Custom, Excise & Service Tax Tribunal
Doshion Limited vs C.C., Ahmedabad on 28 July, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Customs Appeal No.277 of 2010-SM Arising out of the order-in-Appeal No.46/2010/CUS/COMMR(A)/AHD dated 30.4.2010 passed by the Commissioner (Appeals), Customs, Ahmedbad. Doshion Limited .. Appellant Vs. C.C., Ahmedabad .. Respondent
Appearance:
Present Shri Paritosh Gupta, Advocate for the appellants Present Shri S.N. Gohil, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing: 25.5.2017 Date of Pronouncement:28.07.2017 Final Order No.A/11488/2017 Per Dr. D.M. Misra:
This is an appeal filed against the Order-in-Appeal No. 46/2010/CUS/COMMR(A)/AHD dated 30.4.2010 passed by the Commissioner (Appeals), Customs, Ahmedabad.
2. By a letter dated 27.11.2009, the appellant had requested for conversion/amendement of free shipping bill No.1171741 dated 22.8.2005 into DEEC shipping bill (Advance Licence Scheme) under Sec.149 of the Customs Act, 1962 where under they have exported Purified Water Solution Plant consisting of machinery, equipment, accessory spares to one M/s Baximco. Pharmaceuticals Ltd., Bangladesh. The Assistant Commissioner in response to the said letter on 30.11.2009, rejected their request for amendment of free shipping bill into DEEC shipping Bill. Aggrieved by the said communication/letter, the appellant filed an appeal before the ld. Commissioner (Appeals), who in turn, upheld the order and rejected their appeal. Hence, the present appeal.
3. Ld. Advocate Shri Paritosh Gupta for the appellant has submitted that rejection of their request for amendment of the Free Shipping Bill into DEEC (Advance Licence Scheme)shipping bill under Section 149 of the Customs Act, 1962 is erroneous. It is his contention that request was made by them relying upon same set of documents filed at the time of assessment of shipping bills which were listed out in the letter dated 27.11.2009. Therefore, the Department ought to have allowed their request for conversion of free shipping bill into DEEC(Advance Licence Scheme) shipping bill by allowing amendment under u/s 149 of the C.A., 1962.
4. Further, he has submitted that the other objection of the Department that the consignment was not opened for physical examination, therefore amendment cannot be allowed, is not justified for the reason that there was no doubt about the fact that the goods exported by the appellant was Purified Water Solution Plant and the foreign exchange has also been remitted to the appellant. It is his contention that physical examination would be relevant only when the exporter claimed to have used inputs and materials imported under Advance Licence in relation to manufacture of the export goods. But such physical examination would not be relevant nor required when the export goods were produced utilizing inputs and materials procured from other sources whereas the imports are actually being made, later against Advance Licence. Further, he has submitted that the goods were stuffed under supervision of the Customs Officers which is evident from the endorsement in Part B of ARE-1 document. Therefore, the export of the Purified Water Solution Plant cannot be doubted. In support of his contention he has referred to the decisions of the Tribunal in the case of (i) Smruti Pottery Works 2004 (163) ELT 184; (ii) Man Industries (I) Ltd. 2005 (184) ELT 39; (iii) Kiran Pandy Chems Ltd. 2006 (203) ELT 588; (iv) Mahindra & Mahindra Ltd. 2007 (215) ELT 385; (v) Sologuard Medical Devices Pvt. Ltd. 2007 (216) ELT 62; (vi) Sterlite Optical Technologies 2008 (226) ELT 69; and (vii) Yamika Fabrics Pvt. Ltd. 2009 (233) ELT 237.
