The Kerala High Court has directed the company to drawback the amount along with interest and obtain receipt from the customs department. The appellant has mistakenly mentioned the shipping bills in the Duty Drawback Scheme, instead of the Advance Authorisation Scheme.
The bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. has observed that if the DGFT is satisfied that the appellant has discharged his export obligation through the exports that took place between 10.05.2019 and 25.09.2019, then he shall, without further delay, issue the export obligation discharge certificate to the appellant.
Table of Contents
Background
The appellant/assessee is a private limited company, engaged in the manufacture of plastic packing materials. The appellant imports raw materials for the manufacture of the plastic packing materials, and thereafter, exports the finished packing materials to various countries.
In connection with its export activities, the appellant had applied for and obtained Advance Authorisation Licences from the 4th respondent under the Advance Authorisation Scheme that allowed the appellant to import inputs, required for the manufacture of the export product, free of import duty. It is not in dispute that the appellant availed the benefit of the Advance Authorisation Licences granted to him and imported the inputs for the manufacture of the export product.
As per the conditions of the Advance Authorisation Licences issued to the appellant, the licences remained valid for a period of one year and the export obligation was to be fulfilled within a period of 18 months from the date of issuance of Advance Authorisation. The licences issued to the appellant were dated 26.04.2019, 07.05.2019, and 16.08.2019, respectively.
When the appellant later realised the mistake and was confronted with a notice from the DGFT alleging non-fulfillment of the export obligation, he approached the customs authorities with a request for converting the shipping bills under the Drawback Scheme to shipping bills under the Advance Authorisation Scheme.
The customs authorities took the stand that since the application seeking conversion of shipping bills from one Scheme to another was not permissible in terms of Circular No.36/2010-Customs dated 23.09.2010, the request of the appellant for conversion of the shipping bills could not be entertained.
The Single Judge, who considered the matter placed reliance on the very same Circular that was relied upon by the Customs Authority, and found that the appellant, who was not a novice in the business, had nobody else to blame than himself for the predicament that he found himself in. The Writ Petition was therefore dismissed on the ground that the appellant had not applied for conversion within the time contemplated under the Circular aforementioned, and further that he had sought for a conversion of the shipping bills from one filed under a scheme involving less rigorous procedures (duty drawback scheme) to one filed under a scheme that involved a more rigorous procedure (Advance Authorisation Scheme) and this was not permissible as per the Circular.
Arguments
The appellant argued that the order of the Customs Authorities evidenced a very technical approach adopted by them in matters of foreign trade. The defect was a venial one since the fact of import of raw materials without payment of duty, as also the fact of export of the final product are all evidenced by documents such as the import bills of entry and the shipping bills evidencing export, signed by the customs authorities themselves.
The appellant contended that the appellant had not exported the goods in question. As regards the erroneous filing of the shipping bills in connection with the exports effected under the Advance Authorisation Scheme, it is the submission of the learned Senior counsel that the appellant is prepared to refund the duty drawback amount received by him, together with up-to-date interest, so as to obtain the certificate stating that the exports covered by the shipping bills issued between 10.05.2019 and 25.09.2019 were under the Advance Authorisation Scheme. Towards this end, he has also produced a copy of a certificate issued by a chartered engineer certifying that it was the goods imported duty free that was used in the manufacture of the exported final products.
The appellant contended that the conversion of the shipping bills would enable him to obtain an Export Obligation Discharge Certificate from the DGFT and avoid payment of any differential duty of customs for allegedly violating the terms of the Advance Authorisation Scheme.
The department on the other hand contended that as much as the Customs Authorities are acting strictly in accordance with Circular, and an examination as required under the Advance Authorisation Scheme cannot be conducted at this distance of time, and further, the request of the appellant for conversion of the shipping bills had come beyond the period of three months contemplated in the Circular, the Customs Authorities cannot accede to the request of the appellant for a conversion of the shipping bills.
Conclusion
The court held that the sole mistake committed by the appellant was that, in the shipping bills he had mentioned the Duty Drawback Scheme, instead of the Advance Authorisation Scheme, as the Scheme under which the exports were effected.
While it may be a fact that there is a different level of examination envisaged at the time of export for each of the Schemes, the court was of the view that, at this distance of time, the examination already done on the appellant’s exported products needs to be revisited only if it is established that the earlier examination did not look into aspects that were crucially relevant for exports under the Advance Authorisation Scheme.
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Case Details
Case Title: Shine Flexible Prints And Packs Private Limited V/S Commissioner Of Customs
Case No.: WA NO. 743 OF 2024
Date: 09/10/2024
Counsel For Petitioner: Aditya Unnikrishnan
Counsel For Respondent: M.S. Amal Dharsan
