Case Note & Summary
The case involves appeals filed by the Commissioner of Customs (Export) against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, which allowed the amendment of shipping bills to indicate the Duty Free Import Authorisation (DFIA) scheme instead of free shipping. The respondent, M/s.Regin Exports, had applied for DFIA licenses for import of raw cashew nuts. While filing shipping bills through a customs broker, the respondent inadvertently selected code '00' for free shipping instead of code '26' for DFIA scheme. After export completion, the respondent requested amendment of the shipping bills on 26.12.2018. The Assistant Commissioner rejected the request on 31.12.2018, citing Circular No.36/2010 which prescribes a time limit for such conversion. The appellate authority upheld the rejection on 20.03.2020. The CESTAT, however, allowed the appeals on 21.07.2023, setting aside the rejection. The department then filed the present appeals before the High Court. The High Court framed four substantial questions of law regarding the applicability of Circular No.36/2010, reliance on M/s.N.C.John & Sons Pvt.Ltd., whether conversion can be claimed as a matter of right, and whether the Assistant Commissioner's order was incorrect. The Court analyzed the circular and held that it is directory and not mandatory, and that the time limit is not absolute. The Court emphasized that beneficial export promotion schemes should be liberally construed to promote exports, and procedural lapses should not deny substantive benefits. The Court also held that the reliance on M/s.N.C.John & Sons Pvt.Ltd. was valid for the principle of liberal interpretation, even though that case dealt with MEIS reward. The Court dismissed the appeals, upholding the CESTAT order and allowing the amendment of shipping bills.
Headnote
A) Customs Law - Export Promotion Scheme - DFIA Scheme - Conversion of Shipping Bill - Circular No.36/2010 - The issue was whether the exporter could amend shipping bills from free shipping to DFIA scheme after the time limit prescribed in Circular No.36/2010. The Court held that the circular is directory and not mandatory, and the request for conversion can be considered even after the prescribed time limit, as the substantive benefit should not be denied for procedural lapses. (Paras 4-8) B) Customs Law - Beneficial Scheme - Liberal Interpretation - The Court held that beneficial export promotion schemes like DFIA should be liberally construed to promote exports, and procedural requirements should not come in the way of granting substantive benefits. Reliance was placed on M/s.N.C.John & Sons Pvt.Ltd. for the principle of liberal interpretation. (Paras 5-7) C) Customs Law - Circulars - Binding Nature - The Court held that Circular No.36/2010 is directory and not mandatory, and the Assistant Commissioner is not bound to reject a request for conversion merely because it is beyond the time limit. The circular provides guidelines, but the authority can consider the request on merits. (Paras 6-8)
Issue of Consideration
Whether the CESTAT was correct in allowing the amendment of shipping bills to indicate DFIA scheme beyond the time limit prescribed under Circular No.36/2010, and whether the conversion from free shipping to DFIA scheme can be claimed as a matter of right.
Final Decision
The appeals are dismissed. The order of the CESTAT dated 21.07.2023 is upheld. The respondent is permitted to amend the shipping bills to indicate DFIA scheme.
Law Points
- Circular No.36/2010 is directory
- not mandatory
- conversion of shipping bill from free to DFIA scheme can be allowed after time limit
- beneficial export promotion schemes should be liberally construed
- procedural lapses should not deny substantive benefits
- reliance on M/s.N.C.John & Sons Pvt.Ltd. is valid for principle of liberal interpretation.