5. Per contra, the ld. A.R. for the Revenue has submitted that even though the export was effected in the year 2005 by filing free shipping bill No.1171741 dated 22.8.2005, the request for conversion/amendment to DEEC(Advance Licence Scheme) shipping bill was made after lapse of four years i.e. in the year 2009. Further, he has submitted that while allowing export of the goods mentioned against the said shipping bill, the consignment was not opened for physical examination by the Customs authorities, thus it was difficult to correlate with the imported items mentioned against advance licence No.0810046605/02/03/00 dated 15.3.2005 at serial No.1, 5, & 4 of the debit entry made in said advance licence. He has submitted that pump was imported on 27.9.2005, EDI Module was imported on 7.10.05, and SS Pipes were imported on 10.11.06 and 7.12.06, whereas the goods were exported on 22.8.05, much prior to the said importation. Therefore, it was not possible to correlate the list of import item to export list as mentioned in advance licence; and also the said licence is issued with actual user condition and it is also not transferable. Accordingly, the benefit of the advance licence cannot be extended once the goods imported were not used in the export of the finished goods. Further, he has submitted that mere mentioning of the advance licence number in the shipping bill would not suffice to claim the export benefit, but it is the obligation of the manufacturer exporter to categorically declare in ARE I( at serial No.4) that export was in discharge of export obligation; in the present case, the appellant had failed to declare the same in the relevant ARE I No.08/05-06 dated 18.8.05. Thus, it was not a simple mistake, but it was well within the knowledge of the exporter at the time of clearance of the goods from the factory to the port against the said ARE I i.e. before filing of shipping bill on 22.8.2005, that they were not to claim the benefit under the DEEC(Advance Licence Scheme). He has further submitted that copy of the packing list as mentioned in AREI or invoice has not been attached with the application, therefore, it was not possible to correlate the imported goods with the exported ones. He has referred to the judgment of the Honble Delhi High Court in the case of Terra Films Pvt. Ltd. vs. C.C. 2011 (268) ELT 443 (Del.), the judgment of Honble Madras High Court in the case of C.C. (Export) vs. Areva T & D India Ltd. -2013 (298) ELT 689 (Mad.) and Comm. of Cus (Sea Port Export),Chennai vs. Suzlon Energy Ltd. - 2013 (293) ELT 3 (Mad.).
6. Heard both sides and perused the record. The issue involved in the present case for determination is: whether the appellants are eligible to convert/amend the Free Shipping Bill No.1171741 dated 22.8.2005 into DEEC (Advance Licence) Shipping Bill, as requested by them on 27.11.2009 under Section 149 of the Customs Act, 1962. It is the contention of the ld. Advocate for the appellants that conversion of free shipping bills into DEEC Shipping Bills (Advance Licence) cannot be denied to them as on the basis of same set of export documents the request was made asper Section 149 of the Customs Act,1962. Revenues contention on the other hand is that it is difficult to correlate the items exported with the imported items as there was no physical examination of the goods, hence, the conversion of free shipping bills into DEEC (Advance Licence) shipping bills cannot be accepted. I find that the principle relating to allowing conversion of free shipping bill into DEEC ,DFRC etc.shipping bill and from one promotion scheme to another promotion scheme in the context of Sec.149 of the Customs Act Customs,1962 has been laid down by the Honble Delhi High Court in the case of Terra Films Pvt. Ltd. (supra).Their Lordships after considering the Boards Circular No.4/2004 dated 16.1.2004, observed that amendment of the shipping bill after the goods have been exported, cannot be considered as mere amendment, when the request is for conversion of free shipping bills into DEEC or for conversion of shipping bills from one export scheme to another. Their Lordship observed as follows:
4. We have heard? the learned counsel for the exporter and learned counsel for the Department and perused the record. From the facts as noted above, it is seen to be admitted case that it was after a considerable period of time, i.e., more than one year after the export of goods, the exporter filed application in January 2006 requesting for amendment of the said shipping bills. The ground given by the exporter for such request was that there had been a mistake in the documentation as they being new exporter were not aware of the procedure. In fact, similar submission was made before us also for the exporter. The guidelines/instructions which were contained in the Boards Circular No. 4/2004 dated 16th January, 2004 being applicable at the relevant time were applied and the request for amendment was rejected by the Commissioner. The Boards circular dated 16th January, 2004 envisages as under :
As regards permitting conversion of free shipping bills in?(A) to Advance Licence/DEPB/DFRC shipping bills is concerned, it is true over a period of time, with liberalization having been ushered in the Customs administration, clearance of goods is being permitted mostly on the basis of self-declaration made by the exporters on the shipping bills. Such self-assessment scheme necessarily casts the responsibility on the exporters to make up his mind at the time of filing shipping bills as to which export promotion incentive he likes to avail. With the introduction of the system of on-line assessment, such request for conversion at a later date creates difficulties and it is not advisable to encourage such conversion.
