TaxTMI 
TaxTMI 
2024 (8) TMI 1220
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....ailand) Co. Ltd. vide Shipping Bills No. 4017003 dated 7.9.2022, 3841846 dated 30.8.2022 and 3322352 dated 5.8.2022 on payment of Integrated Goods and Services Tax @ 18%. The Appellant availed credit of aforesaid IGST paid by them. After due process of law, the adjudicating authority rejected the request for conversion of the above shipping bills. Aggrieved by the said order, the appellant has filed this appeal. 3. Shri D. Gopalan, learned counsel appeared for the appellant and Shri Anoop Singh, learned authorized representative appeared for the respondent. 3.1 The learned counsel for the appellant submitted that upon sample testing of the subject goods, the goods were found defective, and the entire lot was returned to the supplier vide the Impugned three SB's. The invoices were endorsed stating that the subject goods "got rejected and are being returned to the consignee on non-replacement and non-returnable basis". They duly reversed the input tax credit availed by them on the IGST paid on the subject goods and the time of import so as to seek drawback. At this stage, they realised that the impugned Shipping Bills were filed inadvertently under Code 99 [No Foreign Exchange Invo....
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....on'ble Karnataka High Court in Carl Zeiss case. G. Without prejudice to the above grounds, it is submitted that the application submitted by the Appellant requesting conversion of free Shipping Bills to Drawback Shipping Bills itself is an application for refund under Section 27 of the Act since the Appellant was otherwise eligible for claiming refund of the IGST paid by them at the time of import of goods used in manufacture of the re-export goods. The Ld. Counsel prayed that the appeal may be allowed in full along with consequential relief. 3.2 The learned AR stated on behalf of the respondent that the Commissioner has passed a detailed order rejecting the appellants request which is based on the Act and Rules. As per Section 74 of the CA 1962, 1962, duty needs to be repaid as drawback only when any goods which have been imported are capable of being 'easily identified' and upon which any duty has been paid on importation and have entered for export and the proper officer makes an order for clearance of such goods under Section 51. Export goods are thus required to be identified to the satisfaction of AC/DC as the goods which were imported. It remains undisputable fact t....
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....easons with regard to establishing the identity or otherwise of the goods under re-export and determination of use, if any, while sanctioning duty drawback or otherwise. It may further be noted that the detailed speaking orders, following the principles of natural justice, are to be issued in both cases, i.e. where drawback is proposed to be sanctioned (either in full or part) or proposed to be denied. (emphasis added) He stated that due to the actions of the Exporter in filing a free shipping bill the identity of the goods were not examined and could not be established and they have made themselves ineligible for their benefits. A plain reading of the statute makes it clear that the Act itself differentiates between simple re-export to re-export in which drawback is allowable. Statutory provisions have been contravened. Rules made by the Central Govt in exercise of the powers conferred by section 74 of the CA 1962, 1962 namely Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 have been contravened. In view of above submissions and case records, the case may be decided on merits and the appeal rejected. 4. We have carefully gone through the appeal papers and ....
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....Goods (Drawback of Customs Duties), Rules 1995 and facility circular 04/2021 issued by Chennai Customs. Therefore, the request for conversion of NFEI shipping bill into drawback shipping bill and the consequent claim for duty drawback under section 74 of the Customs Act, 1962 merit rejection." ( emphasis added ) Further, there is no doubt that the formation of opinion by the Competent Authority is a purely subjective process founded on existent circumstances. We find that the dispute here pertains to the discretionary jurisdiction of the Commissioner of Customs under the impugned section of the CA, 1962. However, there are no allegations made by the appellant that the discretion has been exercised in an illegal manner or on wholly untenable grounds or is arbitrary or perverse. We shall now take up the issues raised by the appellant sequentially. 5. Shipping Bills are eligible for conversion into drawback shipping bills under Section 149 of the CA 1962. 5.1 The appellant has relied upon the following judgments in this regard to state that conversion of a SB is permissible, even if the goods exported were not physically examined by the Department. a. Hindustan Unilever v. UOI ....
