TaxTMI 
TaxTMI 
2024 (10) TMI 68
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.... Act, 1962 (hereinafter referred to as the customs act) as being ultra-vires the statutory provisions. 5. The petitioner has also challenged communication dated 19.04.2023, whereby the application for conversion of the shipping bills has been rejected relying upon the para 3 (a) of the aforesaid Circular dated 23.09.2010, which provides for filing of the application within a period of three months from the date of late export order (LEO). 6. The brief facts of the case are as under: 6.1. The petitioner as a Public Limited Company is engaged in the business of manufacture and sale of tea. The petitioner is also engaged in the export of the goods manufactured by it. 6.2. It is the case of the petitioner that after introduction of the GST Regime with effect from 01.07.2017, the petitioner made an application for duty drawback pursuant to the Notification No. 88/2017 dated 21.09.2017 from 01.10.2017. 6.3. The petitioner therefore filed an application for conversion of the shipping bills from category of free/EPCG to duty drawback before Customs Department on 14.07.2022. 6.4. The petitioner relied upon the decision of this Court in case of Mahalaxmi Rubtech Ltd. V/s. U....
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....8. On the other hand, learned advocate Mr. Siddharth Dave for the respondent could not controvert the facts with regard to non-consideration of the decision of this Court rendered in case of Mahalaxmi Rubtech Ltd. (Supra) whereby, para 3 (a) of the Circular no. 36 of 2010 is struck down by this Court. Learned advocate Mr. Siddharth Dave however submitted that the matter may be remanded back to the respondent authority for consideration of the re-issue of the notice and adjudicate the same in accordance with law. 9. Having heard the learned advocates for the respective parties and considering the facts, it would be germane to reproduce the findings given by this Court in case of Mahalaxmi Rubtech Ltd. (Supra) while striking down para 3 (a) of the circular, which reads as under: " ● ANALYSIS: 13 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Principal Commissioner committed any error in passing the impugned order. 14. We must first look into the impugned circular. Circular reads thus: "Circular No. 36/2010....
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....e to DEPB scheme or vice versa) irrespective of whether the benefit of an export promotion scheme claimed by the exporter was denied to him by DGFT/DOC or Customs due to any dispute or not. The conversion may be permitted in accordance with the provisions of section 149 of the Customs Act, 1962 on a case to case basis on merits provided the Commissioner of Customs is satisfied, on the basis of documentary evidence which was in existence at the time the goods were exported, that the goods were eligible for the export promotion scheme to which conversion has been requested. Conversion of shipping bills shall also be subject to conditions as may be specified by the DGFT/MOC. The conversion may be allowed subject to the following further conditions; (a) The request for conversion is made by the exporter within three months from the date of the Let Export Order (LEO). (b) On the basis of available export documents etc., the fact of use of inputs is satisfactorily proved in the resultant export product. (c) The examination report and other endorsements made on the shipping bill/ export documents prove the fact of export and the export product is clearly covered....
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....authorise any document, after it has been presented in the customs house to be amended: Provided that no amendment of a bill of entry or shipping bill or bill of export shall be so authorised to 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." 16. We find merit in the principal argument of Mr. Dave that in Section 149 of the Act, no time period has been prescribed and if in a substantive statutory provision of law, if no time period has been prescribed, then the CBEC could not have issued the circular providing for three months time period to make a request for conversion from the date of the LEO. 17. The CBEC could have provided for a particular time limit only by way of regulations made in the Act. "Regulations" means the regulation made by the Board under any provisions of the Act, 1962. We take notice of the fact that Section 149 came to be amended after the filing of the present writ application. The amended Sect....
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....s, are required to declare the following intent to claim benefit under the MEIS: "We intend to claim rewards under Merchandise Exports from India Scheme". It was submitted that in case of Non-EDI shipping bills, there is no question of tick-marking 'Y' or 'N'. The exporter may either declare the intent or not. 21.1 Reference was made to Public Notice No. 40/2015-2020 dated 09.10.2015, to submit that benefit under the said public notice is given only in cases of EDI generated shipping bills, which require the exporters to tick mark "Y" in case they intend to claim benefits under the MEIS and "N" in case they do not intend to claim benefit under the MEIS. It was submitted that this is a case of Non-EDI shipping bills and that unless there is a 'Declaration of Intent' on the shipping bills, the same do not undergo any scrutiny for the grant of benefit under the MEIS. It was submitted that the purport of seeking waiver of such declaration on Non-EDI shipping bills would be larger as it would cover every Non-EDI shipping bills. 21.2 Reference was made to Circular No. 36/2010-Cus. Dated 23.09.2010, which provides for conversion of free shipping bills to Advance Authoris....
