M.V. Ravindran, JM.

1. The appellant M/s V.R.A. COTTON MILLS PVT LTD, New Delhi 110048 has filed this appeal against the Order by commissioner of Customs(Prev), Jamnagar wherein ld commissioner has rejected Appellant’s request filed on 20-07-2013 for conversion of Shipping Bill from Duty Free Import Authorisation [DFIA] to Drawback scheme on the basis of a CBEC Circular No. 36/2010-Cus., dated 23-9-2010 which has provided one of the condition in para 3(a) that request for such conversion is to be made by exporter within three months from the date of the Let Export Order (LEO).

2. The facts, in brief, are that the appellant is exporter who applied for DFIA to DGFT who had issued DFIA No. 0510306798 dt.31.10.2011 with export obligation of Rs. 25 croes. Thereafter, Appellant exported 10 consignments of Raw Cotton of CTH 5201 totally v/a Rs. 13.51 crores under DFIA shipping Bills. The appellant’s export was to China and such exports were on ‘quota basis’. Since Appellant could not fulfill export obligation, Appellant requested DGFT, New Delhi for cancellation of DFIA in terms of Para 4.28(e) of HBP Vol-I 2009-14 vide their request dt. 28-06-2013. Considering no imports made against said DFIA, DGFT New Delhi cancelled DFIA No. 0510306798 dated 31-10-2011 vide their communication dated 10-07-2013. After cancellation of DFIA No. 0510306798 dt. 31-10-2011, appellant requested the commissioner of Customs(Prev), Jamnagar for conversion of Shipping Bills from DFIA to Drawback scheme on 20-07-2013, which has been rejected only on the ground that request for conversion is not made by the exporter within three months from the date of the Let Export Order (LEO).

3. During personal hearing, on behalf of Appellant shri P.P. Jadeja argued that the appellant is exporter of the Indian Raw Cotton of CTH 5201 who has fulfilled export obligation under DFIA scheme in past cases and availed such benefits on export of goods, without any dispute from either side. He also argued that Appellant is eligible for the substantial benefit on the exports made by them and submitted a written brief containing relevant documents for export, decisions, Circulars etc and argued that such conversion of Shipping Bill from DFIA to Drawback can also be allowed considering on the following grounds :-

i) The documents like contracts, Test analysis reports by Cotton Association of India are existing and available on record for perusal. Concerned Shipping Bills were presented at Pipavav port for allowing exports under DFIA were signed by Customs officers. Bills of Lading, Shipping Bills, B.R.C. showing realisation of sale proceed of exported goods etc specifically indicate that the goods which were cleared for export was Indian Raw Cotton Shankar-6 of CTH 5201.

ii) Under DFIA, appellant had benefits of about 1.5 %, whereas under Drawback scheme, appellant eligible for benefit of 1 % only.

iii) The Cotton Association of India, an independent analytical laboratory had analysed all specific consignments which were exported; that such Test & Analysis reports indicate that the goods were ‘Indian Raw Cotton Shankar-6 of CTH 5201’. Perusal of the analytical certificate given by M/s Cotton Association of India co-relate goods with the Shipping Bills, wherein the description was given as Indian Raw Cotton Shankar-6 of CTH 5201.

iv) There can be no dispute to certificate by M/s Cotton Association of India who are one of the Government of India’s recommended and authorized analytical laboratories. There is no reason why the benefit of said Test reports should not be extended to cover the case of the appellant in seeking conversion of DFIA Shipping Bills into Drawback Shipping Bills, when there is a unimpeachable evidence of export of the Indian Raw Cotton of CTH 5201.

v) It is also submitted that Hon'ble High Court of Mumbai in the case of Repro India Ltd - 2009 (235) ELT 614 (Bom.) has specifically laid down in Para 8 which read that the intentions of the Government is not to export taxes but only to export the goods. In the case in hand, if the duty drawback is not allowed to appellant, the appellant is perforce required to export the taxes, which gets included in the FOB value. This being not the intention, conversion of DFIA Shipping Bills into Drawback Shipping Bills needs to be allowed.

