Customs, Excise and Gold Tribunal - Tamil Nadu
Jindal Stainless Limited vs Commissioner Of Customs (Exports) on 17 December, 2004
Equivalent citations: 2005(98)ECC698, 2005(183)ELT157(TRI-CHENNAI)
ORDER P.G. Chacko, J.
1. The appellants had filed-
(i) Shipping Bill No. 1729177 DT. 23.12.2003
(ii) Shipping Bill No. 1732019 DT. 27.12.2003
(iii) Shipping Bill No. 1735746 DT. 31.12.2003
(iv) Shipping Bill No. 1738208 DT. 5.1.2004 through their CHA, for export of stainless steel coils through Chennai port during the last week of December 2003 and the first week of January 2004 The shipping bills were filed by the CHA under Zero duty EPCG Scheme (Code No. 12 vide Appendix -I to Hand Book of Procedures (Vol. I) under Exim Policy 2002-2007) and the Customs House processed them under the said Scheme. When the appellants received the export promotion (EP) copies of the shipping bills, they realised that the shipping bills had been filed under EPCG instead of the required scheme (EPCG and DEPB (post-exports) under Code No. 55). Hence they returned the documents to their CHA for necessary correction. Meanwhile, their application to the Joint Director General of Foreign Trade (JDGFT) for DEPB credit in their Pass Book was rejected by that authority on the ground that the EP copies of the shipping bills did not mention 'DEPB'. On 13.2.2004, the appellants applied to the Commissioner of Customs (Export) to condone the above mistake (omission of 'DEPB' in shipping bills) and allow them to rectify the mistake by changing the name of EP scheme from "EPCG" to "EPCG and DEPB" (Code No. 12 to Code No. 55). They submitted that the mistake was made inadvertently by their CHA. The CHA also admitted the mistake in their separate letter dated 16.2.2004 addressed to the Commissioner. Acting upon the request of the appellants, the Customs House called for certain documents (EP copy of Shipping Bill in original, Banker's Realization Certificate in original, Invoice & Packing List and ARE-1 & Bill of Lading), which were produced by the appellants. Later, the appellants were informed in writing by the Assistant Commissioner of Customs (Export), Customs House, Chennai that their request for conversion of Shipping Bills from EPCG Scheme to EPCG-DEPB Scheme had not been 'considered' by the appropriate authority. Thereupon, they submitted a letter dated 17.8.2004 to the Commissioner, wherein it was contended that non-mention of the correct scheme in Shipping Bills was only a procedural lapse which could be condoned in terms of Policy Circular No. 7/2002 dated 7.11.2002 issued by the Ministry of Commerce and also that conversion of Shipping Bills from one export promotion scheme to another was permissible under Circular No. 4/2004-Cus. dated 16.1.2004. The appellants also requested the Commissioner for a personal hearing. The Commissioner, however, rejected their request and communicated his decision to them by letter dated 18.8.2004. However, the party was given a post-decisional opportunity to explain their case personally. Accordingly, on 26.8.2004, they were heard by the Commissioner. The party offered their explanation through a letter dated 26.8.2004 which reads as under:
"The Commissioner of Customs Custom House Chennai-600001.
Respected Sir, POINTS PUT FORTH DURING PERSONAL HEARING HELD ON 26.8.2004 We thank you for giving an opportunity to explain the matter.
In your communication dated 18.8.2004 giving us an opportunity to explain the matter, we would like to mention the following points. (1) This matter adversely affect us to the extent of Rs. 27,90,209.59, we therefore request you to have an open mind in appreciating the fact Quoting Policy decision as conveyed earlier in Circular No. 4/2004 dated 16.1.2004 will not be appropriate as the adjudicating authority has to decide the matter on merit and not be guided or influenced by any other authority. (2) The issue has been explained by us in detail in our letter dated 17.8.2004.
* (3) Even assuming for the sake of argument, that the Circular No. 4/2004 stands in the way of solving the problem. We would like to point out that our case falls within para 3.2 of the said circular. It is clarified therein that such conversion could be allowed wherein the benefit of an Export Promotion Scheme claimed by the Exporter has been denied by JDGFT/MOC or customs due to any dispute. Such Conversion may be permitted on merit by the Commissioner on case to case basis subject to certain condition mentioned therein.
** The conditions mentioned therein have been fulfilled in our case.
Further there has been a dispute due to non-mentioning of the correct scheme.
*** The claim has been denied. It is immaterial as to whether it is by JDGFT/MOC or customs. Even if it is denied by anyone of the authorities, the Commissioner of Customs has authority to decide on merits. Therefore, we would like to submit that our case falls within the ambit of Circular No. 4/2004 Cus. dated 16.1.2004.
However, we request your goodselves to take a decision on merit treating this as a procedural lapse and condone the same so that we get the due claim.
Thanking You, Yours faithfully, Sd/ P. SURESH (Senior Manager)"**** After considering the above case of the party, the Commissioner recorded his findings/observations on the margins of the party's letter itself, which read thus:
*"No proof to show that Customs or JDGFT has denied the benefit."
