New Prescribed Format for Deficiency Memos under Section 74 of the Customs Act, 1962

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Dated: 07.07.2026

New Prescribed Format for Deficiency Memos under Section 74 of the Customs Act, 1962

The Central Board of Indirect Taxes & Customs (CBIC) has issued Circular No. 31/2026 to standardize the process of issuing Deficiency Memos for duty drawback claims under Section 74 of the Customs Act, 1962. This move addresses observations from Audit Report 33 of 2025, which highlighted the absence of a prescribed form for such memos.

Background and Purpose

Section 74 of the Customs Act, 1962 allows exporters to claim a refund (drawback) of customs duties paid on imported goods that are subsequently re-exported. However, the audit found inconsistencies in how deficiency memos were issued, leading to delays and confusion in processing claims. To resolve this, CBIC has now mandated a uniform format for Deficiency Memos, ensuring clarity and efficiency in communication between customs authorities and exporters.

Key Features of the Circular

Standardized Deficiency Memo Format
- All customs field formations must use the format provided in Annexure-I of the circular when issuing deficiency memos for drawback claims under Section 74.
- The memo clearly lists the documents and information required from exporters to process their claims.
Comprehensive List of Required Documents
- The memo includes a checklist of documents that may be requested, such as:
  - Calculation sheet for the drawback claim
  - Copies of shipping bill, export invoice, packing list, bill of lading, bill of entry, import invoice, and import packing list
  - Evidence of duty payment (e.g., TR-6 Challan)
  - Self-declaration regarding IGST claims
  - Certificate from GST officer if IGST refund is claimed
  - Notarized affidavit
  - RBI permission for re-export, if applicable
  - Any other relevant documents
Clear Compliance Timeline
- Exporters are given thirty days to comply with the requirements specified in the deficiency memo.
- Failure to comply within this period will result in the claim being treated as not filed, as per Rule 5(4)(b) of the Re-export of Imported Goods (Drawback of Custom Duties) Rules, 2017.

Sample Deficiency Memo Structure (Annexure-I)

The prescribed memo includes:

Reference to the specific shipping bill and date
List of required documents (with checkboxes)
Statement on the consequences of non-compliance
Signature and designation of the issuing customs officer

Example Extract:

“With reference to your drawback claim under Section 74 of the Customs Act, 1962 against the above-mentioned Shipping Bill, you are hereby directed to submit the following (ticked) documents/information for processing of the claim… Your drawback claim is returned herewith and if the requirements specified in this deficiency memo are not complied with within thirty days, your claim shall be treated as not filed…”

Implications for Exporters and Customs Officials

For Exporters:
- The new format provides clarity on the exact documentation required, reducing ambiguity and the risk of claim rejection due to incomplete submissions.
- Exporters should ensure timely and complete responses to deficiency memos to avoid delays or forfeiture of their claims.
For Customs Officials:
- The standardized format streamlines internal processes and ensures uniformity across all customs formations.
- It also helps in maintaining proper audit trails and compliance with statutory requirements.

Conclusion

The introduction of a prescribed format for Deficiency Memos under Section 74 is a significant step towards improving transparency and efficiency in the processing of drawback claims. Exporters and customs officials alike should familiarize themselves with the new requirements to ensure smooth and timely claim settlements.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: CBIC, Ministry of Finance, Govt. of India

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