Custom, Excise & Service Tax Tribunal
Rain C I I Carbon Vizag Limited vs Visakhapatnam-I on 20 October, 2023
(1)
C/30631/2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Customs Appeal No. 30631 of 2017
(Arising out of OIO No. VIZ-CUSTM-000-COM-02-17-18 dated 10.04.2017 passed by Pr.
Commissioner of Customs, Visakhapatnam)
Rain CII Carbon (Vizag) Ltd
Scindia Road, Naval Base Post, ......Appellant
Visakhapatnam - 530 014
VERSUS
Commissioner of Customs
Visakhapatnam - I
Port Area, Visakhapatnam,
......Respondent
Andhra Pradesh - 530 035 Appearance Shri Y.S. Reddy, Advocate for the Appellant.
Shri P. Amaresh, AR for the Respondent.
Coram:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30339/2023 Date of Hearing: 01.09.2023 Date of Decision: 20.10.2023 [Order per: ANIL CHOUDHARY] This Appeal is filed against denial of permission for conversion/ amendment of 13 free shipping bills filed by the filed by the appellant during the period from April 2016 to December 2016, without claiming AIR drawback of Rs.2,53,43,431/- due to oversight of their clearing agent and denying AIR drawback to the appellant vide the impugned order dt.10.4.2017 in violation of the settled legal position and contravention of the legal provisions.
2. The appellant is provided the services of Authorized Export Operator (Star Trading) and they are manufacturer and exporter of Calcined Petroleum Coke (CPC) and either exports the goods against Advance Authorisations or under rebate of taxes paid in which case he also claims AIR Drawback of 1.4%/ 1.1% of the FOB value as provided under Section 12(1)(a) of the Customs, Central Excise and Service Tax Drawback Rules, 1995. He had been regularly claiming the AIR Drawback mentioning the same on the shipping bills and getting it credited to his account.
(2)C/30631/2017
3. However, during the said period, in respect of some exports under rebate of the tax paid, their clearing agent who handles preparation and filing of ARE-1 and Shipping Bills with the customs, wrongly mentioned on the ARE-1s that these exports were against Advance licences. However, free shipping bills i.e., neither claiming the drawback or under Advance authorization were filed in respect of these ARE-1s.
4. On realizing the mistake during the verification of the records, the appellant filed two claims dt.02.01.2017 and 20.2.2017 requesting the Commissioner of Customs, Visakhapatnam to grant the drawback amounts of Rs.1,41,33,326/- and Rs.1,12,10,105/-, by allowing him to amend the shipping bills without converting them into drawback shipping bills as provided under Circular No.36/2010-Cus dt.23.11.2010. The submissions made in the letters, during the hearing and further submissions dt.21.3.2017 are as follows:
(a) Though it is mentioned in certain ARE-1s filed with customs that the exports are against Quantity Based Advance Authorisations, the exports were not made against any fulfilment of any advance authorisations and the entry was made by mistake by staff inadvertently. They will provide any other documents as may be required to verify this claim.
(b) The condition of filing the claim within three months from the date of export under the said circular is not applicable as conversion of shipping bills from one scheme to another was not sought but amendment as provided under Section 149 was sought and conversion of shipping bills is not required to claim AIR duty drawback as per the settled legal position.
(c) The goods were exported as bulk cargo and the same was verified by customs before the issue of LEO as can be seen from the ARE-1 documents.
(d) When Rule 5(2) of the Drawback Rules provides fixation of AIR drawback even after export, it is not correct to deny the drawback on the goods already exported.
(e) Even if it is to be opined that the Commissioner has discretion to allow the claim or not, a liberal view is to be taken in respect of the grant of incentives for exports as per the settled legal position in the case of procedural laws.(3)
C/30631/2017
5. However, the Commissioner of Customs vide the impugned order rejected the claim of AIR drawback with the following findings without considering the documents and numerous decisions filed in support of his claim:
(a) Since the goods were shown as cleared against discharge of export obligation under QBAL in ARE-1s and there was no claim of Rebate at the time of export vide the said Shipping Bills, claim for AIR drawback cannot be allowed.
