ORDER
S.S. Sekhon, Member (T)
1. M/s. Man Industries (I) Ltd. vide Shipping Bill No. 1000017585, 1000017579 1000017580 all dated 25-10-2002 exported “carbon steel submerged ARC welded pipes” under DEPB Scheme. Vide letter dated 23-12-2002 they requested Dy. Commissioner/Export Department for conversion of above mentioned three DEPB Shipping Bills under DEPB Scheme to DEEC Scheme. Exporter submitted that they have filed above mentioned Shipping Bill under DEPB Scheme by mistake. They also submitted a copy of Advance Licence No. 0310156546 dated 3-9-2000 and submitted that the company is a Registered Export House and have been accredited with ISO 9002 certification for the manufactures of quality products. They also submitted that they had already submitted the Chartered Engineer Certificate certifying the inputs used in the resultant export product which is mandatory for logging the DEEC.
1.2 Exporters request was examined in the light of Standing Order No. 7078 dated 20-1-1995, they were to declare the exempted material used in manufacture of the resultant export product at the time of export, as the same is to be examined at the time of examination of the goods. Since no declaration regarding inputs used in the manufacture of the resultant export product was made by the exporter at the time of export and also there was no Standing Order for conversion of DEPB Shipping Bills to DEEC Shipping Bills, they were asked to explain, why their request for conversion should not be rejected?
1.3 The exporter submitted that they had provided Chartered Engineer Certificate certifying the inputs used in the resultant product. They also submitted that during the verification of Advance Licence with the Shipping Bills and other documents after obtaining the Export Obligation Discharge Certificate from Jt. DGFT, Department can verify the inputs used in the resultant product. Exporters vide letter dated 9-4-2003 reiterated what they submitted vide their letter dated 23-1-2003 as already discussed/stated above. As per Chartered Engineer Certificate dated 27-12-2002, exempted material i.e. HR Coils/Plates, Welding Flux, Welding Wire, Grinding Wheel, CO2 Wire, Cutting Oil, Oil and Lubricant, Rust Preventive and X-Ray Films are used in the manufacture of the resultant product i.e. Carbon Steel Submerged ARC Welded Pipes and rare of the same description as mentioned in the Advance Licence No. 0310156546 dated 3-9-2002.
1.4 Vide Letter dated 27-8-2003 exporters undertook that they will claim only HR Plates, Welding Flux, Welding Wire, CO2 Wire and X-Ray Films used as inputs (exempted material) in the manufacture of the resultant export product covered under above Shipping Bills. Again vide letter dated 29-8-2003 they reiterated that by mistake the DEPB Shipping Bills have been filed instead of DEEC Shipping Bills. They submitted that they had already imported the HR Plates Welding Wire, Welding Flux, X-Ray Films against the Advance Licence No. 0310156546 dated 3-9-2002
1.5 Exporter vide letter dated 13-11-2003 submitted a certificate dated 29-10-2003 issued by the Supdt. Customs & Excise, Pithampur certifying that M/s. Man Industries (I) Ltd. imported HR Plates under Advance Licence No. 0310156546 dated 3-9-2002 and manufactured and exported Carbon Steel Submerged ARC Welded Pipes.
1.6 Instructions in way of Board Circular No. 4/2004-Cus., dated 16-1-2004 regarding conversion of Shipping Bills from one export promotion scheme to another export promotion scheme were issued. Request of the exporter was examined in view of Board Circular No. 4/2004-Cus., dated 16-1-2004 and the same was rejected as pre condition of the referred circular is that the conversion of Shipping Bill from one export promotion scheme to another promotion scheme is allowed only in cases where the benefit of an export promotion scheme claimed by the exporter has been denied by DGFT/MOC or Customs due to any dispute. The same was conveyed to exporter by Assistant Commissioner/Gr. VII vide letter No. F. No. S/6-DEPB-MISC-1147/2003 dated 20-1-2004.
1.7 Aggrieved by the order of the Commissioner (EP) conveyed by AC/Gr VII vide letter dated 20-1-2004 rejecting the request for conversion of Shipping Bills from DEPB Scheme to DEEC Scheme, M/s Man Industries (I) Ltd. filed an appeal before Commissioner of Customs (Appeals) and prayed:
(i) That the impugned order (letter dated 20-1-2004) be quashed and set aside.
(ii) That any further and other reliefs as deemed necessary may be granted.
Commissioner (Appeals) dismissed the Appeal vide Order-in-Appeal No. 503/2004-MCH dated 31-8-2004 on the ground that Appeal against the order/decision of the Commissioner lies to the Tribunal and Appeal filed before Commissioner (Appeals) in such cases is beyond jurisdiction.
