2008 (9) TMI 280 - AT - Customs

Conversion of the free shipping bills as shipping bills under DEEC Scheme - Circular dated 16-1-2004 does not prohibit conversion entirely. If there are other reliable evidences regarding use of the duty free inputs imported under DEEC in the export products, the conversion deserves to be granted - As there are several evidences of corroborative nature, conversion should have been allowed by the Commissioner - evidences sought to be relied before us & certificate by the CITES authorities have not been placed before the Commissioner - case remanded

Summary

Issues: Conversion of free shipping bills to shipping bills under DEEC Scheme; Applicability of Circular No. 4 of 2004; Use of duty-free inputs in export products; Examination of goods by Excise and Customs authorities.

In this case, the primary issue revolved around the conversion of free shipping bills to shipping bills under the Duty Entitlement Pass Book (DEEC) Scheme. The appellant had imported Taxus Baccata under DEEC Licences but failed to mention the Licence numbers in the shipping bills during export, resulting in the bills being treated as free shipping bills. The appellant later sought conversion, which was rejected by the Original Authority. The appellant argued that subsequent exports to the same foreign buyer under the DEEC scheme, compliance with SION norms, and examination under CITES requirements supported their request for conversion. The advocate highlighted the relevance of Section 149 of the Customs Act in this context.

The Circular No. 4 of 2004 was a crucial aspect discussed during the proceedings. The Circular prohibited the conversion of free shipping bills into shipping bills under different schemes, with limited exceptions subject to specified conditions. The respondent, represented by the DR, emphasized that allowing conversion of free shipping bills post-export could lead to potential misuse of concessions, especially since the goods had not undergone examination by the Excise or Customs authorities at the port.

Upon careful consideration of the arguments presented by both sides, the Tribunal observed that the Circular did not outrightly prohibit conversion, especially if substantial evidence existed demonstrating the use of duty-free inputs in the exported products. While acknowledging the importance of subsequent exports and CITES certification as corroborative evidence, the Tribunal noted that these crucial pieces of evidence were not submitted before the Commissioner during the initial decision-making process. Consequently, the Tribunal set aside the earlier order and remanded the matter to the Commissioner for a fresh review, emphasizing the need for a reasonable opportunity for the appellant to present their case effectively.

Overall, the judgment focused on the procedural aspects of conversion under the DEEC Scheme, the implications of Circular No. 4 of 2004, the necessity of evidence supporting the use of duty-free inputs, and the significance of examinations by Excise and Customs authorities in determining the validity of conversion requests.