(b) The exporter did not show any satisfactory reason 'beyond their control' for not complying with the provisions of Rule 12 of the said Rules except stating that the omission was by the staff of his clearing agent and beyond his control.
(c) Though Circular No.36/2010-Cus provides for sanction of drawback, the discretion can be used by the Commissioner giving exception under proviso to Rule 12(1)(a), but this cannot be automatically extended.
(d) Since the exporter did not produce any documentary evidence existing at the time of export claiming drawback for the exported goods, amendment under Section 149 is not allowed and since rectification of the bills would amount to introduction of new facts on the shipping bills.
(e) As the shipping bills were filed without claim of export benefits, same were routed through RMS without more rigorous inspection and hence, benefit cannot be claimed.
6. The impugned order is incorrect and not legal for the following reasons:
6.1. The finding that the appellant made the subject exports against 'Quantity Based Advance Authorisations' is against the facts on record. There was no QBAL scheme available at the time of export. The staff inadvertently ticked the entry in the ARE-1. The records are available with customs to check this fact, but order was passed against the facts on record of the customs. The appellant submits a certificate dt.02.08.2023 from Chartered Accountant, certifying this fact and memos for drawing of samples in respect of the subject exported goods.
6.2. The impugned order is passed without following the directions in Circular No.30/2010-Cus wherein it is clearly directed that AIR drawback may be allowed without conversion of free shipping bills into drawback shipping bills.(4)
C/30631/2017 6.3. Discretion of the Commissioner of Customs is required only when the bills are to be converted into drawback shipping bills, but not when amendment was sought for in the shipping bills. The appellant submitted all the documents at the time of the subject exports as recorded in Para 6 of the order, but the lower authority erred and passed the order stating that the documentary evidence was not produced. The appellant had mentioned in his correspondence that he would provide any further information, certifications and documents as may be required by the authority but no further documents were called for.
6.4. It is wrong to deny amendment on the grounds that the appellant had not asked for amendment of 'Let Export Order' and that shipping bills cannot be amended after the EGM is closed. There is no such requirement to amend the LEO or EGM for amendment of shipping bills mentioning the AIR rate on them and claim rebate accordingly.
6.5. The reason that the drawback claims require rigorous examination, and since the goods were passed through RMS, drawback cannot be sanctioned subsequently, is not correct. The goods were exported as bulk quantity, as mentioned in the impugned order (para 3 and 11), in the ship, on due examination and identification as certified by the officer of Customs in the ARE-1s. Further, this reason is against the finding given in the impugned order that the goods were exported against the QBAL.
6.6. It is incorrect to reject numerous decisions cited by the appellant with a bald finding that they are not applicable to his case though these decisions are on the same issue. The action of the lower authority in the appellant case is discriminatory in approach since such amendment in identical cases was allowed in numerous decisions against the policy of granting eligible incentives to the exporters.
7. The appellant submits that the issue is no more res integra and numerous precedent decisions were available of this Tribunal and Hon'ble High Court, that amendment to shipping bills after export of goods is governed by the proviso to Section 149 of the Act and if the requirements of the said proviso are satisfied, amendment of shipping bill shall be allowed. This has been clarified by CBEC also in the Circular No.36/2010-Cus dt.23.9.2010. Few decisions are filed herewith.
(5)C/30631/2017 7.1. In CC, Kandla vs. Indian Oil Corporation Ltd 2022 (5) TMI 879-Gujarat High Court wherein the High Court had dealt with all the three issues in the appellants case i.e., (a) denial of benefit when not specifically mentioning the intention to avail the scheme at the time of export (b) whether the amendment from free shipping bill to claiming benefit under a specific scheme would change whole nature and charter of clearance and (c) whether amendment can be allowed even after 2-3 years after the export and rejected the appeal of the Revenue upholding the order of the Tribunal in favour of the exporter. The Hon'ble Court also declared the condition of three months in the subject circular as ultra vires.
