Notification Prescribing Time Limit For Post-Export Shipping Bill Conversion Cannot Apply Retrospectively: CESTAT Ahmedabad

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that a 2022 notification prescribing a time limit for post-export conversion of Shipping Bills cannot be applied retrospectively to exports made before it came into force.

A coram comprising Judicial Member Somesh Arora and Technical Member Satendra Vikram Singh ruled that the notification had no application to Metalloys Recycling Ltd.'s exports made between October 2019 and January 2022.

The tribunal observed, “We further, note that the Department has also raised the issue regarding applicability of Notification No. 11/2022-Cus. (N.T.) dated 22.02.2022, whereby a time limit was prescribed for post-export conversion of shipping bills in certain cases. We find that the said notification cannot be applied retrospectively to the exports made by the appellant between October, 2019 and January, 2022.”

The ruling came in a dispute over 30 Shipping Bills covering exports of brass and copper billets. Metalloys had initially declared its intention to claim benefits under the Advance Authorisation Scheme but later sought to convert the Shipping Bills to the Duty Drawback scheme.

In simple terms, the company wanted customs to change the export documents from one export-benefit scheme to another after the goods had already been shipped. The dispute was whether customs could refuse that request based on time limits that did not apply when the exports took place.

Section 149 of the Customs Act permits amendment of customs documents after export where the amendment is supported by documentary evidence that existed at the time of export. The provision itself does not prescribe a three-month period for such amendments.

Metalloys had been granted an Advance Authorisation allowing duty-free import of 2,120 MT of raw material. According to the company, COVID-19-related disruptions affected supplies from overseas suppliers, prompting it to procure raw materials domestically after paying GST.

Customs records showed that only 463.315 MT had actually been imported against the 2,120 MT entitlement. A Chartered Accountant's certificate recorded that the exported goods were manufactured using duty-paid domestic inputs and quantified the eligible Duty Drawback at ₹37,60,451.71.

The company subsequently sought amendment of the 30 Shipping Bills under Section 149. The Commissioner rejected the request, relying on CBIC Circular No. 36/2010-Cus., which prescribed a three-month period from the Let Export Order for seeking such conversion.

The tribunal also considered the separate issue of the three-month limit under the circular. It held that the legal position relied upon by the Revenue in Suzlon Energy Ltd. and Anil Sharma v. Union of India no longer held good after the Supreme Court's decision in Union of India v. Mahalaxmi Rubtech Ltd.

In Mahalaxmi Rubtech, the Supreme Court had dismissed the Revenue's challenge to the finding that the three-month limitation under Circular No. 36/2010-Cus. was ultra vires Section 149 of the Customs Act.

The tribunal also relied on the Gujarat High Court's decision in Pr. Commissioner of Customs, Mundra v. Lykis Ltd. and its own decision in Nisan Exports.

In Nisan Exports, the tribunal had allowed conversion of an export promotion scheme to Duty Drawback beyond the three-month period prescribed by the circular. It observed that once an export had taken place, the consequential export benefit could not be denied merely on the ground of the limitation prescribed by the circular.

The tribunal ultimately held that the export benefit could not be denied to Metalloys in light of the legal position prevailing when the exports were made.

“In view of the foregoing discussion, we find that, in the facts and circumstances of the present case and in light of the legal position prevailing at the time of export, the export benefit cannot be denied to the appellant and is liable to be extended. Accordingly, the appeal deserves to be allowed.”, the tribunal noted.

The tribunal accordingly allowed the appeal.

For Appellant: Shri Dev Wadhwa, Advocate

For Revenue: Shri Aakash Singh, Superintendent (AR)