2015 (6) TMI 1140 - AT - Customs

Conversion of shipping bills - the free shipping bills filed by the respondent were allowed to be converted for considering grant of drawback - rejection of conversion of shipping bills on the ground that there is no provision under Rule 12(1)(a) of the Drawback Rules, 1995 read with Board Circular No.4/2004 dated 16.1.2004 wherein conversion of free shipping bills was not allowed in the case of brand rate drawback - Revenue is in appeal on the ground that the learned Commissioner has erred in allowing the shipping bills as Circular No.4/2004 extensively provided that the free shipping bills cannot be converted to brand rate drawback shipping bills - Held that - Board or CBE&C cannot issue circular to restrict the use and exercise of jurisdiction vested in the quasi judicial authorities. Circular No.4/2004 provides that powers to convert the free shipping bills to Brand Rate Drawback Shipping bills have been vested with the Juridictional Commissioner under Section 149 of the Act read with Rule 12 of the Drawback Rules for considering the case of amendment on merits - amendment in shipping bills allowed - appeal dismissed - decided against Revenue.

Issues Involved:
1. Conversion of free shipping bills to drawback shipping bills.
2. Application of Rule 12(1)(a) of the Drawback Rules, 1995.
3. Relevance of Circular No.4/2004.
4. Jurisdiction and authority of the Commissioner of Customs.
5. Compliance with procedural requirements for claiming duty drawback.

Detailed Analysis:

1. Conversion of Free Shipping Bills to Drawback Shipping Bills:
The primary issue revolves around the respondent's request to convert free shipping bills into drawback shipping bills to claim duty drawback. The respondent, engaged in building bus bodies on imported chassis, exported buses under free shipping bills due to the impending expiry of the letter of credit and the delay in the issuance of the brand rate by the Commissioner. The Tribunal initially allowed the conversion based on its precedent in Terai Overseas Ltd., but the High Court remanded the matter for reconsideration, emphasizing Circular No.4/2004.

2. Application of Rule 12(1)(a) of the Drawback Rules, 1995:
Rule 12(1)(a) was critical in determining whether the conversion of shipping bills was permissible. The Commissioner, upon re-examination, found that the respondent had applied for the brand rate well before the exports and had legitimate reasons for exporting under free shipping bills. The Commissioner concluded that the proviso to Rule 12(1)(a) allowed for such conversions if the exporter's failure to comply was beyond their control.

3. Relevance of Circular No.4/2004:
Circular No.4/2004 was a significant point of contention. It generally restricted the conversion of free shipping bills to drawback shipping bills. However, the Commissioner noted that the Circular also provided the Commissioner with discretionary power to consider individual cases on merit. The Tribunal ultimately agreed that the Circular should not unduly restrict the jurisdiction of quasi-judicial authorities.

4. Jurisdiction and Authority of the Commissioner of Customs:
The Commissioner of Customs was found to have the authority under Section 149 of the Customs Act to permit amendments to shipping bills based on documentary evidence existing at the time of export. The Tribunal upheld the Commissioner's decision, emphasizing that the quasi-judicial authority could exercise discretion judiciously and not be unduly constrained by departmental circulars.

5. Compliance with Procedural Requirements for Claiming Duty Drawback:
The respondent had complied with the procedural requirements by applying for the brand rate before the exports and promptly seeking conversion upon receiving the brand rate approval. The Commissioner acknowledged that the respondent's actions were in good faith and within the regulatory framework, thus justifying the conversion of the shipping bills.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the Commissioner's order to convert the free shipping bills to drawback shipping bills. The Tribunal emphasized that departmental circulars should not override the statutory powers vested in quasi-judicial authorities and that the respondent had acted within the bounds of the law. The respondent was entitled to the consequential benefits as per the law.

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