vi) Substantial benefit available otherwise could not be denied for the procedural aspects like in this case. Making request for conversion is a procedural aspect, when the export of goods is the prime condition. Therefore, when the export is not in any dispute, substantial benefit attached to export can not go away on procedural aspects.

vii) The provisions of Rule 12(1) of Customs & Central Excise Duties Drawback Rules, 1995 (Drawback Rules) and also proviso empowers the Commissioner to condone non-observance of provisions of Rule 12 and allow drawback. As such non-observance of condition was beyond appellant’s control. The appellant’s export was only to China and such exports were on ‘quota basis’ and that when such quota for export to China was already exhausted by other such exporters, there was no possibility for the appellant to export further quantity to China;

viii) After exports against DFIA scheme, there was no imports made by the appellant. Hence appellant has not received any benefits on exports.

ix) There is no distinction in the DFIA or Drawback Shipping Bills except showing that the said export is made under claim for drawback or DFIA. Commissioner is empowered to condone non-observance of procedure under Rule 12(1) irrespective of the claim for drawback made on the Shipping Bill or not. The time limit of 3 months has been made only by the CBEC by circular without authority of law such time limitation by Circular is not supported by the Act or Rule or the law established.

x) The provisions of Rule 12(1)(a) of Drawback Rules, require an exporter to declare on the shipping bill, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback, and if so, at what rate or rates and make a declaration on the relevant shipping bill that a claim for drawback is being made and in respect of duties paid on containers packing materials service tax etc. no separate claim for rebate of duty has been made. The Commissioner is empowered to allow drawback or shipping bills which may not contain any of these details. This is nothing but an amendment of the shipping bill filed or conversion. The circular issued by the Board goes beyond the rules. In fact Section 149 of Customs Act, 1962 clearly permits amendment of shipping bill. The section is reproduced below:

'Section 149: Amendment of documents. - Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorize any document, after it has been presented in the custom house to be amended:

Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorized 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.'

xi) It may be seen from the section reproduced above that amendment of shipping bill can be permitted even after the goods have left the country if the basis for amendment is documentary evidence.

xii) It has been claimed by the appellants that documentary evidence is available to show the necessary details required for the purpose of considering drawback. The Commissioner has failed to take note of the provisions of Section 149 which empowers him to consider amendment and if the amendment was to be made on the basis of documents, the applicant would have been benefited. Since Boards circular also does not clearly provide that Commissioner cannot allow amendment under Section 149 of Customs Act 1962, Commissioner could have considered the request under this section. Since Raw cotton according to the appellants has been exported the quantity, description and other details would have been verified since let export order is given in the case of ships by the customs officers after loading takes place.

xiii) Purpose of putting such such condition of time limitation is that conversion is not matter of right and it should not result in availment of double benefits. In case of abnormal delay in making such request for Conversion of shipping bill, Department would not be in a position to ascertain as to whether duty free goods were utilised in export product. However, in the present case, since there is no import, the question of any benefit is not taken at all so far.

xiv) Under these circumstances we request to direct the Commissioner to allow conversion of the shipping bills into drawback shipping bills and eligibility of the appellants to drawback, the amount of drawback etc. would be decided in accordance with law by the appropriate authorities of customs.

xv) We also rely upon following Rules regulations, Circulars decisions:-

a) Para 4.28(e) of HBP Vol-I 2009-14

b) Rule 12 of Customs, Central Excise Duties And Service Tax Drawback Rules

c) Drawback Schedule for CTH 5201

d) 2012(281)ELT-173(Ker) - Leotax vs UOI

e) 2013(298)ELT-123(Tri-Ahd) - Rajguru Impex (India) Ltd. vs C/

f) 2010 (259) ELT 295 (Tri-Ahmd) - ESSAR OIL LTD

g) 2013 (288) ELT 265 (Tri - Che.) - Diamond Engg. (Chennai) P. Ltd.

