2024 (11) TMI 69 - HC - Customs

Non-fulfillment of the export obligation - appellant had imported raw materials duty-free under the scheme but mistakenly filed shipping bills under the Duty Drawback Scheme instead of the Advance Authorisation Scheme - seeking conversion the shipping bills under the Drawback Scheme to shipping bills under the Advance Authorisation Scheme - HELD THAT - The appellant was exempted from payment of duty at the time of import only because the inputs had been imported under the Advance Authorisation Scheme, and there was a customs notification in force granting the exemption from import duty. It is also not in dispute that the appellant had exported finished products during the period between 10.05.2019 and 25.09.2019 under cover of six shipping bills which had passed through the Customs Authorities, who had issued the 'let export' order permitting the export of the said products. The sole mistake committed by the appellant was that, in the shipping bills aforesaid he had mentioned the Duty Drawback Scheme, instead of the Advance Authorisation Scheme, as the Scheme under which the exports were effected. While it may be a fact that there is a different level of examination envisaged at the time of export for each of the Schemes, we are of the view that, at this distance of time, the examination already done on the appellant's exported products needs to be revisited only if it is established that the earlier examination did not look into aspects that were crucially relevant for exports under the Advance Authorisation Scheme. Respondents have not been able to tell us whether there were any such aspects, that were missed out in the earlier examination. At any rate, on the facts of the instant case, we are unable to see why an examination of the exported products, which led to the appellant being sanctioned a drawback, cannot be relied upon for the purposes of the Advance Authorisation Scheme. Since the appellant has agreed to refund the drawback amount received by him together with up-to-date interest till the date of payment, we are of the view that on receipt of such payment from the appellant, the Customs Authorities shall issue a receipt to him evidencing such payment by the appellant. If the DGFT is satisfied that the appellant has discharged his export obligation through the exports that took place between 10.05.2019 and 25.09.2019, then he shall, without further delay, issue the export obligation discharge certificate to the appellant. The figure showing the drawback amount, together with up-to-date interest, that has to be refunded by the appellant, shall be communicated to the appellant by the Customs authorities, within a week from the date of receipt of a copy of this judgment. The appellant shall thereupon make the payment and obtain a receipt from the Customs Authorities, within a further period of one week. He shall then approach the DGFT who shall consider the request of the appellant for the Export Obligation Discharge Certificate within an outer time limit of three weeks from the date on which the appellant produces the receipt before him.

Summary

Issues:
1. Interpretation of Circular No.36/2010-Customs regarding conversion of shipping bills under different schemes.
2. Compliance with export obligations under the Advance Authorisation Scheme.
3. Technical approach of Customs Authorities in foreign trade matters.
4. Refund of duty drawback amount and issuance of Export Obligation Discharge Certificate.

Analysis:
The judgment by the High Court of Kerala involved the appellant, a private limited company engaged in manufacturing plastic packing materials, aggrieved by a judgment regarding export obligations under the Advance Authorisation Scheme. The appellant had imported raw materials duty-free under the scheme but mistakenly filed shipping bills under the Duty Drawback Scheme instead of the Advance Authorisation Scheme. The Customs Authorities rejected the appellant's request for conversion of shipping bills based on Circular No.36/2010-Customs, leading to the appellant filing a Writ Petition which was dismissed by the learned Single Judge.

In the appeal, the appellant argued that the Customs Authorities took a technical approach, emphasizing that the import and export were documented and not in dispute. The appellant offered to refund the duty drawback amount and presented a certificate from a chartered engineer to rectify the error. The Customs Authority, represented by the Central Government counsel, maintained adherence to the Circular and cited time limitations for conversion requests.

The High Court analyzed the situation, acknowledging the appellant's compliance with duty-free import and export of finished products. The Court noted the mistake in filing shipping bills under the wrong scheme but emphasized the need to revisit the examination of exported products only if crucial aspects for the Advance Authorisation Scheme were overlooked. As the appellant agreed to refund the duty drawback amount, the Court directed the Customs Authorities to issue a receipt upon payment, enabling the DGFT to assess compliance with the scheme and issue the Export Obligation Discharge Certificate promptly.

The judgment concluded by instructing the Customs Authorities to communicate the refund amount to the appellant promptly, followed by the appellant making the payment and obtaining a receipt. The DGFT was directed to consider the request for the Export Obligation Discharge Certificate within a specified timeframe upon receipt of the Customs receipt. Ultimately, the Writ Appeal was disposed of in favor of the appellant, providing a detailed roadmap for resolving the issue of export obligation compliance under the Advance Authorisation Scheme.