2012 (12) TMI 152 - AT - Customs

Conversion of free Shipping Bill into DEPB Shipping Bill - appellants exported Losartan Potassium Tablets under free Shipping Bill Held that - Circulars issued by the Board do not permit conversion of free Shipping Bill into any export promotion Shipping Bill like DFIA, DEPB etc. Para (iv) of the circular dated 23-9-2010 states that free Shipping Bills are subject to nil examination norms. Conversion of free Shipping Bill into export promotion scheme Shipping Bill should not be allowed - circular does put conditions and limitations in regard to substitution of Shipping Bills and the same can be construed as limiting exercise of the powers of the proper officer under Section 149 - order passed by the adjudicating Commissioner following those circulars cannot be faulted with - appeal is dismissed.

Issues Involved:
1. Request for conversion of free Shipping Bill to DEPB Shipping Bill.
2. Applicability and interpretation of Board's Circulars.
3. Authority and limitations under Section 149 of the Customs Act.
4. Examination norms and procedural compliance for DEPB benefits.
5. Validity and rationale of the Board's Circulars.

Detailed Analysis:

1. Request for Conversion of Free Shipping Bill to DEPB Shipping Bill:
The appellants exported Losartan Potassium Tablets under a free Shipping Bill and later requested its conversion to a DEPB Shipping Bill. The request was based on the grounds that the goods were factory stuffed under Central Excise supervision, and documentary evidence like the packing list and invoice could prove the export as per the declaration. The adjudicating Commissioner rejected this request, leading to the present appeal.

2. Applicability and Interpretation of Board's Circulars:
The adjudicating Commissioner cited Board's Circular No. 4/2004-Cus., dated 16-1-2004, and Circular No. 36/10-Cus., dated 23-9-2010, which do not permit the conversion of free Shipping Bills into DEPB Shipping Bills. The circulars state that free Shipping Bills are subject to nil examination norms, and conversion should not be allowed due to the lack of rigorous scrutiny required for DEPB Shipping Bills. The Commissioner also noted that the Tribunal's decision in Midex Global Pvt. Ltd. v. C.C.E., Pune, related to a different context of conversion to drawback Shipping Bills.

3. Authority and Limitations under Section 149 of the Customs Act:
The appellants argued that Section 149 of the Customs Act allows for the amendment of documents based on existing documents at the time of export, and the Board's Circulars cannot override this statutory provision. The Tribunal examined whether Section 149 permits substitution of Shipping Bills and concluded that the provision allows for amendments but not substitution. Furthermore, the Commissioner, acting as the proper officer, is bound by the conditions and limitations imposed by the Board under Section 5(1) of the Customs Act. Therefore, the Commissioner's adherence to the Board's Circulars was justified.

4. Examination Norms and Procedural Compliance for DEPB Benefits:
The appellants contended that the goods were factory stuffed under Central Excise supervision, and thus the authenticity of the export goods was established. However, the Tribunal noted that the certification by excise officers at the time of factory stuffing is not a substitute for the customs examination required for DEPB benefits. The free Shipping Bill did not include the Present Market Value (PMV), which is crucial for determining DEPB entitlement, and the required annexure for DEPB Shipping Bill was not filed. The lack of satisfactory reasons for initially filing a free Shipping Bill further weakened the appellants' case.

5. Validity and Rationale of the Board's Circulars:
The Tribunal upheld the validity of the Board's Circulars, noting that they provide sound rationale for denying conversion of free Shipping Bills into DEPB Shipping Bills. The circulars aim to curb misuse of export benefits and ensure proper scrutiny of claims. The Tribunal referenced the Supreme Court's decisions in Commissioner of Central Excise v. Universal Radiators Ltd. and Commissioner of Central Excise v. Hari Chand Shri Gopal, which emphasized adherence to procedural requirements to prevent misuse of exemptions and benefits.

Conclusion:
The Tribunal dismissed the appeal, affirming that the adjudicating Commissioner acted correctly in following the Board's Circulars. The circulars validly imposed conditions and limitations on the conversion of free Shipping Bills to DEPB Shipping Bills, and the appellants failed to provide sufficient reasons or comply with the required procedures for DEPB benefits. The decision emphasized the importance of following established procedures to ensure the integrity of export promotion schemes.

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