Legal principle

A request under Section 149 of the Customs Act, 1962 for conversion of free shipping bills into drawback shipping bills cannot be rejected without affording the exporter an opportunity of hearing — an order passed without such hearing violates the principles of natural justice and must be set aside and remanded for de novo consideration.

Court decision

The Tribunal allowed the appeal and set aside the impugned order solely on the ground that it was passed in violation of the principles of natural justice, without deciding the merits of the conversion claim. The matter was remanded to the Commissioner for de novo reconsideration of the Section 149 request after affording the appellant a proper opportunity of hearing, with a direction to decide within three months; the Tribunal declined to make observations on the merits or on the decisions cited by the appellant, but directed the Commissioner to take note of them in the de novo proceedings.

Facts

Ms Yash Pakka Ltd., a manufacturer-exporter of paper and paper products classifiable under Chapter 48, exported goods against free shipping bills between 01.07.2017 and 01.08.2018, while claiming and receiving drawback on exports made before and after that period. On 07.12.2019 (and again before the Commissioner on 21.12.2020) it sought conversion of those free shipping bills into drawback shipping bills under Section 149 of the Customs Act, 1962. The Commissioner of Customs (Preventive), Lucknow rejected the request by Order-in-Original dated 10.02.2021, citing a delay of over three years in applying, absence of any reason beyond the exporter's control, the three-month conversion norm in Circular No. 36/2010-Cus, non-filing of the declaration contemplated by Rule 13(1)(a) of the Drawback Rules, 2017, and the absence of documentary evidence existing at the time of export. The rejection was made without affording the appellant any opportunity of personal hearing.

Key provisions

• Section 149, Customs Act, 1962 — Amendment of documents
• Rule 13(1)(a), Customs and Central Excise Duties Drawback Rules, 2017 — Statement/Declaration to be made on exports other than by Post
• Section 75, Customs Act, 1962 — Drawback on imported materials used in the manufacture of goods which are exported
• Section 128, Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods
• Section 61(3), Customs Act, 1962 — Period for which goods may remain warehoused
• Section 154, Customs Act, 1962 — Correction of clerical errors etc
• Rule 12(1)(a), Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 — Statement/Declaration to be made on exports other than by Post
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 27A, Customs Act, 1962 — Interest of delay refunds
• Section 17, Customs Act, 1962 — Assessment of duty