7.1.1. Similarly is the decision in the case of Gupta Enterprises vs. CC (Seaport-
Exports), Chennai [2023 (7) TMI 726- Cestat Chennai], wherein, all the three grounds on which conversion/ amendment was denied to the appellant were discussed and held that denial of conversion/ amendment is not legal.
7.2. In the following decisions, contention of the revenue that the claim shall be filed within three months of export as per the circular for amendment of the shipping bills, is not accepted.
(a) Isolloyed Engineering Technologies Ltd vs. CC, Export [2020 (1) TMI 165- Cestat New Delhi], wherein, conversion of free shipping bills was directed to be done without referring to three months period in the circular.
(b) Global Calcium Pvt Ltd vs. CC, Chennai [2017 (6) TMI 1359-
Madras High Court], wherein, it is held that there is no time limit prescribed in the Act and therefore, the three months' time limit cannot be insisted.
(c) E.S. Lighting Technologies Pvt Ltd vs. CC, Exports, ICD, Tughlakabad [2018 (4) TMI 1764- Cestat New Delhi]
(d) Lykis Limited vs. CC, Mundra [2020 (2) TMI 202 - Cestat Ahmedabad]
(e) Visoka Engineering Pvt Ltd vs. CC [2022 (2) TMI 804- Cestat Chennai]
(f) CC vs. Diamond Engineering (Chennai) Pvt Ltd vs. CESTAT [2019 (5) TMI 492- Madras High Court] 7.3. It is held in the following cases that unless evidence exists that the goods exported were not in conformity with the documents, claim cannot be (6) C/30631/2017 rejected on the ground of non-examination as per the norms and benefit cannot be denied on the ground of non-availability of the documents since Section 149 does not stipulate such condition and on procedural infirmities.
(a) Jindal Drugs Pvt Ltd vs. CC (NS-ii), Nhava Sheva [2022 (12) TMI 983- Cestat Mumbai]
(b) Gennex Laboratories Ltd vs. CC, Hyderabad [2012 (11) TMI 997- Cestat Bangalore]
(c) VRA Cotton Mills Pvt Ltd vs. CC, Jamnagar (Preventive) [2014 (8) TMI 772 - Cestat Ahmedabad]
(d) Autotech Industries (India) Pvt Ltd vs. CC, Chennai [2021 (11) TMI 518- Cestat Chennai]
(e) Contemporary Leather Pvt Ltd vs. CC [2021 (12) TMI 293- Cestat Chennai]
(f) Regin Exports vs. CC (Export) [2023 (7) TMI 964- Cestat Chennai]
(g) Midex Global Pvt Ltd vs. CC, Pune [2018 (10) TMI 770- Cesat Mumbai]
(h) Posco Maharashtra Steel Ltd vs. CC (Export-II) [2022 (12) TMI 68- Cestat Mumbai]
(i) CC vs. Angel Starch and Food Pvt Ltd [2022 (7) TMI 53- Madras High Court]
(j) Even in the Cargill India Pvt Ltd case, the Hon'ble Supreme Court held that the ground of not conducting the physical examination of the goods shall not be a ground for rejection of conversion. The issue of amendment under Section 149 was not before the Hon'ble Supreme Court.
(k) Vedanta Aluminium Ltd vs. CCE, Visakhapatnam [2016 (344) ELT 288 (Tri-Hyd)]
(l) Essar Oil Ltd vs. CC, Jamnagar [2010 (259) ELT 295 (Tri-Ahmd)]
(m) Metallic Bellows (I) Ltd vs. CC (Exports), Nhava Sheva [2008 (228) ELT 479 (Tri-Mum)]
(n) Nucleus Satellite Communications Pvt Ltd vs. CC (Seaport), Chennai [2007 (216) ELT 67 (Tri-Chennai] 7.4. The only condition prescribed under Section 149 is that at the time of export the document on the basis of which the benefit of export promotion was claimed, should be existing and this condition is complied, (7) C/30631/2017 the request for conversion of shipping bill from one scheme to another shall be allowed:
(a) Atul Limited vs. CCE&ST, Surat-I [2022 (7) TMI 987- Cestat-
Ahmedabad], wherein the Tribunal rejected the contention of revenue that once the shipping bill is assessed, the only way it can be changed is by way of appeal and holding that no such requirement when specific provision exists in the form of Section
149.
