2015 (4) TMI 67 - HC - Customs

Conversion of free shipping bill into draw back shipping bills - Whether in the facts and circumstances of the case, the Tribunal was legally justified to allow the appeal filed by the 1st respondent ignoring the fact that they have failed to comply the provisions of Rule 12(1)(a) of Drawback Rules, 1995 - Held that - Department s contention is that the specific direction given by the Tribunal for conversion of free shipping bill into Drawback shipping bill is not in consonance with the above-said Circular and Rule 12 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. To that extent, the plea of the Department appears to be justified. - When a specific direction is issued by the Department of Revenue, Drawback Section as to how free shipping bills should be treated for the purpose of drawback, it is incumbent that the said procedure should be followed - order of the Tribunal remanding the matter to the Commissioner directing conversion of free shipping bill into drawback shipping bill without giving the Commissioner the power to examine the issue would not be justified. However, since the Tribunal remanded the matter to the Commissioner, on remand, the jurisdictional Commissioner is empowered to consider the claim for drawback in accordance with Circular No.4 of 2004 dated 16.1.2004. - Decided in favour of assessee.

Summary

Issues:
1. Tribunal's direction for conversion of free shipping bill into drawback shipping bill.
2. Compliance with Rule 12(1)(a) of Drawback Rules, 1995.
3. Interpretation of Circular No.4 of 2004 regarding conversion of shipping bills.

Analysis:
1. The Tribunal directed the Commissioner to allow the conversion of free shipping bills into drawback shipping bills. The issue raised was whether this direction was legally justified, considering the non-compliance with Rule 12(1)(a) of the Drawback Rules, 1995. The appellant contended that the Tribunal's decision ignored the necessity of complying with the provisions of Rule 12(1)(a) for claiming drawback. The Tribunal's decision was based on a similar plea accepted in a previous case, citing a specific decision by the Bangalore Bench of the Tribunal.

2. The key contention revolved around Rule 12(1)(a) of the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995. This rule mandates that exporters must make a declaration on the shipping bill or bill of export, stating necessary particulars for determining duty drawback entitlement. The Ministry of Finance & Company Affairs issued Circular No.4 of 2004, clarifying the conversion of free shipping bills into drawback shipping bills. The circular emphasized that while exemptions could be granted by the Commissioner for availing drawback, there was no provision for converting free shipping bills into drawback shipping bills.

3. The interpretation of Circular No.4 of 2004 was crucial in this case. The circular highlighted that while the conversion of free shipping bills into drawback shipping bills should generally not be allowed, the Commissioner could consider individual requests on merit and case-to-case basis, subject to specific conditions. The circular also addressed the conversion of shipping bills between different export promotion schemes, providing guidelines for such conversions based on certain conditions and timelines.

In conclusion, the High Court re-framed the substantial question of law to address whether the Tribunal was justified in directing the conversion without considering Rule 12(a) and Circular No.4 of 2004. The Court held that the Tribunal's direction was not justified, emphasizing the need to follow the prescribed procedures. However, the Commissioner was empowered to reconsider the claim for drawback in accordance with the circular upon remand.