Customs: Streamlining Refund Processes Through Automation
The CBIC department has issued a new custom circular no. 05/2025 dated 17.02.2025 regarding “Streamlining Refund Processes Through Automation”. The objectives of this circular is to lay stress and work on shortening the time and cost of trading across the borders, Customs has been continuously taking some reforms in order to making them easier, improving efficiency and effectiveness through digitalization.
Objectives of the Circular
The primary goal of Circular No. 05/2025 is to streamline the refund application process for customs duties through automation. The key initiatives outlined in the circular include:
- System-Based Automated Clearances: Automatic clearance of designated imports by assigned importers is promoted in an effort to substantially reduce the time spend on customs clearance procedures.
- Digital Payment Integration: All due customs are now to be settled electronically via the ICEGATE platform for electronic payment gateway, thereby an improvement in the process of settlement.
Legal Framework
The Customs Act of 1962 establishes legal framework for refund claims. Key sections relevant to refunds include:
- Section 27: In this part it is possible for persons who have paid customs duties to make an application for a refund within one year of date of payment.
- Section 26: In relation to export duties, this paragraph describes circumstances in which exporters can claim refunds when products are returned or re-imported within certain time-frames.
- Notification 102/2007-Customs: This advisory update describes any other conditions and remedies in processing refunds, by actively clarifying what the regulatory scheme to support these claims mandates.
Transition from Manual to Automated Processes
At the present time, when an individual, who wishes to make a claim in regard to a refund under Section 27 of the Customs Act, needs to do so, the need to complete a paper application form must be fulfilled. This procedure is in accordance with the Customs Refunds Application (Form) Regulations 1995.
Manual calculation of refund amount is a slow and tedious process that demands a physical user interface. In addition, the current state of the application is not easily accessible to the trade. For this reason, an online duty refund processing module has been designed to improve transparency.
The following items are described relative to the electronic refund processing:
- Online Submission: Refund application lodged electronically in the ICEGATE Portal, together with the documents.
- Re-assessment Requests: Re-examination of the Bill of Entry also takes place on the ICEGATE Portal. Once the re-assessment is finished, a pre-filled refund application will be made available to complete your claim for a refund. The refund amount will be re credited to the bank account that has already been registered within the Customs Automate System.
- Automated Acknowledgment: Following successful filing of the Refund application in the ICEGATE Portal an Application Reference Number (ARN) will be generated. If any deficiency issued by the officer also reflected on the ICEGATE Dashboard.
- Integrated Verification: Errors in submitted data will be cross-checked with reference data to maintain data quality and prevent fraud.
- Real-Time Tracking: Applicants can track refund claims activity in real-time through the portal, providing increased transparency and reducing the requirement for physical follow-up.
- Electronic Disbursal: When the order for Rejection or sanction for the amount of refund is Received or rejected, the show-cause notice will be uploaded in the ICEGATE portal. On grant of Refund, the amount shall be electronically credited to the Bank Account of the Applicant through the Public Financial Management System (PFMS).
Implementation Timeline:
The refund can be submitted in manual and online modes as up to 31.03.2025. Refund applications submitted by hand will not be admitted after 31 March 2025 unless they are approved by the appropriate Principal Commissioner/ Commissioner of Customs and these reasons must be entered in writing.
Implications for Stakeholders
The mechanisation of customs refund procedures has important repercussions for trade and customs administrations:
- Increased Efficiency: With reduced requirement of manual and process streamlining, the new system can be anticipated to reduce the processing time for refunds alleviated.
- Enhanced Transparency: The ability to track refund statuses in real-time fosters greater trust among traders and enhances accountability within customs operations.
- Cost Reduction: Digital processing reduces both customs service personnel's paper work and operational expense and customer service personnel's paper work and operational expense.
- Improved User Experience: People with simple interfaces and paperless electronic alerts will be able to handle the refund application process more easily.