Conversion of DEEC shipping bills to drawback claims turns on substantive entitlement, not a merely procedural filing defect.

Shipping bills filed under the DEEC scheme may be converted into DEEC-cum-drawback shipping bills where the factual basis for drawback exists, and a purely procedural objection cannot defeat substantive entitlement. On the stated facts, the exporters used only a small quantity of duty-free imported inputs, procured the main raw materials domestically on payment of duty, and had not claimed Cenvat credit. Para 2.56 of the EXIM Policy was treated as permitting conversion from one scheme to another, and the absence of a drawback shipping bill at export was not treated as fatal. The conversion request and drawback claim therefore required examination on merits after conversion.

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Issues: Whether shipping bills filed under the DEEC scheme could be converted into DEEC-cum-drawback shipping bills and whether the request for conversion, followed by examination of drawback entitlement, was liable to be allowed.

Analysis: The appellants had exported goods using a small proportion of duty-free imported inputs while the major raw materials were procured indigenously on payment of duty and no Cenvat credit had been claimed. On those facts, the denial of conversion merely on a procedural reading of the circular and rules was found unsustainable. Para 2.56 of the EXIM Policy was treated as enabling conversion from one scheme to another, and the absence of a drawback shipping bill at the time of export was held not to automatically defeat the substantive claim where the factual basis for drawback was otherwise present. Procedural requirements were treated as subordinate to the substantive entitlement, and the Commissioner was found not to have properly examined the drawback aspect on the merits.

Conclusion: The request for conversion could not be rejected on the stated grounds, and the matter was required to be examined for drawback entitlement after conversion. The appeal was therefore allowed in favour of the assessee.

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