2011 (2) TMI 1226 - HC - Customs

Writ petition - DEPB - conversion of free shipping bills into DEPB shipping bills - Respondents submitted that since on the date of taking up the applications of the Petitioner for consideration the Circular dated 16th January 2004 had already been issued, it was decided to reject the Petitioner s claims Held that - claims of the Petitioner ought to have been accepted by the Respondents. It is not denied that the conversion of free shipping bills in question into DEPB bills was granted on 8th December 2003 itself. Therefore, even prior to the Circular dated 16th January 2004 conversion of the free shipping had already been granted. The claims of the Petitioner were only consequent upon such conversion. In any event the Circular dated 16th January 2004 was only prospective, writ petition is allowed

Summary

Issues:
1. Rejection of claim in respect of free shipping bills converted into bills under the Duty Entitlement Pass Book (DEPB) scheme.
2. Interpretation of circulars dated 28th January 2003, 12th May 2003, and 16th January 2004 regarding the conversion of shipping bills under export promotion schemes.
3. Rejection of claims by the Respondent Director General of Foreign Trade (DGFT) based on subsequent circulars.
4. Consideration of alternative remedy under the Foreign Trade (Development Regulation) Act, 1992.

Analysis:
1. The petitioner challenged the rejection of its claim for converting free shipping bills into DEPB shipping bills. The conversion was initially permitted by a circular issued by the Department of Revenue, Ministry of Finance, to address cases where exporters were not allowed to file free shipping bills under export promotion schemes. The circular allowed conversion on a case-to-case basis subject to certain conditions related to export documents and input usage in the exported products.

2. Subsequent amendments to the circular clarified the conditions for conversion, emphasizing the need for timely requests, proof of input usage, compliance with export promotion scheme conditions, and no prior benefit availed under any scheme. The petitioner's claims for conversion were rejected based on these amended circulars issued after the initial conversion of their free shipping bills into DEPB bills.

3. The Respondents argued that the rejection was valid as per the later circular dated 16th January 2004, which restricted the conversion of free shipping bills after its issuance. However, the petitioner contended that their conversion had been granted before this circular, and therefore, their claims should not have been rejected based on a subsequent circular.

4. The Court held that the rejection of the petitioner's claims was unjustified as the conversion had been approved before the restrictive circular came into effect. The Court set aside the rejection and allowed the writ petition, emphasizing that the petitioner should not be delayed by seeking an alternative remedy through appeal under the FTDR Act, especially considering the straightforward nature of the case and the prolonged pendency of the matter.

5. In conclusion, the Court ruled in favor of the petitioner, directing the Respondents to issue consequential orders within four weeks. The judgment highlighted the importance of considering the timeline of events and the impact of subsequent circulars on previously approved conversions, ensuring that the petitioner's rights were upheld without unnecessary delays.