By TIOL News Service

NEW DELHI, AUG 04, 2013: THE respondents filed 155 shipping bills during the period 1.6.2008 to 16.3.09 as free shipping bills showing the export of 'Cutch Block (Acacia Catechu)'. In the said shipping bills, they did not file any declaration for claiming the export incentive. However, they subsequently filed an application with the Range office of the DGFT in Kolkata for duty credit entitlement towards VKGUY Scheme under Chapter 3 of the Foreign Trade Policy 2004-2009 along with all the relevant information.

An objection was raised as regards the absence of endorsement on the said shipping bills in terms of para 3.23.8 of Hand Book of Procedure. Deficiency letter dated 12.2.09 was issued to the respondents to remove the above deficiency and to make a declaration on the shipping bills to the effect -"I/we hereby declare that I/we shall claim the benefit as admissible, under Chapter 3 of FTP".

It needs mention that no such declaration was required to be made in respect of shipping bills filed before 1.4.08. The provisions of Hand Book of Procedures were amended vide para 3.23.8 wherein it was mentioned that export shipment filed under free shipping bill for export after 31.5.08 should contain the declaration to the above effect.

As the shipping bills were filed by the respondents during the period 1.6.08 to 16.3.09, in view of the above provision, the shipping bills required the above declaration. The respondents also approached the DGFT with a request to consider the issue of duty credit script under the above scheme.

The adjudicating authority rejected the respondents request for making the above declaration in terms of provisions of Section 149 of the Customs Act on the ground that the same would amount to introduction of new fact on the shipping bill which was not in existence at the time of export.

The Commissioner (Appeals) observed that the benefit of duty credit entitlement towards VKGUY scheme under Chapter 3 of the Foreign Trade Policy is being denied only on the sole ground that requisite declaration was not made at the time of export. He further observed that there is no dispute about the fact of export of item 'Cutch Block (Acacia Catechu) filed under Serial No. 120 list 8, Appendix 37A and thus legally entitled or eligible for the benefit of scheme. As such, he held that the declaration required to be made on the shipping bills, should be allowed to be made by the exporters in terms of provision of Section 149 of the Customs Act.

In fine, he allowed the appeal.

Revenue is, therefore, in appeal before the CESTAT.

The Member (Judicial) observed -

+ The revenue has contended that in terms of section 149, the shipping bill can be amended only on the basis of documentary evidence, which was in existence at the time of export of the goods, the same would be held to be made by the respondents. We find no merits in the above contention of the Revenue. Admittedly, section 149 allows amendment to the documents. Such amendment has to be on the basis of documentary evidence available at the time of export. As such the documentary evidence "appearing in the said section 149" cannot refer to the "amendment" itself. If the same refers to the amendment, as the Revenue has sought to contend, the provisions of said section would become futile and no amendment would admittedly be available of after the time of export itself.

+ As regards the merits, the revenue is not contesting the availability of the benefit of scheme to the respondents. Such declarations were not required to be made in terms of exports prior to 31.5.08. The exports made by the appellants are immediately after the said period. Learned advocate for the respondents have relied upon various decisions to impress upon his stand that on such a scenario conversion of shipping bills is permissible. However, without referring to the said decision, we hold that it is only a case of filing a declaration, a condition which was introduced recently and the benefit if otherwise available to the exporter, should be extended. With the above observation, we find no infirmity in the view taken by Commissioner (Appeals). Revenue's appeal is accordingly, rejected.”

However, the Member (Technical) disagreed and in a lengthy order concluded -

+ under this section (149) amendment of a document before the goods are exported, are normally allowed. But amendments after the export of goods have to be done with circumspection as per condition prescribed under the proviso. Such power can be used to correct errors in the document if such errors are obvious from other documents in existence at the time of export. … I do not agree with the observations of the Judicial Member in para 6 of the order that section 149 would become futile if the sort of amendments sought by the present respondent is not permitted.

+ the exporter wants to make a declaration in the future tense on a Shipping Bill of the past. This is prima facie not consistent with common sense. The proposed amendment is also not consistent with law under section 149 of the Customs Act, 1962.

+ The DGFT, who is responsible for formulating the policies for grant of VKGUY benefit and also responsible for grant of such benefit, should know best the purpose for making such declaration. This Tribunal can only make a guess as to what is the purpose.

+ it is for DGFT to consider whether the non-declaration of the claim at the time of export is fatal to the claim. If it is not considered fatal that authority may grant the benefit notwithstanding the absence of such declaration on the shipping bills. The customs authorities cannot be forced to incorporate a claim in the Shipping Bills which claim was not there at the time of export and make it appear that the goods were examined with reference to such claim.

+ The issue involved in the claim of the respondent is getting split into two, namely, (i) curing the absence of declaration and (ii) granting of the incentive claimed. Further these aspects are sought to be decided by two separate authorities which is a patently wrong process considering the nature of the defect involved. While making this observation I am conscious of the fact that in the normal course verification of goods with reference to the declaration and grant of benefit are in fact to the done by the two different authorities. But when there is absence of declaration and benefit is to be granted the matter should be decided as a one whole. That is the claim is to be decided considering the issue whether the benefit can be granted ignoring the fact that such claim was not made at the time of export. The issue cannot be split into two separate components of incorporating the declaration by customs authority at a stage when such declaration does not help the customs authority to examine the goods with reference to the claim and then considering the claim separately by another authority. So I am not in agreement with the order as recorded by Judicial Member.

In view of the above, the following difference of opinion is referred to the President to take appropriate steps to resolve the same -

Whether it is proper to make amendments in the shipping bills to include the declaration as desired by the respondent as recorded by Judicial Member?

OR

Whether it is proper to refuse such amendments as held by the Technical Member?

(See2013-TIOL-1169-CESTAT-DEL)