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TMI Blog2024 (10) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... t be applicable to the application made by the petitioner on 01.07.2022 and the respondent No. 3 was required to consider the application for conversion of the shipping bills to drawback shipping bills as per the provision of Section 149 of the Customs Act without rejecting the same on the ground of limitation. The impugned order dated 19.04.2023 passed by the respondent No. 3 is hereby quashed and set aside. The matter is remanded back to the respondent to pass appropriate order to convert the shipping bills of the petitioner from 01.10.2017 to 13.03.2020 to drawback shipping bills while exercising its powers under Section 149 of the Customs Act, so that the petitioner becomes eligible for duty drawback as per Circular No. 88 of 2017. Petition allowed by way of remand. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Petitioner(s) No. 1 : Uchit N Sheth(7336). For the Respondent(s) No. 3 : Mr Siddharth H Dave (5306). ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Uchit Sheth for the petitioner and learned advocate Mr. Siddharth H. Dave for the respondents. 2. Rule returnable forthw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een struck down by this Court by the aforesaid order passed in case of Mahalaxmi Rubtech Ltd. (Supra). The petitioner has therefore preferred this petition. 7. Learned advocate Mr. Uchit Sheth for the petitioner submitted that subsequently by Notification no. 11 of 2022 dated 22.02.2022, the Ministry of Finance through Central Board of Indirect Taxes and Customs has framed regulations for shipping bill (post export conversion in relation to instrument base scheme) Regulations 2022 (for short the regulations ), which specifically provides that the regulation shall apply to shipping bills or bills of expense filed on or after date of publication of the regulations in the official gazette. 7.1. It was therefore submitted that the decision of this Court in case of Mahalaxmi Rubtech Ltd. (Supra) would prevail till coming into existence of the regulations with effect from 22.02.2022 and the respondent could not have rejected request of the petitioner to convert the shipping bills to drawback shipping bills relying upon para 3 (a) of the Circular dated 23.09.2010. 7.2. Learned advocate Mr. Uchit Sheth therefore submitted that prayer (a) made in this petition with regard to striking down t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an export promotion scheme claimed by the exporter has been denied by the DGFT/MoC I or Customs due to any dispute. 2. It has been represented to the Board that the norms for allowing conversion of shipping bills may be relaxed and the Commissioners should be allowed to consider requests for conversion of shipping bills from free to export promotion scheme and from one export promotion scheme to another on a case to case basis depending on the merits of the case. It has also come to notice of the Board that the Tribunals in a series of judgments have held that amendment to shipping bill after export of goods is governed by the proviso to section 149 of the Customs Act, 1962 and if the requirements of the said proviso are satisfied, conversion of shipping bill should be allowed, The conversion of the shipping bill from one scheme to another cannot be linked with denial of benefit of one scheme by DGFT/MoC l or Customs due to some dispute as no such condition for amendment of shipping bill has been provided in section 149 of Customs Act, 1962. 3. The issue has been re-examined in light of the above. It is clarified that Commissioner of Customs may allow conversion of shipping bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (3) of the Customs, Central Excise and Service Tax Drawback Rules, 1995. 5. Due care may be taken while allowing conversion to ensure that the exporter does not take benefit of both the schemes i.e. the scheme to which conversion is sought and the scheme from which conversion is sought. Whenever conversion of a shipping bill is allowed, the same should be informed to DGFT so that they may also ensure that the exporter does not take benefit of both the schemes. 6. This Circular supersedes the Board Circular No. 4/2004-Cus., dated 16-1-2004 and the earlier Circulars issued in the past on this issue. This circular shall be applicable only to shipping bills filed on or after the date of issuance of this Circular. Till such time as EDI system is modified to allow conversion of shipping bill in the EDI system, conversion may be allowed manually. 7. A suitable Public Notice for information of the Trade and Standing Order for guidance of the staff may be issued. Difficulties faced, if any in implementation of the directions may be brought to the notice of the Board. Kindly acknowledge receipt of this Circular. 15. We must now look into few provisions of the Customs Act, 1962. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to consider the very same issue at length. We quote the relevant observations: 20.6 Lastly, it was contended that section 149 of the Act does not provide for any period of limitation for amending the shipping bills. It was submitted that it was on account of the conduct of the respondent authorities in not deciding the issue in question that there was a delay in making the application for amendment of the shipping bills. It was, accordingly, urged that the petition deserves to be allowed by directing the respondents to amend the shipping bills by permitting the same to be converted into MEIS and grant the benefits thereof. 