2024 (12) TMI 1412 - AT - Customs

Conversion of shipping bills filed under Advance Authorisation scheme into Duty Drawback Scheme - applicability of time bar stipulated by Circular No. 36/2010-Cus dated 23.09.2010 - appellant contended that the impugned Order is vitiated by law as it is passed without issuance of any Show Cause Notice - violation of principles of natural justice - HELD THAT - It is found that in this case, the amendment of 164 shipping bills for conversion from Advance Authorisation Scheme to Duty Drawback Scheme was disallowed only on the grounds of time bar, i.e., within 3(three) months from the date of Let Export Order (LEO). It is found that duty on crude oil was exempted on 25.06.2011 and the shipping bills which were filed before the withdrawal of duty on crude oil were permitted for amendment. However, certain shipping bills during the period 01.03.2011 to 26.03.2011 (period before the withdrawal of duty on crude oil) and 27.06.2011 to 30.07.2011 (period after the withdrawal of duty on crude oil) were not allowed for amendment/conversion. 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.' T he denial of amendment of 164 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. However, the Circular No.36/2010-Cus dated 23.09.2010 are not regulations made under Rule 149 of the Customs Act, 1962. 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 in this case that 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 addressed in the judgment include:

• Whether the conversion of shipping bills from the Advance Authorisation Scheme to the Duty Drawback Scheme is permissible despite the time bar stipulated by Circular No. 36/2010-Cus dated 23.09.2010.
• Whether the Circular No. 36/2010-Cus can override the statutory provisions of Section 149 of the Customs Act, 1962, which does not prescribe any time limit for amendment or conversion of documents.
• Whether the rejection of the appellant's request for conversion of shipping bills based on the time bar is legally tenable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Conversion of Shipping Bills and Time Bar

• Relevant legal framework and precedents: The primary legal framework involves Section 149 of the Customs Act, 1962, which allows for the amendment of documents without specifying a time limit. Circular No. 36/2010-Cus, however, imposes a three-month time limit for such amendments. Precedents cited include various High Court decisions declaring the Circular's time limit as unconstitutional.
• Court's interpretation and reasoning: The Tribunal found that Section 149 does not prescribe a time limit, and thus, the Circular cannot override statutory provisions. The Tribunal referenced multiple cases where the Circular's time limit was deemed untenable.
• Key evidence and findings: The appellant's request for conversion was rejected solely based on the time bar. The Tribunal noted that the withdrawal of customs duty on crude oil was a significant factor in the appellant's request for conversion.
• Application of law to facts: The Tribunal applied Section 149, emphasizing its broad scope and lack of a prescribed time limit, thereby invalidating the Circular's time constraint.
• Treatment of competing arguments: The appellant argued against the Circular's time limit, while the Revenue upheld the impugned order based on the same. The Tribunal favored the appellant's interpretation, supported by precedent.
• Conclusions: The Tribunal concluded that the rejection of the conversion request based on the time bar was unsustainable.

Issue 2: Circular's Authority Over Statutory Provisions

• Relevant legal framework and precedents: The issue revolves around the authority of Circulars vis-`a-vis statutory provisions, particularly Section 149 of the Customs Act, 1962. The Tribunal referenced judgments that clarified the non-regulatory nature of Circulars.
• Court's interpretation and reasoning: The Tribunal held that Circular No. 36/2010-Cus does not have the regulatory force to impose a time limit under Section 149.
• Key evidence and findings: The Tribunal noted the absence of a regulatory framework within the Circular that could legally bind the appellant.
• Application of law to facts: The Tribunal applied the principle that statutory provisions take precedence over departmental Circulars.
• Treatment of competing arguments: The Tribunal dismissed the Revenue's reliance on the Circular, emphasizing the statutory interpretation of Section 149.
• Conclusions: The Tribunal concluded that the Circular cannot override Section 149, and thus, the appellant's request should not have been time-barred.

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 statutory provisions under Section 149 of the Customs Act, 1962, take precedence over Circulars. The absence of a prescribed time limit in the statute means that the Circular's time constraint is not legally binding.
• Final determinations on each issue: The Tribunal allowed the appeal, setting aside the impugned order that rejected the conversion of shipping bills based on the time bar. The appellant was granted relief with the conversion of shipping bills from the Advance Authorisation Scheme to the Duty Drawback Scheme.