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Diamond Engg. (Chennai) P. Ltd. v. C.C, (Seaport-Export), Chennai
Summary of Opinion
Factual and Procedural Background
The appellants challenged an order rejecting their request to convert Shipping Bill No. 3780220 dated 11-6-2010 from the Advance Licence Scheme to the DEPB Scheme. The shipment concerned exported "fabricated steel hardware structure" by M/s. Mesto Minerals (India) Pvt. Ltd., Mumbai to a customer in Brazil, under Advance Licence No. 0410091384 dated 5-7-2007, with M/s. Diamond Engineering (Chennai) Pvt. Ltd. (the appellants) as third party exporter. On 27-7-2011 the appellants applied for conversion on the ground that the shipping bill was wrongly filed under the Advance Licence Scheme due to wrong communication from their customer and that no export benefit had been availed under that shipping bill. They also stated delay was caused by the time taken for original documents to be brought from Brazil. The adjudicating authority rejected the conversion request primarily on the grounds that Circular No. 36/2010-Cus., dated 23-9-2010 was inapplicable (the shipping bill pre-dated the circular), that the request was made after more than one year whereas the circular prescribed three months, and that no documentary evidence existing at the time of export had been furnished. The appellants appealed that order to the Tribunal.
Legal Issues Presented
- Whether conversion of a shipping bill filed under the Advance Licence Scheme to the DEPB Scheme can be authorized under Section 149 of the Customs Act, 1962, and whether Board's Circular No. 36/2010-Cus., dated 23-9-2010 applies to the shipping bill in question.
- Whether the conversion request is barred by limitation (the relevance of a one-year lapse or the three-month period mentioned in Circular No.36/2010-Cus.), and if Section 149 prescribes any time-limit for amendment of shipping bills after export.
Arguments of the Parties
Appellants' Arguments
- Due to wrong communication by their customer, the shipping bill was filed under the Advance Licence Scheme even though export against that Advance Licence had already been discharged in May 2009; hence the shipping bill should be converted to DEPB Scheme.
- They relied on Board's Circular No. 36/2010-Cus., dated 23-9-2010, arguing it is beneficial and should be applied retrospectively (relying on Estocorp India P. Ltd. v. Union of India (Del.)). They submitted conversion is permissible under that Circular and Section 149 of the Customs Act, 1962.
- Section 149 imposes no time-limit for amendment; therefore the appellants are entitled to conversion even though the request was made after more than one year.
- Documents supporting the amendment were available at the time of export and the discretion under Section 149 should have been exercised judiciously in their favour; several Tribunal and High Court decisions were relied upon to support convertibility.
Respondent's (SDR) Arguments
- The adjudicating authority had considered Circular No. 36/2010-Cus. but rejected the conversion as time-barred, relying on the High Court decision in M/s. Terra Films Pvt. Ltd. v. Commissioner of Customs (2011-TIOL-215-HC-DEL-Cus.).