h) 2011 (269) E.L.T. 378 (Tri. - Che) - ITC LIMITED vs C/

i) Order No. A/10565 / 2014 dt. 09.04.2014 in Appeal No.C/39/2012-DB filed by Essar Oils Ltd

j) 2002 (141) E.L.T. 394 (Tri. - Kol) - TERAI OVERSEAS LTD.

k) Ltd. Head Notes of some relevant decision on conversion of shipping Bills

l) CBEC Circular No. 36/2010-Cus., dated 23-9-2010

m) CBEC Circular No. 48/98-Cus., dated 15-7-1998

n) CBEC Circular No. 74/97-Cus., dated 30-12-1997

4. On the other hand, Shri S.K. Mall, SDR reiterated the impugned Order and draw attention to provisions of Section 149 of Customs Act 1962 and argued that Section 149 cannot be interpreted to hold that an Appellant can file application for conversion of the Shipping Bills at any point of time. He would submit that the adjudicating authority has correctly come to the conclusion that the appellant herein had not justified the conversion when Appellant has submitted request after 3 months of LEO. He also argued that the appellant having filed Shipping Bills with claim of DFIA for export benefit, exports were allowed by the Department as claimed. The appellant has not filed shipping Bills under Drawback scheme at the time of export and hence they are not eligible for such a request made for conversion of shipping Bill from one scheme to other scheme after 3 months of LEO. He has also argued that although Section 149 of Customs Act 1962 provides for amendment of documents, it does not envisage conversion of Shipping Bill from one export promotion scheme to the other. He relied upon decision of in case of Commr. of Cus. (Seaport-Export), Chennai Vs Suzlon Energy Ltd. Reported in 2013 (293) E.L.T. 3 (Mad.).

5. Hearing submissions made at length by both sides and perusing relevant case records, It is seen that there is no dispute on the facts of case. Appellant was issued DFIA. Appellant has exported 10 consignments of Raw Cotton of CTH 5201 under cover of DFIA shipping Bills. Since Appellant could not fulfill export obligation, they requested DGFT, for cancellation of DFIA in terms of Para 4.28(e) of HBP Vol-I 2009-14 and considering no imports made against said DFIA, DGFT New Delhi cancelled DFIA on 10-07-2013. After cancellation of the said DFIA, appellant requested the commissioner of Customs (Prev), Jamnagar for conversion of Shipping Bill from DFIA to Drawback scheme on 20-07-2013, which has been rejected as request for such conversion is not made by exporter within three months from the date of Let Export Order (LEO).

6. The issue involved in this case is whether the appellant’s application for conversion of Shipping Bills from DFIA to Drawback scheme needs to be allowed or otherwise, when such application filed on 20-07-2013 is made after the goods have been exported, no imports are made against such DFIA and cancellation of such DFIA on 10-07-2013 by DGFT.

7. The undisputed facts are that documents relating to the exports i.e. Invoice, Shipping Bills, Bills of lading and the Bank Realization Certificate clearly indicate that the goods were exported and said goods were described in documents as ‘Indian Raw Cotton Shankar-6 of CTH 5201’. It is also undisputed that the appellant has exported the said goods and subsequently not imported any goods as per the DFIA, which has been cancelled by DGFT on 10-07-2013. Thus, there will be no imports under the said DFIA.

8. On this factual background, I have to consider the submissions made by both sides and I find that the submissions made on behalf of the Appellant needs to be accepted for more than one reason as under.

8.1 I find that DFIA in terms of Para 4.2.1 of Export- Import Policy, issued is to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. Similarly, Para 4.2.6 shows that Once export obligation has been fulfilled, request for transferability of Authorisation or inputs imported against it may be made before concerned authority. Once, transferability is endorsed, authorisation holder may transfer DFIA or duty free inputs. Para 4.28(e) of HBP Vol-I 2009-14 allows cancellation of DFIA when there is no imports made against exports and allows assessee to approach customs for conversion of Shipping Bill under Drawback scheme, for which no time limitation is provided by DGFT.

