2017 (9) TMI 1505 - AT - Customs

Conversion of shipping bills - whether conversion of Free Shipping Bills into DEPB shipping bills as requested by the Appellant in their respective letters, be allowable or otherwise? - Held that - the principle relating to allowing conversion of free shipping bill into DEPB, DFRC etc. shipping bill and from one promotion scheme to another promotion scheme has been laid down by the Hon ble Delhi High Court in the case of Terra Films Pvt. Ltd. v. C.C. 2011 (4) TMI 13 - DELHI HIGH COURT . Their Lordships after considering the Board s Circular No.4/2004 dated 16.1.2004, observed that amendment of the shipping bill after the goods have been exported, cannot be considered as mere amendment, when the request is for conversion of free shipping bills into DEPB or for conversion of shipping bills from one export scheme to another. It is, therefore, clarified that conversion of free shipping (B) bills into Advance Licence/DEPB/DFRC shipping bills should not be allowed. As regards permitting conversion of shipping bills from one export promotion scheme to another is concerned, it is clarified that such conversion should only be allowed where the benefit of an export promotion scheme claimed by the exporter has been denied by DGFT/MOC or Customs due to any dispute. The appellants had applied for conversion of free shipping bills into DEPB Shipping Bills much after the export of goods. Also, at the time of clearance of the goods it was specifically not disclosed in the free shipping bills nor in the ARE-1 export document by declaring thereunder, specifically their intention to claim any of the export benefit i.e. benefit under DEPB scheme, therefore, the consignment was not opened for physical examination by the Customs and the export was allowed. Hence, it is difficult to appreciate the argument of the appellant that it was a question of mere amendment to the shipping bills, which is contrary to the Circular No.4/2004 dated 16.1.2004 issued by the Board and was in force during the relevant time. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Conversion of Free Shipping Bills into DEPB Shipping Bills.
2. Application of Section 149 of the Customs Act, 1962.
3. Compliance with Board's Circular No. 4/2004 dated 16.1.2004.
4. Physical examination and verification of export goods.

Detailed Analysis:

1. Conversion of Free Shipping Bills into DEPB Shipping Bills:
The core issue in these appeals was whether the conversion of Free Shipping Bills into DEPB Shipping Bills, as requested by the Appellant, should be allowed. The appellants argued that such conversion should be permitted based on the same set of export documents under Section 149 of the Customs Act, 1962. The Revenue contended that the conversion could not be accepted due to the difficulty in correlating the exported items with the imported items, as there had been no physical examination of the goods at the time of export.

2. Application of Section 149 of the Customs Act, 1962:
Section 149 of the Customs Act, 1962, permits the amendment of documents after they have been presented in the customs house, provided such amendments are based on documentary evidence existing at the time of export. The Hon’ble Delhi High Court in Terra Films Pvt. Ltd. v. C.C. emphasized that such amendments cannot be considered mere amendments when converting from one export scheme to another. The conversion requests must be made within one month of the denial/rejection of the benefit claimed and must be supported by satisfactory documentary evidence.

3. Compliance with Board's Circular No. 4/2004 dated 16.1.2004:
The Board's Circular No. 4/2004 specifies that conversion of free shipping bills into DEPB/DFRC shipping bills should not be allowed routinely. Conversion is only permissible where the benefit of an export promotion scheme claimed by the exporter has been denied due to a dispute, and even then, it is subject to strict conditions, including timely requests and satisfactory documentary evidence. The Hon’ble Madras High Court in Areva T & D India Ltd. highlighted that such conversions should not be routine and must be based on contemporaneous documentary evidence to prevent double benefits.

4. Physical examination and verification of export goods:
The judgment stressed the importance of physical examination and verification of export goods by Customs to qualify for benefits under different export schemes. The Commissioner and CESTAT found that the conversion request made by the appellants was not merely an amendment but a significant change in the status and character of the documents, which was not feasible after a considerable delay and without physical verification.

Conclusion:
The Tribunal upheld the decisions of the lower authorities, concluding that the appellants' request for conversion of free shipping bills into DEPB shipping bills could not be allowed. The appeals were dismissed on the grounds that the appellants did not meet the stringent requirements set forth in Section 149 of the Customs Act and the Board's Circular No. 4/2004. The judgment emphasized that such conversions are not a matter of right and must be supported by contemporaneous documentary evidence and timely requests, along with the necessity of physical verification of the goods by Customs.