Legal principle

Conversion of a free shipping bill into a drawback shipping bill is permissible under Section 149 of the Customs Act, 1962, subject to establishment of the identity of the exported goods with the imported goods to the satisfaction of the Commissioner, and the time-limit conditions laid down in the circulars may be waived.

Court decision

The appeal was partially allowed in favour of the appellant: the Tribunal clarified that the Revenue has the power to convert a free shipping bill to a drawback shipping bill under Section 149, subject to establishment of the identity of goods (safeguards under Section 74); the time-limit conditions in the circulars were waived; the impugned order was set aside and the matter remanded to the original adjudicating authority, with liberty to the appellants to produce evidence establishing identity to the Commissioner's satisfaction.

Facts

M/s Air India exported certain items under two free shipping bills dated 16.10.2009 and on 4.2.2010 sought their conversion into drawback shipping bills, claiming the exported goods were the same as those imported vide Bill of Entry dated 20.8.2009 and were exported within two years of importation. The Assistant Commissioner rejected the request both under Section 149 and Section 154 of the Customs Act, 1962, relying on CBEC Circular 4/2004 dated 16.1.2004 advising that conversion of free shipping bills should not ordinarily be allowed. The Commissioner (Appeals) upheld the rejection on the ground that the appellants had failed to approach the Commissioner in terms of Rule 12(1)(a) of the Customs, Central Excise Duty Drawback Rules.

Key provisions

• Section 149, Customs Act, 1962 — Amendment of documents
• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods
• Section 154, Customs Act, 1962 — Correction of clerical errors etc
• Section 75, Customs Act, 1962 — Drawback on imported materials used in the manufacture of goods which are exported