable, subject to Section 27(2). Section 27(1A) sets the time within which he must decide: three months from the date of receipt of the application.
Proof required: Application + documentary evidence that duty and interest were paid (or borne) and the incidence was not passed on; This is the unjust enrichment test. Without it the refund goes to the Consumer Welfare Fund, unless a case listed in Section 27(2) applies. For example: refund of export duty; duty on imported goods exported out of India; drawback; duty borne by the buyer, if he has not passed on the incidence to another person; or duty borne by a notified class of applicants.
Interest on delay: Duty ordered to be refunded under Section 27(2) not refunded within 3 months from the date of receipt of the application → interest under Section 27A; The trigger is non-refund within three months of receipt of the application, not merely non-sanction. Study this with the separate topic on interest on delayed refund.

How to solve Claim for Refund of Customs Duty (Section 27) questions

Use this order for any Section 27 question. It keeps your answer in provision-facts-conclusion form.

1Identify the claimant. Check that he is a person who paid the duty and interest, or who bore it and can show he bore it. The rank of the assessing officer is not relevant.
2Identify the duty and interest involved. Note the amount paid and the date of each payment.
3Check whether the duty and interest were paid under protest. If they were, the one-year limit does not apply, as the proviso to Section 27(1) provides.
4If there was no protest, check the time limit. Count one year from the date of payment. For provisional assessment, count from the date of adjustment after final assessment. Exclude the period for which an order of the Commissioner (Appeals), Appellate Tribunal or any court was stayed.
5State the procedure. The application goes in the prescribed form and manner to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs), with evidence of payment and of non-passing on of the burden. For a self-assessed Bill of Entry, note that the assessment must first be reassessed or appealed.
6Apply the unjust enrichment test under Section 27(2). If the burden was passed on, the amount goes to the Consumer Welfare Fund unless a Section 27(2) case applies. If it was not, the claimant gets the refund.
7Conclude. State whether the claim is valid, who gets the money, and whether interest under Section 27A can arise if duty ordered to be refunded is not refunded within three months from the date of receipt of the application.

Quickest way: Protest, date and stay check

When to use it: Use this in case-scenario MCQs and short problems where the facts give dates and ask whether the refund claim is valid.

Check whether the payment was under protest. If yes, the one-year limit does not apply. For a self-assessed Bill of Entry, the assessment must still be reassessed or appealed first.
If not, mark the payment date, or the date of adjustment if the assessment was provisional.
Add one year, plus the period for which an order of the Commissioner (Appeals), Appellate Tribunal or court was stayed, and compare it with the application date.
If the claim is late and neither protest nor a stay applies, it is time-barred.
Check whether the burden of duty was passed on. If it was, the money goes to the Consumer Welfare Fund unless a Section 27(2) case applies.
Write the conclusion in one line with the reason.

Common mistakes in Claim for Refund of Customs Duty (Section 27)

Counting the one year from the date of the Bill of Entry or the date the error was found.
Students mix up the date of filing, the date of discovery and the date of payment.
Fix: Count from the date of payment of duty and interest. For provisional assessment, count from the date of adjustment after final assessment.
Applying the one-year limit to duty and interest paid under protest.
Students count the dates mechanically and miss the words 'under protest' in the facts.
Fix: Read the facts for protest first. The proviso to Section 27(1) says the one-year limit does not apply where duty and interest were paid under protest. For a self-assessed Bill of Entry, the assessment must first be reassessed or appealed. Also exclude the period of any stay of an order of the Commissioner (Appeals), Appellate Tribunal or court.
Saying only the person who paid the duty can claim.
Students read 'paid' and ignore the person who bore the duty.
Fix: Say that a person who paid duty and interest, or who bore it, may claim. The one who bore it must show that he bore it.
Saying every refund is paid to the applicant.
Students ignore unjust enrichment.
Fix: State that the applicant must show the burden was not passed on. Otherwise the refund is credited to the Consumer Welfare Fund, except in the Section 27(2) cases, such as refund of export duty, duty borne by the buyer who has not passed on the incidence, or duty borne by a notified class of applicants.
Confusing the officer who receives the application with the appellate authority.
Students mix the refund route with the appeal route.
Fix: The application under Section 27 goes to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs). An appeal is a different route against an order.
Leaving out interest paid on the duty from the claim.
Students focus on the duty alone.
Fix: The section covers refund of duty and the interest paid on it. Mention both in your answer.
Writing a section number or period for the interest on delay without linking it properly.
Section 27 and Section 27A are studied together and get mixed.
Fix: Keep them separate. Section 27 gives the right to claim and the procedure. Section 27A gives interest if duty ordered to be refunded under Section 27(2) is not refunded within three months from the date of receipt of the application.

