2024 (6) TMI 137 - AT - Customs

Conversion of free Shipping Bills into drawback Shipping Bills under Section 149 of Customs Act - HELD THAT - A careful reading of N/N. 208/1977-Cus dated 01.10.1977 harmoniously with the factual matrix, would clarify that the goods in question are funded by KOICA and they are being exported by the Appellants to help the Government of Nepal to overcome the calamity of earthquake. These supplies will fall under (a) or (aa) of the Notification but more precisely under (aa). However, the Adjudicating Authority has considered that these goods will fall under (b). He fails to note that (b) specifies that the exclusion is applicable only when the payment is received in Indian currency. The Explanation given is specific to (b) on the following two counts - (i) Indian Currency is mentioned only under (b) and not under (a) or under (aa). (ii) Exception to (b) is created if the payment is received in any foreign currency other than those in the list. The Explanation infact goes on to define the Freely convertible currency wherein certain currencies are mentioned. This means that even if the payment is received in foreign currency but not within the list of these specified currency, still it will be excluded as part of this Notification. In view of these findings, it is found that neither (b) nor the Explanation given under Annexure with respect to (b) would be applicable in the present case. The Adjudicating Authority is directed to consider these documentary evidence and issue an Order modifying the Free Shipping Bills to Drawback Shipping Bills in respect of both the Appeals to enable the Appellants to file their drawback claims. Appeal allowed.

Summary

Issues involved: Conversion of free Shipping Bills into drawback Shipping Bills under Section 149.

The Appellants, a subsidiary company, imported capital goods from their holding company in South Korea and supplied them to Nepal. They wanted to claim drawback on Customs Duty paid during import by converting the Shipping Bills. The Adjudicating Authority rejected their request based on Notification No. 208/1977-Cus and subsequent amendments, stating no drawback is allowed if goods were imported from third countries and exported to Nepal. The Appellant appealed to the Tribunal, arguing that the funding was done by an international agency, making them eligible under (a) or (aa) of the Notification. The Tribunal analyzed the provisions and found that the goods fell under (aa) as they were supplied to help Nepal post-earthquake, funded by KOICA. The Explanation in the Notification was specific to (b) and did not apply to (a) or (aa). Therefore, the Tribunal allowed the appeals, directing the conversion of Shipping Bills to enable drawback claims.

The Tribunal's decision was based on the interpretation of Notification No. 208/1977-Cus and subsequent amendments regarding drawback claims for goods exported to Nepal. The Tribunal clarified that the Explanation in the Notification was specific to certain conditions and did not apply to the Appellants' situation. By considering the funding source and purpose of the goods supplied to Nepal, the Tribunal concluded that the goods fell under (aa) of the Notification, making the Appellants eligible for drawback claims. The Tribunal directed the Adjudicating Authority to modify the Shipping Bills accordingly to facilitate the Appellants' claims.