1.8 M/s. Man Industries (I) Ltd. filed an Appeal before CESTAT, West Regional Bench at Mumbai, where vide an Order No. A-146/WZB/2005/CI dated 14-2-2005 [2005 (184) E.L.T. 39 (Tri. – Mumbai)], the Bench observing that the Commissioner has refused permission for conversion only on the basis of Circular No. 2/2004, such denial cannot be sustained in view of the circulars in force during the pendency of the application for conversion and the Tribunal’s order in the case of Sumruti Pottery Works v. CC Kandla and. Sanghi Industries Ltd. v. CC, Jamnagar. Since there is no finding by the Commissioner in the entitlement of the appellants to conversion on the basis of the circulars and decision, CESTAT set aside the order and remanded back the case to the jurisdictional Commissioner for fresh decision in the light of the Board’s Circular No. 6/2003-Cus., dated 40/2003-Cus. and Tribunal’s order in Smruti Pottery Works and Sanghi Industries Ltd. . CESTAT also directed the jurisdictional Commissioner to pass fresh order after extending reasonable opportunity of hearing to the appellants.
1.9 As per the directions of the CESTAT Commissioner of Customs (EP) granted personal hearing to M/s. Man Industries (I) Ltd. on 10-11-2005 and by the order now impugned before us, the Commissioner (EP) found-
“As per Paras 3 & 4 of Board’s Circular No. 6/2003 dated 28-10-2003, in cases where the exporter wanted to avail benefit of a particular export promotion scheme but he was forced to file a free shipping bill by customs or in cases where benefit of an export promotion scheme was denied to the exporter by Customs or DGFT, in all such cases conversion of shipping bill may be allowed subject to certain conditions. As per circular referred, following types of conversion of Shipping bill may be allowed:
1. Where the exporter wanted to avail benefit of an export promotion scheme (including DBK) but he was forced to file free shipping bill.
2. Where an exporter had filed Shipping Bill under a particular export promotion scheme but benefit of that scheme was denied to him by DGFT or Customs.
Also as per Board Circular No. 40/2003 dated 12-5-2003, conversion of Shipping Bills from one export promotion scheme to another (where the benefit of that scheme has been refused by Customs/DGFT vide para 4 (ii) of DOR Circular No. 6/2003-Cus., may be permitted by the Commissioner on case to case basis.
Here, I find that the exporters M/s. Man Industries (I) Ltd. were entitled to avail the benefits of DEEC Scheme but they suo motu and on their own choice preferred export under DEPB Scheme. I observe that this case does not come under the types of cases of Conversion of Shipping Bills as per Paras 3 & 4 of the Board’s Circular No. 6/2003 dated 28-1-2003. Also this case is not covered under Circular No. 40/2003-Cus. dated 12-5-2003 which clearly states that conversion of Shipping Bills from one export promotion scheme to another (where the benefits of that scheme has been refused by Customs/DGFT vide Para 4(ii) of DOR Circular No. 6/2003-Cus.) may be permitted on merits by the Commissioner on case to case basis. There is no such refusal by Customs or DGFT under Para 4(ii) of the Circular No. 6/2003 ibid. In fact, the request for conversion is an afterthought and not merely a mistake. I find the benefit of the Export Promotion scheme has not been denied by DGFT, Ministry of Commerce or Customs.
As regards submission of the exporters during Personal Hearing that request for conversion from DEPB to DEEC was made within one month of the export in December 2002,1 observe that there is no such condition for conversion of Shipping Bills in Circular No. 6/2003 and 40/2003 but a condition stipulated in para 3.2 (a) of Circular No. 4/2004-Cus., dated 16-1-2004 and already submitted by the exporters that they do not fall under the Board’s Circular No. 4/2004-Cus., dated 16-1-2004. Since Board’s Circular Nos. 4/2004 supersedes earlier DOR Circular Nos. 6/2003-Cus., dated 28-1-2003 and 40/2003-Cus., dated 12-5-2003, so the exporter cannot claim benefit of one condition of Board’s Circular No. 4/2004 and request conversion under Board’s Circular No. 6/2003 & 40/2003.
I observe that the basic condition for conversion of Shipping Bill from one export promotion scheme to another export promotion scheme is same in all the Circulars issued by the Board on this issue.