It is, therefore, clarified that conversion of free shipping?(B) bills into Advance Licence/DEPB/DFRC shipping bills should not be allowed. 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 or 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 provided in the resultant export product.
c. The examination report 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 DEPB Schedule as the case may be.
d. On the basis of shipping 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 for 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.
5. From the above,? it may be seen that as per Clause B of the circular that the conversion of free shipping bills into Advance Licence/DEPB/DFRC shipping bills should not be allowed in routine. As regards permitting conversion of shipping bills from one export promotion scheme to another, this clause envisages that such conversion to be allowed only where the benefit of export promotion scheme claimed by the exporter has been denied by DGFT/MOC or Customs due to any dispute. However, in such a case, conversion may be permitted by the Commissioner on case-to-case basis, subject to conditions enumerated in sub-clauses (a) to (e). Even under Clause A, the request for conversion from one scheme to another was not to be done ordinarily in routine. It was primarily for the reason that such conversion at a later date created difficulties. There is no dispute with regard to submissions as made by the learned counsel for the exporter/appellant that the circular could not override the scope of the Section 149 of the Act and cannot be generalised in every case of amendment of shipping bills. By submitting these arguments, the learned counsel tried to emphasise that the request of exporter for conversion of the shipping bills from one scheme to another was that of amendment under Section 149 of the Act and not only confined to conversion within the scope of the aforesaid circular. In fact, the matter was remanded by the CESTAT to the Commissioner on such submission made by the exporter before the CESTAT. Section 149 of the Act under which the exporter submits the amendment to be permissible reads as under :
Amendment?Section 149. of documents - Save as otherwise provided in Section 30 and 41, the proper officer may, in his discretion, authorize any document after it has been presented in the customs house to be amended.
Provided that no amendment of a bill of entry or a shipping bill of export shall be 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.
6.As per proviso? of this Section 149, no amendment of a shipping bill was to be allowed after the export goods have been exported except on the basis of the documentary evidence, which was in existence at the time the goods were exported. The submission of the learned counsel for the appellant/exporter in this regard was that the exporter was in possession of all the documents at the time of export to show that it was entitled to claim under the DEPB/DECC cum drawback scheme. From the plain reading of Section 149, it may be seen that exporter could not claim amendment in routine and as a matter of right. The discretion vested in the Proper Officer to permit amendment in any document after the same has been presented in the Customs house. Though this discretion was to be exercised judiciously, but it was qualified with the proviso that the amendment could be allowed only if it was based on the documentary evidence in existence at the time the goods were exported. The Commissioner in the remand case has rightly observed that the present case in fact relates to the request for conversion of shipping bills from one export promotion scheme into another and was not merely of an amendment in the shipping bill. The request was made for conversion from one scheme to another after the lapse of long period of more than one year. It was a case of request for conversion and not of amendment inasmuch by converting from one scheme to another, it was not only addition of word cum duty drawback, but change of entire status and character of the documents. Even if it was to be taken as a case of amendment, the proper officer may not be in possession of the documents sought to be amended after lapse of such a long period, particularly when the goods already stood exported. For enabling an exporter to draw the benefits of any scheme, not only physical verification of documents would be required, but as is noted by both the authorities below, the verification of the goods of export as also their examination by the Customs was necessarily required to be done. In the given factual circumstances, that was rightly held to be impossible. The Commissioner in the remand case rightly distinguished the cases cited on behalf of the exporter from the facts of the present. The finding of fact as arrived at by the Commissioner has been rightly upheld by the CESTAT.
7. In similar circumstances, the Honble Madras High Court in Areva T & D India Ltd. (supra) considering the scope of Section 149 of the Customs Act when a request for conversion of duty free shipping bills into DEEC shipping bills after a considerable delay in making such request observed as follows:
16.?The provision regarding amendment of documents gives a clear indication that such amendments cannot be permitted as a matter of course. It is true that discretion is given to the authorities to permit amendment of documents after it has been presented in the customs house. However, no amendment can be made after the export, except on the basis of documentary evidence which was in existence at the time when the goods were exported.
