Conversion from Draw Back Scheme to Advance License Scheme prohibited after availing benefits under Circular 36/2010

CESTAT Ahmadabad dismissed the appeal seeking conversion of shipping bills from Draw Back Scheme to Advance License Scheme. The tribunal held that once draw back benefits were availed by the appellants, conversion to another scheme was not permissible under Circular No. 36/2010. The Commissioner's refusal was upheld, noting that allowing post-benefit conversion would jeopardize revenue interests and undermine scheme finality. The tribunal distinguished this from Gujarat HC's decision in Principal Commissioner of Customs v. Lykis Limited, emphasizing that condition 3(e) of the circular remains valid, prohibiting conversion after benefit availment.

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Issues Involved:
1. Conversion of shipping bills from Drawback Scheme to Advance License Scheme.
2. Applicability and interpretation of Circular No. 36/2010-Cus dated 23.09.2010.
3. Timeliness of the conversion request.
4. Legal precedents cited by the appellant.

Summary of Judgment:

Conversion of Shipping Bills from Drawback Scheme to Advance License Scheme:
The appellants, exporters of P&P medicines, sought to convert 38 shipping bills filed under the Drawback Scheme to the Advance License Scheme. The request was made after availing the Drawback benefit and nearly two years post-export. The appellants argued for conversion by citing various precedents, including Nissan Exports vs CC Mundra, where amendments of shipping bills were allowed beyond the prescribed period.

Applicability and Interpretation of Circular No. 36/2010-Cus dated 23.09.2010:
The Circular No. 36/2010-Cus, particularly para 3, was scrutinized. It was noted that the Commissioner of Customs is the competent authority for such conversions u/s 149 of the Customs Act, 1962. The Circular allows conversion under specific conditions, including that the request must be made within three months from the Let Export Order (LEO) and that the exporter has not availed benefits under the original scheme.

Timeliness of the Conversion Request:
The court noted that the request for conversion was made long after the exports were completed and the Drawback benefits were availed. It was emphasized that even though para 3(a) of the Circular, which prescribed a three-month limitation, was struck down by the Hon'ble Gujarat High Court, para 3(e) remained valid. This clause prevents conversion if the exporter has already availed benefits under the original scheme.

Legal Precedents Cited by the Appellant:
The appellants cited several cases to support their plea for conversion. However, the court found that these cases primarily addressed the issue of time limitations for conversion and did not apply to situations where benefits under the original scheme were already availed. The court referred to the decision in Commissioner of Customs (Export) Vs. E.S. Lighting Technologies (P) Ltd., which held that requests for conversion should be made within a reasonable time.

Conclusion:
The court upheld the findings of the Commissioner, stating that allowing conversion from a less rigorous examination scheme (Drawback) to a more rigorous one (Advance License) would contravene statutory provisions. The appeal was dismissed as the appellants had already availed the Drawback benefits, making them ineligible for conversion under para 3(e) of Circular No. 36/2010-Cus. The judgment emphasized the importance of finality in export decisions and the binding nature of CBEC/CBIC circulars on the department.

(Pronounced in the open court on 22.03.2024)

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