I observe that all details such as SION Sr. No., Product Code and DEPB rate notified were mentioned in the Shipping Bills and also all declarations required for filing of DEPB Shipping Bills were made on/attached with the Shipping Bills by the exporter which clearly shows the intention of the exporter to avail the benefit of DEPB scheme and not of DEEC Scheme as they had not made declaration regarding exempt material used in the manufacture of the resultant export product required at the time of export. This also makes it evident that their plea of mistake is nothing but afterthought. Since Shipping Bills were filed under DEPB Scheme, examination Order by the assessing AO and examination report by examining AO were in the light of S.O. No. 7300/97 and 7306/97, which elaborate the export procedure under DEPB Scheme. I observe that exporter applied for conversion of DEPB Shipping Bills to DEEC Shipping Bills on 23-12-2002 when they later realised that exporting the subject goods under DEPB Scheme they would get higher incentives on account of Duty foregone benefit under DEEC as compared to benefit under DEPB Scheme.
In case of Stnruti Pottery Works v. CC, Kandla, advocate for the appellant submitted that appellant exported consignment of sanitary wares under Shipping Bills and they wanted to avail the benefits of DFRC in respect of their exports which has been refused by the Customs Authorities as the certificate from Central Excise Officers listing the inputs used in the manufacture of the exports product was required, that in these circumstances they were forced to file Free Shipping Bills. He also submitted that their request for conversion of Free Shipping Bill to DFRC Shipping Bill was rejected on the ground that they had not established that they were forced to file Free Shipping Bill and they have not proved use of inputs in the resultant export product as under the DFRC Scheme. In Sanghi Industries case, the issue is similar to that of Smruti Pottery, & thereafter relying on the case laws rejected the request of conversion of the Shipping Bills.
Hence this appeal.
2.1 The request of the appellant for conversion of the Shipping Bills was made in terms of the statutory rights available to the appellant under Section 149 of the Customs Act, 1962. The said section entitles the proper officer of Customs to direct amendment of any document, after it has been presented in the Custom House. By the application of conversion of the Shipping Bill, appellant was requesting the proper officer, to exercise this statutory power vested in such authority, to amend a Shipping Bill. The statutory conditions subject to which such amendment could or could not be made is described in the proviso to Section 149 of the Customs Act, 1962, which reads as:
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.
It is not in dispute that the requirements of abovementioned proviso are satisfied by the appellant and consequently Commissioner ought to have allowed the request for conversion in stead of “bound” by the terms of a Board circular which laid down certain situations, only in which conversion was permitted. That the appellants case was not specifically covered by one of the situations contemplated in the Board’s circular cannot deny the appellants statutory right, to seek any amendment & same is lost. The statutory right, as also the statutory obligation of the proper officer to amend a document after its presentation in the Custom House cannot be curtailed or set to naught by circulars of the Board. The approach adopted by the Respondent has the effect of inferring from & conferring upon the Board Circular, a status of a statute overruling the proviso to Section 149 of the Customs Act, 1962 which is impermissible.
2.2 The Commissioner has clearly overlooked only circulars which are benevolent to the assessee that are binding upon the department and not circulars which seek to curtail statutory rights. This proposition is clearly laid down by the Hon’ble Supreme Court in the case of Collector of Central Excise, Patna v. Usha Martin Industries , wherein it was held that:
21. Through a catena of decisions this Court has pronounced that Revenue cannot be permitted to take a stand contrary to the instructions issued by the Board. It is a different matter that an assessee can contest the validity or legality of a departmental instruction. But that right cannot be conceded to the department, more so when others have acted according to such instructions,
The Supreme Court thus makes it clear that while a benevolent Circular is binding on the department and an assessee is always entitled to dispute the applicability & correctness of a Board’s Circular. By application of this principle, it ought to be held that even if the appellants’ case did not fall within four corners of the Board’s Circulars in question, the claim was eligible for consideration independently subject to provision of Section 149 of the Customs Act, 1962 and, in view of the facts and circumstances of the case, particularly the undisputed position that the entire claim for conversion of the Shipping Bills was based on documentary evidences in form of Chartered Engineers, & Range Superintendent of Central Excise certificates, arrived at on documents and material anterior to export i.e. which were in existence at the time of export of the goods, as is the requirement in the proviso to Section 149.
2.3 Since the entire claim of the appellant is established on the basis of documentary evidence already in existence at the time of export, there was no valid reason for the Commissioner to have refused such an amendment. The impugned order passed is therefore clearly untenable and is to be set aside.
2.4 The Commissioner has also erred in not following the ratio laid down by this Tribunal in the case of Smriti Pottery Works v. CC, Kandla and the reasons assigned by the Commissioner is clearly incorrect.
3.1 In view of the findings hereinabove, the order is set aside and the appeal is allowed.
(Pronounced in Court.)