Gujarat High Court
Anil Sharma & vs Union Of India & 3 on 9 January, 2017
Bench: M.R. Shah, B.N. Karia
C/SCA/17991/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 17991 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE B.N. KARIA sd/
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1 Whether Reporters of Local Papers may be allowed to see NO
the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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ANIL SHARMA & 1....Petitioner(s)
Versus
UNION OF INDIA & 3....Respondent(s)
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Appearance:
MR D K TRIVEDI, ADVOCATE for the Petitioner(s) No. 1 2
JAIMIN A GANDHI, ADVOCATE for the Respondent(s) No. 3 4
NOTICE SERVED for the Respondent(s) No. 2
NOTICE UNSERVED for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 09/01/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate writ, direction and order to quash and set aside the impugned letters/ decisions dated 11.01.2016 and 01.08.2016 issued by the respondent no.4 and consequently direct the respondent no.3 to carry out the amendment in Page 1 of 10 HC-NIC Page 1 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT Shipping Bill No. 3913191 dated 17.07.2014 to the effect that the said shipping bill was filed under the Advance Authorization No.0510383348 dated 01.04.2014.
2.0. The facts leading to the present Special Civil Application so pleaded by the petitioner in nutshell are as under:
2.1. That the petitioner no.2 herein M/s. Uniworld Sugars Private Limited, is a sugar refinery located at survey no. 145, village Varsamedi, Tal: Anjar, Dist. Kutch. That the petitioner no.1 is the Director of the aforesaid company. The said refinery is setup for the purpose of refining raw sugar and by that manufacturing white refined sugar for export market. That as the petitioner was required to import raw sugar in huge quantity and that once the same is refined, the refined white sugar was required to be exported out of India,the petitioner submitted an application for Advance Authorization before the respondent no.2. That Advance Authorization bearing No.0510383348 dated 1.4.2014 was issued to the petitioner no.2 by the Additional Director General of Foreign Trade, Central Licensing Area, New Delhi.
That under the said license, the petitioner no.2 was permitted to import 13249.950 MTs of raw sugar having cost insurance and freight (CIF) value of Rs.35,73,52,500/ for manufacture and export of 12619.00 MTs of white refined sugar having a Free On Board (FOB) value of Rs. 41,09,55,375/ within a period of 18 months from the date import. It is the case on behalf of the petitioner that after receiving the said Advance Authorization, the petitioner imported 10,599.950 MTs of raw sugar from Brazil which was imported through Kandla Cusmos Port vide Bill of Entry No. 5776080 dated 11.06.2014 and Bill of Entry No. 6443937 dated 14.08.2014. It is the case on behalf of the petitioner that as provided in the said authorization against the aforesaid quantity of Page 2 of 10 HC-NIC Page 2 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT 10599.950 MTs of raw sugar directly imported, the petitioner manufactured a total quantity of 10095.210 MTs of white refined sugar therefrom. It is the case on behalf of the petitioner that as provided in the Foreign Trade Policy, the petitioner was required to export white refined sugar within stipulated period of 18 months. It is the case on behalf of the petitioner that same was properly complied with by the petitioner and the aforesaid quantity of 10095.210 MTs of white refined sugar was exported under 14 different shipping bills during the period from 19.06.2014 to 19.09.2014. It is the case on behalf of the petitioner that as per the provision in the Foreign Trade Policy according to which instead of importing any particular quantity of specified goods in a Authorization, if any Authorization Holder wants to source such quantity locally, they can do so, the petitioner requested respondent no.2 for invalidation of the authorization to the extent 2650.00 MTs of raw sugar may be allowed to be source locally. Accordingly, the authorization was invalidated and the petitioners were allowed to procure 2650.00 Mts of raw sugar from Sanjivani Sahkari Sakhar Karkhana Limited. It is the case on behalf of the petitioner that subsequently petitioner entered into agreement with the aforesaid Sugar Mill at Maharashtra for supply of 2650.00 MTs of raw sugar under Advance Authorization. It is the case on behalf of the petitioner that after sourcing the aforesaid raw sugar domestically, the same was refined and 2516.530 MTs of white refined sugar manufactured out of the said domestically procured quantity of 2642.300 MTs of raw sugar, was also exported out of India, under Ship Bill No.3913191 dated 17.07.2014. It is the case on behalf of the petitioner that although while exporting 10095.210 MTs of white refined sugar manufactured out of 10599.950 MTs of imported raw sugar, the petitioner had not made any mistake and properly punched in the shipping bill that the said exports are against the aforesaid advance authorization. However, through mistake while exporting 2516.530 MTs Page 3 of 10 HC-NIC Page 3 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT of domestically procured raw sugar, the petitioner had punched drawback in the shipping bill. It is the case of the petitioner that as a result of the same, though the exports were under advance authorization, as far as 2516.530 MTs are concerned, the shipping bill showed that the exports were under drawback scheme.
