2025 (1) TMI 84 - AT - Customs

100% EOU - request for conversion of shipping bills from EOU to DEPB and drawback scheme - rejection of request for conversion on the ground that when the export has taken place under shipping bill mentioning EOU, the final de-bonding was not completed, the final de-bonding was completed only on 21.01.2010 - Applicability of Section 149 of the Customs Act, 1962 - Learned Commissioner while rejecting request for conversion neither issued any show cause notice nor granted any personal hearing - violation of principles of natural justice. Violation of principles of natural justice - HELD THAT - The decision taken for rejecting the conversion from EOU shipping bill to DBK/DEPB shipping bill is absolutely in gross violation of natural justice. Therefore the said decision is liable to be set aside on this ground alone. However, this Tribunal being a final fact finding authority considered the fact of the present case and it is found that there is no dispute that the appellant have been paying duty on all their clearances after debonding and also paid the duty on the closing stock, therefore all the goods cleared for export suffered the duty on the inputs raw material in process material therefore the appellant were clearly eligible for conversion of shipping bill from EOU to DBK/DEPB scheme. There is no fault on the part of the appellant in filling the EOU shipping bill for the reason that though the appellant had discharged all the duties and started paying duty for the subsequent clearances but since they were not given the final NOC, they could not have filed DBK/DEPB shipping bill. Therefore in these circumstances there are no reason for denying the conversion of EOU shipping bill to DBK/DEPB shipping bill. Applicability of Section 149 of the Customs Act, 1962 - HELD THAT - From the section 149, it is clear that the only condition to be fulfilled for conversion is that at the time of export the documentary evidence should be existed on the basis of which the conversion can be made. In the present case there is no dispute that the export of the goods have been made out of duty paid inputs and the EOU shipping bill was filed for want of final NOC. Therefore in this case the appellant s case is clearly covered by Section 149 of the Customs Act, 1962. Thus, the appellant is legally entitled for conversion of EOU shipping bill to DBK/DEPB shipping bill. Conclusion - i) The decision taken for rejecting the conversion from EOU shipping bill to DBK/DEPB shipping bill is absolutely in gross violation of natural justice. ii) In the present case there is no dispute that the export of the goods have been made out of duty paid inputs and the EOU shipping bill was filed for want of final NOC. Therefore in this case the appellant s case is clearly covered by Section 149 of the Customs Act, 1962. The decision of the Commissioner rejecting the conversion of EOU shipping bill to DBK/DEPB shipping bill is set aside - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the appellant's request for conversion of shipping bills from EOU to DBK/DEPB scheme should be granted.
• Whether the refusal to convert the shipping bills violated principles of natural justice due to lack of show cause notice and personal hearing.
• Whether the appellant fulfilled the conditions under Section 149 of the Customs Act, 1962 for amendment of shipping bills.
• Whether the appellant is entitled to DEPB and drawback benefits despite the abolition of the DEPB scheme.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Conversion of Shipping Bills

• Relevant Legal Framework and Precedents: The appellant sought conversion under Section 149 of the Customs Act, 1962, which allows amendments to documents post-export based on existing documentary evidence. Relevant judgments included those from various High Courts and CESTAT decisions supporting the appellant's position.
• Court's Interpretation and Reasoning: The tribunal noted that the appellant paid all duties post-debonding, and the goods exported were duty-paid. The tribunal found no fault in the appellant filing EOU shipping bills due to the absence of a final NOC.
• Key Evidence and Findings: The appellant had discharged all duties and was eligible for conversion as the exports were made with duty-paid inputs.
• Application of Law to Facts: The tribunal applied Section 149, noting the existence of necessary documentary evidence at the time of export, thus fulfilling the conditions for conversion.
• Treatment of Competing Arguments: The tribunal dismissed the Revenue's arguments due to the lack of procedural fairness and found the appellant's reliance on precedents persuasive.
• Conclusions: The tribunal concluded that the appellant was eligible for the conversion of shipping bills from EOU to DBK/DEPB scheme.

Issue 2: Violation of Natural Justice

• Relevant Legal Framework and Precedents: The principles of natural justice require a fair hearing, including issuing a show cause notice and providing an opportunity for a personal hearing.
• Court's Interpretation and Reasoning: The tribunal found that the Commissioner's decision lacked procedural fairness as no show cause notice was issued, nor was a personal hearing granted.
• Key Evidence and Findings: The tribunal noted the absence of procedural steps typically required in such cases.
• Application of Law to Facts: The tribunal applied the principles of natural justice, finding the process followed by the Commissioner deficient.
• Treatment of Competing Arguments: The tribunal found the appellant's argument regarding the violation of natural justice compelling and unchallenged.
• Conclusions: The tribunal set aside the Commissioner's decision on the grounds of procedural unfairness.

Issue 3: Entitlement to DEPB and Drawback Benefits

• Relevant Legal Framework and Precedents: The DEPB scheme was abolished, but the appellant argued for benefits accrued before its abolition. Relevant precedents included decisions where benefits were granted despite scheme changes.
• Court's Interpretation and Reasoning: The tribunal recognized the appellant's accrued benefits under the DEPB scheme at the relevant time.
• Key Evidence and Findings: The tribunal noted the appellant's compliance with the necessary conditions for DEPB and drawback benefits.
• Application of Law to Facts: The tribunal applied the principle that accrued benefits should be honored despite subsequent policy changes.
• Treatment of Competing Arguments: The tribunal found the appellant's reliance on precedents persuasive and did not find the Revenue's arguments sufficient to deny the benefits.
• Conclusions: The tribunal concluded that the appellant was entitled to the DEPB and drawback benefits accrued before the scheme's abolition.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The decision taken for rejecting the conversion from EOU shipping bill to DBK/DEPB shipping bill is absolutely in gross violation of natural justice."
• Core Principles Established: The tribunal reinforced the importance of procedural fairness and the right to accrued benefits under existing schemes.
• Final Determinations on Each Issue: The tribunal set aside the Commissioner's decision, allowing the conversion of shipping bills and recognizing the appellant's entitlement to DEPB and drawback benefits.

The tribunal's decision emphasized adherence to procedural fairness and the honoring of accrued benefits under existing legal frameworks, setting a precedent for similar cases in the future.