8.2 I find that Rule 12(1)(a) of Drawback Rules, require an exporter to declare on the Shipping Bill, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to Drawback, and if so, at what rate or rates and make a declaration on the relevant Shipping Bill that a claim for Drawback is being made and in respect of duties paid on containers packing materials service tax etc. no separate claim for rebate of duty has been made. The Commissioner is empowered to allow Drawback on Shipping Bills which may not contain any of these details. The provisions of Rule 12(1) of Customs & Central Excise Duties Drawback Rules, 1995 (Drawback Rules) and also proviso empowers the Commissioner to condone non-observance of provisions of Rule 12 and allow Drawback. This is nothing but an amendment or conversion of the Shipping Bill filed. The circular issued by the Board goes beyond the Rules. In fact Section 149 of Customs Act 1962 clearly permits amendment of Shipping Bill without any such time limit even after export of goods. The section is reproduced below:

'Section 149: Amendment of documents. - Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorize any document, after it has been presented in the custom house to be amended:

Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so authorized 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.'

8.3 Documents submitted by the appellant like contracts for exports, Test analysis reports by Cotton Association of India, Shipping Bills were signed & cleared by proper Customs officers and Bills of Lading, BRC for realisation of currency etc specifically indicate that the goods which were cleared for export were ‘Indian Raw Cotton Shankar-6 of CTH 5201’. Perusal of the analytical certificate given by M/s Cotton Association of India seems to co-relate the goods in the shipping bills wherein the description was given as ‘Indian Raw Cotton Shankar-6 of CTH 5201’.

8.4 Appellant’s submission of non observance of provisions of Rule 12(1) of Drawback Rules could be also treated beyond their control, when export as claimed by appellant was only to China on ‘quota basis’ and when such quota for export to China had been exhausted by other such exporters, there was no possibility for appellant to export any other quantity to China. After exports against DFIA scheme, there was no import by the appellant. Since Appellant could not fulfill export obligation, Appellant requested DGFT for cancellation of DFIA in terms of Para 4.28(e) of HBP Vol-I 2009-14 vide their request dt. 28-06-2013. Para 4.28(e) ibid is reproduced:

e) In case an exporter is unable to complete EO undertaken in full and he has not made any import under Authorisation, Authorisation holder will also have an option to get the Authorisation cancelled and apply for drawback after obtaining permission from Customs authorities for conversion of shipping bills to Drawback Shipping Bills.

Considering no imports made against said DFIA, DGFT New Delhi cancelled DFIA No. 0510306798 dated 31-10-2011 in terms of Para 4.28(e) of HBP Vol-I 2009-14 vide their communication dt.10.07.2013. Thus, in such facts, appellant could have applied for conversion only after getting cancellation of the said DFIA. The appellant applied for such conversion immediately on 20-07-2013, which is within 10 days of such cancellation of DFIA by DGFT.

8.5 I also find that Hon'ble High Court of Mumbai in the case of Repro India Ltd 2009 (235) ELT 614 (Bom.) has specifically laid down in Para 8 which read that the intentions of the Government is not to export taxes but only to export the goods. In the case in hand, if the duty drawback is not allowed to the appellant, the appellant is perforce required to export the taxes, which gets included in the FOB value. In my view, this being not the intention, conversion of Shipping Bills from DFIA to Drawback Scheme needs to be allowed.

8.6 The provisions of Para 4.28(e) of HBP Vol-I 2009-14, Rule 12 of Customs, Central Excise Duties And Service Tax Drawback Rules and section 149 of the Customs Act 1962 has not specifically prescribed any such time limitation of 3 months for applying for the conversion of Shipping Bill.

8.7 I find that in the relied upon decisions on behalf of appellant, 2012(2810ELT-173(Ker)-Leotex vs UOI, the hon’ble High Court has allowed conversion from DEPB to Drawback Scheme observing in Para 4 as under:

'Circular dated 23-9-2010 is not mandatory at all. In fact, the latest Circular dated 23-9-2010 shows that in view of the decisions of the Tribunal and this court on the question, the Government themselves had decided to liberalise the provision regarding even conversion from one scheme to another.'

