Customs Rejects IOCL’s 104 Shipping Bill Conversion Relying on Circular Declared Ultra Vires by HC: Madras HC directs Reconsideration [Read Order]

The issue stemmed from IOCL’s application dated 26.06.2011, wherein it sought conversion of a total of 698 shipping bills. While the customs authorities permitted conversion for 594 of these, the remaining 104 were rejected on the sole ground that the request was made beyond three months from the date of the Let Export Order (LEO), citing Circular No. 36/2010-Cus dated 23.09.2010 issued by the Central Board of Excise and Customs (CBEC).

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CESTAT, relying on a judgment of the Gujarat High Court in Mahalakshmi Rubtech Ltd v. Union of India, held that the rejection relying on Circular No.36/2010 was incorrect. The Apex Court has not interfered with the said finding of the Gujarat High Court.

The Madras High Court, agreeing with this reasoning, noted that although the department’s Special Leave Petition against the Gujarat HC’s decision was dismissed on the ground of delay, the judgment itself had not been overturned or stayed by the Supreme Court.

The Bench comprising Chief Justice K.R. Shriram and Justice Mohammed Shaffiq observed “Since the Gujarat High Court has held that the impugned circular to the extent of paragraph 3(a) is ultra vires Articles 14 and 19(1)(g) of the Constitution of India, as also ultra vires Section 149 of the Customs Act, 1962, the question of the Commissioner or the Original Authority relying on the said provision in the circular does not arise.”

Accordingly, the Court dismissed the appeal and directed that the 104 rejected shipping bills be reconsidered by the Original Authority afresh, in accordance with law and on merits, without reference to the now-invalidated time restriction in the circular. The Court also instructed that a personal hearing be granted to IOCL and mandated that a fresh order be passed within 12 weeks.

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