(b) Kuruwa Enterprises and others vs. CC, Cochin [2019 (11) TMI 1052- Cestat Bangalore].
7.5. With regards to the discretion of the officer, as held in the following cases of identical nature, approach of officer shall be giving progressive interpretation rather than conventional outlook while dealing in procedural laws.
(a) Raj and Company vs UOI [2021 (2) TMI 1101- Gujarat High Court]
(b) Sambhaji vs. Gangabai [2009 (240) ELT 161 (SC)]
8. In view of the foregoing submissions, it is prayed that the appeal of the appellant may please be allowed with consequential relief.
9. Opposing the Appeal, learned AR for Revenue urges that examination norms are prescribed for export of goods under various incentive schemes. Vide Circular No. 06/2022-CUS dated 23.01.2002, wherein the Board, after considering the need for faster clearance or export cargo, have prescribed that where export goods are stocked and sealed in the presence of the Customs/ Central Excise officers at the factory of the manufacturer, ICD/CFS, notified warehouses and other places where the Commissioner has, by a special order, permitted examination of goods for export, scheme of examination prescribed is
- No examination except (a) where the seals are found tampered with; or (b) there is specific intelligence in which case, permission of Deputy/Assistant Commissioner would be required before checking. In case of export under claim of Drawback/DEPB scheme, where the claim of incentive is Rs.1 lakh or less (or) more than Rs.1 lakh, the requirement is as follows:
S.No. Category of Exports Scale of Examination
Export consignments shipped to
sensitive places viz., Dubai, Sharjah, Others
Singapore, Hong Kong and Colombo
Consignments where the
(i) amount of drawback/DEPB 25% 2%
involved is Rs.1 lakh or less
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C/30631/2017
Consignments where the
(ii) amount of drawback/DEPB 50% 10%
involved is more than Rs.1 lakh
10. Similar is the norm for export under EPCG/DEEC schemes. As the goods were exported under free shipping bills/QBAL, the same were cleared under RMS. Further, reliance is placed on the ruling of Hon'ble AP High Court in the case of Commissioner vs Vedanta Aluminium Ltd [2018 (361) ELT A66 (AP)], wherein, this Tribunal had held that conversion of free shipping bill to DEPB shipping bill could not be denied if the exporter had claimed DEPB benefit for part of the quantity shipped earlier, but failed to claim it in the subsequent shipping bill for the remaining quantity of goods, though, it was declared in ARE1 form in respect of that shipping bill also. The Tribunal held that non- declaration of DEPB benefit in subsequent shipping bill is only a clerical error. The Tribunal also observed that Sec 149 does not lay down any time limit for seeking amendment of the documents. The Hon'ble High Court remanded the Appeal of Revenue against the Order of this Tribunal. Further relies on the ruling of Tribunal in Freedom International vs CC, Amritsar [2002 (145) ELT 414 (Tri-Del)], wherein, it was held that conversion of the shipping bill was denied due to late filing of the claim for the reason that exporter was mentally disturbed during the relevant time. The Tribunal held that the said reason does not qualify under reason 'beyond control of the exporter'. He also relies on the following rulings:
i) Humboldt Wedag India Pvt Ltd vs CC (Export), Chennai [2015 (327) ELT 220 (Tri-Chennai)]
ii) Cargill India Pvt Ltd vs CCE, Visakhapatnam-II [2015 (325) ELT 801 (SC)]
iii) Maize Products vs CC, Kandla [2018 (360) ELT 560 (Tri-Ahm)]
11. In Cargill India Pvt Ltd (supra), the Hon'ble Supreme Court examined Rule 12(1)(a) of the Drawback Rules, 1995, as well as the scope of Board Circular No. 04/2004 dated 16.01.2004, wherein, it was clarified that in terms of proviso to Rule 12(1)(a) of the Drawback Rules, 1995, the Commissioner may examine and consider individual requests pertaining to AIR (All Industry Rates) of Drawback and it would not apply to brand rate of duty drawback, where rate is claimed in terms of Rule 6 or Rule 7 of the Drawback Rules.