- The SDR also relied on Tribunal decisions including M/s. Bharat Fritz Werner Ltd. v. Commissioner of Customs (Export), Nhava Sheva (Tri.-Mumbai) and M/s. Activas Pharma Manufacturing Pvt. Ltd. v. Commissioner of Customs, Chennai (Tri.-Chennai) to support the time-bar/denial stance.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Estocorp India P. Ltd. v. Union of India (Del.) | The appellants invoked this case to support the proposition that a beneficial circular may be applied retrospectively. | The appellants relied on this authority; the opinion records that the appellants invoked it but does not separately elaborate on the court's independent application of this case. |
| Commissioner of Central Excise, Nhava Sheva v. Crest Chemicals (2009-TIOL-2125-CESTAT-MUM) | The appellants cited this Tribunal decision to support exercise of discretion under Section 149 (as per the appellants' submission). | The opinion notes reliance by the appellants on this decision; the court did not set out further detail of the rule from this case beyond recording the reliance. |
| Leotex v. Union of India (Ker.) | Used to support the proposition that conversion from one export promotion scheme to another is permissible and that entitlement to duty drawback may follow such conversion. | The court quoted and relied on decisions of this character (including Leotex) as supporting the applicability of Circular No.36/2010-Cus. and permissibility of conversion. |
| Commissioner v. Amritsar Swadesh Textile Corpn. P. Ltd. (Kar.) | Cited by appellants among authorities supporting conversion permissibility. | The opinion records reliance but does not elaborate a specific rule from this case; it is relied upon collectively to support conversion permissibility. |
| Commissioner of Customs v. Man Industries (I) Ltd. (Bom.) | Cited by the appellants as one of the authorities supporting conversion/amendment under applicable law. | The opinion records this citation; no separate exposition of the principle from this case is provided in the text. |
| Terra Films Pvt. Ltd. v. Commissioner of Customs, New Delhi (Tri.-Del.) and M/s. Terra Films Pvt. Ltd. v. Commissioner of Customs (2011-TIOL-215-HC-DEL-Cus.) (Del.) | The High Court decision is cited for the proposition that conversion/amendment of a shipping bill after export may be denied where goods have been exported long ago and documentary verification/physical examination is impossible — the High Court upheld denial where conversion was sought after more than one year and verification was infeasible. | The SDR relied on Terra Films to support denial as time-barred. The court examined the Terra Films decision in detail, found its time-limit observation not applicable to the present facts because there was no finding that physical examination of goods was required for the present amendment, and therefore distinguished Terra Films on the facts. |
| Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur (S.C.) | Cited by the appellants among authorities supporting their submissions. | The opinion records the citation; it does not elaborate the specific rule drawn from this Supreme Court decision in the body of the judgment. |
| M/s. Hero Cycles Ltd. v. Commissioner of Customs (Tri.) | Referenced in the context of earlier Tribunal decisions discussed in Terra Films' factual matrix. | The opinion recounts that this and similar Tribunal decisions were considered in Terra Films; the court does not adopt a separate rule from Hero Cycles for the present decision. |
| M/s. Smurti Pottery Works v. Commissioner of Customs, Kandla (Tri.-Del.) | One of the Tribunal precedents mentioned in the Terra Films discussion. | The opinion notes these earlier Tribunal decisions were relied upon in Terra Films; the present court did not apply them directly to the facts at hand. |
| M/s. Sanghi Industries Ltd. v. Commissioner of Customs (Tri.-Del.) | One of the Tribunal precedents mentioned in the Terra Films discussion. | The opinion notes its mention in Terra Films; no direct application in the present decision is recorded. |
| M/s. Bharat Fritz Werner Ltd. v. Commissioner of Customs (Export), Nhava Sheva (Tri.-Mumbai) | Relied upon by the SDR to support denial of conversion/amendment as time-barred in the present proceedings. | The court records the SDR's reliance on this decision but does not otherwise analyze or adopt its rule in the present order. |
| M/s. Activas Pharma Manufacturing Pvt. Ltd. v. Commissioner of Customs, Chennai (Tri.-Chennai) | Relied upon by the SDR alongside other Tribunal/High Court decisions to support the position that conversion may be time-barred. | The opinion records the citation and the SDR's reliance; the court's reasoning distinguishes the facts relied upon in Terra Films and remands the matter for document examination rather than applying this authority for outright dismissal. |
Court's Reasoning and Analysis
The court examined Section 149 of the Customs Act, 1962 which authorises the proper officer in his discretion to permit amendment of documents presented in the Customs House, subject to the proviso that no amendment of a shipping bill shall be authorised after export except on the basis of documentary evidence which was in existence at the time the goods were exported.
From the plain reading of Section 149, the court observed: (i) the Customs officer has discretion to authorise amendment of a shipping bill, and (ii) Section 149 contains no express time-limit for amendment; the sole statutory condition is that the amendment must be based on documentary evidence that existed at the time of export or clearance.
The court considered the Tribunal and High Court precedents relied upon by the parties, with particular attention to Terra Films. In Terra Films the High Court upheld denial of conversion where the request was made after more than one year and where physical verification/examination of goods (and other factual constraints) made amendment impracticable; the court recited the High Court's reasoning that conversion in those facts was not merely routine amendment but a change of status requiring verification.