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....ment, after it has been presented in the customs house to be amended. It was submitted that for conversion of shipping bills from free shipping bills to one under the export promotion scheme, the provisions of the Circular dated 23.09.2010 have to be satisfied, namely that the application has to be made within three months from the date of the Let Export Order. The Customs Department is bound by the said circular and more particularly, condition No. 3 (a) thereof, which specifies a particular time limit for entertaining an application thereof. 22.1 It was submitted that the Customs Department has no discretion to extend the time limit, and hence, the said authorities were justified in not accepting the application made by the petitioner, which was filed beyond the time limit prescribed by the circular. 23. Chapter 3 of the Foreign Trade Policy 2015-20 has introduced the Merchandise Exports From India Scheme. The procedure for claiming benefit under the said scheme has been provided under the Handbook of Procedure to Foreign Trade Policy 2015-20. Para 3.14 thereof provides for the procedure for 'Declaration of Intent' on EDI and Non-EDI shipping bills for claiming ....
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....pparent that the 'declaration of intent', in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of Non-EDI shipping bills, such 'declaration of intent' is not stated to be mandatory. The respondents, in their affidavit in reply, have stated that the instant case is of a SEZ unit which exported the goods under free shipping bills. All the SEZ exports come under free shipping bills. Therefore, the mandatory 'declaration of intent' with effect from 01.06.2015 will not be applicable in this case. Therefore, the unit has to declare its intent for claiming benefits under the MEIS for exports made prior to 01.06.2015, that is, for the period between 01.04.2015 to 31.05.2015. As per the Foreign Trade Policy/Handbook of Procedure 2015-20, MEIS benefits were available to SEZ units with effect from 01.04.2015. 25. In case of EDI shipping bills, where it was mandatory to file the 'declaration of intent' in the manner provided in para 3.14 of the Handbook of Procedure to FTP (2015-20), vide Public Notice 40/2015-2020 dated 9th October,2015, it has been provided thus: "2. As per para 3.14 of Hand Book of Procedure to FTP (2015-20), all expo....
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....ed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner's request for amending the shipping bills to incorporate 'declaration of intent', has furnished comments on the issue to the respondent No. 6 - Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner has been regularly filing its claim for similar goods under the MEIS for later periods and it appears that the petitioner is otherwise eligible for benefits under the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circular No. 36/2010-Customs dated 23.09.2010 and Notification No. 40/2012 (NT) dated 02.05.2012, the decision regarding conversion may be taken on the basis of documentary evidence which was in existence at the time when the goods were exported subject to the satisfaction of the competent authority. 28. Thus, the eligibility of the petitioner to c....
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.... petitioner making such application for amendment, after prolonged inter se communications between the respondents as to who had the jurisdiction to decide said application, the same came to be turned down on the ground that the application for amendment had been made beyond three months as stipulated in Circular 36/2010-Customs dated 23rd September, 2010. 33. Circular 36/2010-Customs dated 23^rd September, 2010 provides for conversion of free shipping bills to Advance Authorisation/ DEPB/Drawback shipping bills and from one export promotion scheme to another. Clause (a) of paragraph 3 thereof provides that the conversion may be allowed subject to the conditions laid down thereunder. Condition (a) thereof reads thus: "Request for conversion is made by the exporter within three months of the date of the Let Export Order (LEO)". From paragraph 4 of the circular, the reason for providing such time limit appears to be that free shipping bills (shipping bills not filed under any export promotion scheme) are subject to 'nil' examination norms. 34. In the facts of the present case, as noticed earlier, it is not the case of the respondents that the petitioner is not other....
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....was not vital to the appellant's case. The material which did and does exist is substantial; the appellant should, therefore, be permitted to amend its shipping bill. The respondents are directed to give effect to this order within the next two months. The appeal is consequently allowed." 36. In the opinion of this court, the above decision would be squarely applicable to the facts of the present case. As is evident from the letter dated 07/08.09.2019 (Annexure-O to the petition), the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner's request for amendment in the shipping bills to incorporate 'declaration of intent', furnished comments for specific recommendations on the issue to respondent No. 6 - Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner is filing regularly its claim for similar goods under MEIS for later periods and it appears that the petitioner is, otherwise, eligible for the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circul....
