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TMI Blog2024 (8) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... HAT:- A discretionary power to allow also carries with it the power not to allow, based on the facts and circumstances of the issue at hand. It is to be stated that the power under Section 149 of CA 1962 involves exercise of discretion, the scope of review during appeal in such a case is to examine if the discretion has been rightly exercised and that it is not based on irrelevant materials and is fair and reasonable in the circumstances. The Hon ble Supreme Court in its judgment in the case of STATE OF ORISSA ORS. VERSUS MD. ILLIYAS [ 2005 (11) TMI 469 - SUPREME COURT] held that a decision is a precedent on its own facts. It is not everything said in a judgment that constitutes a precedent. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent. Section 149 is a discretionary provision which gives the power to the proper officer to authorise any document, after it has been presented in the custom house to be amended, under certain restrictions and conditions, if he so deems fit. It is not an exclusive provision for the conversion of one type of SB into another. Amendment from one SB type to another cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjective satisfaction by the proper officer could have been achieved only by physical examination cannot be a matter of challenge so long as the use of discretion is not perverse etc. - No such allegation is made by the appellant whose main grouse is only the use of discretion by the proper officer resulted in him wanting to examine the goods. In the case of WB. ELECTRICITY REGULATORY COMMISSION VERSUS CESC. LTD. ETC. [ 2002 (10) TMI 772 - SUPREME COURT] the Hon ble Apex Court has held that the rule of prudence in law is that the appellate power is not to be exercised for the purpose of substituting one subjective satisfaction with another, without there being any specific reason for such substitution. Whether non-declaration of 'drawback' claim on the Shipping Bill as required under Rule 4 of Drawback Rules cannot be a basis for rejecting Appellant's request for conversion of Shipping Bills? - HELD THAT:- The object and purpose of the procedure laid down is to ensure that the Customs department is made aware that the SB involves the payment of drawback and the goods can be subject to checks as felt necessary. Since the object of the rule would be defeated by non-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that upon sample testing of the subject goods, the goods were found defective, and the entire lot was returned to the supplier vide the Impugned three SB s. The invoices were endorsed stating that the subject goods got rejected and are being returned to the consignee on non-replacement and non-returnable basis . They duly reversed the input tax credit availed by them on the IGST paid on the subject goods and the time of import so as to seek drawback. At this stage, they realised that the impugned Shipping Bills were filed inadvertently under Code 99 [No Foreign Exchange Involved ( NFEI)] instead of under Code 19 [Shipping Bill for Duty Drawback] for claiming drawback of duty. Therefore, the appellant filed three applications dated 20.09.2022, seeking amendment of the impugned shipping bills, viz., conversion of NFEI shipping bills into drawback shipping bills. However, the Ld. Commissioner of Customs (Chennai-II), Imports has passed the impugned order rejecting the appellant's application for conversion of NFEI shipping bills to drawback shipping bills. The Ld. Counsel has stated that, A. The impugned shipping bills are eligible for conversion into drawback shipping bills und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed a detailed order rejecting the appellants request which is based on the Act and Rules. As per Section 74 of the CA 1962, 1962, duty needs to be repaid as drawback only when any goods which have been imported are capable of being easily identified and upon which any duty has been paid on importation and have entered for export and the proper officer makes an order for clearance of such goods under Section 51. Export goods are thus required to be identified to the satisfaction of AC/DC as the goods which were imported. It remains undisputable fact that the Exporter has contravened above statutory conditions. He further submitted that the exporter shall at the time of export of the goods state on the shipping bill, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback under section 74 and make a declaration on the relevant shipping bill to that effect. He referred to para 4 of Circular No. 36/2010-Customs dated 23.09.2010 dealing with conversion of free shipping bills to export promotion scheme shipping bills and conversion of shipping bills from one scheme to another which is reproduced below: 4. Free ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute makes it clear that the Act itself differentiates between simple re-export to re-export in which drawback is allowable. Statutory provisions have been contravened. Rules made by the Central Govt in exercise of the powers conferred by section 74 of the CA 1962, 1962 namely Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 have been contravened. In view of above submissions and case records, the case may be decided on merits and the appeal rejected. 4. We have carefully gone through the appeal papers and have heard the rival parties. Before examining the rival contentions, it would be fruitful to reproduce the relevant portion of the impugned order for easy reference. 8.1 With regard to the issue, whether drawback under section 74 of the Customs Act, 1962 can be allowed based on the document and evidences available on record, I find that a combined reading of the legal stipulations enumerated in para 4 above, and the compliance by the exporter / importer leads to the short conclusion that in case of a claim for drawback on re-export of imported goods, the goods should necessarily be subjected to physical examination to establish their identity and use. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion has been exercised in an illegal manner or on wholly untenable grounds or is arbitrary or perverse. We shall now take up the issues raised by the appellant sequentially. 5. Shipping Bills are eligible for conversion into drawback shipping bills under Section 149 of the CA 1962. 