Custom, Excise & Service Tax Tribunal
M/S. Polydrug Laboratories Pvt. Ltd vs Commissioner Of Customs(General), ... on 11 November, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/902/12-MUM (Arising out of Order-in-Appeal No. 316/MCH/ AC/ CFS (M) (X) /2012 dated 26/6/2012 passed by Commissioner of Customs (Appeals), Mumbai, Zone I) For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Polydrug Laboratories Pvt. Ltd.
:
Appellant
VS
Commissioner of Customs(General), Mumbai
:
Respondent
Appearance
Shri Rajiv Gupta, Consultant for the Appellants
Shri. D.D. Joshi, Asst. Commissioner (A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 11/11/2014
Date of decision /11/2014
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Appeal No. 316/MCH/ AC/ CFS(M)(X)/2012 dated 26/6/2012 passed by Commissioner of Customs(Appeals), Mumbai, Zone I, wherein Order-in-Original No. 2/ RCC /AC (CFS-M) dated 19/1/2011 was upheld by the Commissioner of Customs (Appeals). The fact of the case is that the appellant, exporter while exporting the said goods filed 3 free shipping bills Nos. 7158011 dated 4/11/2009, 7153804 dated 31/8/2009 and 7153624 dated 28/8/2009. With intention to avail incentive under VKGUY Scheme, they sought amendment in the said shipping bills under Section 149 of Customs Act, 1962. The Asst. Commissioner of Customs by speaking order dated 19/1/2011 rejected the request of the appellant on the ground that; it is mandatory requirement to mention intent of VKGUY under Chapter 3 of FTP on free shipping bills as per para 3.23.8 of HBP-2008 and para 3.11.8 of the HBP -2009; Circular No 26/2009 Cus dated 30/9/2009 states that intention to avail the benefit of reward scheme is required to be declared at the time of export, due to non declaring the said intention the goods were not examined in terms of Circular 1/2009 Cus dated 13/1/2009 wherein examination norms in respect of export goods under reward scheme was provided, according to which the exporter shall states the intention to claim benefits under chapter 3 of FTP by declaring on the free shipping bills, their intention to claim the benefits as admissible under chapter 3 of FTP. In the said circular examination norms is also prescribed and in the present case being the value of the case less than 20 lakhs, hence appropriate norms of 2 %; had the exporter declared the intention of scheme of VKGUY, the goods would have undergone 2% examination. The request for amendment can not be allowed as per instruction contained in both the circular 36/2010 dated 23/9/2010 and circular no. 04/2004 dated 26/1/2004; requested amendment would tantamount to conversion of subject Free Shipping Bill into EP/Reward Scheme Shipping Bills. The instant case can not be covered under Section 149 of Customs Act, 1962, as the intention of the exporter to claim the benefits under chapter 3 of FTP is not found to be existed and there is no mention of the scheme of VKGUY in the shipping bills. Aggrieved with the order, the appellant approached the Commissioner (Appeals) where the Commissioner(Appeals) upheld order of the original authority and dismissed the appeal of the appellant. Therefore the appellant is before me.
2. Shri. Rajiv Gupta, ld. Consultant for the appellant made the following submissions.
The appellant is seeking amendment in the free shipping bills under which the goods have been exported by making declaration of their intention for availing the scheme of VKGUY under chapter 3 of FTP, which is permissible under section 149 of Customs Act, 1962. He submits that even for the export under VKGUY scheme free shipping bill is required to be filed and only declaration has to be made regarding intention of scheme of the benefit of VKGUY scheme, therefore it is only the amendment which is sought for and it is not the case of conversion of shipping bill from one reward scheme to other reward scheme. He submits that the provision for declaration of intent to claim under Chapter 3 on the free shipping bill was made by circular no 36/2010-Cus dated 23/9/2010, policy circular no. 32(RE/2010) 2009/14 dated 3/6/2011 and DGFT public notice no. 53(RE-2010)/2009-14 dated 3 Jun 2011. It is his submission that even though the VKGUY scheme was existed but the requirement of declaration of intent to claim chapter 3 benefit was brought into effect by the above said authorities. In the present case the shipping bills were filed on 28/8/2009, 31/8/2009 and 4/11/2009, which is prior to the period when the aforesaid authorities brought to the notice of the exporter, therefore non declaration of intent under VKGUY scheme was unintentional. As regard the claim that the amendment sought for by the appellant is in accordance with the section 149 of Customs Act, 1962, he submits that all the information and documentary evidences were produced at the time of export and exports were permitted, for claim of VKGUY scheme, nothing more information or documentary evidence was otherwise required, therefore the insertion of declaration regarding VKGUY scheme if made subsequently is covered by the provision of section 149 of Customs Act, 1962. He submits that even prior to introduction of provision for declaration for VKGUY scheme on free shipping bill, the benefit of VKGUY scheme have been allowed without such declaration on shipping bill, this clearly shows that no additional information or documentary evidence is required for claiming VKGUY scheme. He submits that in the both situations, whether the declaration under VKGUY scheme is required to be made or otherwise, only one shipping bill i.e. free shipping bill is required to be filed. Accordingly, the subsequent mention of the VKGUY scheme is only an amendment on the existing shipping bill. The appellant as directed during hearing, submitted a written submission on 18/11/2014 alongwith export shipping bills of earlier period on which no endorsement of VKGUY appeared and VKGUY licences were issued.