** "No evidence. Conditions not fulfilled."
*** "Nothing has been denied. Original SB as filed has been assessed. Conversion request has been denied since conditions prescribed under Board's Circular have not been fulfilled."
**** "It is regretted that, in view of Board's circular and......(not legible) request for conversion cannot be considered."
The present appeal is against the above "order" of the Commissioner of Customs.
2. Heard both sides Ld. Counsel for the appellants referred to the relevant export promotion scheme and submitted that their's was not a case of conversion of Shipping Bill from one EP scheme to another but one of correction of the Secheme entry in Shipping Bill in keeping with the real purport of the document. The appellants had actually intended both EPCG and DEPB (post-exports). This intention was evident from the entries in Form ARE-1. It was also pointed out by the Counsel that, in respect of similar exports both prior and subsequent to the period covered by the subject Shipping Bills, the entries in Shipping Bills tallied with those in the corresponding ARE-1s and the appellants obtained DEPB benefit. It was only in respect of the four Shipping Bills in question that they failed to get the benefit on account of their omission to mention 'DEPB' in the Shipping Bills. According to Ld. Counsel, it was well within the powers of the Commissioner to condone the mistake in terms of para 3.2 of Circular No. 4/2004-Cus. dated 16.1.2004 of the Department of Revenue. It was claimed that the appellants had satisfied all the conditions mentioned in para 3.2 of the circular. It was also submitted by the counsel that, in terms of para 9.3 of Exim Policy, 22.12.2004 was the deadline for obtaining orders of the JDGFT for DEPB benefit in respect of export covered by the first of the four Shipping Bills Ld. Counsel, therefore, prayed for urgent disposal of the case.
3. Ld. JCDR submitted that the request of the party was for conversion of one EP scheme to another and the same could be considered only in terms of DOR circular No. 4/2004-Cus dated 16.1.2004. According to him, the appellants had failed to establish that they had fulfilled the conditions stipulated in para 3.2 of the circular for conversion of their Shipping Bills from Code No. 12 to Code No. 55. Ld. JCDR also expressed the doubt whether the appeal was against any appealable order.
4. We have perused the records and considered the submissions. The Duty Entitlement Pass Book (post exports) Scheme (in short, DEPB Scheme) under Code No. 6 and the Export Promotion Capital Goods Scheme (in short, EPCG Scheme) under Code No. 12 are export promotion schemes under the Central Government's Export Import Policy. Under the DEPB Scheme, the exporter makes an application to the JDGFT for issue of Pass Book and commences exports. After fulfilment of export obligation, the Pass Book-holder produces the EP copies of Shipping Bills together with the Pass Book to JDGFT for making credit entries. Such credit is allowed at pre-determined rates on the deemed import content of the export goods and the same is available to Stainless Steel Coils falling under Sl. No. 390 of the Products Group-Engineering. This credit can be used for import of any goods other than those in the Negative List. Under the EPCG scheme, import licences are issued first for import of capital goods at a concessional rate of Customs duty. The export obligation is fulfilled by export of goods manufactured by the use of such capital goods. Normally, it is four times the CIF value of the imported capital goods and has to be fulfilled in five years. Under "Zero duty EPCG" Scheme, however, the export obligation is six times the CIF value of the capital goods and has to be fulfilled in eight years. These exports can also be reckoned for DEPB Scheme and, when so done, it is a combination of schemes, referred to as "EPCG and DEPB (post exports)" falling under Code No. 55. The time allowed for filing an application for DEPB credit is six months from the date of export or three months from the date of realisation, whichever is later, vide para 4.47 of the Exim Policy 2002-2007.
A delay of upto six months from the last date may be condoned in terms of para 9.3 of the Exim Policy, but, in this event, there will be a "late cut" at the rate of 10% on the DEPB entitlement. In the instant case, the earliest of the four Shipping Bills was filed on 23.12.2003. In terms of paragraphs 4.47 and 9.3 of the Exim Policy, the time period including the condonable period of delay for making application to the JDGFT for DEPB benefit on this Shipping Bill is ending on 22.12.2004. In respect of the remaining Shipping Bills taken in chronological order, the last dates for similar applications are 26.12.2004, 30.12.2004 and 4.1.2005 respectively. The JDGFT will not allow the credits unless the Commissioner of Customs permits change of EP Scheme from "Zero duty EPCG" Scheme to "EPCG and DEPB (post-export)" in the Shipping. Bills. Ld. Commissioner has rejected the party's request for such change.
