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of <h1>CESTAT allows conversion from DFIA to Drawback after HC struck down three-month time limit in Para 3(a) Circular 36/2010</h1> <h3>VRA COTTON MILLS P LTD Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX - CUSTOMS (P) JAMNAGAR</h3> CESTAT Ahmedabad allowed the appeal challenging rejection of conversion request from DFIA to Drawback shipping bills. The Commissioner had rejected the ... Rejection of the request for conversion of Shipping Bills from DFIA to Drawback - request was made after the expiry of the three months from the date of let export order as prescribed under Para 3(a) of the CBIC Circular No. 36/2010-Customs dated 23-9-2010 - Para 3(a) of the said Circular has been held to be ultra vires Articles 14 and 19 (1) (g) of the Constitution of India as also ultra vires Section 149 of the Customs Act 1962, by the Hon’ble Gujarat High Court by its decision in MESSRS MAHALAXMI RUBTECH LTD. VERSUS UNION OF INDIA [2021 (3) TMI 240 - GUJARAT HIGH COURT]. HELD THAT:- It was not open to the Commissioner to reject the Appellant’s requests for conversion of DFIA Shipping Bills to Drawback Shipping Bills by relying on Para 3 (a) of the Board Circular No.36/2010-Cus dated 23-9-2010 since the Hon’ble Gujarat High Court in the case of MESSRS MAHALAXMI RUBTECH LTD. VERSUS UNION OF INDIA [2021 (3) TMI 240 - GUJARAT HIGH COURT], has by its judgment and order dated 2-3-2021 held that the said Board Circular No. 36/2010-Cus dated 23-9-2010, to the extent of Para 3 (a), to be ultra vires Article 14 and 19(1)(g) of the Constitution of India and also as ultra vires Section 149 of the Customs Act, 1962. Since the only basis for rejecting the Appellant’s request for conversion of the Shipping Bills in the impugned Order/ decision of the Commissioner, is Para 3(a) of the said Circular, which has been struck down by the Hon’ble Gujarat High Court as ultra vires as aforesaid, the impugned Order/ decision of the Commissioner is clearly bad in law. It is further seen that under Para 4.28 (e) of the Handbook of Procedures 2009-14, the Appellant could have applied for conversion of the Shipping Bills only after the cancellation of the DFIA licenses by the licensing authority. The DFIA licenses were cancelled by two letters dated 11-7-2013 and 12-3-2014 and soon thereafter the Appellant applied for conversion by letters dated 20-7-2013 and 21-3-2014 which were followed by various reminders; there was therefore no delay on the part of the Appellant in applying for conversion of the Shipping Bills. Thus, no time limit was prescribed in Para 4.28 (e) of the Handbook of Procedures for seeking conversion of the Shipping Bills to Drawback Shipping Bills and the Appellant was entitled to conversion of the Shipping Bills into drawback shipping bills. The impugned order cannot be sustained. Appeal is allowed. Issues:Whether rejection of the request for conversion of Shipping Bills from DFIA to Drawback, based on the time limit prescribed in Circular No. 36/2010-Customs, is sustainable in law.Analysis:The Appellant, a manufacturer-exporter, exported goods under DFIA licenses but did not import under them. The Appellant surrendered the licenses and applied for conversion of Shipping Bills to Drawback Shipping Bills. The Commissioner rejected the request citing Circular No. 36/2010-Customs. The Appellant argued that the Circular was struck down by the Gujarat High Court and Tribunal's previous decision favored them.The Tribunal found the rejection based on the Circular invalid due to the Gujarat High Court's ruling that the Circular was ultra vires the Constitution and the Customs Act. The Bombay High Court also deemed the Circular illegal. The Tribunal previously held that no time limit was prescribed for conversion. The Commissioner should have followed the Tribunal's decision in the Appellant's case.The Appellant promptly applied for conversion after canceling the DFIA licenses, with no delay. The Tribunal held that the Appellant was entitled to conversion without any time limit as per the Handbook of Procedures. The Tribunal allowed the appeal, stating that the impugned order was unsustainable and granted consequential relief.
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