21. Opposing the petition, Mr. Nikunt Raval, learned senior standing counsel for respondents No. 2, 3 and 5, invited the attention of the court to the Foreign Trade Policy 2015-20, whereby the MEIS came to be introduced. It was submitted that one of the prerequisites for claiming benefits under the said scheme in respect of Non-EDI shipping bills has been provided in para 3.14 of the Handbook of Procedure to the Foreign Trade Policy 2015-20, which requires that all exporters, while filing export shipments under all categories of shipping bills, are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits under the scheme is not declared in the shipping bills, the necessary process required for clearing the goods will be missed out. 21.4 It was, accordingly, urged that the mandate of the Circular dated 23.09.2010 for making application for conversion of shipping bills within a period of three months from the date of the Let Export Order cannot be waived and that the applications filed beyond the period of limitation have rightly been rejected by the respondent authorities. It was, accordingly, urged that the petition, being devoid of merits, deserves to be dismissed. 22. Mr. Nirzar Desai, learned senior standing counsel for respondents No. 1, 4 and 6 submitted that the Customs Department is concerned with the amendment under section 149 of the Customs Act, 1962. It was submitted that the Circular dated 23.09.2010 provides that for the purpose of making amendment, the application should be made within a period of three months from the date of the Let Export Order. Referring to section 149 of the Act, it was submitted that the same permits the proper officer, in his discretion, to authorise any document, after it has been presented in the customs house to be amended. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewards under Merchandise Exports From India Scheme (MEIS) . Such declaration shall be required even for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP. (b) Whenever there is a decision during the financial year to include any new product/goods or new markets then to avail such rewards: (i) For exports of such products/goods, to such markets, a grace period of one month from the date of notification/public notice will be allowed for making this declaration of intent. (ii) After the grace period of one month, all exports (of such products/goods or to such markets) would have to include the declaration of intent on all categories of shipping bills. (iii) For exports made prior to date of notification/ public notice of products/markets, such a declaration would not be required since such exports would have already taken place. 24. On a plain reading of the provisions of para 3.14 of the Handbook of Procedure to Foreign Trade Policy 2015-20, it is apparent that the declaration of intent , in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of Non-EDI shipping bills, such declaration of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 01.06.2015, only those shipping bills, which are transmitted by Custom Authorities to DGFT, shall be considered under MEIS. Effect of this Public Notice: Shipping bills, where declaration of intent Y has not been marked and N has been ticked inadvertently in the reward item box while filing shipping bill in Customs for exports made between 1.4.2015 to 31.5.2015, shall be transmitted by CBEC to DGFT. 26. Vide Public Notice No. 47/2015-2020 dated 08.12.2015, the procedure prescribed vide Public Notice No. 40 dated 09.10.2015 has been extended beyond 31.05.2015 for the period from 01.06.2015 to 30.09.2015. 27. From the facts and contentions noted above, it emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No. 36/2010-Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of shipping bills from free to MEIS, whereafter, the petitioner applied for conversion of shipping bill. 31. Subsequently, vide communication dated 18/19.07.2017, the petitioner was informed that the shipping bills are required to be amended by the competent authority under section 149 of the Act and was requested to approach the proper officer of Customs under section 149 of the Act, whereupon the petitioner, on 01.08.2017, requested the competent authority to amend the shipping bills under section 149 of the Act at the earliest. 32. Thus, the respondents had not informed the petitioner immediately to get the shipping bills converted into one under the MEIS. It was only after a lot of inter se communication, that the petitioner was advised to get the shipping bills amended and converted to MEIS shipping bills. Upon the petitioner making such application for amendment, after prolonged inter se communications between the respondents as to who had the jurisdiction to decide said application, the same came to be turned down on the ground that the application for amendment had been made beyond three months as stipulated in Circular 36/2010-Customs dated 23rd September, 2010. 33. Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveal that the export goods are essentially agricultural produce and continued to be covered as an item eligible for benefit. At the time, just prior to 142008, the goods had been exported as free shipping bills. The exporter/appellant s fault here is that it did not file the requisite declaration. In all other respects, i.e. as to whether they conform to the description in the shipping documents and the value, etc. continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the customs authorities. 8. Having regard to these, we are of the opinion that in the peculiar circumstances of the case, the omission to file the declaration of the kind we are concerned with, when all other relative materials are present was not vital to the appellant s case. The material which did and does exist is substantial; the appellant should, therefore, be permitted to amend its shipping bill. The respondents are directed to give effect to this order within the next two months. The appeal is consequently allowed. 