The present court distinguished Terra Films on the factual matrix: unlike in Terra Films, the adjudicating authority in the present case did not find that the documents for which amendment was sought required physical examination of the exported goods. Therefore the one-year observation in Terra Films was held not applicable to the facts before the court.
The adjudicating authority had denied conversion on three grounds (recorded by the court): (i) Circular No.36/2010-Cus. could not be applied because export pre-dated the circular and the request was after one year; (ii) Circular No.36/2010 prescribes a three-month time-limit; and (iii) no documentary evidence was furnished by the exporter. The court analysed Section 149 and concluded that it contains no time-limit and that the decisive condition is availability of documentary evidence at the time of export.
Relying on prior decisions cited (including decisions supporting the permissibility of conversion and the Board circular clarifying the position), the court held Circular No.36/2010-Cus. applicable to the facts of this case and stated that conversion under Section 149 is permissible if the documentary evidence supporting amendment existed at the time of export.
Because the adjudicating authority had concluded that no documentary evidence had been furnished, the court did not itself decide whether conversion should be granted. Instead, the court remanded the matter to the adjudicating authority with directions to examine the documentary evidence on the basis of which amendment is sought and to determine whether those documents were available at the time of filing of the shipping bill. If the adjudicating authority finds the documents were available at the time of filing/export, the court directed that the appellants are entitled to conversion from the Advance Licence Scheme to the DEPB Scheme.
Holding and Implications
APPEAL DISPOSED OF; MATTER REMANDED TO THE ADJUDICATING AUTHORITY
Holding: The Tribunal disposed of the appeal by remitting the matter to the adjudicating authority to examine the documentary evidence relied upon by the appellants in light of Section 149 of the Customs Act, 1962 and Circular No.36/2010-Cus., dated 23-9-2010. The court held that Section 149 does not prescribe any time-limit for amendment; the only statutory requirement is that amendments after export must be based on documentary evidence that existed at the time of export. The court concluded that if the adjudicating authority finds that the documents on the basis of which amendment is sought did exist at the time of filing the shipping bills, conversion from Advance Licence Scheme to DEPB Scheme should be allowed.
Implications: The direct effect is a remand for factual and documentary re-examination by the adjudicating authority. No blanket denial on the ground of limitation was upheld by the Tribunal in the present facts; rather, the adjudicating authority must verify whether documentary evidence existed at the relevant time. The opinion did not purport to lay down a new legal precedent beyond applying Section 149 and existing authorities and Circular No.36/2010-Cus.; it remitted the case for adjudicative fact-finding and compliance with Section 149's documentary requirement.
[Order]. - This appeal is filed by the appellants against the impugned order, wherein the request for conversion of Shipping Bill No. 3780220, dated 11-6-2010 from Advance Licence Scheme to DEPB Scheme was rejected.
2. The brief facts of the case are that one M/s. Mesto Minerals (India) Pvt. Ld., Mumbai exported ‘fabricated steel hardware structure’ made out of MS & HR plates/sheets/strips to their counterpart in Brazil, vide the above mentioned shipping bill under Advance Licence No. 0410091384, dated 5-7-2007 with M/s. Diamond Engineering (Chennai) Pvt. Ltd. Appellants] as a third party exporter. On 27-7-2011, the appellants sought conversion of shipping bill from Advance Licence Scheme to DEPB Scheme on the ground that the shipping bill was wrongly filed under Advance Licence Scheme due to wrong communication of their customer i.e., M/s. Mesto Mineral (India) Pvt. Ltd., and that they have not availed any export benefit on the above mentioned shipping bill. It is also submitted that it took a very long time for the original documents to be brought from Brazil. The said request for conversion of shipping bill from Advance Licence Scheme to DEPB Scheme was rejected by the adjudicating authority on the ground that the Circular No. 36/2010-Cus., dated 23-9-2010 is not applicable. In this case, the shipping bill was filed prior to issuance of the said circular and it was also held that the request for conversion of shipping bill is to be made by the exporter within three months from the date of ‘let export order’ but, in this case, the request for amendment has been made after more than one year, therefore, in that circumstances the same request is hit by limitation prescribed under Circular No. 36/2010-Cus., dated 23-9-2010. It is also held that as no documentary evidence has been furnished by the exporter which existed at the time of export to support the request and the fact that the request for the same has been made after one year, therefore, the request was denied. Aggrieved from the said order, the appellants are in appeal before me.
