2025 (6) TMI 1851 - AT - Customs

Conversion/substitution of shipping bills - substitution of scheme code 00 to scheme code 03 in shipping bill - section 149 of Customs Act 1962 - goods had not undergone prescribed level of examination that the export category sought would have been subjected to - HELD THAT - In the light of the documentation available for ascertainment of conformity of the impugned goods with that required to be exported in fulfillment of obligation under the scheme of Foreign Trade Policy (FTP) the consequence of amendment providing access to claim for fulfilment of export obligation is a separate decision independent of the amendment and to be taken on the facts of each export. It was not proper for the authority under section 149 of Customs Act 1962 to anticipate and preclude exercise of power arising from non-compliance with the notification against which the imports have been permitted subject to fulfilment of obligation by the proper authority to do so. The impugned order is in error and is set aside to enable the proper officer under section 149 of Customs Act 1962 to decide upon the requests in the light of law as enacted and judicially determined - Appeal is allowed by way of remand.

Summary

The core legal questions considered in this judgment revolve around the scope and application of section 149 of the Customs Act, 1962, specifically regarding the amendment of shipping bills post-exportation. The issues include whether the adjudicating authority correctly interpreted the scope of section 149 in refusing the amendment of the shipping bill from 'scheme code 00' to 'scheme code 03'; the applicability and legal effect of the Shipping Bill (Post export conversion in relation to instrument-based scheme) Regulations, 2022; the relevance and binding nature of CBEC Circular No. 36/2010-Cus dated 23rd September 2010 in permitting such amendments; and the extent to which customs authorities can pre-judge eligibility for export incentives under the Foreign Trade Policy (FTP) during amendment proceedings under section 149.

Regarding the legal framework, section 149 of the Customs Act, 1962 empowers the proper officer to authorize amendments to documents, including shipping bills, after presentation at the customs house, subject to prescribed conditions and restrictions. The section contains provisos limiting amendments after clearance or exportation to those supported by documentary evidence existing at the relevant time. The Shipping Bill (Post export conversion in relation to instrument-based scheme) Regulations, 2022 provide a regulatory framework for certain post-export conversions but are limited in scope and do not exhaustively govern all amendments under section 149. CBEC Circular No. 36/2010-Cus, while not statutory, guides facilitation of scheme migration and amendments to support export promotion schemes.

The Court analyzed the Commissioner of Customs' interpretation that the 2022 Regulations restrict amendments only to conversions within a narrowly defined category and that the circular's conditions had not been complied with. It was held that this interpretation was incorrect as section 149 confers a broader discretionary power to amend shipping bills generally, not confined by the limited definition of 'conversion' in the Regulations. The Regulations' limited scope does not curtail the statutory authority under section 149.

The Court extensively reviewed the precedents, particularly the Tribunal's decisions in Posco Maharashtra Steels Ltd and Haldiram Foods International Pvt Ltd, which emphasized the facilitative intent of the circular and the need to interpret such non-statutory instructions in the spirit of liberalizing trade facilitation rather than imposing rigid restrictions. It was noted that the circulars were issued before the expanded scope of section 151A of the Customs Act empowered the Board to issue binding instructions beyond classification and levy of duty, and thus could not impose binding limitations inconsistent with the statute.

On the question of whether the customs authority could pre-judge eligibility for export incentives under the FTP during the amendment process, the Court held that such eligibility determination is the prerogative of the Directorate General of Foreign Trade (DGFT) under the Foreign Trade (Development & Regulation) Act, 1992, and not the customs authority under section 149. The customs authority's role is limited to assessing conformity of documents and not to undertake substantive eligibility scrutiny, which would be ultra vires and an impermissible encroachment on the DGFT's jurisdiction.

In applying the law to facts, the Court found that the appellant's request to amend the shipping bill to reflect the correct scheme code was a nominal correction that did not alter the description of the exported goods or contravene the factual position at the time of export. The amendment did not fall within the restrictive proviso of section 149 that limits amendments post-export to documentary evidence existing at the time. The refusal to amend based on non-compliance with the circular or the limited scope of the Regulations was therefore not legally sustainable.

The Court also addressed competing arguments regarding the timing and reasonableness of the amendment request. It emphasized that section 149 does not prescribe a rigid time limit for amendments, and the discretion of the proper officer must be exercised based on justification and the absence of detriment to the State's interests. The mere lapse of time without other adverse factors is not a valid ground for rejection. The appellant's documentation and explanation were sufficient to justify the amendment.

Consequently, the Court concluded that the impugned order was in error in law and set it aside. It remanded the matter to the proper officer for fresh consideration in accordance with the correct legal principles, without pre-judging eligibility or unduly restricting the scope of amendment under section 149.

Significant holdings include the following verbatim legal reasoning:

"Amendments sought under section 149 of Customs Act, 1962 may be permitted in 'documents' subject to justification including the reasonableness of the time within which such alteration is sought to be incorporated and in bills of entry/ shipping bills alterations are to be denied only to the extent of not mirroring the facts at the time of clearance/exportation. Implicitly, the ascertainability of the facts, and not mere elapse of time which was not considered for specifying in the legislation, is to be the factor in determining limitation."

"To decide on eligibility of import at this stage is patently in excess of jurisdiction and peremptory. This premature filtration at the threshold not envisaged in section 149 of Customs Act, 1962 and arrogating of 'policing' over statutory authority vested in another agency of the State is unacceptable."

"The circulars... are to be construed as guidance for trade facilitation on the part of the field formations under Central Board of Excise & Customs... in the absence of such authority, which could be construed as empowerment to enforce restricted applicability, the impugned circular, as well as its predecessor, could not have imposed rigid restrictions that are not contemplated in the parent statute."

Core principles established include:

• The discretionary power under section 149 of Customs Act, 1962 to amend shipping bills is broad and not confined by the limited definitions in subordinate regulations.
• Non-statutory circulars issued by the Board are facilitative and cannot override or restrict statutory powers unless expressly empowered by law.
• Customs authorities cannot pre-judge eligibility for export incentives governed by the DGFT during amendment proceedings under section 149.
• Amendments to shipping bills post-exportation must reflect facts as they existed at the time of export but can be permitted for nominal corrections that do not alter substantive facts.
• Time limits for amendments are not strictly prescribed in section 149; discretion must be exercised based on justification and absence of detriment to State interests.

Final determinations on each issue were that the refusal of amendment on grounds of non-compliance with the circular and limited scope of the 2022 Regulations was incorrect; the customs authority exceeded jurisdiction by pre-judging eligibility; and the amendment sought was permissible under section 149. The impugned order was set aside and the matter remanded for fresh consideration consistent with these principles.