Custom, Excise & Service Tax Tribunal
Global Calcium Private Ltd vs Commissioner Of Customs on 29 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/41611/2016
[Arising out of Order-in-Appeal No.48246/2016 dt. 8.7.2016 passed by the Commissioner of Customs, Chennai ]
Global Calcium Private Ltd.
Appellant
Versus
Commissioner of Customs,
Chennai-IV Respondent
Appearance:
Shri G. Derrick Sam, Advocate For the Appellant Shri A. Cletus, ADC (AR) For the Respondent CORAM:
Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing/decision : 29.11.2016 FINAL ORDER No.42370/2016 Issue in dispute relates to rejection of request of the appellant for conversion of 189 free shipping bills to drawback shipping bills. The matter is coming up before this forum for the second time. In the first round, vide Final Order No.40575/2016 dt. 1.4.2016, Single Member Bench of this Tribunal had held that appellant being manufacturer-exporter is entitled to avail drawback and the entire export documents are available for verification and in the absence of time-bar provision in law, it is open to the authorities to examine the merit of the case since there is no material on record to suggest that the issue is not considerable. On these findings, the matter had been remanded for de novo consideration. In de novo proceedings, the Commissioner of Customs vide the impugned order has rejected the request for conversion of the free shipping bills for the reasons recorded in paras-7 to 9 of his order. In particular, lower authority has found that no declaration/claim for drawback was made by the appellant under Drawback Rules, 1995; that appellants have not given any reason beyond their control due to which they failed to comply with provisions of Rule 12 (1) (a) of Drawback Rules; that AREs-1 do not contain any declaration concerning claim of drawback. Lower authority has also rejected the claim on the ground that exporter had no intention of applying for drawback at the time of export of goods; that filing of free shipping bills was done consciously and it was not a matter of any inadvertent error and due to any reason beyond their control of the appellant. Lower authority has also noted the fact that request of conversion was made more than one year after the issue of Let Export Order. Hence this appeal.
2. Today, Ld. Advocate Shri G. Derrick Sam appearing for appellant, placed reliance on the decision of Honble High Court of Madras in CC Tuticorin Vs Thiru Arooran Sugars Ltd. 2014 (307) ELT 248 (Mad.) and inter alia the decision of CESTAT Chennai in I.P. Rings Vs CC (Air) Chennai - 2006 (202) ELT 61 (Tri.-Chennai); Kiran Pondy Chems Ltd. Vs CC Chennai 2006 (203) ELT 588 (Tri.-Chennai); and that of Bangalore Bench decision in Gennex Laboratories Ltd. Vs CC Hyderabad 2012 (285) ELT 363 (Tri._Bang.). Ld. Advocate submitted that the common ratio in all these decisions is that firstly there is no bar for conversion of free shipping bills and secondly there is no provision for period of limitation within which such requests for conversion have to be made. He submitted that all the consignments covered by the said free shipping bills had been examined and sealed by the jurisdictional Central Excise officers.
3. On the other hand, Ld.A.R, Shri A. Cletus, ADC on behalf of Revenue, contends that norms for examination of free shipping bills are much less rigorous than that of goods exported under export promotion schemes. He also argues that once the goods are exported under free shipping bills, their conversion cannot be allowed except on the basis of documentary evidence as mandated by Section 149 of the Customs Act, 1962. He submits that in the instant case required documentary evidence produced has not met to the satisfaction of the competent authority. For these reasons, he reiterated that the impugned order is correct and does not require any interference.
4. Heard both sides and gone through the facts of the case. In the first place, it is noticed that the decisions of Honble High Court and Tribunal decisions cited by learned advocate (except for Gennex Laboratories Ltd. case) relate to the Boards circular No.4/2004-Cus. dt. 16.1.2004. As such, I hold that they cannot be made applicable to the facts of the present case since thereafter Board vide Circular No.36/2010-Cus. dt. 23.9.2010, has taken note of series of judgements and accordingly guidelines had been issued for evaluating and decided upon the request for such conversion. For easy reference, the said circular is reproduced below :-
Shipping Bills Conversion of free shipping bills to Advance Authorisation/DEPB/Drawback shipping bills and from one export promotion scheme to another Clarifications Circular No. 36/2010-Cus., dated 23-9-2010 F.No. 109/121/2009-DBK Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Conversion of free shipping bills to export promotion scheme shipping bills and conversion of shipping bills from one scheme to another - Regarding.
I am directed to invite attention to the Boards circular No. 4/2004-Cus., dated 16-1-2004 which debars conversion of free shipping bills to Advance License/DFRC/DEPB shipping bills and allows conversion of shipping bills from one export promotion scheme to another only where the benefit of an export promotion scheme claimed by the exporter has been denied by the DGFT/MoC&I or Customs due to any dispute.
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 that 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.