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....okul Overseas (supra) was requested to direct the respondent to allow the benefits under the MEIS under five different applications and to accept the amendment in shipping bills with a declaration made by a separate communication. The petitioner was the partnership firm situated at Kandla Special Economic Zone and was engaged in the manufacturing of derivatives of Castor Oils and cleared its final product to export and was also a certified Three Star Export House. In MEIS, it sought to promote export of notified goods manufactured in India. The Court referred to five different kind of duties scrips with varying conditions attached to their use and all these had merged into a single scheme MEIS. For export made during April, 2015 to January, 2016 the request was made to grant the benefit. The petitioners were requested to allow benefits on the shipping bills where declaration of intent was not mentioned prior to 01.06.2015 and also requested to extend the benefit of the Public Notice dated 09.10.2015 to Non-EDI shipping bills. In this background, the Court in detail considered the procedure for declaration of intent on EDI and Non-EDI shipping bills as provided under Chapter 3 of th....
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....such markets, a grace period of one month from the date of notification/public notice will be allowed for making this declaration of intent. (ii) After the grace period of one month, all exports (of such products/goods or to such markets) would have to include the declaration of intent on all categories of shipping bills. (iii) For exports made prior to date of notification/ public notice of products/markets, such a declaration would not be required since such exports would have already taken place." 24. On a plain reading of the provisions of para 3.14 of the Handbook of Procedure to Foreign Trade Policy 2015-20, it is apparent that the 'declaration of intent', in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of Non-EDI shipping bills, such 'declaration of intent' is not stated to be mandatory. The respondents, in their affidavit in reply, have stated that the instant case is of a SEZ unit which exported the goods under free shipping bills. All the SEZ exports come under free shipping bills. Therefore, the mandatory 'declaration of intent' with effect from 01.06.2015 will not be applicable in this case. Therefor....
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....m box' while filing shipping bill in Customs for exports made between 1.4.2015 to 31.5.2015, shall be transmitted by CBEC to DGFT." 26. Vide Public Notice No. 47/2015-2020 dated 08.12.2015, the procedure prescribed vide Public Notice No. 40 dated 09.10.2015 has been extended beyond 31.05.2015 for the period from 01.06.2015 to 30.09.2015. 27. From the facts and contentions noted above, it emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No. 36/2010-Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner's request for amending the shipping bills to incorporate 'declaration of intent', has furnished comments on the issue to the respondent No. 6 - Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petition....
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....pping bills are required to be amended by the competent authority under section 149 of the Act and was requested to approach the proper officer of Customs under section 149 of the Act, whereupon the petitioner, on 01.08.2017, requested the competent authority to amend the shipping bills under section 149 of the Act at the earliest. 32. Thus, the respondents had not informed the petitioner immediately to get the shipping bills converted into one under the MEIS. It was only after a lot of inter se communication, that the petitioner was advised to get the shipping bills amended and converted to MEIS shipping bills. Upon the petitioner making such application for amendment, after prolonged inter se communications between the respondents as to who had the jurisdiction to decide said application, the same came to be turned down on the ground that the application for amendment had been made beyond three months as stipulated in Circular 36/2010-Customs dated 23rd September, 2010. 33. Circular 36/2010-Customs dated 23rd September, 2010 provides for conversion of free shipping bills to Advance Authorisation /DEPB/Drawback shipping bills and from one export promotion scheme ....
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....ior to 142008, the goods had been exported as free shipping bills. The exporter/appellant's fault here is that it did not file the requisite declaration. In all other respects, I.e. as to whether they conform to the description in the shipping documents and the value, etc. continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the customs authorities. 8. Having regard to these, we are of the opinion that in the peculiar circumstances of the case, the omission to file the declaration of the kind we are concerned with, when all other relative materials are present was not vital to the appellant's case. The material which did and does exist is substantial; the appellant should, therefore, be permitted to amend its shipping bill. The respondents are directed to give effect to this order within the next two months. The appeal is consequently allowed." 36. In the opinion of this court, the above decision would be squarely applicable to the facts of the present case. As is evident from the letter dated 07/08.09.2019 (Annexure-O to the petition), the Deputy Commissioner of Customs, Kandla SEZ, Gandhidha....