3. Shri S. Jaikumar, learned advocate for the appellants submitted that while filing the shipping bill, there was a wrong communication that the same is filed against Advance Licence hereinabove. In fact, the export against the said Advance Licence had already been discharged by the exporter in May, 2009 itself but due to wrong communication, it was mentioned in shipping bill against Advance Licence. Therefore, the appellants filed for conversion from Advance Licence Scheme to DEPB Scheme, as they are entitled for such conversion as per Board’s Circular No. 36/2010-Cus., dated 23-9-2010. He further submitted that as the circular is beneficiary in nature, then the same should be made applicable retrospectively as held by the Hon’ble High Court of Delhi in the case of Estocorp India P. Ltd. v. Union of India reported in (Del.). He further submitted that although the Notification No. 4/2004, dated 16-1-2004 was relied upon by the adjudicating authority and denied the amendment in the shipping bill but the said circular has been considered by this Tribunal in several cases and has held that conversion of shipping bills from one scheme to another scheme is allowable, therefore, relying on those decisions the Circular No. 36/2010-Cus., dated 23-9-2010 was issued, wherein in paragraph 2, it was observed that it has also come to the notice of the Board that “the Tribunal in a series of judgments have held that amendment to shipping bill after export of goods is governed by proviso to Section 149 of the Customs Act, 1962 and if the requirements of the said proviso is fulfilled, conversion of shipping bills should be allowed”. Therefore, it was clarified that Commissioner of Customs may allow conversion of shipping bills from schemes involving more rigorous examination to schemes involving less rigorous examination for example, from Advance Authorisation/DFIA Scheme to Drawback/DEPB Scheme] or within the scheme involving same level of examination [for example, from Drawback Scheme to DEPB Scheme or vice versa] irrespective of whether the benefit of Export Promotion Scheme claimed by the exporter was denied to him by DGFT/DOC or Customs due to any dispute or not, therefore, he prayed that on merits the request be granted. On the limitation aspect, he submits that as per Section 149 of the Customs Act, 1962, no time-limit is prescribed, therefore, the appellants are entitled for conversion. He also submitted that the same view was taken by this Tribunal in the case of Commissioner of Central Excise, Nhava Sheva v. Crest Chemicals reported in 2009-TIOL-2125-CESTAT-MUM = (Tri.). He further submitted that the discretion under Section 149 of the Customs Act, 1972 for amendment of the shipping bill from one scheme to another is to be exercised judiciously and the same has not been done in the instant case, as the documents on the basis of which the amendment is sought are available at the time of export. Therefore, he prayed that the impugned order be set aside and conversion from Advance Licence Scheme to DEPB Scheme be allowed. He relied on the decisions of Leotex v. Union of India reported in (Ker.), Commissioner v. Amritsar Swadesh Textile Corpn. P. Ltd. reported in (Kar.), Commissioner of Customs v. Man Industries (I) Ltd. reported in (Bom.), Terra Films Pvt. Ltd. v. Commissioner of Customs, New Delhi reported in (Tri.-Del.) and Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur reported in (S.C.) = (S.C.).
4. On the other hand, the learned SDR strongly opposed the contention of the learned counsel and submitted that the contention of the learned counsel that the adjudicating authority has not considered the Circular No. 36/2010-Cus., dated 23-9-2010 is not correct. In fact, the adjudicating authority has considered the circular and thereafter, their claim has been rejected as time-barred, as the same has been filed beyond the one year period, as held by the Hon’ble High Court of Delhi in the case of M/s. Terra Films Pvt. Ltd. v. Commissioner of Customs reported in 2011-TIOL-215-HC-DEL-Cus. = (Del.). He also relied on the decisions of M/s. Bharat Fritz Werner Ltd. v. Commissioner of Customs (Export), Nhava Sheva reported in (Tri.-Mumbai) and M/s. Activas Pharma Manufacturing Pvt. Ltd. v. Commissioner of Customs, Chennai reported in (Tri.-Chennai).