3. On the other hand, Shri D.D. Joshi, Asst. Commissioner (A.R) reiterates the impugned order and submits that declaration of intention of the appellant for claiming VKGUY scheme on the shipping bill is mandatory requirement and seeking amendment in the shipping bill is not covered under section 149 of Customs Act, 1962. He submits that the circular No. 26/2009-Cus dated 13/9/2009 sub para (vi) of para VI mandates that intent to claim benefit under chapter 3 of FTP on free shipping bill is compulsory.
4. I have carefully considered the submissions made by both the sides.
5. The issue in question to be decided by me is whether amendment by a declaration of intent of claiming VKGUY scheme can be allowed on the free shipping bill under which goods already have been exported. The VKGUY scheme was in operation during the policy period 2004-09 when the export has taken place. As regard the export under VKGUY scheme, there was no specific shipping bill was prescribed, therefore the export was allowed under free shipping bill only. It is observed that even in case of free shipping bill VKGUY scheme was allowed even without any declaration. The DGFT and also the Revenue subsequently felt the need of declaration of Chapter 3 of FTP even in respect of VKGUY on the free shipping bill and accordingly made the amendment in the HBP and custom also issued circular to this effect. In the present case the goods were exported during Aug 2009 and Sep 2009, whereas all these clarification and amendments regarding declaration of intent of the export claiming VKGUY scheme was brought to the effect in Sep 2009 and subsequently Nov 2009 vide circular No. 26/2009-Cus dated 13/9/2009, 36/2010-Cus dated 23/9/2010, DGFT policy circular no. 32(RE-2010) 2009-14 dated 3/6/2011, Public notice no. 53(RE-2010)/2009-14 dated 03/6/2011, whereas the export of the appellant were taken place on Aug 2009 and Sep 2009 . In these circumstances, non-declaration by the appellant of their intent to avail VKGUY scheme on the shipping bill is bonafide and amendment to that effect in the shipping bill is covered under the provision of Section 149 of Customs Act, 1962, which is reproduced below:-
Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the custom house to be amended:
Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorised to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.
From the reading of the Section 149 of Customs Act, 1962, it can be seen that the amendment of shipping bill is permitted in case such amendment is on the basis of documentary evidence which is in existence at the time of export of the goods. In the present case, there is no dispute about nature of the goods, the value of the goods and other information, as it was appearing in the documents such as ARE-1, shipping bill and other related documents. On the basis of such documents the goods have been allowed to be exported. The appellant is seeking the amendment on the basis of the very same documents which were produced before the Customs Authority at the time of export. It is also to be noted that in respect of very same goods in the earlier occasion the appellant was allowed VKGUY benefits therefore the amendment merely of declaration of intent to claim the benefit of VKGUY is not contrary to any of the documents and information contained therein, which was existed at the time of the export of the goods. Needless to say that at the time of export itself the amendment and clarification to the effect of declaration of scheme on the free shipping bill was undergoing even in circular of the DGFT dated 03 Jun 2011 given relaxation. The amendment of para 3.11.8 -2009 is reproduced below:-
2. The amended para 3.11.8 will now read as :
Export shipments filed under the Free Shipping Bill category, would need the following declaration on the Shipping Bills in order to be eligible for claiming chapter 3 benefits of FTP :
We intend to claim chapter 3 benefits. This declaration shall not be required for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP.
If there is a decision during the year to include any new product or new market to avail such benefit, then:
(i) For exports of such products/ export to such markets, a grace period of one month from the date of decision/ notification/public notice will be allowed for making this declaration of intent on free shipping bills.
(ii) After the grace period of one month, all exports (of such products or to such markets) would have to include the declaration of intent on the free shipping bills.
(iii) For exports made prior to date of decision/notification/public notice of products/markets, such a declaration will not be required since such exports would have already taken place. Effect of this Public Notice:
Till now Shipping Bills filed under Chapter 4 (including drawback), Chapter 5 or Chapter 6 schemes needed a Declaration of Intent for claiming chapter 3 benefits. Now this Declaration of Intent is required only on Free Shipping Bills for claiming Chapter 3 benefits.
