Relief for Bharat Electronics: CESTAT Upholds Shipping Bill Conversion Beyond 3 Months, CBEC Circular Time Limit Not Binding [Read Order]

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) ruled that amendment of shipping bills after export to claim duty drawback is permissible and that the time limit prescribed in CBEC circulars is not binding.

The Commissioner of Customs, the appellant, challenged the order passed in favour of Bharat Electronics Ltd., the respondent, a Government of India undertaking engaged in the manufacture and export of electronic and communication equipment. The respondent had exported goods during the period from 02.07.2020 to 28.12.2020 under several shipping bills but had filed them as “free shipping bills” instead of claiming duty drawback due to an inadvertent clerical error.

The respondent later requested amendment of these shipping bills through a letter dated 09.02.2021, seeking conversion to “All Industry Rate of Duty Drawback” shipping bills. They stated that the exports were not made under any export promotion scheme and that all applicable duties and taxes had been paid on inputs used in the exported goods.

The Adjudicating Authority allowed the request for amendment. However, the department filed an appeal on the ground that the authority had not followed CBEC Circular No. 36/2010, which prescribes a time limit of three months for such conversion.

The revenue counsel argued that the request for conversion in several cases was made beyond the prescribed period of three months and that Board circulars are binding on the department. They relied on the Supreme Court judgment in Ratan Melting & Wire Industries to support their contention.

The respondent’s counsel argued that the error in filing free shipping bills was only a clerical mistake and that substantive benefits like duty drawback should not be denied due to procedural lapses. They relied on various Tribunal decisions to support the position that conversion of shipping bills is allowed when the conditions under Section 149 of the Customs Act are satisfied.

The two-member bench comprising P.A. Augustian (Judicial Member) and Pullela Nageswara Rao (Technical Member) observed that the dispute was mainly about the applicability of the time limit prescribed in the Board circular. The tribunal observed that judicial precedents including decisions of the Gujarat High Court, have held that such time limits are not binding when they are not part of the statutory provision under Section 149 of the Customs Act.

The tribunal explained that when the substantive conditions for claiming drawback are satisfied, procedural requirements should not defeat the claim. It pointed out that the Adjudicating Authority had correctly allowed the amendment of the shipping bills.

In view of these findings, the Tribunal found no infirmity in the impugned order. The appeal filed by the revenue was dismissed, and the cross-objection filed by the respondent was disposed of accordingly.

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