Karnataka HC allows Conversion of MEIS Shipping Bills to DEPB Scheme stating Similar Examination Scale, Dismisses Revenue’s Appeal [Read Order]
Since the scale of examination under both schemes was similar, the conversion was permissible, and the non-examination of goods could not be attributed to the assessee.
DEPB - scheme - Taxscan
DEPB - scheme - Taxscan
The High Court of Karnataka upheld the Customs Excise and Service Tax Appellate Tribunal’s ( CESTAT) order allowing the conversion of MEIS shipping bills to the DEPB scheme stating that the scale of examination under both schemes was similar.
The Revenue-appellant, filed an appeal under Section 130 of the Customs Act, 1962, against the CESTAT Bengaluru’s order dated 01.04.2022 in Final Order No. 20168/2022. In this case, Louverline Blinds, respondent-assessee,was engaged in the manufacture of motorized curtain and blind assemblies and their accessories.
For manufacturing goods meant for export, it imported various inputs under an Advance Authorization License, including ceiling brackets and curtain track belts. The license required export of the final products within 18 months without payment of import duty.
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The respondent-assessee filed six shipping bills for export, indicating its intention to avail the benefit under the Merchandise Export Incentive Scheme (MEIS), instead of showing that the exports were under the Advance Authorization License. It later requested an amendment of the shipping bills to reflect the correct scheme.
The Principal Commissioner of Customs at Bengaluru rejected the request, relying on Section 149 of the Customs Act and Circulars No.36/2010 and No.6/2002. On appeal, the tribunal held that the shipping bills were not free shipping bills and that the intention to avail MEIS was clearly indicated.
The CESTAT further observed that the amendment effectively converted the shipping bills from MEIS to the Drawback/DEPB Scheme, which was permissible as the scale of examination under both schemes was identical.
Justice S.G.Pandit and Justice K.V. Aravind considered the submissions of both the parties. It was undisputed that the assessee manufactured motorized curtain and blind assemblies, imported inputs for export, and held an Advance Authorization License. The sole issue was the conversion of shipping bills to the DEPB Scheme.
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The Revenue had rejected the conversion request on three grounds: that the shipping bills were free shipping bills, that the request was beyond the one-year period under Section 149, and that the bills were not examined as required under the DEPB Scheme.
The court noted that the Revenue’s claim was based on a mistaken premise, as the shipping bills were filed under the MEIS Scheme, not as free shipping bills.
Circulars No.36/2010 and No.6/2002 allowed conversion of shipping bills between export promotion schemes if documentary evidence established eligibility. The assessee had used imported inputs for the exported goods, and no benefits were claimed under any other scheme.
The CESTAT correctly held that the conversion was from MEIS to DEPB, under which the scale of examination was similar, and the non-examination of goods could not be attributed to the assessee. The court found the tribunal’s conclusions justified.
Accordingly the appeal was dismissed.
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