36. In the opinion of this court, the above decision would be squarely applicable to the facts of the present case. As is evident from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed and set aside. The respondents are directed to permit the petitioner to convert the shipping bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority. The respondents shall give effect to this order within two months from the date of receipt of copy of this order. Rule is made absolute accordingly, with no order as to costs. 22 In one of the recent pronouncements by a Coordinate Bench of this Court, in the case of M/s. Raj and Company vs. Union of India [Special Civil Application No. 17804 of 2019 decided on 8th February 2021], we find reference of M/s Gokul Overseas (supra). We quote the relevant observations: 11. This Court in case of Messrs Gokul Overseas (supra) was requested to direct the respondent to allow the benefits under the MEIS under five different applications and to accept the amendment in shipping bills with a declaration made by a separate communication. The petitioner was the partnership firm situated at Kandla Special Economic Zone and was engaged in the manufacturing of derivatives of Castor Oils and cleared its final product to export and was also a certified Three Star Export House. In MEIS, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 5 or Chapter 6 of FTP. (ii) Non-EDI Shipping Bills: In the case of non-EDI Shipping Bills, Export shipments would need the following declaration on the Shipping Bills in order to be eligible for claiming rewards under MEIS : We intend to claim rewards under Merchandise Exports From India Scheme (MEIS) . Such declaration shall be required even for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP. (b) Whenever there is a decision during the financial year to include any new product/goods or new markets then to avail such rewards: (i) For exports of such products/goods, to such markets, a grace period of one month from the date of notification/public notice will be allowed for making this declaration of intent. (ii) After the grace period of one month, all exports (of such products/goods or to such markets) would have to include the declaration of intent on all categories of shipping bills. (iii) For exports made prior to date of notification/ public notice of products/markets, such a declaration would not be required since such exports would have already taken place. 24. On a plain reading of the provisions of para 3.14 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g bills after electronic filing Of application to RA at the time of submission of application for MEIS rewards in these cases. RA shall grant MEIS rewards after examination of such shipping bills in accordance with other provisions of FTP/HBP. 4. From 01.06.2015, only those shipping bills, which are transmitted by Custom Authorities to DGFT, shall be considered under MEIS. Effect of this Public Notice: Shipping bills, where declaration of intent Y has not been marked and N has been ticked inadvertently in the reward item box while filing shipping bill in Customs for exports made between 1.4.2015 to 31.5.2015, shall be transmitted by CBEC to DGFT. 26. Vide Public Notice No. 47/2015-2020 dated 08.12.2015, the procedure prescribed vide Public Notice No. 40 dated 09.10.2015 has been extended beyond 31.05.2015 for the period from 01.06.2015 to 30.09.2015. 27. From the facts and contentions noted above, it emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No. 36/2010-Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndla, to allow benefits under the MEIS on the shipping bills in case the declaration of intent was not mentioned on exports made prior to 01.06.2015, whereupon the petitioner was advised/informed to comply with the amendment in the form of conversion of shipping bills from free to MEIS, whereafter, the petitioner applied for conversion of shipping bill. 31. Subsequently, vide communication dated 18/19.07.2017, the petitioner was informed that the shipping bills are required to be amended by the competent authority under section 149 of the Act and was requested to approach the proper officer of Customs under section 149 of the Act, whereupon the petitioner, on 01.08.2017, requested the competent authority to amend the shipping bills under section 149 of the Act at the earliest. 32. Thus, the respondents had not informed the petitioner immediately to get the shipping bills converted into one under the MEIS. It was only after a lot of inter se communication, that the petitioner was advised to get the shipping bills amended and converted to MEIS shipping bills. Upon the petitioner making such application for amendment, after prolonged inter se communications between the respondents as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents carried out thereto are per se not declaration of law but only impose conditions which are to be fulfilled and otherwise conform to the requirements of law. Without making a deeper analysis of these legal provisions, the facts of this case reveal that the export goods are essentially agricultural produce and continued to be covered as an item eligible for benefit. At the time, just prior to 142008, the goods had been exported as free shipping bills. The exporter/appellant s fault here is that it did not file the requisite declaration. In all other respects, I.e. as to whether they conform to the description in the shipping documents and the value, etc. continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the customs authorities. 8. Having regard to these, we are of the opinion that in the peculiar circumstances of the case, the omission to file the declaration of the kind we are concerned with, when all other relative materials are present was not vital to the appellant s case. The material which did and does exist is substantial; the appellant should, therefore, be permitted to amend its shipping bill. The respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exports made under such shipping bills. 