Customs Duty Refund through Online Mode and its Challenges to Trade and Stakeholders

Abstract

Abstract In the Customs Act, 1962 levies customs duty, redemption fine, and penalty on importers and exporters. When a Bill of Entries are re-assessed under Section 18A, 149 of the Act, or pursuant to an appellate order, a CESTAT ruling, or a court direction and the duty payable is reduced, the differential amount becomes refundable. In earlier days, refund applications under the Act were filed and processed entirely offline mode. The Central Board of Indirect Taxes and Customs (CBIC), has since introduced an online refund module on the ICEGATE portal through Circular No. 05/2025-Customs, dated 17th February 2025. Because the module is new, stakeholders are running into practical difficulties that largely trace back to a lack of clear guidance. A more serious pattern has also emerged: several Customs locations are declining to remit duty under Section 23 of the Customs Act, 1962 even in cases that squarely fall within that provision, and are instead demanding unjust enrichment documentation for amounts that fall outside the definition of “duty” under Section 2(15) read with Section 12 including deposits made during investigation, fines and penalties reduced on appeal, and duty in advance for goods that were never landed, lost, abandoned, destroyed, or re-exported from customs control under an adjudication order. This paper examines these challenges against the statutory framework and the existing body of customs case law on refunds and unjust enrichment, and proposes safeguards to ensure that the move to an online refund regime strengthens, rather than weakens, the rule of law.