Whether conversion of shipping bill under drawback scheme to advance licence scheme possible?

PJ-Case law-2013/14-1585

Case: - CHERMA'S EXQUISITE LTD. VS COMMR. OF CUS. (EXPORTS), CHENNAI

Citation: - 2013 (288) E.L.T. 545 (Tn. - Chennai)

Brief facts:- The facts of the case are that the appellants filed a shipping bill on 2-7-2009 for export of ready garments under advance licence cum duty drawback scheme. Thereafter, they moved an application for conversion of the part of the consignment under drawback scheme to advance licence scheme on 15-9-2009. As the appellants were given the benefit of drawback scheme before their filing of the request on 15-9-2009 and considering the fact that the appellants are not entitled for benefit of conversion as per board’s circular No. 4/2004-Cus., dated 16-1-2004, their request for conversion from duty drawback scheme to advance licence scheme was denied. Against the said order, the appellant is in appeal before the tribunal.

Appellant contention :- On the behalf of the appellants, Shri A.K. Jayaraj, Advocate appears and submits that although the duty drawback scheme has been sanctioned but the appellants are ready to pay back the duty drawback claimed along with interest till the date when the conversion is allowed. He further submits that they are entitled for conversion of shipping bill from drawback scheme to advance licence scheme as per Board’s Circular No. 4/2004-Cus., dated 16-1-2004 as their claim for conversion to advance licence scheme was not denied by the DGFT, Department of commerce or the Customs due to any dispute. Further he submitted that as part of the consignment was under advance licence scheme and a part of the consignment was under duty drawback scheme and the consignment was examined at the time of export of the goods, and all the documents available at the time of clearance of goods as required by section 149 of the customs act, 1962, therefore, their claim for conversion from duty drawback scheme to advance licence scheme be granted.

Respondent contention:-The learned SDR strongly opposed the contention of leaned counsel and submitted that as the appellants have already got duty drawback sanctioned by the adjudicating authority, therefore, they cannot take cannot take double benefit at this stage. Further, he submitted that the adjudicating authority has considered their claim from all the angles and thereafter has come to the decision that their request for conversion from duty drawback scheme to advance licence scheme cannot be accepted on the premise that for export under advance licence scheme requires rigorous examination of goods as compared to the duty drawback scheme and the quantities mentioned in the advance licence has already been exported by the appellants. Therefore, they cannot export more quantity against the licence.

Reasoning of judgement: -Considering the submissions made by both sides, in this case, the appellant filed a shipping Bill no. 3419019 on 2-7-2009 for export readymade garments. Part of the consignment was under advance licence scheme and part of consignment was under drawback scheme. The request for conversion was made on 15-9-2009 within 2.5 month for conversion of drawback scheme to advance licence No. 0910037756. The denial was made on the following grounds:-
(a) the drawback has already been sanctioned.
(b) They are not covered by Board’s circular No. 4/2004-Cus., dated 16-1-2004 and
(c) Goods require rigorous examination at the time of export under advance licence scheme.

With regard to first ground for denial, the appellants are ready to pay drawback availed by them along with interest. Therefore, the claim cannot be denied on the ground. The denial on the second ground that the Board’ Circular No. 4/2004-Cus., dated 16-1-2004 is not sustainable as the conversion under advance licence scheme has not been denied by the DGFT or ministry of commerce or customs due to any dispute therefore, conversion from drawback scheme to advance licence scheme is available to the appellant. Further, part of the consignment was under advance licence scheme and part of the consignment was under the drawback scheme and at the time export, the consignment was examined by the customs authorities as per advance licence scheme. Therefore, conversion can be allowed and cannot be denied on this premise only. The contention of learned SDR that the appellants have already fulfilled the export obligation against licence No. 010037756, therefore, they are not entitled to take benefit of the said licence is not sustainable as the revenue is getting the amount paid to the appellants under drawback scheme along with the interest and it is immaterial whether they will get benefit under the advance licence scheme or not. Therefore, the impugned order is set aside and appeal is allowed to with consequential relief. Appellant shall approach within 15 days of communication of this order before the authorities concerned with a proof of payment of duty drawback along with interest for conversion of their shipping bill from drawback scheme to advance licence scheme and thereafter within 15 days, the adjudicating authority shall allow conversion of shipping bill from duty drawback scheme to advance licence scheme as per section 149 of the customs Act, 1962.

Decision: -Appeal Allowed.

Comment:-The Analogy drawn from this case is that if export is made through shipping bill under duty drawback scheme then that shipping bill can be converted from drawback scheme to advance licence scheme on payment of drawback claimed earlier along with interest as per the section 149 of the Customs Act, 1962.

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PJ-Case law-2013/14-1585

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