Manufacturer wins appeal to convert shipping bills for AIR drawback after clearing agent oversight under Section 149

The CESTAT Hyderabad allowed an appeal where the appellant, a regular exporter and manufacturer, was denied permission to convert/amend 13 free shipping bills to claim AIR drawback. The denial occurred due to clearing agent oversight during April-December 2016 exports. The appellant discovered the mistake during record verification and immediately requested amendment under Section 149 of the Act read with Rule 12(1)(a) of Drawback Rules, 1995. The tribunal found the Commissioner's rejection reasons flimsy and contrary to statutory provisions and Board circulars, noting no allegations of mis-declaration or fraud existed.

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Issues Involved:
1. Denial of permission for conversion/amendment of free shipping bills.
2. Rejection of AIR drawback claims.
3. Procedural compliance and discretion of the Commissioner of Customs.

Summary:

Issue 1: Denial of permission for conversion/amendment of free shipping bills
The appellant, an exporter of Calcined Petroleum Coke (CPC), sought to amend 13 free shipping bills filed between April 2016 and December 2016 to claim AIR drawback, which was omitted due to an error by their clearing agent. The appellant argued that the mistake was inadvertent and requested amendment under Section 149 of the Customs Act, supported by Circular No.36/2010-Cus, which allows for such amendments without converting free shipping bills into drawback shipping bills.

Issue 2: Rejection of AIR drawback claims
The Commissioner of Customs rejected the AIR drawback claims, citing that the goods were shown as cleared against Quantity Based Advance Authorisations (QBAL) and no rebate was claimed at the time of export. The Commissioner also noted that the appellant did not provide satisfactory reasons beyond their control for the omission and that the amendment would introduce new facts on the shipping bills. The appellant countered that the exports were not made against any advance authorisations and that the records with customs could verify this. Various judicial precedents and circulars were cited to support the claim that amendments should be allowed if the necessary documents existed at the time of export.

Issue 3: Procedural compliance and discretion of the Commissioner of Customs
The appellant argued that the Commissioner's discretion should be exercised liberally in procedural matters, especially when no fraud or mis-declaration was involved. The Tribunal found the reasons for rejection by the Commissioner to be flimsy and against the spirit of Section 149 of the Customs Act and Rule 12(1)(a) of the Drawback Rules, supported by Circular No. 36/2010-Cus. The Tribunal noted that the appellant had promptly filed the request for amendment upon discovering the mistake and that there was no allegation of fraud or mis-declaration.

Judgment:
The Tribunal allowed the appeal, set aside the impugned order, and directed the concerned authority to grant the benefit of AIR drawback subject to the submission of relevant documents. The claim for drawback was ordered to be processed and disbursed within 45 days, along with interest as per rules.

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