2006 (5) TMI 277 - AT - Customs

Summary

Issues:
1. Claim of DEPB benefit denied for consignments exported in August 2003.
2. Customs authorities rejected conversion of free shipping bills into DEPB shipping bills.
3. Dispute regarding the fabrication of machinery from M.S./H.R. Plates/sheets.
4. Appeal filed before Commissioner (Appeals) challenging denial of DEPB benefit.

Analysis:
1. The appellants, manufacturers/exporters of various plant machineries, entered into a contract for supplying a cement plant to Nepal. They claimed DEPB benefit for consignments exported in August 2003, but the Department rejected the claim despite certification that the machinery was fabricated from M.S./H.R. Plates/sheets. Customs authorities insisted on clearing the goods under free shipping bills, leading to the appeal before the Commissioner (Appeals).

2. The appellants argued that they were forced to clear the goods under free shipping bills despite claiming DEPB benefit. They referred to Circular No. 6/2003, which allows conversion of shipping bills if the exporter proves the use of inputs in the export product. They requested conversion of free shipping bills into DEPB shipping bills to avail the benefit they were entitled to.

3. The Revenue contended that the appellants themselves cleared the goods under free shipping bills with an endorsement not to claim any benefit under export promotion schemes. However, the appellants maintained that they were compelled to do so by the customs authorities, highlighting discrepancies in the handling of similar consignments for other countries.

4. The Tribunal analyzed the submissions and found that the appellants intended to claim DEPB benefit, as evidenced by their commercial invoices and packing lists. The Board's Circular supported the appellants' claim for conversion of shipping bills into DEPB bills. The Commissioner (Appeals) incorrectly rejected the claim based on the certification by engineers that the machinery was fabricated from M.S./H.R. Plates/sheets.

5. Consequently, the Tribunal set aside the Commissioner (Appeals) order and directed the customs authority to allow the conversion of free shipping bills into DEPB shipping bills. DEPB benefit was to be granted where the appellants could establish their entitlement based on the documents. The Tribunal emphasized that only in the case of composite articles where no inspection or weighment was conducted at the time of export, DEPB benefit should not be allowed.