Section 27A explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
If a customs refund that has been ordered under section 27(2) is not paid within three months of the application, the government pays interest to the applicant. Section 27A fixes the three-month trigger, the date from which interest runs, the range within which the rate is notified, and treats appellate and court orders of refund as orders under section 27(2).
This article follows the text on the CBIC portal updated to 30 March 2022 (the Act as amended up to the Finance Act, 2022). Please check any later Finance Act changes to this section before acting.
Where duty ordered to be refunded under section 27(2) is not refunded within three months from the date of receipt of the application under section 27(1), the applicant is paid interest on the duty from the day after those three months until the date of refund. The rate is fixed by the Central Government by notification, within the range the section prints: not below five per cent and not exceeding thirty per cent per annum. The rate itself is not in the Act.
What triggers interest
The section opens with a condition: duty must have been ordered to be refunded under sub-section (2) of section 27 to an applicant, and it must not have been refunded within three months from the date of receipt of the application under sub-section (1) of that section. Both parts matter.
- An order of refund must exist. The section speaks of duty "ordered to be refunded". An application alone, with no refund order, does not start interest under this section. For how the refund order is made, see our article on section 27.
- Three months from receipt of the application. The clock is counted from the date of receipt of the application, not from the date of the order. So an order made late in the period leaves little time before interest begins, and an order made after the period has already run means interest starts accruing from the day after the three months.
If your refund has been sanctioned but not paid and you want to check whether interest is due and from when, a legal consultation can help you test the dates.
From when interest runs
Interest is paid "on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty". Take an invented example: the application is received on 10 January; the three months end on 10 April; interest runs from 11 April until the day the refund is paid. The base for interest is the duty ordered to be refunded.
The rate: a range, fixed by notification
The section says interest is at such rate, "not below five percent" and not exceeding thirty percent per annum, as is for the time being fixed by the Central Government by notification in the Official Gazette. The Act prints only the range. The rate fixed within the range is in a notification, and this article states no notified rate.
The footnotes show how the section's words have changed: the section was inserted by the Finance Act, 1995 (22 of 1995) with effect from 26 May 1995; the words "not below five percent" were substituted for "not below ten percent" by the Finance Act, 2001 (14 of 2001) with effect from 11 May 2001; and the words "by the Central Government by Notification in the Official Gazette" were substituted for "by the Board" by the Finance Act, 2000 (10 of 2000) with effect from 12 May 2000. The text above is the section as printed with those changes.
The proviso: older applications
The proviso deals with refunds ordered under section 27(2) on applications made before the date on which the Finance Bill, 1995 received the assent of the President. If such a refund is not made within three months from that date, interest is paid from the date immediately after three months from that date until the date of refund. It is a transitional rule for applications that were pending when the section was introduced.
The Explanation: refunds ordered on appeal
The Explanation says that where any order of refund is made by the Commissioner (Appeals), the Appellate Tribunal, the National Tax Tribunal or any court against an order of the Assistant Commissioner of Customs or Deputy Commissioner of Customs under sub-section (2) of section 27, the order of the appellate body or court is deemed to be an order passed under that sub-section for the purposes of this section.
The effect is that interest is not limited to cases where the first officer allowed the refund. If a refund is ordered by the appeal body or a court against the officer's order, that order counts as an order under section 27(2) for the purposes of interest. The copy prints the words "National Tax Tribunal" in the Explanation with a footnote that they are to be inserted from a date to be notified; this article does not treat that Tribunal as functioning. For the appeal route, see our post on the customs appeal process.
Where this sits with the other interest rules
| Provision | Interest on | Rate source |
|---|---|---|
| Section 27A | Duty ordered to be refunded under section 27(2) but not refunded within three months of the application | Fixed by notification within the range printed in section 27A |
| Section 18(4) | Refundable amount after provisional assessment, not refunded within three months from the date of assessment of duty finally or re-assessment | Rate fixed under section 27A |
| Section 28AA | Delayed payment of duty by the person liable under section 28 | Fixed by notification within the range printed in section 28AA |
Section 18(4) refers back to the rate fixed under section 27A, as our article on section 18 explains. The interest that the importer pays on delayed duty is dealt with in section 28AA, covered in our article on section 28AA. The sections run in both directions: the government pays interest on a delayed refund, and the person liable pays interest on delayed duty.
A worked example with invented names
Kiran Exports Pvt. Ltd. applies for a refund on 1 February. The Assistant Commissioner passes an order allowing the refund, but the money is not credited to Kiran by 1 May, which is three months from receipt of the application. From 2 May until the date the refund is actually paid, Kiran is entitled to interest on the duty ordered to be refunded, at the rate fixed by notification. If the department had rejected the claim and the Commissioner (Appeals) later ordered the refund, that order would be treated as an order under section 27(2) for the purposes of section 27A. The practical side of claims is in our post on customs refund grounds and the claim process.
Need help recovering a delayed refund?
A sanctioned refund that sits unpaid is money lost to you. A legal consultation can help you work out whether interest is payable under section 27A and how to claim it.
Key takeaways
- Interest under section 27A needs a refund order under section 27(2) and non-payment within three months from receipt of the application.
- Interest runs on the duty from the day after the three months to the date of refund.
- The Act prints only the range, not below five per cent and not exceeding thirty per cent per annum; the rate is notified.
- An appellate or court order of refund is deemed an order under section 27(2) for this section.
- The Tribunal reference in the Explanation is printed with a "to be inserted" note.
Read next
- Section 27: claim for refund of duty and unjust enrichment
- Section 28AA: interest on delayed payment of duty
- Section 18: provisional assessment of duty
- Customs Refund: Grounds and Claim Process
Disclaimer: Based on the Customs Act, 1962 as published on the CBIC Tax Information Portal, updated to 30 March 2022 (amended up to the Finance Act, 2022), as consulted on 2 October 2026. Finance Acts of 2023 and later, and the current rules, regulations and notifications, should be checked. This article is general information, not legal advice; check the official text before acting.