Customs, Excise and Gold Tribunal - Delhi
Smruti Pottery Works And Sunrise ... vs Commissioner Of Customs on 6 November, 2003
Equivalent citations: 2004(91)ECC701, 2004(163)ELT184(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in both these appeals is whether the Appellants M/s. Smruti Pottery Works and M/s. Sunrise Pottery Works are eligible to get their free shipping bills converted into DFRC Shipping Bills.
2.1 Shri Krishnakant, learned Advocate, submitted that both the Appellants are engaged in the manufacture and export of all types of sanitary wares; that in 2000-2001 and 2001-2002 they exported consignments of sanitary wares under Shipping Bills; that they wanted to avail benefit of DFRC in respect of their exports which has been refused by the Customs Authorities as the Certificate from Central Excise officers listing the inputs used in the manufacture of the export product was required; that in these circumstances they were forced to file free shipping bills; that the Board, under Circular No. 6/2003 dated 28.1.2003 has clarified that in all those cass, where the exporters were not allowed to file shipping bills under a particular export promotion scheme and had to export goods against free shipping bills, conversion of shipping bills would be allowed by the Commissioner subject to the following conditions -
(i) On the basis of the export documents the fact of used inputs was specifically proved.
(ii) The examination report etc. prove the export and export was covered under relevant SION/DEPB Schedule.
(iii) On the basis of the Shipping bills etc. all conditions of the scheme was fulfilled.
2.2 The learned Advocate also mentioned that the Board, under Circular No. 40/2003 dated 12.5.2003, also announced that the Trade has represented that it is difficult to prove that the exporter was forced to file free shipping bill as Customs do not give denial in writing and accordingly the condition would be that the exporter should not have availed benefit of export promotion scheme.
2.3 He also mentioned that they applied for conversion of their free shipping bills of DFRC Shipping Bills; that however, their requests has been rejected, under the impugned orders, on the ground that they had not established that they were forced to file free shipping bills and they have not proved the use of inputs in the resultant export product as under the DFRC Scheme, the declaration given by the exporter for ingredients used by the exporter was verified by way of sample test which had not been furnished by them and that they had not fulfilled the condition (11) of Notification No. 46/2002.
3. The learned Advocate submitted that the Commissioner's insistence that they must prove that they were forced to file free Shipping Bills is contrary to the Circular dated 12.5.2003; that it has been held by the Tribunal in the case of Palmtech Engineers Pvt. Ltd. vs. CCE, Bangalore 2001(132) ELT 492 (T) that "the Collector's Order, without considering this Board's Circular is bad in law. It is well settled now. The Department can not argue against the Board's instructions"; that there is no dispute that the sanitary wares were exported; that as per the Standard Input Output Norms, Zirconium Silicate / Opacifier is allowed to be imported against export of sanitary ware; that as the impugned goods do not appear in Para 4.31 of the Hand Book of Procedure, there is no requirement to establish by Test report or otherwise that the said chemicals were actually used in the sanitary ware exported; that as per the practice, DFRC for import of Zirconium silicate is routinely granted against export of sanitary wares as the Standard Input Output Norm and actual use of the chemical into he export is not to be established; that other Commissionerates at Nhava Sheva, Mumbai, Coimbator and Salem have permitted conversion of Shipping Bills in the light of the Board's Circular; that the Tribunal has held in Palmtech Engineers case, supra, that finding of a different Collector contrary to settled position of law is not binding. The learned Advocate, further, contended that in any case the Appellants have in fact used Zirconium Silicate in the manufacture of sanitary ware exported which is evident from the invoices annexed with the Memorandum of Appeal; that they had also produced the Chartered Engineer's Certificate as well as the Certificate issued by their Association. Finally he submitted that DFRC licences are issued under Notification 46/2002 which does not stipulate that Central Excise verification is required for claiming the DFRC for import of inputs. Reliance has been placed on the decision in Indofil Chemical Co. Vs. CC, Mumbai 1997 (107) ELT 440 (T).
4. Countering the arguments, Shri V. Valte, learned Senior Departmental Representative, contended that Appeal does not lie with the Tribunal as there is the denial of conversion of Shipping Bill into DFRC Shipping Bill is not under any of the provisions of the Customs Act. He also submitted that as per Paragraph 4 of the Board's circular dated 28.1.2003, the conversion of Shipping bill is to be allowed subject to the conditions that on the basis of available export document, etc. the fact of use of inputs is satisfactorily proved in the resultant export product for the purpose of allowing conversion into DFRC Scheme; that this condition is not satisfied by the Appellants. In reply the learned Advocate mentioned that all the documents are now being filed by the Appellants.
5. We have considered the submissions of both the sides. There is no substance in the contention of the learned Senior Departmental Representative that Appeal is not maintainable under the Customs Act since the Appellants are seeking the benefit of DFRC Scheme which is provided by way of a Notification issued under Section 25 of the Customs Act. Once the said benefit is disallowed, the Appellants, being aggrieved parties are eligible to file Appeal against such Order. It has not been disputed by the Revenue that both the Appellants have exported "sanitary wares" and the same is covered under DFRC Schedule against Standard Input-Output Norms (K-74) of the Handbook of Procedure Vol-II. In the Norms against Export Item "Sanitary ware" - it is mentioned that Import Items are (1) Zirconium Silicate/opacifer and (2) ceramic colours OR white prepared pigments. The Norms also specify the quentity of Import Item which is allowable. A perusal of both the Circulars, referred to by the learned Advocate, reveals that the Government has allowed conversion of free shipping bills into Advane licence/DEPB/DFRC/Drawback shipping bills without the necessity of exporter proving that he was forced to file free shipping bill by Customs at the time of export of goods. Accordingly the conversion of free shipping bill into DFRC Shipping Bill can not be denied on the ground that the Appellant have not established that they were forced to file Shipping bills under free shipping bills category. The Appellant have also submitted Certificate from the Chartered Engineers & Surveyors to show that Zirconium Silicate/Opacifier is used for the manufacturing of sanitary ware products. In view of the said inputs being mentioned in the Standard Input/Output Norms and the fact that Chartered Engineer has also certified the use of Zirconium Silicate/Opacifier, the conversion of Shipping bill can not be denied on the ground that the Appellants have not proved the use of the ingredients. We, therefore, allow both the appeals filed by the Appellants.