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....ing bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority. The respondents shall give effect to this order within two months from the date of receipt of copy of this order. Rule is made absolute accordingly, with no order as to costs." 12. The Court thus had recognised the fact that the eligibility of the petitioner to claim benefits under the MEIS scheme has not been questioned. The only hurdle was that the shipping bills were free shipping bills and there was no declaration of intent made. The petitioner needed to get the shipping bills amended by incorporating the declaration of intent as provided under the MEIS and it had taken aid of various circulars to allow that petition. 13. In the instant case, as noted hereinabove, there is no doubt with regard to the exports having been made under the FTP 2015-20 where, initially, Sri Lanka was not one of the countries where such reward was available on export to the said country. The petitioner has already exported its product 'vitrified tiles' to Sri Lanka and 73 shipping bills have also been produced before the respondent authorities. What has been p....
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....s have been cleared for the home consumption and deposited in the warehouse where export goods have been exported, except on the basis of the documentary evidences, which are in existence at the time of the clearance, deposit or the export of the goods, as the case may be. In the electronic age, all procedures have been simplified and the EDI is essentially keeping pace with the electronic age. The simplification of this process shall have to be viewed for the benefit of the exporters for whose benefit the scheme has been brought by the Centre as availment of benefits is in no manner going to have any bearing adversely on the exchequer; And, even otherwise, it is essentially to avail the exporter the benefits prescribed under the MEIS that the request has been sent by the petitioner to make the same available to it. Therefore, it is also expected of the respondent authority to adopt an approach, giving progressive interpretation to all these provisions and the policy decisions rather than having conventional outlook. 17. We also cannot overlook a noticeable fact in this communication where there is a specific reference of the decision of the High Court of Madras and the ap....
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....e in his individual case, and all the relevant facts including the proportion in which the materials or components or input services are used in the production or manufacture of goods and the duties paid on such materials or components or the tax paid on input services have to be submitted with such application as mandated under Sub Rule (1) of Rule 6. Thereafter, as laid down under Clause (b) of Rule 6(1), the proper Revenue Officer would make an enquiry and determine the amount or rate of Drawback in respect of such goods; which is the brand rate for that particular case. 26 Since the Petitioner M/s. Terra Films Pvt. Ltd. before the Delhi High Court was claiming Drawback at the brand rate, proper verification and enquiry into the raw materials, components and input services used by them and also the duties and taxes actually paid on such input transactions were required to be conducted. Only then, the brand rate of drawback could have been fixed for the goods exported by the said exporter. But the goods were exported by M/s. Terra Films Pvt. Ltd. during September, 2004 to April, 2005 (as recorded in para 2 of the judgement), and the request for conversion of the shipping....
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....nd rate, and therefore, the denial of the exporter's claim in that case could be said to be in accordance with the Scheme of Section 149 of the Customs Act read with Rule 6 of the Drawback Rules. 29 The Delhi High Court has not followed the judgement in case of M/s. Terra Films Pvt. Ltd. while deciding a subsequent case of M/s. Kedia Agencies (P) Ltd. reported in 2017 (348) ELT 634 (Del.); and it is observed at para 7 of judgement in Kedia Agencies (P) Ltd. as under:- "............at the time, just prior to 1.4.2008, the goods had been exported as free shipping bills. The exporter/appellant's fault here is that it did not file the requisite declaration. In all other respects, i.e. as to whether they conform to the description in the shipping documents and the value etc., continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the Custom authorities." 30 This latter judgment in Kedia Agencies (P) Ltd. referred to above has been considered by this Court in M/s. Raj and Company (supra). decided on 8th February 2021 and concurred with. In para 11 of the judgement in M/s. Raj and Company, the relevant....
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.....10.2017 to 31.03.2020 from EPCG/Free to DBK Shipping Bills. In this regard it is to inform that the request for conversion of the above said Shipping Bills (list attached with your letter dated 01.07.2022 as annexure-A, B & C) has been rejected by the Competent Authority as you have not applied for the said conversion within the prescribed time limit as stipulated in Para 3 (a) of Circular No. 36/2010-Customs dated 23.09.2010. This is for your information please." 12. The aforesaid communication clearly shows that the respondent No. 3 has ignored the binding decision of this Court. 13. Moreover, the regulations have come into effect from 22.02.2022 with prospective effect as stated in the regulation No. 1, which reads as under: "1. Short title and commencement- (1) These regulations may be called the Shipping Bill (Post export conversion in relation to instrument based scheme) Regulations, 2022. (2) They shall come into force on the date of their publication in the Official Gazette. (3) These regulations shall apply to shipping bills or bills of export filed on or after the date of publication of these regulations in the ....