2.2. It is the case on behalf of the petitioner that as it was electronically generated shipping bill and the entire system is online, automatically amount of drawback aggregating to Rs. 9,18,388.75 was credited to the account of the petitioner, however immediately on realizing their mistake the petitioner paid back/ given away the drawback amount of Rs.9,18,388.75 vide Demand Draft dated 27.12.2014 along with interest to the credit of the Central Government at Kandla Customs House. It is submitted that therefore, although the aforesaid mistake was rectified properly, the petitioner was required to request the Customs Authorities to amend the shipping bill which was wrongly punched and therefore, the petitioner vide letter dated 30.12.2014 requested the Custom Authority at Kandla to amend the said shipping bill from drawback scheme to Advance Authorization scheme to enable them to take up the matter with the licensing authorities i.e. respondent no.2 herein for realization of their export obligation under the Advance Authorization in question and its redemption. A reminder was sent vide letters dated 27.12.2015, 16.07.2015 and 3.11.2015. That vide communication dated 11.01.2016 the Assistant Commissioner (Export) on behalf of respondent no.3 had vide his letter dated 11.01.2016 informed the petitioners that their request for amendment has not been considered by the respondent no.3 on the ground that no conversion of shipping bill from one scheme to another scheme beyond three years from the date of Let Export Order (LEO), which is the requirement as per the Board Circular No. 36 of 2010. It is the case on Page 4 of 10 HC-NIC Page 4 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT behalf of the petitioner that thereafter vide communication dated 08.06.2016 the petitioner requested to reconsider its earlier decision by submitting that circular no. 36 of 2010 shall not be applicable in the present case and therefore, it was requested to amend the shipping bill as per Section 149 of the Customs Act. That once again request of the petitioner has been turned down vide communication dated 01.08.2016. Hence, present petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India for the aforesaid relief.
3.0. Shri D.K. Trivedi, learned advocate has appeared on behalf of the petitioner and Shri Jaymin Gandhi, learned advocate has appeared on behalf of respondent department.
4.0. Shri D.K. Trivedi, learned advocate for the petitioner has vehemently submitted that in the present case it is not the case of conversion from one scheme to another scheme i.e. from drawback scheme to advance scheme and therefore, Circular No. 36 of 2010 shall not be applicable to the facts of the case on hand.
4.1. It is further submitted by Shri Trivedi, learned advocate for the petitioner that in the present case it was case of amendment in the shipping bill to correct the mistake and therefore, Section 149 of the Customs Act shall be attracted, which does not provide any time limit for amending the shipping bill. It is submitted that therefore, the impugned communication / decision rejecting the application of the petitioner to amend the shipping bill on the ground that the same is made beyond the period of three months is contrary to the provisions of the Act, more particularly, Section 149 of the Custom Act.
4.2. It is further submitted by Shri Trivedi, learned advocate for Page 5 of 10 HC-NIC Page 5 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT the petitioner that in the present case right from very beginning the intention of the petitioner was to get the benefit under the Advance Authorization and in the shipping bill by mistake the same was punched as drawback scheme. It is submitted that in fact having realized such mistake the petitioner also returned the drawback amount which was credited to the account of the petitioner. It is submitted that therefore, considering Section 149 of the Customs Act, respondent ought to have permitted the petitioner to amend the shipping bill, more particularly, when the petitioner had as such export the entire quantity of 2650 MTs of sugar.
4.3. It is further submitted by Shri Trivedi, learned advocate for the petitioner that in the case of amendment of shipping bill where export goods have been exported the same is permissible only on the basis of documentary evidence which were in existence at the time of goods were exported. It is submitted that this is case where goods are already exported out of India, the respondent no.3 for the purpose of amending shipping bill in question was required to consider the documentary evidences only. It is submitted that in the present case there are overwhelming documentary evidence that the goods were imported / indigenously procured under the Advance Authorization, subsequently finished goods were manufactured and exported out of India. It is submitted that therefore, the impugned decision rejecting the application of the petitioner to amend the shipping bill deserves to be quashed and set aside.
Making above submission and relying upon the decision of the Bombay High Court in the case of Commissioner of Customs vs. Man Industries (I) Ltd reported in 2007(216) ELT 15 (Bom) which has been confirmed by the Hon'ble Supreme Court subsequently, it is requested to allow the present petition and grant the relief as prayed for.
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C/SCA/17991/2016 JUDGMENT
5.0. Present petition is vehemently opposed by Shri Jaymin Gandhi, learned advocate for the respondent.
5.1. It is vehemently submitted by Shri Gandhi, learned advocate for the respondent that in fact this is a case of conversion from one scheme to another scheme and therefore, Circular No. 36 of 2010 shall be applicable and Section 149 of the Customs Act shall not be applicable / attracted. It is submitted that therefore, when it has been found that application was submitted before the period of three months, authority is justified in rejecting the said application.
