2014 (2) TMI 781 - HC - Customs

Conversion of free shipping bills into DEEC shipping bills - Advance licenses - CESTAT while remanding the matter, directed the Commissioner of Customs to verify the contemporaneous documents for the purpose of deciding the issue regarding conversion of shipping bills into DEEC shipping bills - Commissioner arrived at a factual finding that there were no contemporaneous documentary evidence to exercise the discretion and allow the conversion as prayed for by the exporter. Accordingly, the request for conversion was rejected - CESTAT without indicating as to how those documents would prove the contemporaneous nature of the transaction, the CESTAT arrived at a finding that the contemporaneous documents which were in existence at the time when the goods were exported justified the request for amendment of documents. Held that - We are not inclined to verify the documents in the appeal filed by the Department. Those documents should have been considered by CESTAT in extenso. The present controversy has arisen only on account of the failure of CESTAT to indicate the details of documents and its link and the contemporaneous nature in the order under appeal. Therefore we are of the view that the Tribunal was not justified in allowing the appeal without any kind of indication about the details of contemporaneous documents - Even according to the exporter, only few documents were submitted before the Commissioner of Customs. The so called voluminous documents were produced for the first time before the Tribunal. Therefore, the Commissioner was not having the benefit of verifying those documents. We are, therefore, of the considered view that the matter requires fresh consideration by the Commissioner - Matter remanded back - Decided in favour of Revenue.

Issues Involved:
1. Applicability of Board Circular No. 4/2004 prohibiting conversion of free shipping bills into DEEC shipping bills.
2. Reliance on the precedent set by Kitply Industries Ltd. v. Commissioner of Customs.
3. Conversion of free shipping bills into DEEC shipping bills despite non-fulfillment of export obligations.
4. Impact of the introduction of the EDI (Electronic Data Interchange) System on the case.
5. Evaluation of contemporaneous documents produced by the exporter.
6. Jurisdiction of the High Court to decide the appeal against the CESTAT order transferred from Mumbai to Chennai.

Issue-wise Detailed Analysis:

1. Applicability of Board Circular No. 4/2004:
The appellant argued that the CESTAT ignored Board Circular No. 4/2004 dated 16-1-2004, which prohibited the conversion of free shipping bills into DEEC shipping bills. The court noted that the CESTAT should have considered this circular in its decision-making process, especially since it was in force when the request for conversion was made by the exporter.

2. Reliance on Kitply Industries Ltd. v. Commissioner of Customs:
The appellant contended that the CESTAT erroneously relied on the case of Kitply Industries Ltd. v. Commissioner of Customs, which was not applicable to the present case. The court highlighted that the CESTAT should have evaluated the relevance and applicability of this precedent more thoroughly before relying on it in its judgment.

3. Conversion Despite Non-fulfillment of Export Obligations:
The appellant questioned the CESTAT's decision to allow the conversion of shipping bills despite the exporter not discharging its export obligations. The court emphasized that the CESTAT should have scrutinized whether the exporter had fulfilled its obligations and whether the conversion was justified under the circumstances.

4. Impact of EDI System:
The appellant raised concerns about the CESTAT not appreciating the subsequent introduction of the EDI System and treating it as falling under the proviso to Section 149 of the Customs Act. The court noted that the CESTAT should have considered the implications of the EDI System on the case and whether it affected the eligibility for conversion.

5. Evaluation of Contemporaneous Documents:
The court found that the CESTAT did not provide a clear indication of the nature of the contemporaneous documents submitted by the exporter. The CESTAT's order lacked detailed reasoning on how the documents proved the contemporaneous nature of the transactions. The court emphasized that the CESTAT should have explicitly discussed the documents and provided a factual finding supported by reasons, as required under Section 149 of the Customs Act.

6. Jurisdiction of the High Court:
The appellant questioned the jurisdiction of the High Court to decide the appeal, given that the case was transferred from the CESTAT Mumbai Bench to the Chennai Bench at the request of the exporter. The court clarified that the transfer was made by an administrative order and did not affect the High Court's jurisdiction to hear the appeal.

Conclusion:
The court set aside the CESTAT's order dated 15 April 2009 and remanded the matter to the Commissioner of Customs, Mumbai for fresh consideration. The exporter was given the opportunity to produce contemporaneous documents in support of their case. The court emphasized the need for detailed reasoning and evaluation of evidence by the CESTAT in its judgments. The Civil Miscellaneous Appeal was allowed, and the connected Miscellaneous Petition was closed with no costs.

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