17.?There is a purpose in putting such onerous condition in the matter of amendment of documents after making exports. The conversion is not a matter of right. The idea is that such conversion should not result in availment of double benefits. Though the Section does not say that omission should be genuine, a reading of the provision gives a clear idea that it was not intended as a routine measure. Only in very exceptional cases, conversion would be permitted and that too, on production of contemporaneous documentary evidence. In case of abnormal delay in making such request for conversion, the Department would not be in a position to ascertain as to whether the duty free goods were utilised in the export product. It was only for the said purpose the Legislature has incorporated provision regarding strict rules of evidence in the nature of contemporaneous documents for the purpose of amendment of bill of entry, shipping bills or bill of export.
7. In Suzlon Energy Ltd. (supra) answering the question whether conversion of shipping bills can be allowed under Section 149 of the Customs Act and referring to the Boards Circular No.4/2004 dated 16.1.2004 the Honble Madras High Court emphasized that same cannot be claimed as a matter of right. Following the judgment of the Honble Delhi High Court in Terra Films Pvt. Ltds case, their Lordship observed as:
18.?A similar issue was considered by the Division Bench of Delhi High Court in the matter of M/s. Terra Films Pvt. Ltd. v. Commissioner of Customs [2011 (268) E.L.T. 443 (Del.)]. In the above decision, the Delhi High Court has considered the scope of Section 149 of Customs Act and found that the discretion vested in the Proper Officer to permit amendment in any document after the same has been presented in the Customs house has to be though exercised judicially, it was qualified with the proviso that the amendment could be allowed only if it was based on the documentary evidence in existence at the time the goods were exported. It is further observed therein that the request was made for conversion from one Scheme to another is a case of request for conversion and not of an amendment inasmuch as by converting from one Scheme to another, it was not only addition of certain word, but change of entire status and character of the documents. Thus, the Delhi High Court observed that the Proper Officer may not be in a possession of the documents sought to be amended particularly, when the goods already stood exported. For enabling an exporter to draw the benefits of any scheme, not only physical verification of documents would be required, but also verification of the goods of export and their examination by the Customs was necessarily required to be done. By observing so, the Delhi High Court upheld the rejection of the request of the exporter seeking for conversion of the Shipping Bill from one Scheme to another.
19.?We are in full agreement with the reasonings given by the Delhi High Court in the above said case and by following the said decision [2011 (268) E.L.T. 443 (Del.)], we find that the 1st Respondents claim seeking conversion is not maintainable and the same has been rightly rejected by the Commissioner of Customs. The Tribunal has not gone into any of these aspect in detail, even though it happens to be a final fact finding authority. It has simply allowed the conversion by resorting to the provision under Section 149 of Customs Act as if, it is a simple request for amendment. Therefore, we find that the order passed by the Tribunal cannot be sustained and accordingly, the same is set aside and the appeal filed by the Department is allowed. The questions of law raised in the appeal are answered in favour of the Department. No costs.
8. Applying the principle of law settled in the above cases to the circumstances of the present case, I find that undisputed facts in the present case are that the appellant had applied for conversion of free shipping bills into DEEC (Advance Licence Scheme) Shipping Bills four years after export i.e. on 27.11.2009. Also, at the time of clearance of the goods it was specifically not disclosed in the free shipping bills nor in the ARE-1 export document by declaring thereunder specifically to claim any of the export benefit i.e. benefit under DEEC (Advance Licence), therefore, the consignment was not opened for physical examination by the Customs and the export was allowed. Hence, it is difficult to appreciate the argument of the appellant that it was a question of mere amendment to the shipping bills and should be allowed under Section 149 of the Customs Act, 1962 which is contrary to the Circular No.4/2004 dated 16.1.2004 issued by the Board and was in force during the relevant time.
9. I also agree with the findings of the Ld. Commissioner (Appeals) that the request for conversion of free shipping bills to DEEC (Advance Licence) Scheme cannot be considered, as the said scheme is strictly on actual user basis exemption and no transferability is allowed pre or post export. Hence, strict interpretation need to be applied. In the result, the impugned order is upheld and the appeal is dismissed.
(Pronounced in the open Court on 28.7.2017) (Dr. D.M. Misra) Member (Judicial scd/ Appeal No.C/277/2010 11