2017 (10) TMI 858 - AT - Customs

Conversion of shipping bills - free shipping bills to drawback shipping bills - rejection on the ground that the goods have left the country on the basis of free shipping bill without due examination by the customs officers as such the provisions of Section 74 could not be availed by the appellant as there is no physical examination of the goods to identify them to be the same which were originally imported by them - Held that - The import and export goods should be same for applying the provisions of Section 74. Such identity can no doubt established by physical examination and /or by documentary verification - admittedly no physical examination could be carried out. However the same cannot be the sole reason for refusal of the request of the appellant for considering the claim for converting the shipping bill and to consider their request for drawback under Section 74. The Board in the circular dt. 23/09/2010 in fact clarified that the Commissioner may allow all industry rate of duty drawback on goods exported under free shipping bill without conversion of such free shipping bill to drawback scheme shipping bill in terms of the proviso to Rule 12(1)(a) of Drawback Rules 1995. The appellants imported certain items and cleared them on payment of duty. Later after 4 months they exported the said items. We are dealing with engineering product of easily identifiable nature with documentary support - Tribunal while dealing with similar requests by the exporters held that the refusal of conversion of the free shipping bill to drawback shipping bill cannot be on the basis of non-examination of such export cargo - In Essar Oil Ltd. Vs. CC kandla 2014 (5) TMI 635 - CESTAT AHMEDABAD it was held that even though no samples could be drawn on the furnace oil exported to establish the exact nature of the product based on documentary evidences the conversion of shipping bill into drawback shipping bill and processing of the claim can be done. The conversion of shipping bill as sought for allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Request for conversion of shipping bill from free to drawback, refusal based on lack of physical examination, applicability of Section 74 of the Customs Act, 1962, interpretation of Board circular, delay in filing request, reliance on tribunal decisions.

Analysis:

Issue 1: Request for conversion of shipping bill
The appellant imported microscopes, paid customs duty, and later re-exported the items under a free shipping bill. The Commissioner rejected the request for conversion to drawback due to lack of physical examination. The appellant argued that the identification of goods could be established through supporting documents and documentary evidence. The Tribunal noted that no physical examination was conducted but held that it cannot be the sole reason for refusal. The Board circular clarified that duty drawback can be allowed on goods exported under free shipping bills without conversion. The Tribunal relied on previous cases where conversion was allowed based on documentary evidence, even without physical examination.

Issue 2: Applicability of Section 74
The Tribunal emphasized that for applying Section 74, the imported and exported goods must be the same. While physical examination is a method to establish identity, it is not the only way. In this case, the goods were engineering products with clear identification and documentary support. The Tribunal held that the appellant's case was stronger as they exported the same items they imported, and all industry rate of duty drawback should be allowed without conversion.

Issue 3: Interpretation of Board circular
The Tribunal interpreted the Board circular to support the appellant's claim, stating that duty drawback can be granted on goods exported under free shipping bills without physical verification. This interpretation favored the appellant's case as they had documentary evidence to establish the identity of the goods.

Issue 4: Delay in filing request
The appellant filed the request for conversion two months after the export, arguing that there was no delay in approaching the Customs authorities. The Tribunal did not find the delay significant and focused on the merits of the case rather than procedural timelines.

Issue 5: Reliance on tribunal decisions
The appellant relied on tribunal decisions where conversion of shipping bills was allowed based on documentary evidence, similar to the present case. The Tribunal considered these precedents and ruled in favor of the appellant, setting aside the impugned order and directing the authorities to process the claim based on documentary evidence.

In conclusion, the Tribunal found merit in the appellant's claim, emphasizing the importance of documentary evidence in establishing the identity of goods for duty drawback purposes. The decision highlighted the flexibility in interpreting regulations to facilitate legitimate claims based on available evidence, even in the absence of physical examination.