2017 (8) TMI 145 - AT - Customs

Conversion of shipping bills - free Shipping Bills to DEPB Shipping Bills - case of appellant is that conversion of free shipping bills into DEPB Shipping Bills cannot be denied to them as on the basis of same set of export documents the request was made as per Section 149 of the Customs Act,1962 - Revenue s contention on the other hand is that it is difficult to correlate the items exported with the imported items as there was no physical examination of the goods, hence, the conversion of free shipping bills into DEPB shipping bills cannot be accepted - interpretation of statute. Held that - the principle relating to allowing conversion of free shipping bill into DEPB ,DFRC etc. shipping bill and from one promotion scheme to another promotion scheme has been laid down by the Hon ble Delhi High Court in the case of Terra Films Pvt. Ltd. v. C.C. 2011 (4) TMI 13 - DELHI HIGH COURT . Their Lordships after considering the Board s Circular No.4/2004 dated 16.1.2004, observed that amendment of the shipping bill after the goods have been exported, cannot be considered as mere amendment, when the request is for conversion of free shipping bills into DEPB or for conversion of shipping bills from one export scheme to another. In the present case are that the appellant had applied for conversion of free shipping bills into DEPB Shipping Bills four to five years after export i.e. on 1.12.2003. Also, at the time of clearance of the goods it was specifically not disclosed in the free shipping bills nor in the ARE-1 export document by declaring thereunder specifically their intention to claim any of the export benefit i.e. benefit under DEPB scheme, therefore, the consignment was not opened for physical examination by the Customs and the export was allowed. Hence, it is difficult to appreciate the argument of the appellant that it was a question of mere amendment to the shipping bills, which is contrary to the Circular No.4/2004 dated 16.1.2004 issued by the Board and was in force during the relevant time. The request for conversion of free shipping bills to DEPB Scheme cannot be considered, as the said scheme is strictly on actual user basis exemption and no transferability is allowed pre or post export. Hence, strict interpretation need to be applied - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Conversion of free shipping bills into DEPB shipping bills.
2. Application of Section 149 of the Customs Act, 1962.
3. Relevance of Board’s Circular No. 4/2004 dated 16.1.2004.
4. Physical examination of goods and correlation with imported items.
5. Timeliness and delay in filing the request for conversion.
6. Discretion of the Proper Officer in permitting amendments.

Detailed Analysis:

1. Conversion of Free Shipping Bills into DEPB Shipping Bills:
The primary issue is whether the conversion of 51 free shipping bills (in Appeal No. C/493/2011) and 28 free shipping bills (in Appeal No. C/492/2011) from the period 1997-1999 into DEPB shipping bills, as requested by the appellant on 1.10.2003, is allowable. The appellants argued that the conversion should be permitted based on the same set of export documents under Section 149 of the Customs Act, 1962. The Revenue contended that due to the lack of physical examination of the goods, it is difficult to correlate the exported items with the imported items, thus rejecting the conversion request.

2. Application of Section 149 of the Customs Act, 1962:
Section 149 allows amendments to documents presented in the customs house, provided the amendment is based on documentary evidence existing at the time the goods were exported. The appellants claimed they possessed all necessary documents at the time of export to show entitlement under the DEPB scheme. However, the discretion to permit amendments lies with the Proper Officer and must be exercised judiciously, ensuring the amendment is based on pre-existing documentary evidence.

3. Relevance of Board’s Circular No. 4/2004 dated 16.1.2004:
The circular clarifies that conversion of free shipping bills into DEPB shipping bills should not be allowed routinely. It permits such conversions only when the benefit of an export promotion scheme claimed by the exporter has been denied due to a dispute, subject to conditions such as timely request, satisfactory evidence of input use, and compliance with export promotion scheme conditions. The circular emphasizes that conversion requests should not be encouraged due to the difficulties they create.

4. Physical Examination of Goods and Correlation with Imported Items:
The conversion request was denied partly because there was no physical examination of the goods at the time of export, making it challenging to verify the correlation between exported and imported items. The Hon’ble Delhi High Court in Terra Films Pvt. Ltd. v. C.C. emphasized that physical verification of documents and goods is necessary to draw benefits from any export scheme.

5. Timeliness and Delay in Filing the Request for Conversion:
The appellants filed the conversion request four to five years after the export, which is significantly delayed. The Hon’ble Madras High Court in Areva T & D India Ltd. highlighted that amendments should not be permitted as a matter of course and must be based on contemporaneous documentary evidence. The delay in filing the request makes it difficult for the authorities to ascertain the use of duty-free goods in the export product.

6. Discretion of the Proper Officer in Permitting Amendments:
The Proper Officer has the discretion to permit amendments, but this discretion is qualified by the requirement for documentary evidence existing at the time of export. The Commissioner rightly observed that the request for conversion was not merely an amendment but a change in the status and character of the documents, which could not be allowed after such a long period.

Conclusion:
The Tribunal upheld the impugned orders, agreeing with the Revenue's contention that the conversion request could not be considered due to the lack of physical examination and the strict interpretation required for the DEPB scheme. The appeals were dismissed, reinforcing the principle that such conversions should not be allowed routinely and must be supported by contemporaneous documentary evidence.