38. In the light of the above discussion, the petition succeeds and is, accordingly, allowed. The impugned letter dated 11.02.2019 of the respondent No. 2, Under Secretary, Government of India, is hereby quashed and set aside. The respondents are directed to permit the petitioner to convert the shipping bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority. The respondents shall give effect to this order within two months from the date of receipt of copy of this order. Rule is made absolute accordingly, with no order as to costs. 12. The Court thus had recognised the fact that the eligibility of the petitioner to claim benefits under the MEIS scheme has not been questioned. The only hurdle was that the shipping bills were free shipping bills and there was no declaration of intent made. The petitioner needed to get the shipping bills amended by incorporating the declaration of intent as provided under the MEIS and it had taken aid of various circulars to allow that petition. 13. In the instant case, as noted hereinabove, there is no doubt with regard to the exports having been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has been taken recourse to by the petitioner does not prescribe any time limit. It is a discretion of the concerned officer, which can authorize any document after it has been presented in the Custom House to be amended. Of course, this has not to be amended after once the imported goods have been cleared for the home consumption and deposited in the warehouse where export goods have been exported, except on the basis of the documentary evidences, which are in existence at the time of the clearance, deposit or the export of the goods, as the case may be. In the electronic age, all procedures have been simplified and the EDI is essentially keeping pace with the electronic age. The simplification of this process shall have to be viewed for the benefit of the exporters for whose benefit the scheme has been brought by the Centre as availment of benefits is in no manner going to have any bearing adversely on the exchequer; And, even otherwise, it is essentially to avail the exporter the benefits prescribed under the MEIS that the request has been sent by the petitioner to make the same available to it. Therefore, it is also expected of the respondent authority to adopt an approach, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined, and such cases are covered under Rule 6. Where no All India rate of Drawback is determined in respect of any goods, the manufacturer/exporter has to apply within 3 months from the relevant date for fixation of Drawback rate in his individual case, and all the relevant facts including the proportion in which the materials or components or input services are used in the production or manufacture of goods and the duties paid on such materials or components or the tax paid on input services have to be submitted with such application as mandated under Sub Rule (1) of Rule 6. Thereafter, as laid down under Clause (b) of Rule 6(1), the proper Revenue Officer would make an enquiry and determine the amount or rate of Drawback in respect of such goods; which is the brand rate for that particular case. 26 Since the Petitioner M/s. Terra Films Pvt. Ltd. before the Delhi High Court was claiming Drawback at the brand rate, proper verification and enquiry into the raw materials, components and input services used by them and also the duties and taxes actually paid on such input transactions were required to be conducted. Only then, the brand rate of drawback could have been fixed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the goods were cleared for export. 28. The judgement of the Delhi High Court is for a case where the claim was for fixation of brand rate of Drawback and paying Drawback at special brand rate, and therefore, the denial of the exporter s claim in that case could be said to be in accordance with the Scheme of Section 149 of the Customs Act read with Rule 6 of the Drawback Rules. 29 The Delhi High Court has not followed the judgement in case of M/s. Terra Films Pvt. Ltd. while deciding a subsequent case of M/s. Kedia Agencies (P) Ltd. reported in 2017 (348) ELT 634 (Del.); and it is observed at para 7 of judgement in Kedia Agencies (P) Ltd. as under:- at the time, just prior to 1.4.2008, the goods had been exported as free shipping bills. The exporter/appellant s fault here is that it did not file the requisite declaration. In all other respects, i.e. as to whether they conform to the description in the shipping documents and the value etc., continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the Custom authorities. 30 This latter judgment in Kedia Agencies (P) Ltd. referred to above has been considered by this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 01.07.2022 23.08.2022 under which request to covert the shipping bill filed during 01.10.2017 to 31.03.2020 from EPCG/Free to DBK Shipping Bills. In this regard it is to inform that the request for conversion of the above said Shipping Bills (list attached with your letter dated 01.07.2022 as annexure-A, B C) has been rejected by the Competent Authority as you have not applied for the said conversion within the prescribed time limit as stipulated in Para 3 (a) of Circular No. 36/2010-Customs dated 23.09.2010. This is for your information please. 12. The aforesaid communication clearly shows that the respondent No. 3 has ignored the binding decision of this Court. 13. Moreover, the regulations have come into effect from 22.02.2022 with prospective effect as stated in the regulation No. 1, which reads as under: 1. Short title and commencement- (1) These regulations may be called the Shipping Bill (Post export conversion in relation to instrument based scheme) Regulations, 2022. (2) They shall come into force on the date of their publication in the Official Gazette. (3) These regulations shall apply to shipping bills or bills of export filed on or after the date of publication of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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