5. Heard both sides in detail and considered their submissions and the case laws relied upon.
6. In this case, the shipping bill was filed under Advance Licence Scheme. In fact, as EODC has already been completed in 2009, therefore, the appellants have sought for amendment in the shipping bill under Section 149 of the Customs Act, 1962 from Advance Licence Scheme to DEPB Scheme. Therefore, we have to examine the provisions of Section 149 of the Customs Act, 1962, which are reproduced herein as under :-
“Section 149 : Amendment of documents :- Save as otherwise provided in Section 30 and 41, the proper officer may, in his discretion, authorize any document, after it has been presented in the Custom House to be amended :
Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorized to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.”
7. As per the provisions of Section 149 ibid, the Customs officer has discretion to authorise any shipping bill to be amended on the basis of documentary evidence which was in existence at the time when the goods were cleared/exported. From mere reading of the said provisions, it can be ascertained that there is no time-limit prescribed for conversion of shipping bills from one scheme to another and the only condition imposed is that on the basis of documentary evidence, which were available at the time when the goods were cleared/exported, the Customs officer can amend the document. As regards limitation, learned SDR has relied on the decision of Terra Films Pvt. Ltd. (supra) passed by the Hon’ble High Court of Delhi. In that case, the facts are that seven shipping bills were filed during the period Sept.’04 to Apr. ‘05, for amendment from ‘DEEC/DEPB’ to ‘DEEC/DEPB-cum-Drawback Scheme’, which was denied by the learned Commissioner, as the same was not in accordance with the decisions of this Tribunal in the case of M/s. Hero Cycles Ltd. v. Commissioner of Customs reported in 2004-TIOL-654-CESTAT-DEL = (Tri.) M/s. Smurti Pottery Works v. Commissioner of Customs, Kandla reported in (Tri.-Del.) and M/s. Sanghi Industries Ltd. v. Commissioner of Customs reported in (Tri.-Del.). The said order was challenged before this Tribunal and his Tribunal in its finding has observed that “one reason for not acceding to the request was that goods have already been exported and to cause verification to fix the brand rate under the Drawback Rules is physically impossible”. In view of the above, this Tribunal held that the decision taken by the learned Commissioner for denying the amendment of shipping bill in terms of Section 149 cannot be held to be arbitrary. In these set of facts, the Hon’ble High Court has observed as under :-
“6. As per proviso of this Section 149, no amendment of a shipping bill was to be allowed after the export goods have been exported except on the basis of the documentary evidence, which was in existence at the time the goods were exported. The submission of the leaned counsel for the appellant/exporter in this regard was that the exporter was in possession of all the documents at the time of export to show that it was entitled to claim under the DEPB/DEEC-cum-Drawback Scheme. From the plain reading of Section 149, it may be seen that exporter could not claim amendment in routine and as a matter of right. The discretion vested in the Proper Officer to permit amendment in any document after the same has been presented in the Customs house. Though this discretion was to be exercised judiciously, but it was qualified with the proviso that the amendment could be allowed only if it was based on the documentary evidence in existence at the time the goods were exported. The Commissioner in the remand case has rightly observed that the present case in fact relates to the request for conversion of shipping bills from one Export Promotion Scheme to another and was not merely of an amendment in the shipping bill. The request was made for conversion from one scheme to another after the lapse of long period of more than one year. It was a case of request for “conversion” and not of “amendment” inasmuch as by converting from one scheme to another, it was not only addition of word ‘cum’ duty drawback, but change of entire status and character of the documents. Even if it was to be taken as a case of amendment, the Proper Officer may not be in possession of the documents sought to be amended after lapse of such a long period, particularly when the goods already stood exported. For enabling an exporter to draw the benefits of any scheme, not only physical verification of documents would be required, but as is noted by both the authorities below, the verification of the goods of export as also their examination by the Customs was necessarily required to be done. In the given factual circumstances, that was rightly held to be impossible. The Commissioner in the remand case rightly distinguished the cases cited on behalf of the exporter from the facts of the present. The finding of fact as arrived by the Commissioner has been rightly upheld by the CESTAT.
