The Central Board of Excise and Customs (CBEC) has made life easier for exporters by relaxing the norms for conversion of shipping bills from free to export promotion scheme and from one export promotion scheme to another. The latest CBEC Circular (no.36/2010-Cus dated 23/09/2010) permits the Commissioners of Customs to allow conversion of shipping bills from schemes involving more rigorous examination to schemes involving less rigorous examination (for example, from Advance Authorisation/DFIA scheme to Drawback/DEPB scheme) or within the schemes involving same level of examination (for example, from Drawback scheme to DEPB scheme or vice versa).
CBEC has always been reluctant to permit conversion of shipping bills. Its guidelines for conversions issued in 1970 and 1973 were revised only in December 1997, allowing conversion of DEEC shipping bills to Drawback shipping bills, subject to certain conditions. Till July 1998, CBEC did not delegate the powers to allow conversions to the Commissioners. In January 2003, it allowed conversions where the exporter wanted to avail of the benefit of an export promotion scheme (including Drawback) but he was forced to file free shipping bill and where the exporter had filed shipping bill under a particular export promotion scheme but benefit of that scheme was denied to him by the Directorate General of Foreign Trade or Customs. In May 2003, CBEC allowed conversions even when the exporter was not forced to file free shipping bill.
In January 2004, CBEC instructed that conversion of free shipping bills into Advance Licence/DEPB/DFRC shipping bills should not be allowed and that conversion of shipping bills from one export promotion scheme to another should only be allowed where the benefit of any export promotion scheme claimed by the exporter has been denied by DGFT/MOC or customs due to any dispute. The courts, however, ruled that this Circular could not override Section 149 of the Customs Act of 1962 which permits amendments to the shipping bill on the basis of documents that existed at the time the goods were exported.
In the case of Kiran Pondy Chems Ltd [2006 (2003) ELT 588], the Chennai Tribunal observed that “documentary evidence contemplated under the proviso to Section 149 ibid was in existence at the time of exports. Had situations of this kind been conceived, and the above provision of law been noted by the Board, the circular would not have placed any embargo on the Commissioners of Customs in the matter of permitting conversion of “free” shipping bills to DEEC shipping bills.” In the case of Man Industries [2006 (202) ELT 433], the Tribunal held that “even if the Appellant’s case did not fall within the four corners of the Board’s Circulars in question, the claim was eligible for consideration independently subject to a provision of Section 149 of the Customs Act, 1962. A series of similar Tribunal judgments followed forcing CBEC reconsider its stand.
CBEC, however, says that conversion of free shipping bills into export promotion scheme shipping bills (advance authorization, DFIA, DEPB, reward schemes etc.) should not be allowed on the grounds that goods under free shipping bills are not examined. CBEC could have been graceful by following the rationale behind its own circular number 25/2005-Cus dated June 6, 2005 for accepting in-house test results of manufacturer exporters having the ISO 9000 series certification for the purpose of conversion of free shipping bills into export promotion scheme shipping bills.
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