2009 (7) TMI 348 - AT - Customs

Whether conversion of free shipping bill to drawback shipping bill was to be allowed - The machine was imported and cleared on payment of appropriate duty of customs under a bill of entry dated 30-10-02. The bill of entry expressly revealed the importer s intention to return the goods to the supplier (M/s Kodak Australasia). subsequently machine presented for export, examination report on shiping bill established identity of goods conversion of shiping bills denied as market value of exported goods, as per section 76 of Custom Act, 1962, not ascertained as on date of export - Even if amendment of the shipping bill is allowed under Section 149 of the Act on the strength of the available documents, the claim for drawback cannot be examined under Section 74 of the Act on account of the mischief of Section 76. - In a case where the market price of the goods as on the date of export is not capable of being ascertained, it is not possible for the competent authority to take up the claim for drawback inasmuch as no drawback can be allowed in respect of any goods the market price of which is less than the drawback which is due thereon. - I hold that any conversion of free shipping bill to drawback shipping bill in this case will be repugnant to the provisions of Section 76(1) of the Customs Act and consequently the benefit of drawback under Section 74 cannot be granted to the respondent revenue s appeal is allowed

Summary

Issues:
Conversion of free shipping bill to drawback shipping bill.

Analysis:
The case involved the question of whether the conversion of a free shipping bill to a drawback shipping bill was permissible. The respondent had imported a second-hand machine from Australia and later exported it under a free shipping bill. The request for conversion to a drawback shipping bill was initially rejected by the Dy. Commissioner of Customs. The appellate authority, however, allowed the conversion, leading to the Revenue's appeal. The key contention was whether the goods' identity was established for claiming drawback under Section 74 of the Customs Act.

The Department argued that the exporter could not claim drawback as the goods were exported without establishing their identity to the satisfaction of the authorities. They cited Circular No. 4/04-Cus and Notification no. 19/65-Cus, emphasizing Section 76 of the Customs Act regarding the market price requirement for drawback claims. On the other hand, the respondent's counsel referred to Section 149 of the Customs Act, asserting that the requirements for amendment of the shipping bill were met. They also cited precedents supporting conversion of shipping bills and highlighted the Board's circular permitting drawback under a free shipping bill subject to Commissioner's satisfaction.

The Tribunal carefully examined the facts, noting that the machine was imported and cleared with the intention of returning it to the supplier. The examination report confirmed the goods' identity during export. The Tribunal emphasized the significance of ascertaining market value under Section 76 for drawback claims. It concluded that conversion to a drawback shipping bill would contradict Section 76, rendering the lower appellate authority's decision futile. The Tribunal set aside the appellate order, disallowing the benefit of drawback under Section 74 to the respondent.

In conclusion, the judgment focused on the legal provisions governing drawback claims, specifically Section 76 of the Customs Act. It highlighted the importance of establishing market value for granting drawbacks and emphasized the legal constraints in converting a free shipping bill to a drawback shipping bill. The decision rested on the interpretation of relevant statutory provisions and their applicability to the case at hand.