7. We do not see any perversity or illegality in the discretion exercised by the Commissioner in rejecting the request of the exporter of conversion/amendment from one scheme to the other after a lapse of more than one year. There is no reason to interfere in the findings of the fact arrived at by the CESTAT. Since, there is no question of law involved, the appeal is dismissed. No orders as to costs. Ordered accordingly.”
8. In the said decision as the goods have already been exported and require physical examination, for the amendment sought by the appellants, therefore, the Hon’ble High Court observed that as the shipping bills were filed beyond the one year period, as held by CESTAT in the facts of the above cited case is correct but in the instant case, there is no finding of the adjudicating authority that the documents on the basis of which amendment is sought require physical examination of the goods exported, for amendment under Section 149 of the Customs Act, 1962. Therefore, the time-limit observed by the Hon’ble High Court in the case of Terra Films Pvt. Ltd. (supra) is not applicable to the facts of the present case. In the case on hand, the adjudicating authority has denied the amendment on the following grounds :-
(i) that benefit of Notification No. 36/2010-Cus., dated 23-9-2010 cannot be granted as export has taken place prior to that; and request is being sought after one year of filing of the shipping bill and as per Circular No. 36/2010-Cus., dated 23-9-2010, the time-limit is only three months, therefore, conversion of shipping bills was denied. Finally, he also observed that no documentary evidence has been furnished by the exporter.
9. In the case of Leotex (supra), the Hon’ble High Court Amritsar Swadesh Textile Corpn. P. Ltd. (supra), the Hon’ble High
“The Revenue has preferred this appeal against the order passed by the Tribunal holding that conversion from one scheme to another scheme is permissible and in those circumstances, the assessee is entitled to duty drawback. For the purpose, the Tribunal has remitted the matter back to the Appellate Commissioner.
The material on record discloses that the assessee had paid the duty in respect of indigenous goods. However, he did not claim the Cenvat credit. Therefore, he claimed benefit of duty drawback under the Drawback Rules. The Appellate Commissioner held that the circular or the rules do not permit such a duty drawback.
It is not in dispute that the Board has issued a circular clarifying the legal position that such a conversion is permissible. Once such a conversion is permissible, the assessee is entitled to duty drawback and benefit of duty drawback is a matter required to be calculated by the Appellate Commissioner. It is in those circumstances, after setting aside the finding of the Commissioner that such a conversion is not permissible, the Tribunal has remanded the matter back to the Commissioner to decide the permissibility of duty drawback in accordance with Rules. Therefore, the order passed by the Tribunal is in accordance with the law and does not suffer from any infirmity, which call for interference. In that view of the matter, we do not see any merit in this appeal.
In the light of what we have stated above, the appeal is rejected. The substantial questions of law framed in this appeal are answered in favour of the assessee and against the Revenue. However, the matter stands remitted to the Commissioner for determination of duty.”
10. Therefore, relying on the above said decisions, the Circular No. 36/2010-Cus., dated 23-9-2010 is applicable to the facts of present case and the appellants are entitled for conversion of the shipping bill from Advance Licence Scheme to DEPB Scheme as per Section 149 of the Customs Act, 1962. Further, on time-limit also, the facts of this case are not relevant to the facts of the cases that are relied upon by the learned departmental representative in the case of Terra Films Pvt. Ltd. (supra) and Section 149 of the Customs Act does not have any time-limit for amendment of the document. The only condition is that the document on the basis of which amendment is sought should be available at the time of export. Therefore, the amendment sought cannot be denied on the ground of limitation. Further, the adjudicating authority has held that no documentary evidence has been furnished by the exporter, therefore, the matter is remanded back to the adjudicating authority to examine the documents on the basis of which the amendment is sought and also to ensure as to whether those documents were available at the time of filing of the shipping bills or not and if those documents on the basis of which amendment is sought were available at the time of filing of the shipping bills, then the appellants are entitled for conversion of the shipping bills from Advance Licence Scheme to DEPB Scheme. In view of these observations, the matter is remanded back to the adjudicating authority to examine the documentary evidence as per the provisions of Section 149 of the Customs Act, 1962 as discussed above. Appeal is disposed of in the above terms.
(Pronounced in open court on 13-9-2012)
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