Cus - Conversion of Shipping Bill - Exporter cannot be penalized for inaction of department - Shipping bill was passed without any objection at time of shipment and it is also not case of department that goods have not been exported and export proceeds has not been realized - appeal allowed: CESTAT
By TIOL News Service
MUMBAI, DEC 19, 2013: THE appellant exported a consignment of 100% cotton yarn dyed Terry Towels under the claim of DEPB scheme under three shipping bills. They claimed benefit of DEPB Credit @ 11% on FOB and obtained a DEPB Licence dated 25.02.2000 having a validity period of 12 months for the duty credit of Rs.1,83,361/-. However, the Dy. Commissioner disallowed DEPB on 22.03.2000 on the ground that the export goods were yarn dyed but not processed and the appellant could not prove the fact of processing of fabric with the help of AR4 in terms of Board's Circular No. 54/99-Cus since the appellant were Merchant exporters.
The appellant approached the Jt. DGFT, Mumbai for the cancellation of the DEPB Licence. The Jt. DGFT vide letter dated 30.03.2001 informed the appellant that the licence had already expired on 25.02.2001.
Earlier, the appellant vide their letter dated 15.09.2000 requested for conversion of shipping bill from DEPB scheme to Drawback. The request was rejected by the Commissioner on the ground that benefit under DEPB and Drawback are operated under two different spheres, and unless the appellant had complied with the provisions of Rule 12(1)(a) of Customs and Central Excise Drawback Rules, 1995 and unless the intention to avail drawback is declared and due procedure is followed conversion from Draw back to DEPB is not feasible.
Before the CESTAT against this order, the appellant submitted that they have applied for conversion much prior to the date their licence expired; the goods were subjected to examination and their claim is allowable in terms of Rule 12(1)(a) ibid as no allegation has been brought against them. Reliance is also placed on the decision in Manawat Plastics Pvt. Ltd. vs. CCE - (2007-TIOL-2393-CESTAT-MUM).
The Revenue representative submitted that the appellant had made the request within one month from the date of denial of DEPB benefits as provided in para 3.2(a) of Circular No. 4/2004-Cus dated 16.01.2004.
To this submission the appellant interjected by saying that they had applied for the conversion of shipping bill from DEPB to Drawback scheme much prior to rejection of the request (in 2000) but their file was missing for the last five years in the department and only on 05.12.2006 the Commissioner has taken a decision on their request.
The Bench observed -
"7.1 Undisputedly the export was made under the DEPB scheme and no objection was raised at the time of export of the goods. I find that only at the time of DEPB verification only the Dy Commissioner has raised the objection thereafter the appellant applied for conversion of DEPB shipping bill to Drawback shipping bill. Rule 12 of Rule ibid provides for conversion of Shipping Bill. The Rule is reproduced here-in-under for convenience of reference:…"
9. From the above it follows that Commissioner of Customs can exempt such exporter or his authorized agent from the provisions of above clauses. Admittedly, it is not the case of the department that the appellant failed to comply with the aforesaid provisions. The shipping bill was passed without any objection and goods were allowed to be re-exported…."
After extracting paragraph 6 from the decision passed by the Tribunal - (2010-TIOL-1903-CESTAT-MUM) after the order cited by the appellant was remanded by the High Court, the CESTAT concluded -
"10. Considering the fact that shipment had taken place in the year 1999 and the department took about 7 years to decide the request of the appellant and in this manner 14 years had lapsed since the shipment was made. If the case is remanded to the ld. Commissioner for deciding the issue it is not certain as to how much more time it would take the matter. It is pertinent to mention here that DEPB shipping bill has to undergo higher amount of rigour in comparison to Drawback shipping bill. The shipping bill was passed without any objection at the time of the shipment as already discussed (supra). Further it is not the case of the department that the goods have not been exported and reached to destination and the export proceeds has not been realized nor it is the case of the department that the appellants are claiming double benefit under two different schemes. The exporter cannot be penalized for the inaction of the department at the time of allowing the shipment and thereafter."
In fine, the Bench allowed the conversion of Shipping Bill from DEPB to Drawback and directed the authority concerned to decide the drawback claim expeditiously as per law.
(See 2013-TIOL-1883-CESTAT-MUM)
