Shipping bill conversion and DEPB claim scrutiny allowed where conversion followed revenue objection, with merits remitted for reconsideration.

Free shipping bills may be converted into DEPB shipping bills where the conversion is triggered by the revenue's objection that the goods are not covered by the scheme, rather than by a voluntary post-export change by the exporter. In such circumstances, the conversion is treated as permissible. Once conversion is allowed, the substantive DEPB claim must be examined on merits, and where the lower authorities have not undertaken that scrutiny, the matter may be remitted for objective verification in light of the relevant DGFT clarification. The operative effect is that the conversion issue is resolved in the exporter's favour, while entitlement to the DEPB benefit remains subject to reconsideration.

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Issues: (i) Whether free shipping bills could be converted into DEPB shipping bills when the original DEPB claim was rejected on the ground that the goods were not covered by the scheme. (ii) Whether the DEPB claim required reconsideration by the lower authority in the light of the DGFT clarification.

Issue (i): Whether free shipping bills could be converted into DEPB shipping bills when the original DEPB claim was rejected on the ground that the goods were not covered by the scheme.

Analysis: The conversion was not made at the instance of the exporter as a matter of choice. The contemporaneous record showed that the examining officer had taken the view that the goods were not covered by the DEPB schedule, and the shipping bills were converted only after that objection. On those facts, the conversion could not be treated as an impermissible post-export change sought by the exporter. The earlier precedent on similar facts was applied.

Conclusion: The conversion of the free shipping bills into DEPB shipping bills was permissible and was allowed.

Issue (ii): Whether the DEPB claim required reconsideration by the lower authority in the light of the DGFT clarification.

Analysis: The claim itself had not been examined on merits by the lower authorities after conversion. Since the exporter had relied on clarification issued by the DGFT authorities, the claim required objective verification in light of that clarification before final determination of entitlement.

Conclusion: The matter was remitted to the lower authorities for examination of the DEPB claim on merits in the light of the DGFT clarification.

Final Conclusion: The exporter obtained relief on the conversion issue, but the quantum and admissibility of the DEPB benefit remained subject to reconsideration by the lower authority.

Ratio Decidendi: Where conversion of shipping bills is necessitated by the revenue's objection and not by a voluntary post-export change by the exporter, the conversion may be permitted and the substantive claim must then be examined on merits.

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