5.2. It is submitted that conversion from one scheme to another scheme will be governed by the concerned Board Circular No. 36 of 2010. In support of his above submission, he has heavily relied upon the decision of the Division Bench of the Madras High Court in the case of Commissioner of Customs (SeaportExport), Chennai vs. Suzlon Energy Ltd reported in (2014) 50 Taxmann. Com 401 (Madras) as well as decision of the Delhi High Court in the case of Terra Films Pvt Ltd vs. Commissioner of Customs reported in 2011(268) ELT 443 (Del).
5.3. It is submitted by Shri Gandhi, learned advocate for the respondent that as per Advance Authorization Scheme, the petitioner is under obligation to ensure that all the raw materials imported under the scheme is used in manufacture of goods exported under the Scheme. It is submitted that Exporter has to file DEEC declaration to the effect that what are the raw materials used in manufacture of final product. It is submitted that at the time of execution of goods materials given in declaration will be verified. It is submitted that in the present case it was not verified since shipping bill was not filed under DEEC scheme and now the verification is not possible as the materials are not available.
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C/SCA/17991/2016 JUDGMENT
Making above submissions and relying upon the above decisions, it is requested to dismiss the present petition.
6.0. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that it is the case of the petitioner that though they imported the goods under the shipping bill under the Advance Authorization Scheme, through oversight and by mistake it was punched as duty drawback. Therefore, it is the case on behalf of the petitioner that subsequently when they requested to amend the bill of entry, the case would fall under Section 149 of the Custom Act, which does not provide any limitation to make application to amend the shipping bill and therefore, the authorities are not justified in rejecting the application on the ground that the same is not within the period of three months, relying upon board Circular No. 36 of 2010. Identical question came to be considered by the Division Bench of the Madras High Court in the case of Suzlon Energy Ltd (supra). Relying upon considering the decision of the Division Bench of the Delhi High Court in the case of Terra Films Pvt Ltd (supra), Madras High Court has held that such goods would not fall under Section 149 of the Customs Act, but shall be governed by Board Circular No. 36 of 2010. In the case of Terra Films Pvt Ltd (supra), the Delhi High Court has considered the scope of Section 149 of the Customs Act and found that discretion vested in the proper officer to permit the amendment in any document after same has been presented in the Customs House has to be though 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. In the said decision, it is further observed that the request made for conversion from one scheme to another scheme is a case of request for conversion and not of amendment inasmuch as by converting from one scheme to Page 8 of 10 HC-NIC Page 8 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT another scheme, it was not only addition of word "cum" duty drawback but change entire status and character of the document. The Delhi High Court has thereafter observed that proper officer may not be in possession of the documents sought to be amended after lapse of such a long period when the goods already stood exported. For enabling an exporter to draw the benefits of any scheme, not only physical verification of the documents would be required but also verification of the goods of export as also their examination by the Customs was necessarily required to be done.
6.1. Thus, the request of the petitioner which has been rejected by the respondent cannot be said to be a mere amendment in the shipping bill as contemplated under Section 149 of the Customs Act, but it will be case of conversion of one scheme to another scheme, for which, proper officer is required to verify whether the very manufactured final product which has been manufactured from the raw material has been exported or not.
7.0. The contention on behalf of the petitioner that as the case would fall under Section 149 of the Customs Act which does not prescribe any time limit and therefore, on the basis of material on record, which was available at the time of export, it could have been verified whether final goods manufactured from the raw material imported has been exported or not, can be verified is concerned, as such, as observed herein above Section 149 of the Customs Act will not be applicable. Even otherwise, it is required to be noted that what is considered at the time of DECC, the appropriate inquiry would be limited to the extent to satisfy the authority whether raw material which was imported has been used in manufacturing final product or not. So far as Advance Authorization Scheme is concerned, the appropriate Page 9 of 10 HC-NIC Page 9 of 10 Created On Sat Aug 12 02:19:57 IST 2017 C/SCA/17991/2016 JUDGMENT authority is required to consider after holding appropriate inquiry that the raw material which was imported has only been used in the manufacture of final product and that final product has been actually exported.
8.0. Now, so far as the decision of the Bombay High Court in the case of Man Industries (I) Ltd (supra) relied upon by the learned advocate for the petitioner is concerned, on facts the said decision shall not be applicable.
9.0. In view of the above and for the reasons stated above, it cannot be said that the respondents have committed any error and / or illegality in rejecting the application of the petitioner considering the Board Circular No. 36 of 2010. Under the circumstances, present petition deserves to be dismissed and is accordingly dismissed. Notice discharged.
sd/ (M.R. SHAH, J.) sd/ (B.N. KARIA, J.) Kaushik Page 10 of 10 HC-NIC Page 10 of 10 Created On Sat Aug 12 02:19:57 IST 2017