Hon'ble Supreme Court found that the conversion of free shipping bills to drawback shipping bills for AIR have been arbitrarily rejected and accordingly, (9) C/30631/2017 remanded the matter to the Commissioner to examine the request on merits, after hearing the Assessee/exporter.
12. Reliance is also placed on Board Circular No.36/2010-CUS dated 23.09.2010, wherein, the Board considered its earlier Circular No. 04/20014- CUS and clarified that Commissioner of Customs may allow conversion of shipping bills from schemes involving more rigorous examination to schemes involving less rigorous examination or within the schemes involving same level of examination (for ex., from drawback scheme to DEPB scheme or vice versa) irrespective of whether the benefit of export promotion scheme claimed by the exporter was denied to him by DGFT or Customs due to any dispute or not. The conversion may be permitted in accordance with the provisions of Sec 149 of Customs Act, 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 export promotion scheme to which conversion has been requested. The Circular further provides that the request for conversion is made by the exporter within three months from the date of the 'let export order'. It is further specified in the circular that free shipping bills should not be allowed to be converted. However, the Commissioner may allow AIR 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 proviso to Rule 12(1)(a) of the Drawback Rules, 1995. He also relies on the ruling of Hon'ble Delhi High Court in the case of Terra Films Pvt Ltd vs CC [2011 (268) ELT 443 (Delhi)], wherein the Hon'ble High Court observed that the exporter could not claim amendment in routine and in the matter of right. The discretion is vested in the proper officer to permit amendment in any document after the same has been presented in the customs house. Such discretion has to be exercised judicially.
13. Having considered the rival contentions, we find that the Appellant is a regular exporter as well as manufacturer of CPC. We further find that such goods are not stocked in containers for export. These goods are exported without any packing as bulk cargo, which is admitted fact. Further, admittedly, Appellant was regularly claiming the benefit of drawback at AIR. We further find that the exports in question were made during the period April, 2016 to December, 2016. The Appellant came to know of the mistake during verification of records during the end of December or beginning of January and have immediately filed the request for grant of drawback before the Commissioner of Customs by allowing them to amend shipping bills without converting them into (10) C/30631/2017 drawback shipping bills, as provided under Sec 149 of the Act read with Rule 12(1)(a) of the Drawback Rules, 1995, read with aforementioned Circular No. 36/2010-CUS.
14. We further find that the reasons given for rejection by the Commissioner of Customs are flimsy and against the very spirit of Sec 149 of the Act read with Rule 12(1)(a) of Drawback Rules, 1995, read with clarification given by the Board vide its Circular No. 04/2004-CUS read with amended Circular No. 36/2010-CUS. We find that the Board have categorically provided for allowing the benefit of drawback on AIR where there is no case of any mis-declaration or fraud, etc. In the present case, we find there is no such allegation or finding in the Impugned Order.
15. In view of our aforementioned findings and observations, we allow the Appeal and set aside the Impugned Order. We further direct the concerned authority to grant the benefit of drawback at AIR subject to furnishing of all relevant documents for processing of claim. We also direct that the claim for drawback should be processed and disbursed within the period of 45 days from the date of receipt of the copy of this Order along with interest, as per Rules.
16. Appeal allowed.
(Pronounced in the Open Court on 20.10.2023) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda