Indirect Tax Laws and Practice · Refund

Refund of Export Duty under Section 26 of the Customs Act

Q: When is export duty refundable under section 26 of the Customs Act?

Export duty is refundable when the goods are returned to the person who paid it, otherwise than by way of re-sale, are re-imported within one year from exportation, and a refund application is made before six months expire from the proper officer's clearance order. All three must be met.

Q: From which date does the six-month period for the refund application run?

It runs from the date on which the proper officer makes an order for the clearance of the goods. It does not run from the date of export, payment of duty or arrival of the goods.

Q: Who receives the refund of export duty?

The person by whom or on whose behalf the duty was paid. Under section 27(2), first proviso, clause (d), a section 26 refund is paid to the applicant and not credited to the Fund.

Q: Is the one-year limit in section 27 the same as the limit in section 26?

No. Section 27(1) is the general provision and counts one year from the date of payment of duty. Section 26 sets its own conditions: re-import within one year of exportation and application within six months of the clearance order. In a section 26 question, apply those conditions, and use section 27(2), first proviso, clause (d) for payment to the applicant.

Updated 11 October 2026 · Fact-checked

Section 26 of the Customs Act, 1962 refunds export duty already paid if three conditions are met together: the goods come back to the exporter otherwise than by re-sale, they are re-imported within one year of exportation, and a refund application is made within six months from the date the proper officer orders clearance of the goods.

Understand Refund of Export Duty under Section 26

Export duty is paid when goods are exported. Sometimes the goods do not stay abroad. A buyer may reject them, or the shipment may come back for another reason. If duty stays with the government in that case, the exporter pays tax on an export that did not effectively happen.

Section 26 deals with this. It lets the person who paid the export duty get it back, but only on fixed conditions. The conditions protect the revenue. They ensure that the goods really returned to the exporter and did not leave the exporter's hands through a fresh sale.

There are three conditions, and all must be satisfied. First, the goods must be returned to the person by whom, or on whose behalf, the duty was paid, and not by way of re-sale. Second, the goods must be re-imported within one year from the date of exportation. Third, the application for refund must be made before six months expire from the date on which the proper officer makes an order for clearance of the goods.

The refund goes to the person by whom or on whose behalf the duty was paid. Section 27 is the general refund provision. Its first proviso to sub-section (2) lists export duty as specified in section 26 among the amounts that are paid to the applicant instead of being credited to the Fund. So a section 26 refund is paid to the applicant and is not credited to the Fund.

Remember the two clocks. The one-year clock runs from exportation and covers re-import. The six-month clock runs from the clearance order and covers the application. Exam questions are built on mixing these two clocks up.

Key rules to remember

Condition (a): nature of return: Goods returned to the person who paid (or on whose behalf paid), otherwise than by way of re-sale; A re-sale to the same person breaks the condition. The goods must come back as the exporter's own goods.
Condition (b): re-import period: Re-import date ≤ date of exportation + 1 year; The clock starts on the date of exportation, not the date of shipping bill filing or payment.
Condition (c): application period: Application date < date of proper officer's clearance order + 6 months; The statute says before the expiry of six months from the date the proper officer orders clearance of the goods. The clock starts at the clearance order, not at re-import.
Who gets the refund: Refund to the person by whom or on whose behalf the duty was paid; All three conditions are joined by 'and'. Failing any one defeats the claim.
Link to Section 27: Section 27(2), first proviso, clause (d): export duty as specified in section 26 is paid to the applicant; It is not credited to the Fund. Section 27(3) says no refund shall be made except as provided in section 27(2).

How to solve Refund of Export Duty under Section 26 questions

Use this method for any question on refund of export duty. Treat it as a checklist of the three statutory conditions.

1Confirm that export duty was actually paid on the goods exported. No duty paid means nothing to refund.
2Identify who paid the duty, or on whose behalf it was paid. That person is the one entitled to the refund.
3Test condition (a). Did the goods come back to that person, and not by way of re-sale? A re-sale defeats the claim.
4Test condition (b). Count one year from the date of exportation. Check that the re-import date falls within it.
5Find the date on which the proper officer ordered clearance of the re-imported goods. Count six months from that date.
6Test condition (c). Check that the application was made before those six months expired.
7Conclude. If all three conditions are met, the duty is refundable. If any one fails, the refund is not allowed under section 26.
8Add the link to section 27(2): the section 26 refund is paid to the applicant, not credited to the Fund.

Quickest way: Three-test pass or fail

When to use it: Use it in MCQs and short case scenarios where dates and the nature of return are given.

Write the three tests as: Return (not re-sale), 1 year from export, 6 months from clearance order.
Mark each test Yes or No from the facts.
Check which date each clock starts from: exportation for the one year, clearance order for the six months.
If any test is No, the answer is no refund. If all are Yes, refund goes to the person who paid.

Common mistakes in Refund of Export Duty under Section 26

Starting the six-month clock from the date of re-import.
Students assume the application period follows the arrival of the goods.
Fix: Read clause (c): six months run from the date the proper officer makes an order for clearance of the goods.
Starting the one-year clock from the date of payment of duty.
Section 27 uses date of payment, so the two sections get mixed.
Fix: Under section 26(b), the one year runs from the date of exportation.
Allowing the refund when the goods return after a re-sale.
Students focus on the fact that goods came back and ignore the exclusion.
Fix: Condition (a) says goods must be returned otherwise than by way of re-sale. A re-sale defeats it.
Treating the three conditions as alternatives.
Students read the list as 'any one of'.
Fix: The conditions are joined by 'and'. All three must be satisfied.
Mixing the section 26 time limits with the general one-year-from-payment period in section 27(1).
Section 27 is the general refund section, so students carry its date-of-payment clock into section 26.
Fix: Section 26 sets its own conditions: re-import within one year of exportation and application within six months of the clearance order. Section 27(2), first proviso, clause (d) deals with payment of the section 26 refund to the applicant.
Confusing refund of export duty with refund of GST or duty drawback.
All are called refunds in the Indirect Tax paper.
Fix: Section 26 is only about export duty paid and the goods returning. Drawback is under sections 74 and 75.

Worked examples

Example 1

Anand Exports Ltd paid export duty on goods shipped on 10 March 2026. The overseas buyer rejected the goods and they were returned to Anand Exports and re-imported on 15 January 2027. The proper officer ordered their clearance on 20 January 2027. Anand applied for refund on 5 June 2027. Is the duty refundable under section 26?

Show the solution

Duty was paid on exportation, so there is duty to refund.
Condition (a): the goods were returned to the exporter who paid the duty, and not by way of re-sale. This is met.
Condition (b): exportation on 10 March 2026. One year ends on 10 March 2027. Re-import on 15 January 2027 is inside that period. This is met.
Condition (c): clearance order on 20 January 2027. Six months expire on 20 July 2027. Application on 5 June 2027 is before that date. This is met.
All three conditions are satisfied.

Answer: Yes. The export duty is refundable under section 26 to Anand Exports Ltd, and under section 27(2) it is paid to the applicant.

Example 2

Bharat Textiles exported goods on 1 April 2026 and paid export duty. The goods were re-imported on 15 February 2027 and cleared on 20 February 2027. Bharat applied for refund on 10 September 2027. Examine the claim.

Show the solution

Assume the goods came back to Bharat otherwise than by re-sale, so condition (a) is met.
Condition (b): exportation on 1 April 2026. One year ends on 1 April 2027. Re-import on 15 February 2027 is within it. This is met.
Condition (c): clearance order on 20 February 2027. Six months expire on 20 August 2027. The application on 10 September 2027 is after that date. This is not met.
All three conditions must be met, so the claim fails on condition (c).

Answer: The refund is not allowed under section 26. The application was made after six months from the clearance order, even though the re-import was within one year.

Exam tips

In date-based questions, draw two timelines: one from exportation for re-import, one from the clearance order for the application. Do not mix them.
Check for a re-sale in the facts. It is a favourite way to make an otherwise perfect claim fail.
In MCQs, watch for options that quote the wrong starting point, such as date of payment or date of re-import, for the six months.
Quote the words of the section where you can, especially 'otherwise than by way of re-sale' and 'before the expiry of six months'.
In a long answer, link section 26 to section 27(2) proviso clause (d) to show the refund is paid to the applicant.

Practice questions from Refund

Refund of Export Duty under Section 26 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA FinalRefund of Export Duty (Section 26)

Refund of Export Duty under Section 26: frequently asked questions

When is export duty refundable under section 26 of the Customs Act?

Export duty is refundable when the goods are returned to the person who paid it, otherwise than by way of re-sale, are re-imported within one year from exportation, and a refund application is made before six months expire from the proper officer's clearance order. All three must be met.

From which date does the six-month period for the refund application run?

It runs from the date on which the proper officer makes an order for the clearance of the goods. It does not run from the date of export, payment of duty or arrival of the goods.

Who receives the refund of export duty?

The person by whom or on whose behalf the duty was paid. Under section 27(2), first proviso, clause (d), a section 26 refund is paid to the applicant and not credited to the Fund.

Is the one-year limit in section 27 the same as the limit in section 26?

No. Section 27(1) is the general provision and counts one year from the date of payment of duty. Section 26 sets its own conditions: re-import within one year of exportation and application within six months of the clearance order. In a section 26 question, apply those conditions, and use section 27(2), first proviso, clause (d) for payment to the applicant.