From the above, it can be seen that under the head of effect of this public notice, it was made clear that after this amendment only the requirement of declaration of intent on free shipping bill for claiming Chapter 3 benefit was made effective. From clause 1 of the aforesaid public notice it can be seen that even if the declaration was mandated by the Custom Circular No. 26/2009-Cus dated 3/9/2009 the one month grace period was provided for allowing to make declaration of intent on free shipping bill. In view of above, the amendment in the shipping bill by declaring the intent of the exporter can be allowed under section 149 of Customs Act, 1962. In the circular No. 36 /2010-Cus dated 23/9/2010 CBEC it is clarified as under.
2. It has been represented to the Board that the norms for allowing conversion of shipping bills may be relaxed and the Commissioners should be allowed to consider requests for conversion of shipping bills from free to export promotion scheme and from one export promotion scheme to another on a case to case basis depending on the merits of the case. It has also come to notice of the Board the Tribunals in a series of judgments have held that amendment to shipping bill after export of goods is governed by the proviso to section 149 of the Customs Act, 1962 and if the requirements of the said proviso are satisfied, conversion of shipping bill should be allowed. The conversion of the shipping bill from one scheme to another cannot be linked with denial of benefit of one scheme by DGFT/MoC&I or Customs due to some dispute as no such condition for amendment of shipping bill has been provided in section 149 of Customs Act, 1962.
From the clarification, it is clear that amendment of shipping bill is permissible. The case of the appellant does not fall under the ambit of exclusion provided under the said clarification inasmuch as the appellant neither claimed any benefit nor the same has been denied by the Custom and DGFT Mumbai, due to any dispute, therefore the amendment in the shipping bill as sought by the appellant can not be denied. In the case of Metallic Bellows(I) Pvt. Ltd. Vs CC(E) Nhava Sheva[2008(228)ELT 479(Tri-Mumbai)] It was held as under:-
5.?On perusal of the record, it is seen that the adjudicating authority while rejecting the application of the appellants for conversion of the bill of entry has clearly indicated that this is a mistake and that mistake has arisen due to the reason that the appellant was not aware of the formalities. It is also a fact that the goods were exported and the appellant had filed free shipping bill. I find that in an identical issue in respect of the very same Board Circular No. 4/2004, co-ordinate bench of the Tribunal in the case of Nucleus Satellite Communications Pvt. Ltd. (supra), the Tribunal held as under :-
I have carefully considered the case records and submissions by both sides. The exporter in this case had been making regular exports under DEPB scheme and by omission (of the CHA according to the appellant), the impugned export could not be entered under DEPB. The conversion of the shipping bill requested for is permissible in terms of the provisions of Section 149. I do not find any reason why the request should not be allowed in view of the above provision. The circular of the Board No. 4/04 does not mention any statutory bar for denying the conversion claimed by the exporters. By denying export incentives granted by the Government through various schemes, the objective to promote exports will be defeated. In the circumstances the appeal filed by M/s. Nucleus Satellite Communications Pvt. Ltd., is allowed.
6.?Further, I find from the submissions made by the Counsel that identical case free shipping bill conversion is to be allowed under the provisions of Section 149 of the Customs Act, 1962 as has been held by the Tribunal in the case of Man Industries as reported at 2006 (202) E.L.T. 433. I also find that the said case was taken in appeal by the revenue in Customs appeal No. 65/06 and Honble High Court of Bombay dismissed the appeal as reported at 2007 (216) E.L.T. 15 (Bom).
7.?Accordingly, to my mind issue of conversion of free shipping bill into advance licence is covered in favour of the appellant by the decision of the Tribunal and the decision of the Honble High Court.
8.?As such, the impugned order is set aside and the appeal is allowed and the matter is remanded back for the limited purpose of affecting the conversion of the shipping bill from free shipping bill to advance licence shipping bill. Appeal disposed off accordingly.
In the above case law the fact was that the exporter was unaware of the formalities of advance licence and due to ignorance, the exporter failed to avail appropriate scheme. In the present case, VKGUY scheme was allowed on the free shipping bill without any declaration and requirement of declaration of free shipping bill brought into effect. More or less on same time goods in the present case has been exported therefore appellant was not aware of these circulars and amendments of Sep 2009. The fact of the present case is very much identical to the fact of the cited judgments.
6. In view of my above discussion, I am of the view that request of the appellant seeking amendment in the free shipping bill is legitimate and covered by the provision of section 149 of Customs Act, 1962. It is also to be noted that the Revenue has not brought any material on record that the amendment sought for by the appellant will cause any loss to the Revenue or will prejudice the interest of the Revenue in any manner. In view of above observations and discussion order of the lower authority is set aside and the appeal is allowed.
(Operative part of the order pronounced in the Court on /11/2014)
Ramesh Nair
Member (Judicial)
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