2004 (8) TMI 263 - AT - Customs

Eligibility of converting free shipping bills into DFRC shipping bills - HELD THAT - In view of the clarification issued by the Board vide Circular No. 40/03-Cus. the conversion has to be permitted on merits on case to case basis subject to fulfilment of all the conditions. In the impugned order the Adjudicating Authority has not made any mention about the condition which was included vide Circular No. 40/03-Cus. which goes to show that there was no violation of the said condition relating to availment of the benefit of any Export Promotion Scheme. We find force in the submissions of the learned Advocate that they are not claiming DFRC benefit in respect of inputs like lime stone silica and laterite and accordingly the fact that they are not covered by SION entry is not material. They have also given up their claim in respect of bauxite. It is not disputed by the Revenue that coal, magnesite refractory bricks and furnace oil find mention in SION at Serial No. 1030 and as such condition No. (a) of the circular dated 28-1-03 stands complied with. The condition No. (b) also stands satisfied as the fact of export of clinker is not in dispute. As far as condition No. (c) is concerned, it has been mentioned by the Adjudicating Authority himself in the impugned order that Mundra Port is the notified Port. Accordingly, exports made through Mundra Port which is notified, are eligible for DFRC benefit. We however, agree with the learned D.R. that Jakhao Port, which has been notified subsequent to the export made by the appellants, the benefit of DFRC will not be available in respect of such shipping bills. We allow conversion of free shipping bills into DFRC shipping bills in respect of which goods were exported through Mundra Port. The appellants are not eligible for conversion of free shipping bills into DFRC shipping bills where the goods were exported through Jakhao Port. The appeal is, thus, partly allowed.

Summary

Issues involved: Eligibility of converting free shipping bills into DFRC shipping bills.

Summary:
The appeal filed by M/s. Sanghi Industries Ltd. raised the issue of whether they are entitled to convert their free shipping bills into DFRC shipping bills. The appellants had exported rotary kiln clinker under free shipping bills and later requested conversion to DFRC shipping bills. The Commissioner of Customs rejected their request citing reasons such as fuel and coal not being covered under DFRC and bauxite not meeting SION entry specifications. The appellants argued that furnace oil and coal are covered under DFRC, and they fulfilled the conditions specified in Circular No. 6/03-Cus. They also referred to a previous Tribunal decision allowing such conversions without proving coercion by Customs. Ultimately, the Tribunal allowed the conversion of free shipping bills into DFRC shipping bills for exports made through Mundra Port but not for exports through Jakhao Port, partly allowing the appeal.

The Board's circulars clarified the conditions for allowing conversion of shipping bills, emphasizing the need to prove the use of inputs, export of the product under relevant SION, and fulfillment of all Scheme conditions. The Tribunal's interpretation in a previous case highlighted that conversion into DFRC shipping bills can be permitted without proving coercion by Customs. In the present case, the appellants filed free shipping bills to expedite exports and later sought conversion to DFRC shipping bills. The Tribunal noted that the conditions specified in Circular No. 40/03-Cus. were not violated, and the appellants were not claiming DFRC benefit for certain inputs. The Tribunal found that conditions (a) and (b) of the circular dated 28-1-03 were met, as the use of coal, magnesite refractory bricks, and furnace oil was certified, and the export of clinker was established. Regarding condition (c), the Tribunal observed that exports through Mundra Port, a notified port, were eligible for DFRC benefit, while exports through Jakhao Port were not eligible. Consequently, the Tribunal partly allowed the appeal, permitting conversion for exports through Mundra Port but not for exports through Jakhao Port.