2013 (10) TMI 457 - AT - Customs

Export against advance licence - conversion of free shipping bills into DEEC bills - What was the documentary evidence available at the time of export Held that - On going through the ARE-2 document it was quite clear that nowhere there was an indication that the export was in fulfillment of obligations under an Advance Licence - As already mentioned earlier the shipping bill was also a free-shipping bill and there was no examination in the port since the examination was done by the Range Officer and the seal was affixed by the Central Excise officer - Therefore the contemporaneous record we have was only a free shipping bill and an ARE-2 wherein no declaration regarding advance licence was available and the examination was done by the inspector who did not draw the sample also. The examination was conducted by the inspector would show that the department treated the consignment as one of export without claiming any incentive - He had also observed that as per the existing instruction, the consignment should have been examined only by a Superintendent and the very fact that the examination was conducted by the inspector would show that the department had treated it as a free export without claiming any benefits and under these circumstances, the conversion cannot be allowed - On going through the records I find that during the relevant time instructions required that the Superintendent to conduct examination - Without valid reasons it may not be proper to reject the observation of the Commissioner that the examination by Superintendent was very relevant and necessary in this case. The appellants were engaged in the business of export of electronic goods including EDC terminals also known as Point-of-Sale terminals Held that - If the appellants were to mention all the relevant details, the fact that inspector only examined the consignment and therefore appellant cannot be denied the-benefit could have been a view possible - Unfortunately for the appellant neither in the shipping bill nor in ARE-2 have declared the Advance Licence No. or the fact that exports were in fulfillment of obligations caused by the DEEC Licence - Under these circumstances the examination also becomes a relevant factor - Further the drawal sample was also a relevant factor. It may be relevant to take note of the fact that in the earlier instructions the conversion of free shipping bills to a shipping bill/DEEC/DEPB cum drawback was totally not allowable and in 2010, the Board liberalized the whole system of conversion - At the time of liberalizing, the Board took the view that such application should be made within 3 months - As already mentioned earlier, I would not like to go into this aspect also since in my opinion it was not required to be considered. Moreover as submitted by the learned counsel in the show-cause notice this was not one of the grounds taken and if the claim were to be rejected on that ground it would be going beyond the show-cause notice - On this ground the issue becomes irrelevant and cannot be considered - the request for conversion cannot be considered and the order rejecting the request was upheld.

Summary

Issues Involved:
1. Whether the request for conversion of free shipping bills into DEEC bills constitutes an amendment under Section 149 of the Customs Act, 1962.
2. Adequacy and relevance of documentary evidence and examination by the Inspector.
3. Delay in filing the application for conversion.

Detailed Analysis:

1. Amendment vs. Conversion:
The appellants contended that their request was for an amendment under Section 149 of the Customs Act, 1962, rather than a conversion of shipping bills. They cited several Tribunal decisions supporting this view. However, the respondent argued that it was a conversion from one export promotion scheme to another, relying on the decision of the Hon'ble High Court of Delhi in Terra Films Pvt. Ltd. The judgment noted that the Board's Circular No. 36/2010-Cus. dated 23.09.2010 suggested that such cases should be treated as amendments. Despite this, the judgment concluded that due to conflicting interpretations, it would treat the case as an amendment but without delving deeply into this issue.

2. Documentary Evidence and Examination:
Section 149 of the Customs Act permits amendments based on documentary evidence existing at the time of export. The appellants failed to declare the DEEC licence number in the shipping bill and ARE-2 form, which only contained a declaration that the export was not in discharge of obligations under a value-based advance licence issued prior to 31.03.1995. The examination of goods was conducted by an inspector, not a superintendent, which was against the instructions requiring a superintendent's involvement. The judgment emphasized that the inspector's examination indicated that the department treated the consignment as a free export without claiming any benefits, thus supporting the Commissioner's decision to reject the conversion request.

3. Delay in Filing Application:
The appellants filed the conversion request 8 to 14 months after the exports, which the respondent argued was considerable. Although the judgment did not base its decision on the delay, it acknowledged that the Hon'ble High Court in Terra Films Pvt. Ltd. had considered a one-year delay as significant. The Board's 2010 liberalized instructions allowed conversion applications within three months, but this aspect was not a ground in the show-cause notice and thus was not considered in the final decision.

Conclusion:
The judgment upheld the Commissioner's order rejecting the request for conversion, emphasizing the lack of necessary declarations in the shipping bill and ARE-2 form, the improper examination by an inspector, and the absence of relevant documentary evidence at the time of export. The appeal was rejected, maintaining that the request for conversion could not be considered under the given circumstances.