8.8 I find that in the relied upon decisions on behalf of appellant, 2013(298)ELT-123(Tri-Ahd) - Rajguru Impex (India) Ltd. vs CC, this Bench has also allowed conversion from DFRC to DEPB scheme observing in Para 9, 10 as under:-

'Description of goods in Shipping Bill had to be taken as one covering goods which were exported - Since that description was exactly as mentioned in DEPB schedule, application for conversion had to be considered sympathetically, and allowed - It was more so as EXIM policy was designed to encourage exports and in facts of case liberal view was called for.'

8.9 I find that in the relied upon decisions on behalf of appellant, 2013 (288) E.L.T. 265 (Tri. - Chennai) - Diamond Engg. (Chennai) P. Ltd vs CC, Bench has allowed conversion from DEEC to DEPB observing as under:-

EXIM - Shipping bill - Conversion from ‘Advance Licence to DEPB Scheme’ - Request made after more than one year of export - Request rejected on the ground that Circular No. 36/2010-Cus., dated 23-9-2010 permitted conversion within three months from the date of ‘Let Export’ order and no documentary evidence produced by the exporter which existed at the time of export to support the request - HELD : Circular being beneficiary in nature, issued consequently to a number of Tribunal's decisions holding that amendment of shipping bill after export is governed by proviso to Section 149 of Customs Act, 1962, which prescribes no time-limit for such conversion and if the documentary evidence available at the time of export is produced such conversion needs to be allowed - Circular No. 36/2010-Cus., dated 23-9-2010 and Section 149 of Customs Act, 1962.

8.10 I find that in the relied upon decisions on behalf of appellant, 2010 (259) ELT 295 (Tri-Ahmd) and recent Order No. A/10565/2014 dated 09.04.2014 in Appeal No.C/39/2012-DB in case of ESSAR OIL LTD, Division Bench of this Court has also allowed conversion of Shipping Bill from Free scheme to Drawback scheme considering exports made, Rule 12(1) of Drawback Rules and section 149 of the Customs Act 1962.

9. Ld.Departmental Representativ

e’s reliance on the judgment of Hon'ble High Court in the case of Commr. Of Cus. (Seaport-Export), Chennai Vs Suzlon Energy Ltd. Reported in 2013 (293) E.L.T. 3 (Mad.) may not carry the case of the Revenue any further for the reason that in the said case, conversion was sought from one export benefit scheme into another after importing the goods under DEEC & EPCG and conversion of Shipping Bills. I find that the Hon’ble High Court have perused the Circular No. 36 of 2010, dated 23-9-2010 and observed in Para 17 as under :- 'No doubt, the issue has been considered by the Board in detail and it is stated therein that conversion should be permitted in accordance with the provision of Section 149 of 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 and that the goods were eligible for the export promotion scheme to which conversion has been requested' I find that facts of the said case are totally different than the issue in hand. I find that on deeper perusal of the judgment, it transpires that supporting evidences were not in existence at time of export of goods. In view of this, I find that the Hon'ble High Court has taken a view in facts of the said case, which may be applicable in situation which is similar or identical case. For the case in hand, appellant’s exports are not in any dispute as regards description, quality, quantity, value, BRC etc, having no import against DFIA the substantial benefit on such exports now available need not be denied. 10. Division Bench of this Court has taken view that conversion can be allowed in such cases, I do not find any reason to deviate from such a view already taken. Accordingly, in view of the foregoing, I set aside the impugned order and direct lower authorities to convert DFIA Shipping Bills in this appeal to drawback shipping bills. I also make it clear that I have allowed only conversion into drawback Shipping Bills and eligibility of the appellant to the amount of drawback and its quantum etc. would be decided in accordance with the law by the appropriate authorities of customs. 11. The impugned order is set aside and the appeal is allowed with consequential benefits of Drawback scheme as available in this case.