Worked examples

Example 1

Ravi Traders imported machine parts and paid customs duty of ₹6,40,000 on 10 June 2026 on a self-assessed Bill of Entry. The payment was not made under protest. It later found that an exemption applied. It applied for a refund on 20 August 2027. The assessment was not provisional, no stay order operated, and the burden was not passed on to customers. Is the refund claim valid?

Show the solution

Provision: Section 27 requires the application within one year from the date of payment of duty and interest. The limit is lifted only for payment under protest, and the period of a stay is excluded.
Facts: Payment was on 10 June 2026. One year expired on 10 June 2027. The application was made on 20 August 2027, which is after this date.
The payment was not under protest, so the limit applies in full. No stay order period is available to exclude, and no provisional assessment is involved.
Route: The Bill of Entry was self-assessed. Before any refund can be sanctioned, Ravi Traders must have the assessment modified or appealed. A refund application alone does not do this.
Unjust enrichment is not an issue, but it cannot cure a time-barred claim.

Answer: The claim is time-barred. The payment was not under protest, the application was filed after the one-year period from the date of payment expired on 10 June 2027, and no stay applies. The officer cannot sanction the refund under Section 27. Even a claim in time would need the self-assessed Bill of Entry to be reassessed or appealed first.

Example 2

Meera Exports imported goods and paid ₹10,00,000 duty provisionally under Section 18 on 1 March 2026. The final assessment order dated 15 September 2026 determined the duty at ₹8,00,000 and adjusted the amount. Meera did not pass the burden on to anyone. By when should she apply for refund of the excess duty, and to whom? What is the refund amount?

Show the solution

Refund amount: ₹10,00,000 paid minus ₹8,00,000 finally assessed = ₹2,00,000.
Time limit: For provisional assessment, the one year is counted from the date of adjustment of duty after final assessment, not from 1 March 2026.
Adjustment date is 15 September 2026. One year from that date ends on 15 September 2027, so the application must be made on or before 15 September 2027.
Authority: The application goes in the prescribed form and manner to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs), with evidence of payment and of non-passing on of the burden.
Because the burden was not passed on, the refund is payable to Meera.

Answer: Meera can claim ₹2,00,000. She must apply to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs) on or before 15 September 2027, counting one year from the date of adjustment after final assessment. The refund is payable to her because there is no unjust enrichment.

Exam tips

For case-scenario MCQs, find the payment date, the application date and the words 'under protest', 'provisional' and 'stay order' first. Most questions turn on these.
Check for 'under protest' in the facts. If duty and interest were paid under protest, the one-year limit does not apply. If a stay of an order of the Commissioner (Appeals), Appellate Tribunal or court is mentioned, exclude the period of the stay.
In written answers, use provision-facts-conclusion. State the one-year rule, apply the dates, then conclude.
Always mention that the claim covers both duty and interest paid on it.
Link Section 27 to unjust enrichment and Section 27A in one line each. Examiners often combine them.
Do not quote section numbers you are unsure of. Name Section 27 and Section 27A and describe the rest in words.

Practice questions from Refund

Claim for Refund of Customs Duty (Section 27): frequently asked questions

What is the time limit to claim refund of customs duty under Section 27?

You must apply before the expiry of one year from the date of payment of duty and interest. For provisional assessment, the year runs from the date of adjustment after final assessment. The proviso to Section 27(1) says the limit does not apply where the duty and interest were paid under protest. The period for which an order of the Commissioner (Appeals), Appellate Tribunal or any court is stayed is excluded.

Who can claim a refund under Section 27 of the Customs Act?

Any person who paid duty or interest, or who bore it, can apply. A person claiming as the one who bore the duty must show that he bore it. The unjust enrichment test applies to the refund. The application goes to the proper officer (the Assistant Commissioner of Customs or Deputy Commissioner of Customs), who sanctions it subject to Section 27(2).

Does the importer always get the refund if the claim is valid?

No. The importer must prove that the burden of duty was not passed on to anyone else. If it was passed on, the amount is credited to the Consumer Welfare Fund, except in the cases Section 27(2) allows, such as refund of export duty, duty borne by the buyer who has not passed on the incidence, or duty borne by a notified class of applicants.

Is interest payable if the refund is delayed?

Yes. If duty ordered to be refunded under Section 27(2) is not refunded within three months from the date of receipt of the application, interest becomes payable under Section 27A. Study that section along with this one.