3.?The issue has been re-examined in light of the above. It is clarified that Commissioner of Customs may allow conversion of shipping bills from schemes involving more rigorous examination to schemes involving less rigorous examination (for example, from Advance Authorization/DFIA scheme to Drawback/DEPB scheme) or within the schemes involving same level of examination (for example from Drawback scheme to DEPB scheme or vice versa) irrespective of whether the benefit of an export promotion scheme claimed by the exporter was denied to him by DGFT/DOC or Customs due to any dispute or not. The conversion may be permitted in accordance with the provisions of section 149 of the Customs Act, 1962 on a case to case basis on merits provided the Commissioner of Customs is satisfied, on the basis of documentary evidence which was in existence at the time the goods were exported, that the goods were eligible for the export promotion scheme to which conversion has been requested. Conversion of shipping bills shall also be subject to conditions as may be specified by the DGFT/MOC. The conversion may be allowed subject to the following further conditions :
(a) The request for conversion is made by the exporter within three months from the date of the Let Export Order (LEO).
(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 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/Drawback Schedule as the case may be.
(d) On the basis of S/Bill/export documents, the exporter has fulfilled all conditions of the export promotion scheme to 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 has been noticed or investigation initiated against him in respect of such exports.
4.?Free shipping bills (shipping bills not filed under any export promotion scheme) are subject to nil examination norms. Conversion of free shipping bills into EP scheme shipping bills (advance authorization, DFIA, DEPB, reward schemes etc.) should not be allowed. However, the Commissioner may allow All Industry Rate of duty drawback on goods exported under free shipping bill, without conversion of such free shipping bill to Drawback Scheme shipping bill, in terms of the proviso to rule 12(1) (a) of the Customs, Central Excise and Service Tax Drawback Rules, 1995.
5.?Due care may be taken while allowing conversion to ensure that the exporter does not take benefit of both the schemes i.e. the scheme to which conversion is sought and the scheme from which conversion is sought. Whenever conversion of a shipping bill is allowed, the same should be informed to DGFT so that they may also ensure that the exporter does not take benefit of both the schemes.
6.?This circular supersedes the Board circular No. 4/2004-Cus., dated 16-1-2004 and the earlier circulars issued in the past on this issue. This circular shall be applicable only to shipping bills filed on or after the date of issuance of this circular. Till such time as EDI system is modified to allow conversion of shipping bill in the EDI system, conversion may be allowed manually.
7.?A suitable Public Notice for information of the Trade and Standing Order for guidance of the staff may be issued. Difficulties faced, if any in implementation of the directions may be brought to the notice of the Board.
Kindly acknowledge receipt of this Circular.
5. Section 149 of the Customs Act provides for amendment of inter alia shipping bills after export of the goods only on the basis of documentary evidence which was in existence at the time when the goods were exported. The proper officer for the purposes of Section 149 is the Commissioner of Customs. Section 149 also mandates that such amendment may be done by such proper officer in his discretion. Such discretion has to be an objective discretion and not subjective. Only towards this end, taking note of various judgements, the Board had issued the above reproduced circular dt. 23.9.2010 not only as a measure of facilitation for conversion of shipping bills but also to provide guidelines to the proper officer on the type, nature and procedure of conversion that may be allowed and the proceduralities required to be followed thereon. From perusal of the circular, it emerges that Board has empowered the Commissioner of Customs to allow conversion of shipping bill from schemes involving from rigorous examination to schemes involving less rigorous examination (for example, free advance authorization, DFIA reward schemes to drawback/DEPB scheme or schemes involving same level of examination). However, it has been clearly laid down in the circular that since free shipping bills are subjected to NIL examination norms, conversion of free shipping bill into export promotion scheme shipping bill should not be allowed. At the same time, it has been clarified that, in the light of para-4 of the circular, the Commissioner may allow All Industry Rate of duty drawback on goods exported under free shipping bills without conversion of such free shipping bill to Drawback Scheme shipping bill.
6. Viewed in this background, I find that in the impugned order, the lower authority has only considered the matter of conversion of free shipping bills to drawback shipping bills. However, the alternative allowance of All Industry Rate of duty of drawback on goods exported under free shipping bills without such conversion has not been considered by the lower authority. In the event, the matter is once again remanded to adjudicating authority to re-examine the matter with regard to para-4 of the Circular No.36/2010-Cus. dt. 23.9.2010 and also other relevant guidelines given in the said circular. It is clarified that time bar provision will not apply in this matter. In this exercise, the adjudicating authority will give a reasonable opportunity to the appellant to put forth their case once again and decide the matter within three months and pass a reasonable order.
Appeal is remanded to the Adjudicating Authority with above directions.
(Dictated and pronounced in open court) (MADHU MOHAN DAMODHAR) MEMBER (TECHNICAL) gs 8