2021 (2) TMI 523 - HC - Customs

Duty Drawback - conversion of shipping bill - claim of drawback on import of microscopes despite exporting the goods vide a free shipping bill and without physical examination of the goods by the customs authorities at the time of export - Section 74 of the Customs Act - time limitation - respondent claimed drawback of duty on the said goods more than 3 months after the export of the goods - HELD THAT - It is evident that Proviso to Rule 4(a) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 provides for exemption or waiver of the requirement physical verification and cannot form the sole basis for rejection of the claim for drawback of duty under Section 74 of the Act. Similarly, clauses 3 and 4 Circular dated 23.09.2010, which deals with conversion of free shipping bills to export promotion scheme shipping bills and conversion of shipping boils from one scheme to another also provides that on case to case basis on merits, provided the commissioner of customs is satisfied, on the basis of documentary evidence which was in existence at the time the goods were available for export promotion scheme to which conversion has been requested, the same may be allowed subject to the conditions mentioned therein. Thus, the tribunal has rightly recorded the finding that the claim of the appellant for conversion of shipping bill is based on pre existing documents which were available at the time of re-export and no new material evidence has been claimed and identity of the product can be established on the basis of documentary evidence as physical examination could not be done at the time of shipment. It is also pertinent to note that goods were exported on 13.09.2006 and on 30.11.2006, the demand was made to convert the duty drawback under Section 74 of the Act. Thereafter, a reminder was submitted on 20.02.2007. Thus, the original demand has been made within the prescribed period of limitation. The substantial questions of law framed by this court are answered against the appellant and in favour of the respondent - Appeal dismissed.

Summary

Issues:
1. Whether the Tribunal erred in setting aside the order of the Commissioner and allowing the respondent to claim drawback of duty paid on import of microscopes despite certain conditions not being met?
2. Whether the Tribunal erred in holding that the respondent is entitled to claim drawback of duty paid on import of microscopes despite the claim being time-barred?

Analysis:
Issue 1:
The appeal was filed against the Customs, Excise and Service Tax Appellate Tribunal's order, challenging the decision to allow the respondent to claim duty drawback on imported microscopes despite certain conditions not being fulfilled. The Commissioner had initially rejected the claim as the goods were not physically examined by customs authorities during export, a requirement under Section 74 of the Customs Act. The Commissioner also noted that the claim was made more than three months after export, violating Rule 5(1) of the 1995 Rules. However, the Tribunal relied on a Circular by the Central Board of Direct Taxes, allowing industry rates of duty drawback on goods exported under a free shipping bill without conversion to a drawback bill. The Tribunal set aside the Commissioner's order, leading to the appeal.

Issue 2:
The second issue raised was regarding the timeliness of the claim for duty drawback by the respondent. The appellant argued that the claim was time-barred as it was made nearly five months after the export of the goods, exceeding the three-month limit set by Rule 5 of the 1995 Rules. However, the respondent contended that the claim was within the limitation period and referred to Rule 5(1) allowing an extension by three months, which was met in this case. Additionally, the respondent cited a decision by the High Court of Gujarat supporting their position. The Court examined the relevant rules and circulars, concluding that the claim was made within the prescribed time limit and upheld the Tribunal's decision to allow the claim for duty drawback.

In the final judgment, the Court dismissed the appeal, finding no merit in the appellant's arguments and ruling in favor of the respondent based on the interpretation of the Customs Act, relevant rules, and circulars.