In order to increase efficiency, the Finance Ministry has been advised by the Comptroller and Auditor General of India (CAG) to explore introducing an online customs refund system that is similar to the Goods and Services Tax Network (GSTN) system.
As outlined in Sections 27 and 26 of the Customs Act, 1962, importers and exporters are entitled to request refunds. In cases where the refund isn’t disbursed within the designated timeframe, interest is applicable at a rate of 15% per annum, as specified in Section 27A of the Customs Act, 1962.
To initiate a refund claim, it is necessary to submit an application along with supporting documents such as assessment records, sales invoices, and similar documentation. These documents are used to substantiate the assertion that excess duty and interest have been paid, that the duty or interest burden hasn’t been transferred to another party, and that the refund hasn’t been previously obtained.
As reported by the ET, the CAG said that “The Ministry may consider having an online workflow or capturing and processing refunds on the lines of the GSTN System so that the Department is able to electronically keep track of BEs against which refund has been applied for. This would make the monitoring of refund cases more efficient, effective and transparent.
As per the CAG’s recommendation, implementing a system that displays daily fluctuations in the exchange rate could potentially alleviate uncertainties and prevent unwarranted delays or discrepancies that might affect exporters or importers seeking refunds.
At present, the Central Board of Indirect Taxes and Customs (CBIC) releases the updates regarding foreign exchange rate fluctuations through notifications at intervals of 15 days. However, as per the CAG’s recommendation, it would be more beneficial to have a system in place that provides real-time updates on foreign exchange rate variations.
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