2024 (12) TMI 1411 - AT - Customs

Conversion of export shipments under Advance Authorization scheme to Duty Drawback scheme for realisation of export benefits - time limitation - rejection of conversion of shipping bills from Advance Authorisation Scheme to Duty Drawback Scheme only on the grounds of time bar, i.e., not within 3(three) months from the date of Let Export Order (LEO). HELD THAT - In the case of CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE COMMISSIONER OF CUSTOMS, THE DEPUTY COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS PARAYIL FOOD PRODUCTS PVT. LTD., THE UNION OF INDIA, JOINT DIRECTOR GENERAL OF FOREIGN TRADE 2023 (1) TMI 1061 - KERALA HIGH COURT , Hon ble High of Kerala held that ' The power and scope of Section 149 are wide and have serious ramifications both for the revenue and the importer/exporter. Therefore, it is in the realm or jurisdiction of respondents herein to make Section 149 operable as prescribed by regulations subject to such terms and conditions as may be stipulated by the competent authority subject to the above observations, the Writ Appeal fails and stands dismissed'. The denial of amendment of 4( four) Shipping bills from Advance Authorisation Scheme to Duty Drawback Scheme was solely on the basis of time bar i.e., not seeking such amendment within 3(three) months of the Let Export Order (LEO) - there are catena of decisions, wherein the co-ordinate benches of the Tribunal and the Hon'ble High Courts have held that the limitation of 3(three) months prescribed in Circular No.36/2010-Cus dated 23.09.2010 is not legally tenable, since the relevant Section 149 of the Customs Act, 1962 states that by way of regulation issued under that section the time limit could be prescribed. Also, vide Notification No. 11/2022-Cus (NT) dated 22.02.2022 the Shipping Bill (Post Export Conversion in relation to Instrument based Scheme) Regulations, 2022 were introduced, which provides for a total of 2(two) years time period for filing for conversion of shipping bills. Hence, the rejection of conversion of the impugned shipping bills on time bar is untenable. It is found that in this case the conversion sought by the Appellant was from Advance Authorisation scheme shipping bills involving more rigorous examination to a Duty Drawback scheme shipping bills involving less rigorous examination. Conclusion - The limitation of 3(three) months prescribed in Circular No.36/2010-Cus dated 23.09.2010 is not legally tenable, since the relevant Section 149 of the Customs Act, 1962 states that by way of regulation issued under that section the time limit could be prescribed. The impugned order rejecting the request for conversion of shipping bills filed under Advance Authorisation scheme into Duty Drawback Scheme is unsustainable and needs to be set aside - appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the appellant's request for conversion of shipping bills from the Advance Authorization Scheme to the Duty Drawback Scheme was rightfully denied based on the time limit prescribed by Circular No. 36/2010-Cus.
• Whether the provisions of Section 149 of the Customs Act, 1962 override the time limits set by the Circular.
• Whether the introduction of the Shipping Bill (Post Export Conversion in relation to Instrument based Scheme) Regulations, 2022 affects the appellant's request for conversion.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Denial of Conversion Based on Time Limit

• Relevant legal framework and precedents: The appellant argued that Section 149 of the Customs Act, 1962, which allows for the amendment of documents, does not prescribe any time limit for such amendments. The appellant cited several precedents where courts have held that Circular No. 36/2010-Cus cannot impose a time limit that overrides statutory provisions.
• Court's interpretation and reasoning: The Tribunal found that the denial of conversion was solely based on the time bar set by Circular No. 36/2010-Cus, which is not legally tenable as it is not a regulation under Section 149 of the Customs Act.
• Key evidence and findings: The Tribunal noted multiple decisions from various High Courts and coordinate benches that have held the time limit prescribed by the Circular as untenable.
• Application of law to facts: The Tribunal applied the legal principle that statutory provisions take precedence over departmental circulars, especially when the circulars impose additional restrictions not found in the statute.
• Treatment of competing arguments: The Tribunal considered the arguments from the Revenue, reiterating the findings of the impugned order, but found them unpersuasive in light of the statutory framework and judicial precedents.
• Conclusions: The Tribunal concluded that the rejection of the appellant's request based on the time limit was unsustainable.

Issue 2: Impact of the 2022 Regulations

• Relevant legal framework and precedents: The Shipping Bill (Post Export Conversion in relation to Instrument based Scheme) Regulations, 2022, provide a two-year period for seeking conversion of shipping bills.
• Court's interpretation and reasoning: The Tribunal acknowledged that the 2022 Regulations now provide a more extended timeframe, which supports the appellant's position that their application was within the permissible period.
• Key evidence and findings: The Tribunal found that the appellant's application for conversion was indeed within the two-year period allowed by the new regulations.
• Application of law to facts: The Tribunal applied the 2022 Regulations to the appellant's case, finding that the appellant's request was timely under the new framework.
• Treatment of competing arguments: The Tribunal did not find any compelling arguments from the Revenue that could counter the applicability of the 2022 Regulations.
• Conclusions: The Tribunal concluded that the appellant's request for conversion was timely and should be allowed.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "Circular No. 36/2010 cannot be construed as a regulation issued under the Act. The power and scope of Section 149 are wide and have serious ramifications both for the revenue and the importer/exporter."
• Core principles established: The Tribunal established that departmental circulars cannot impose restrictions that are not found in the statutory provisions and that statutory provisions take precedence over such circulars.
• Final determinations on each issue: The Tribunal set aside the impugned order, allowing the appeal and granting the appellant's request for conversion of shipping bills with consequential relief as per law.

In conclusion, the Tribunal's judgment underscores the primacy of statutory provisions over departmental circulars and affirms the appellant's right to seek conversion of shipping bills under the more favorable timeframe established by recent regulations.