2022 (2) TMI 745 - AT - Customs

Rejection of conversion of free shipping bills to advance authorization shipping bills - Section 149 of the Customs Act, 1962 - HELD THAT - When the statute does not prescribe any time limit for filing an application for conversion of a shipping bill, the department cannot rely upon a circular to frustrate the provisions contained in the statute. When there is a conflict, the statute will definitely prevail over the Board circular. The issue whether the time limit prescribed as per the Board circular will apply was considered by this Tribunal in the case of Autotech Industries (India) Pvt. Ltd. 2021 (11) TMI 518 - CESTAT CHENNAI and held that time limit of three months prescribed in the above Board circular cannot be applied to reject the request of conversion / amendment of shipping bills. The Tribunal in the case of Contemporary Leather Pvt. Ltd. Vs. CC, Chennai 2021 (12) TMI 293 - CESTAT CHENNAI followed the decision of the Hon'ble jurisdictional High Court to hold that the Board circular cannot be pressed into application to deny the request for conversion of shipping bills. The second ground for rejecting the request for conversion of free shipping bills is that the goods exported have not been subjected to physical examination. As can be seen from Section 149, which has been noticed above, there is no requirement in the said section that the amendment can be allowed only if the goods have been subjected to physical examination before export - On perusal of the impugned shipping bills, it is seen that the appellants have clearly stated in the shipping bills that the goods are exported under advance authorization scheme. On one shipping bill, there is a mistake in noting the license number of the advance authorization. In both the shipping bills, the scheme code was wrongly mentioned though they have stated that the goods are exported under advance authorization. The code has been noted as 00 instead of 01 . Section 149 is a provision which permits the importer / exporter to request for amendment of documents for the mistakes that may have happened while filing the documents. When an application for amendment is received, if it is very much clear from the documents that the mistake was only an inadvertent mistake and there is no attempt of fraud or mis-statement to evade duty, the request for conversion ought to be allowed - The Tribunal in the case of Autotech Industries (India) Pvt. Ltd. had observed that the amendment is only a procedural issue. In the present case, the documents itself establish that these were inadvertent mistakes. The rejection of request for conversion of free shipping bills to advance authorization scheme shipping bills are not justified. The impugned order is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection of request for conversion of free shipping bills to advance authorization shipping bills.
2. Time limit for filing an application for conversion of shipping bills.
3. Requirement of physical examination of goods for conversion of shipping bills.

Detailed Analysis:

Issue 1: Rejection of Request for Conversion of Free Shipping Bills to Advance Authorization Shipping Bills

The appellant exported "Paint for Fire Proofing" under two shipping bills, mistakenly indicating the scheme code as "00" (free shipping bill) instead of "01" (advance authorization). They sought to amend the shipping bills to reflect the correct scheme. The Commissioner rejected this request based on Board Circular No. 36/2010, which prohibits the conversion of free shipping bills to export promotion scheme shipping bills. The appellant argued that the first page of the shipping bills and the export invoices clearly indicated the export was under advance authorization, and the mistake was inadvertent.

Issue 2: Time Limit for Filing an Application for Conversion of Shipping Bills

The appellant’s request was also rejected on the grounds of exceeding the three-month time limit prescribed by the Board Circular No. 36/2010. However, the appellant contended that Section 149 of the Customs Act, 1962, which governs the amendment of shipping bills, does not stipulate any time limit. The Tribunal and the Hon'ble High Court of Kerala have previously held that statutory provisions prevail over circulars, and thus, the time limit in the circular cannot override the statute. The Tribunal cited previous judgments (Autotech Industries (India) Pvt. Ltd. and Contemporary Leather Pvt. Ltd.) supporting this view.

Issue 3: Requirement of Physical Examination of Goods for Conversion of Shipping Bills

The request was further rejected because the goods were not physically examined, as they were filed under free shipping bills. The appellant argued that Section 149 does not require physical examination for amendments and that the necessary documents proving the goods were exported under advance authorization were provided. The Tribunal noted that the documents indicated the goods were exported under advance authorization, and the mistake was inadvertent. The Tribunal referenced the case of Autotech Industries (India) Pvt. Ltd., where it was held that amendments are procedural and should be allowed if the documents establish an inadvertent mistake without fraud or misstatement.

Conclusion:

After reviewing the facts and evidence, the Tribunal concluded that the rejection of the request for conversion was unjustified. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized that statutory provisions must prevail over circulars and that procedural amendments should be permitted when supported by documentary evidence existing at the time of export. The judgment was pronounced in open court on 16.02.2022.