What Happens Under RBI Rules When a Foreign Buyer Returns Exported Goods?

A returned export shipment leaves an open shipping bill in EDPMS, because the export value it records will not reach India. The goods coming back are a fresh import for customs purposes. Three records then need fixing: the EDPMS entry with your AD bank, the customs entry for the re-import, and your GST export position.

• Open entry: Every goods export carries a declaration of its full export value. At an EDI port the shipping bill itself counts as the Export Declaration Form (Regulation 3(1)). The AD bank marks off the EDPMS entry only after the export value is realised (Regulation 18(1)(g)).
• Reduction: When the full value will not be received, the AD bank may allow a reduction in export value on your request with reasons. For a shipping bill of up to ₹10 lakh, the bank may allow it on your declaration (Regulation 6).
• Customs: Goods imported into India after being exported are liable to duty and to the same conditions as like goods being imported (section 20, Customs Act, 1962). Ask Customs or your customs broker whether any exemption applies to your re-import.
• GST: IGST on imported goods is levied with customs duty under the Customs Tariff Act (proviso to section 5(1), IGST Act). A refund already received on the export can be recovered if sale proceeds are not realised (CGST Rule 96B).
• Old rules: The Master Direction on export had a separate paragraph on refunding export proceeds for goods re-imported due to poor quality (para D.2). RBI superseded that Master Direction from 1 October 2026 (A.P. (DIR Series) Circular No. 20, para 4).

From 1 October 2026 the AD bank decides on reductions under Regulation 6 and handles adjustments under its own internal policy. Talk to the bank as soon as you know the goods are coming back.

Any goods exporter whose shipment comes back, or will never be paid for, must resolve the open EDPMS entry. The customs and GST steps apply only when the goods physically return to India. Service exporters have no goods to re-import, so only the realisation and EDPMS rules matter for them.

You close the shipping bill by asking your AD bank to approve a reduction in export value, with reasons and evidence of the return. Up to ₹10 lakh per shipping bill, the bank may accept your declaration. Above that, the bank decides after checking the reasons. File the customs import entry and settle any GST effect alongside.

1. Tell your AD bank early. The bank must monitor open entries and follow up with you (Regulation 5(2)), so explain the return before the realisation period ends.
2. Collect proof of the return: the buyer's rejection message, the return transport document and, once the goods land, the customs import entry.
3. If the goods are re-imported, file the import entry and pay any duty and IGST that Customs assesses (section 20, Customs Act). Ask Customs whether export benefits claimed on the original shipment affect the re-import.
4. Submit a reduction request to the AD bank citing the reasons for non-realisation (Regulation 6). For a shipping bill of ₹10 lakh or less, the bank may permit the reduction on your declaration (proviso to Regulation 6).
5. For entries of ₹10 lakh or less, you can also declare that payment was realised "in full or otherwise" and ask for closure, singly or in a quarterly bulk declaration (first proviso to Regulation 4(2)). See EDPMS closure.
6. If you still expect to resell the goods to another buyer and receive payment, ask for an extension of the realisation period instead (second proviso to Regulation 5(1)). See extension of export realisation period.
7. Check your GST position. If you received an IGST or input tax credit refund on the export and proceeds stay unrealised, deposit the refund to that extent, with interest, within 30 days of the end of the FEMA period or extension (CGST Rule 96B(1)).
8. Ask the bank to confirm in writing that the EDPMS entry is closed, and keep it in your export file.

The deadline is the realisation period of the original shipping bill: 9 months from shipment, or 12 months if invoiced or settled in rupees, unless the AD bank extends it (Regulation 5(1)). Each AD bank sets its document list in its internal policy and must publish the main features on its website (Regulation 19(1)(a) and 19(4)).

An open shipping bill for returned goods counts as unrealised export proceeds. If it stays unrealised for over a year after the due or extended date, you can export only against full advance or an irrevocable letter of credit (Regulation 13). GST export refunds can also be recovered with interest.

• Export restriction: Further exports need full advance payment or an irrevocable LC once proceeds are unrealised for more than one year past the due date (Regulation 13).
• Caution list: Exporters already on RBI's caution list on 30 September 2026 stay governed by that order until removed (proviso to Regulation 13).
• GST refund: A refunded IGST or input tax credit must be deposited with interest within 30 days of the FEMA period ending, or it is recovered as an erroneous refund (CGST Rule 96B(1)).
• Refund later: If you realise proceeds after recovery and show evidence within three months of realisation, the recovered amount is refunded to that extent, provided proceeds were realised within any extended period RBI permits (CGST Rule 96B(2)).
• Bank charges: The AD bank may not levy charges or penalties on you for regulatory delays, and its charges must be reasonable (Regulation 19(3)).

Ask the AD bank to approve the reduction or close the entry on your declaration, then get written confirmation. If the bank refuses, use the escalation and appeal process its SOP must provide (Regulation 19(2)). For older open entries, see export proceeds not realised.

No single RBI paragraph covers returned goods from 1 October 2026. The FEMA (Export and Import of Goods and Services) Regulations, 2026 handle the situation through the general rules on realisation, reduction and EDPMS closure. The older Master Direction paragraphs were superseded by A.P. (DIR Series) Circular No. 20.

• Waiting: Raising the return with the AD bank only after the realisation period ends. Ask for a reduction or an extension while the period is still running.
• Replacement: Assuming a replacement shipment closes the original entry. The replacement has its own shipping bill and EDPMS entry.
• No import entry: Bringing goods back without a proper customs import entry. Section 20 of the Customs Act treats them as an import, and the entry is your evidence of return.
• Hidden benefits: Not telling Customs or the bank about export benefits claimed on the original shipment, such as an IGST refund.
• GST refund: Keeping a GST export refund for a shipment that was never paid for. Rule 96B requires repayment within 30 days after the FEMA period ends.
• Old rules: Quoting para D.2 or other Master Direction paragraphs for transactions handled from 1 October 2026. Those paragraphs are superseded.

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 3(1), 4(2), 5, 6, 13, 18(1)(g), 19 (checked 8 Oct 2026)
2. RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Para 4; Annex A item 40 (Refund of Export Proceeds, A.P. DIR Circular No. 37 of 5 April 2007) (checked 8 Oct 2026)
3. RBI Master Direction: Export of Goods and Services (superseded from 1 October 2026), Paras C.3, C.4 and D.2 (checked 8 Oct 2026)
4. Customs Act, 1962 (CBIC Tax Information Portal), Sections 20 and 26 (checked 8 Oct 2026)
5. Integrated Goods and Services Tax Act, 2017, section 5, Proviso to section 5(1) (checked 8 Oct 2026)
6. CGST Rules, 2017, Rule 96B: Recovery of refund where export proceeds not realised, Sub-rules (1) and (2) and proviso (checked 8 Oct 2026)