5.1 The appellant has relied upon the following judgments in this regard to state that conversion of a SB is permissible, even if the goods exported were not physically examined by the Department. a. Hindustan Unilever v. UOI [2021 (49) G.S.T.L. 292 (Mad.)] b. Hewlett Packard Enterprise India (P) Ltd v. Jt Commissioner of Customs [2021 (375) E.L.T. 488 (Mad.)] c. M/s. Summer India Textile Mills P. Ltd. v. Commissioner of Customs, Tuticorin, 2022 (2) TMI 101-CESTAT CHENNAI d. Carboline India Pvt. Ltd. v. Commissioner of Customs, Chennai-IV, 2022 (381) ELT 397 (Tri. Chennai) e. M/s. Autotech Industries (India) Pvt. Ltd. v. Commissioner of Customs Chennai IV Commissionerate, 2021 (11) TMI 518- CESTAT CHENNAI f. Indian Oil Corporation Ltd. v. CC, Tuticorin, 2023 (12) TMI 576- CESTAT CHENNAI. Each case presents its own features. A discretionary power to allow also carries with it the power not to allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the proper officer to authorise any document, after it has been presented in the custom house to be amended, under certain restrictions and conditions, if he so deems fit. It is not an exclusive provision for the conversion of one type of SB into another. Amendment from one SB type to another cannot be claimed as a matter of right. Further no formal request for an amendment of the SB s under section 149 of CA 1962, as is being pleaded now, appears to have been made. That technicality however need not detain us as a disqualification, but is useful in understanding the action that followed. 6. The question whether the subject goods were the same goods that were re-exported vide the impugned Shipping Bills, are not relevant for permitting the conversion of the impugned Shipping Bills. 6.1 We find from the appellants letter dated 01/11/2022 addressed to the Commissioner of Customs that the appellant had initially approached the Customs department requesting for cancellation of Let Export Order (LEO) and amending the impugned shipping bill under section 74 of CA 1962, but they were informed that the shipping bill had moved to history in the computer system and hence it could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of the Circular. The judgment held para 3(a) 0f the circular to be ultra vires of section 149 of CA 1962. The facts of the case are distinguished as discussed below. 7.2 Circular No. 36/2010 in as much as it relates to the facts in issue in this matter, does not seek to prescribe any additional conditions above that which is prescribed in the Act. Section 74 of CA 1962, permits the payment of drawback only if the goods are capable of being easily identified to the satisfaction of the AC / DC of Customs as the goods on which duty has been paid on importation. As stated in Circular No. 46/2011- Customs dated 20.10.2011, this includes but is not limited to physical properties, weight, marks and numbers, test report if any, document evidence vis- -vis import documents etc. In short, to identify goods as being the same at the time of export as they were at the time of import, requires it to be (i) same in nature/ physical identity, (ii) quantity and (iii) state of use / quality (new / old etc). The identity, quantity and quality of goods are not capable of being ascertained by examining the paperwork alone and requires physical examination of the consignment. Unscrupulous traders ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial and economic interest of the country. Administrative Instructions/ Circulars help in achieving uniformity, predictability, removal of ambiguity, cost saving and provides a level playing field for the trade on the one hand, while putting a check on blame worthy conduct on the other. In Sant Ram Vs State of Rajasthan, [AIR 1967 SC1910], a Constitution Bench of the Supreme Court has held that statutory rules cannot be amended by Executive instructions but if the rules are silent on any particular point, Government can fill up the gaps by issuing executive instructions, in conformity with the existing rules. The relevant portion is extracted below; We proceed to consider the next contention of Mr. N.C. Chatterjee that in the absence of any statutory rules governing promotions to selection grade posts the Government cannot issue administrative instructions and such administrative instructions cannot impose any restrictions not found in the Rules already framed. We are unable to accept this argument as correct. It is true that there is no specific provision in the Rules laying down the principle of promotion of junior or senior grade officers to selection grade posts. But that does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper officer could have been achieved only by physical examination cannot be a matter of challenge so long as the use of discretion is not perverse etc. No such allegation is made by the appellant whose main grouse is only the use of discretion by the proper officer resulted in him wanting to examine the goods. In the case of West Bengal Electricity Regulatory Commission v. Cesc Ltd. [(2002) 8 SCC 715 / (2002) 7 Scale 217] the Hon ble Apex Court has held that the rule of prudence in law is that the appellate power is not to be exercised for the purpose of substituting one subjective satisfaction with another, without there being any specific reason for such substitution. 9. Non-declaration of 'drawback' claim on the Shipping Bill as required under Rule 4 of Drawback Rules cannot be a basis for rejecting Appellant's request for conversion of Shipping Bills 9.1 For a better understanding of the averments made by the appellant, Rule 4 is reproduced below; Rule 4. - Statements/Declarations to be made on exports other than by post.- In the case of exports other than by post, the exporter shall at the time of export of the goods (a) state on the shipping bill or bill of expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCR 679(CB)], the Hon ble Apex Court observed as under: Rules made under a statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be judicially noticed for all purposes of construction or obligation: see Maxwell On the Interpretation of Statutes , 10th edn., pp. 50-51. The proverb trust but verify is a salutary one and adherence to it by statutory authorities helps to ensure that they discharge their fiscal responsibilities with due care and diligence. The use by the proper officer of his discretion to satisfy himself of the identity of the goods by physical examination is well within the provisions of law and cannot be faulted. 10. The Appellant submits that the declaration claiming drawback was inadvertently not made by them in the impugned Shipping Bills, which can be cured as held by the Hon'ble Karnataka High Court in Carl Zeiss case (supra). 10.1 Proviso to Rule 4(a) of the Drawback Rules allows the Commissioner of Customs to exempt an exporter or his authorized agent who has failed to comply with the provisions of this clause from its provisions, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a majority of 8:1. As per the majority decision, the language of the statute could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters. This is a bar upon a bar and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Central Excise Act 1944. (Section 27 in the case of a refund under the Customs Act 1962). Hence any claim for refund of customs duties has to be made as per the provisions of section 27 of CA 1962. 12. Having regard to the discussions above we find that the exercise of discretion by the original / proper authority is fair and reasonable. Neither has the appellant alleged or brought out any perversity or irrationality in the use of such a discretion. Hence the decision does not require any substitution just because the appellant feels ..... X X X X Extracts X X X X X X X X Extracts X X X X
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