5. The subject Shipping Bills mentioned only "Zero duty DPCG Scheme". It has been claimed that this was a mistake on the part of the CHA. This claim appears to be genuine inasmuch as the ARE-1 filed with each Shipping Bill contains entries clearly indicative of the nature of export. The very caption of ARE-1 is "EXPORT UNDER DEPB SCHEME". The body of ARE-1 also mentions "EXPORT UNDER "DEPB". This document also contains a declaration by the exporter, which reads "We hereby declare that the export is under DEPB Scheme". The Customs officer has certified shipping of the consignment in Part B of ARE-I. It is apparent from the Shipping Bills coupled with the ARE-Is that the exports were intended to be under the EPCG-DEPB Scheme (Code No. 55) only. The exporter's declaration as given in ARE-I is enough to indicate that they had instructed their CHA to file the Shipping Bills under this scheme. The CHA, in their letter submitted to the Commissioner, admitted the mistake of having omitted to mention 'DEPB' in the Shipping Bills. The appellants also consistently pleaded before the Commissioner that it was only a procedural lapse on the part of the CHA. The appellants' request to the Commissioner was to change the Scheme entry from "Zero duty EPCG" to "EPCG and DEPB (post export)" in the Shipping Bills. It was a request for a simple amendment of entry in Shipping Bill in keeping with the real nature of export. The party did not ask for conversion of the nature of exports. The exports were already under the EPCG-DEPB Scheme as acknowledged by the Customs through assessment of the Shipping Bills (which mentioned "EPCG Scheme") and certification of exports in Part B of the ARE-Is (which mentioned "EXPORT UNDER DEPB"). The exporter's request was only for conversion of Shipping Bills from one EP Scheme to another as envisaged in para 3.2 of DOR Circular No. 4/2004-Cus. dated 16.1.2004. We have also noticed that both sides agree that the party's request could have been dealt within terms of this Circular only.
6. The Commissioner penned that the conditions stipulated in para 3.2 of the above Circular were not fulfilled by the exporter, and he declined their request. We extract the following from para 3.2 of the Circular:
"As regards permitting conversion of shipping bills from one export promotion scheme to another is concerned, it is clarified that such conversion should only be allowed where the benefit of an export promotion scheme claimed by the exporter has been denied by DGFT/MOC of customs due to any dispute. Such conversion may be permitted on merits by the Commissioner on case to case basis subject to the following conditions:
(a) The request for conversion is made by the exporter within one month of the denial/rejection of the benefit claimed.
(b) On the basis of available export documents etc., the fact of use of inputs is satisfactorily proved in the resultant export product.
(c) The examination report and other documents and other endorsements made on the Shipping Bill/Export documents prove the fact of export and the export product is clearly covered under relevant SION and or DEPB Schedule as the case may be.
(d) On the basis of S/Bill/export documents the exporter is fulfilling all conditions of the Export Promotion Scheme into which he is seeking conversion.
(e) The exporter has not availed benefit of the export promotion Scheme under which the goods were exported and no fraud/misdeclaration/ manipulation/investigation is initiated against him in respect of such exports."
Ld. Commissioner has not stated the basis (if any) of his finding that the exporters did not fulfil the above conditions. Ld. Commissioner knew that his decision on the party's request would have the consequence of DEPB benefit being denied to them. He knew, he was discharging a quasi-judicial function. That is why he penned his decision after hearing the party in keeping with the principles of natural justice. This aspect must dispel the apprehensions of Ld. JCDR who doubted the appealability of the Commissioner's decision. What was scribbled by the Commissioner on the margins of the party's letter dated 26.8.2004 is certainly appealable under Section 129A (1) (a) of the Customs Act. We have perused the correspondence between the appellants and the Department on the subject Shipping Bills. It was in their letter dated 13.2.2004 that the party had first requested the Commissioner for correction of the Shipping Bills, and it was with reference to this request that the Assistant Commissioner by letter dated 5.5.2004 informed them that the Commissioner had not "considered" their request. Ultimately, on 26.8.2004, the Commissioner put his "considerations" into black and white. Thus, the impugned decision is on a request made by the party as early as on 13.2.2004. It is, now, their case, pleaded through counsel, that this request was made within the period of one month prescribed under Condition (a), para 3.2 of DOR Circular No. 4/2004-Cus. ibid. This case of theirs has not been rebutted by, or on behalf of, the respondent. Ld. Counsel also argued that the appellants had complied with conditions (b) to (e) also. Again, these arguments have also gone unrebutted. Therefore, we have to hold that the appellants fulfilled all the above conditions for conversion of the Shipping Bills from "Zero duty EPCG" to "EPCG and DEPB (post export)". The Revenue has no case that, once this change of Scheme entry in SBs is made, the exporter will still be ineligible for DEPB benefit. Therefore, the EP copies of the subject, Shipping Bills should be allowed to be amended so that the appellants can claim DEPB benefit before the JDGFT.
7. In the result, the impugned proceedings are set aside and this appeal is allowed. It is also ordered that "EPCG and DEPB (post export)" be substituted for "Zero duty EPCG" in the subject Shipping Bills. It will, now, be open to the appellants to apply to the JDGFT for DEPB credit in respect of the exports covered by the said Shipping Bills within the extended period prescribed in para 9.3 of Exim Policy 2002-2007.
8. As the last date for filing DEPB credit claim with JDGFT in relation to the first Shipping Bill is 22.12.2004, we think it is necessary for the ends of justice to direct the Registry to issue this order by dasti. Ordered accordingly.