2014 (5) TMI 635 - AT - Customs

Conversion of free shipping bills to drawback shipping bills - Whether the appellant s application for conversion of free shipping bills into drawback shipping bills needs to be allowed or otherwise, when such application is made after the goods were exported - Held that - documents relating to the exports i.e. invoice, shipping bills, Bills of lading and the bank realization certificate clearly indicate that the goods were exported and said goods were described in documents as furnace oil . It is also undisputed that the appellant was exporting the said goods and subsequently the specific brand rate was fixed for the appellant s goods i.e. furnace oil. Documents like ARE-1, Bills of Lading, shipping bills specifically were signed by the Customs officers clearly indicate that the goods which were cleared for export was furnace oil - CBEC vide Circular No.25/2005/Cus, has specifically not accepted the representation of the Trade and the recommendations of the conference of the Chief Commissioners that the manufacturer/exporter s in-house quality control results can be relied upon if the said manufacturers/exporters are awarded with ISO 9000 series certificate. In our view, non-production of appellant s in-house certificate, may not have any bearing on the outcome of the case in as much as there is no contest to the certificate issued by M/s Geochem laboratory who are one of the Government of India s recommended and authorized analytical laboratories. - No reason why the benefit of said circular be not extended to cover the case of the appellant in seeking conversion of free shipping bills into drawback shipping bills, when there is a unimpeachable evidence of export of the furnace oil If the duty drawback is not allowed to the appellant, the appellant is perforce required to export the taxes, which gets included in the FOB value. In our view, this being not the intention, conversion of free shipping bills into drawback shipping bills needs to be allowed - Decided in favour of assessee.

Issues Involved:
1. Conversion of free shipping bills into drawback shipping bills.
2. Interpretation of Section 149 of the Customs Act, 1962.
3. Relevance of CBEC Circular No. 25/2005-Cus.
4. Validity of evidence from independent laboratories for export verification.
5. Applicability of previous judgments and circulars in similar cases.

Detailed Analysis:

1. Conversion of Free Shipping Bills into Drawback Shipping Bills:
The primary issue in this case is whether the appellant's application for converting free shipping bills into drawback shipping bills should be allowed, despite being made post-export. The appellant had initially filed free shipping bills for exporting furnace oil, later seeking conversion to claim duty drawback benefits. The adjudicating authority rejected the application, citing Section 149 of the Customs Act, 1962, and a CBEC circular, arguing that the conversion is not permissible after export without proper verification.

2. Interpretation of Section 149 of the Customs Act, 1962:
The appellant argued that Section 149 allows amendments to shipping bills based on documentary evidence existing at the time of export. The Tribunal found that the documents, such as ARE-1, Bills of Lading, and shipping bills signed by Customs officers, clearly indicated the export of furnace oil. Thus, the Tribunal concluded that Section 149 supports the conversion of shipping bills if documentary evidence from the time of export is available.

3. Relevance of CBEC Circular No. 25/2005-Cus:
The appellant contended that the CBEC Circular No. 25/2005-Cus permits reliance on in-house quality control results if the exporter has an ISO 9000 series certificate. The Tribunal noted that while the appellant did not produce an in-house certificate, the certificate from M/s Geochem Laboratory, a Government of India-authorized laboratory, was sufficient. The Tribunal extended the benefit of the circular to the appellant, emphasizing the unimpeachable evidence of furnace oil export.

4. Validity of Evidence from Independent Laboratories for Export Verification:
The Tribunal accepted the analytical reports from M/s Geochem Laboratory, which confirmed the export of furnace oil. The Departmental Representative's argument that no samples were drawn by Customs was dismissed, as the independent laboratory's reports were deemed reliable. The Tribunal emphasized that the CBEC circular allows reliance on quality control results from authorized laboratories.

5. Applicability of Previous Judgments and Circulars in Similar Cases:
The Tribunal referenced its own previous decision in the appellant's case, where conversion of free shipping bills to drawback shipping bills was allowed. It also cited the High Court of Mumbai's judgment in Repro India Ltd., which stated that the government's intention is to export goods, not taxes. The Tribunal found no reason to deviate from its earlier decision and noted that the Delhi High Court's judgment in Terra Films Pvt. Ltd. was not applicable, as it involved different facts and lacked supporting evidence at the time of export.

Conclusion:
The Tribunal set aside the adjudicating authority's order and directed the lower authorities to convert the appellant's free shipping bills into drawback shipping bills. The appeal was allowed, emphasizing that the documentary evidence and independent laboratory reports substantiated the appellant's claim for conversion. The Tribunal's decision was based on a thorough interpretation of Section 149, relevant CBEC circulars, and previous judicial precedents.

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