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.... be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported as the case may be. Provided further that such authorization or amendment may also be done electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria Provided also that such amendments, as may be specified by the Board may be done by the importer or exporter on the common portal. (emphasis added) We find that section 149 is a discretionary provision which gives the power to the proper officer to authorise any document, after it has been presented in the custom house to be amended, under certain restrictions and conditions, if he so deems fit. It is not an exclusive provision for the conversion of one type of SB into another. Amendment from one SB type to another cannot be claimed as a matter of right. Further no formal request for an amendment of the SB's under section 149 of CA 1962, as is being pleaded now, appears to have been made. That techni....
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....ircular No. 36/2010. In terms of Section 2(32) of CA 1962 to mean "prescribed" means prescribed by regulations made under this Act. Further, as per Section 2(35) ibid, "regulations" means the regulations made by the Board under any provision of this Act. The combined reading of the above provisions clearly show that restrictions/ conditions mentioned in Circulars issued by the Board cannot be treated as those 'prescribed' under the CA 1962. They have relied upon the judgment of the Hon'ble Bombay High Court in Colossustex Pvt. Ltd. v. Union of India, [2024 (387) ELT 277 (Bom.)], which dealt with a case in which a request for amending particulars in the SB, was rejected as being time barred in terms of para 3(a) of the Circular. The judgment held para 3(a) 0f the circular to be ultra vires of section 149 of CA 1962. The facts of the case are distinguished as discussed below. 7.2 Circular No. 36/2010 in as much as it relates to the facts in issue in this matter, does not seek to prescribe any additional conditions above that which is prescribed in the Act. Section 74 of CA 1962, permits the payment of drawback only if the goods are "capable of being easily identified" to the....
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....effect that Circular cannot be interpreted contrary to the statute itself is not relevant to the facts of this case. 7.4 While the Act and Rules confer discretion to an officer under certain circumstances, it should not result in arbitrary power being conferred on the executive in the absence of any guidance as to how that discretion should be exercised. In such situations administrative Circulars provide criteria or guidelines for exercise of that discretion. It seeks to achieve uniformity, nondiscriminatory and predictable application of discretion. This is all the more important when it is exercised by a large number of officers at different Customs stations and in situations that has an effect on trade / industry and the financial and economic interest of the country. Administrative Instructions/ Circulars help in achieving uniformity, predictability, removal of ambiguity, cost saving and provides a level playing field for the trade on the one hand, while putting a check on blame worthy conduct on the other. In Sant Ram Vs State of Rajasthan, [AIR 1967 SC1910], a Constitution Bench of the Supreme Court has held that statutory rules cannot be amended by Executive instructions b....
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....ctive and is based on the material on record then the courts would not interfere with the order passed by the authority only because another view possibly can be taken. Such satisfaction of the authority can be interfered with only if the satisfaction recorded is either demonstratively perverse based on no evidence, misreading of evidence or which a reasonable person could not form or that the person concerned was not given due opportunity resulting in prejudicing his rights under the Act." The decision taken in the impugned order cannot be stated to be illegal or having suffered from procedural impropriety or being irrational in the sense that it was in outrageous defiance of logic or moral standards. Whether the subjective satisfaction by the proper officer could have been achieved only by physical examination cannot be a matter of challenge so long as the use of discretion is not perverse etc. No such allegation is made by the appellant whose main grouse is only the use of discretion by the proper officer resulted in him wanting to examine the goods. In the case of West Bengal Electricity Regulatory Commission v. Cesc Ltd. [(2002) 8 SCC 715 / (2002) 7 Scale 217] the Hon'ble Ap....
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....t of the rule would be defeated by non-compliance causing a loss to the exchequer, hence the said rule has to be held as mandatory. Further it is not that the appellant's non-compliance was to do with something unimportant and tangential or that the procedure was so confusing or incorrectly written that the omission should be accepted. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. Further when a statute uses the word "shall", prima facie, it is mandatory, more so for the reason that non-compliance of the rule may result in excess / undue payment of drawback causing a loss to the exchequer. In the State of U.P. & Ors. v. Babu Ram Upadhya [(1961) 2 SCR 679(CB)], the Hon'ble Apex Court observed as under: "Rules made under a statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be judicially noticed for all purposes of construction or obligation: see Maxwell "On the Interpretation of Statutes", 10th edn., pp. 50-51." The proverb ....