2025 (7) TMI 1148 - AT - Customs

Partial rejection of conversion request made under Section 149 of the Customs Act 1962 of shipping bills - rejection on the ground of time limitation - shipping bills were pertaining to the period beyond three years of export - HELD THAT - Section 29(2) that deals with saving clause or Article 137 prescribing 3 years limitation for filing an application are not applicable to the proceedings initiated before a Quasi-Judicial Authority or Tribunal for which a specific time limit can t be imputed to conversion of a shipping bill as Section 149 itself has not provided any such time limit and also categorically incorporated in its body that such conversion can be done on the basis of documentary proof (since after export no other material object would be available for such inspection). Therefore when conversion from one scheme to another scheme would be beneficial to the exporter and there is no time limit available to carry out such conversion it would not be prudent and proper to fix a stipulation of 3 years of period from the date of export to enable the Appellant to convert shipping bills from one scheme to another scheme on which score alone the rejection order passed by the Commissioner is unsustainable in law. The order of rejection for conversion of 1767 bills from drawback scheme to DFIA scheme is hereby set aside by holding that the request for conversion of those 1767 bills are also valid and hence converted from drawback to DFIA scheme subject to reversal of duty drawback alongwith applicable interest to be done by the Appellant within 3 months of receipt of this order - Appeal allowed.

Summary

ISSUES:

Whether a time limit or period of limitation applies to the conversion of shipping bills under Section 149 of the Customs Act, 1962 from one export promotion scheme to another.Whether Article 137 of the Limitation Act, 1963 or Section 29(2) of the Limitation Act is applicable to quasi-judicial proceedings under Section 149 of the Customs Act.Whether Circular No. 36/2010-Cus., specifically para 3(e), restricting conversion of shipping bills after availing benefits under an Export Promotion Scheme, applies to conversion from Drawback Scheme to Duty Free Import Authorisation (DFIA) Scheme.Whether non-examination of shipping bills at the time of conversion affects the validity of such conversion.Whether the Foreign Trade Policy (FTP) 2015-20 applies prospectively, thereby limiting conversion of shipping bills filed prior to its commencement.

RULINGS / HOLDINGS:

The Court held that "Section 149 itself has not provided any such time limit" and therefore no limitation period, including the 3 years prescribed under Article 137 of the Limitation Act, applies to conversion of shipping bills under Section 149 of the Customs Act.It was ruled that "Section 29(2) and Article 137 prescribing 3 years limitation … are not applicable to the proceedings initiated before a Quasi-Judicial Authority or Tribunal", and hence limitation provisions of the Limitation Act do not govern such conversions.The restriction under para 3(e) of Circular No. 36/2010-Cus. was held inapplicable to conversion from Drawback Scheme to DFIA Scheme because "Drawback is provided by the Customs Act itself" and is not directly covered under Export Promotion Schemes governed by DGFT policy.The Court found that shipping bills were duly examined as per the record and that "rigorous examination … has lost its vigour in the RMS era", thereby rejecting the argument that non-examination invalidates the conversion.The Court rejected the argument that FTP 2015-20 applies prospectively to prohibit conversion of shipping bills prior to 01.04.2015, relying on precedent that "Procedural Rules are retrospective in nature" and prior period conversions have been upheld.

RATIONALE:

The Court applied the authoritative Supreme Court ruling that Limitation Act provisions apply only to proceedings before Courts and not to Tribunals or Quasi-Judicial Authorities unless expressly stated, emphasizing that Section 149 of the Customs Act does not prescribe any limitation period for conversion.It distinguished between benefits under the Customs Act (Drawback Scheme) and Export Promotion Schemes administered by DGFT, finding that circular restrictions on conversion after availing EP Scheme benefits cannot be imposed on conversions involving the Drawback Scheme.The Court relied on judicial precedents affirming that limitation principles under the Limitation Act do not apply to quasi-judicial proceedings and that procedural rules are generally retrospective, thereby supporting conversion of shipping bills filed beyond the purported limitation period.The decision recognized the evolving customs examination practices under the Risk Management System (RMS), which reduces the emphasis on physical examination at the time of conversion.No dissent or doctrinal shift was noted; the judgment reaffirmed settled principles regarding limitation and quasi-judicial authority under customs law.