Simpson and company vs CC AIR CARGO Ch - VII

IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI

Customs Appeal No.42235 of 2016

(Arising out of Order-in-Original No.697/2016-AIR dated 1.8.2016 passed by the
Commissioner of Customs (Air Cargo), Chennai)

Simpson and Co. Ltd. Appellant
861/862, Anna Salai
Chennai – 600 002.

Vs.

Commissioner of Customs Respondent
Chennai Air Cargo, VII Commissionerate
New Custom House, Meenambakkam,
Chennai – 600 027.

APPEARANCE:

Ms. Shobhana Krishnan, Advocate for the Appellant
Smt. O.M. Reena, Authorized Representative for the Respondent

CORAM

Hon’ble Shri M. Ajit Kumar, Member (Technical)

FINAL ORDER NO.
41157/2026

Date of Hearing : 13.10.2026
Date of Decision: 30.10.2026


This appeal is filed by the appellant against Order-in-Original No.
697/2016 dated 01.08.2016 passed by the Commissioner of Customs
(Air Cargo), Chennai.
2. Brief facts are that the Appellant sought conversion of 48
shipping bills from the EPCG/Advance Authorisation Scheme to the
Drawback Scheme before the Commissioner of Customs (Sea), who
allowed conversion, including for three Air Export shipping bills. The
Appellant subsequently claimed drawback on 21 shipping bills,
including the said three Shipping Bills, in dispute involving a drawback
amount of Rs.6,52,423/-, that belonged to Air Export, supported by a

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brand letter issued by the Additional Commissioner, LTU, Chennai. The
drawback claim relating to the Air Export three shipping bills—Nos.
6401581 dated 25.11.2011, 6505238 dated 02.12.2011 and 6564041
dated 07.12.2011—were rejected on the ground that the drawback
conversion was granted by the Commissioner of Customs (Sea),
although they belonged to the jurisdiction of the Air Commissionerate.
Further any request for conversion of shipping bills from one scheme
to another scheme should have been filed before the Principal
Commissioner of Customs (Air Cargo), the proper officer, within three
months from the date of Let Export Order as per Circular No. 36/2010
dated 23.09.2010. The claims were rejected as they were not filed
within the stipulated period. Hence the present appeal.
3. Ms. Shobhana Krishnan, Ld. Counsel appeared for the appellant
and Ld. Authorized representative Smt. O.M. Reena appeared for the
respondent.
Submissions made by the Appellant
3.1 Ms. Shobhana Krishnan, Ld. Counsel for the appellant submitted
as under:
A. The time-chart of events leading to the present issue were given
in the form of a Table, reproduced below:
DATE EVENT
2011 The Appellant secured a long-term contract from Cummins
Inc., USA for supply of diesel engines.
August 2011 The Appellant applied for Advance Authorisation License to
avail duty exemption on the imported components used in the
manufacture of diesel engines to be exported and was granted
Advance Authorisation License No. 0410127375 under F. No.
04/21040/00243 dated 24.08.2011 for various part numbers.

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September
to October
2011
Change in the customer specifications led to change in the part
numbers of the proposed imports under the Advance
Authorisation. Resultantly, certain components imported did
not match with the part numbers as per the Import Item List
given in Advance Authorisation.

These components were cleared on payment of duty and
balance under Advance Authorisation. Hence, the exported
diesel engines had duty paid components and components
cleared under Advance Authorisation.
10.11.20211 To neutralise the duty component on the imported goods used
in exported diesel engines, the Appellant opted for drawback
which necessitated the conversion of Shipping Bills from
Advance Authorisation scheme to Drawback Scheme.

Accordingly, Appellant filed letter dated 10.11.2011 to
Commissioner of Customs (Sea) requesting conversion of
Shipping Bills from Advance Authorisation to Drawback. This
request was in request of previous shipping Bills and did not
cover the Impugned Shipping Bills.
25.11.2011 The Appellant was directed to pay duty on all the imports
made under Advance Authorisation No. 0410127375 dated
24.08.2011 along with appropriate interest and surrender the
advance license to the JDGFT and produce acknowledgement
thereof.

Dec 2011-
March 2012
Following the instruction from the Assistant Commissioner of
Customs, the Appellant paid duty of Rs. 1,51,65,210/- along
with interest of Rs. 6,17,746/- vide 16 TR Challans.

12.03.2012 Acknowledging the payment of duty along with interest made
by the Appellant, the Department issued letter to the Foreign
Trade Development Officer requesting for issuance of EODC
against the Advance Authorisation No. 0410127375 dated
24.08.2011.
6.03.2012 On fulfilment of the above conditions, the Appellant submitted
a letter dated 26.03.2012 along with export promotion copies
of Shipping Bills and other documents before the Assistant
Commissioner requesting for conversion of 48 Shipping Bills
from Advance Authorisation License to Drawback Shipping
Bills.

In the said letter, the Appellant specifically mentioned that
export promotion copy of Shipping Bills in respect of Shipping
Bill No. 6401581 dated 25.11.2011, 6505238 dated
02.12.2011 and 6564041 dated 07.12.2011 (“ impugned
Shipping Bills ”) was not available and therefore the same
will be subsequently submitted upon receipt. Further, it was
requested that the conversion of the impugned Shipping Bills
also be considered.

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24.04.2012 Appellant submitted the Redemption letter issued by the
Foreign Trade Development Officer, Chennai in respect of
Advance Authorisation No. 0410127375 dated 24.08.2011
along with export promotion copy of impugned Shipping Bills.
30.07.2012 After verification of all the submitted documents, the
Commissioner of Customs (Exports) approved the conversion
of 48 Shipping Bills including the impugned Shipping Bills from
Advance Authorisation to drawback vide letter F. No. S.
Misc./211/2011-EDC/CON dated 30.07.2012.
28.09.2013 Post conversion of Shipping Bills, Brand Rate of Drawback was
fixed under Rule 7(1) of the Customs, Central Excise Duties
and Service Tax Drawback Rules, 1995 vide letter dated
28.09.2013.
03.10.2013 Based on fixation of brand rate of drawback, Appellant made
claim before Commissioner of Customs (Air Port) for drawback
in respect of goods exported vide 21 shipping Bills including
the impugned Shipping Bills.
26.12.2013 During pendency of above application, the Additional
Commissioner of Central Excise issued corrigendum to the
original letter dated 28.09.2013 revising the brand rate of
drawback fixed in respect of goods exported by sea as well as
air.
09.09.2015 While drawback was granted in respected of 18 shipping bills,
in respect of 3 impugned Shipping Bills, drawback was not
sanctioned. Appellant vide letter dated 09.09.2015, intimated
the authority of the proceedings pertaining to conversion vide
which the Impugned Shipping Bills were converted.
Further, copy of letter from Large Tax Payer Unit granting
drawback against the exports through Air Customs, including
for impugned shipping bills was also enclosed.
29.01.2016 Thereafter, in January 2016, the Principal Commissioner of
Customs (Drawback-Air), Chennai issued Show Cause Notice
F. No. Misc. 243/2015-DBK-ACC dated 29.01.2016 asking the
Appellant to show cause as to why the claim for conversion
should not be rejected as time barred. The SCN observed that
the request for conversion of impugned shipping bills was not
filed in time prescribed in Circular 36/2010-Cus. dated
23.09.2010 to the Principal Commissioner of Customs (Air
Cargo) who is the proper officer to grant the conversion.
16.02.2016 In response to the SCN, the Appellant submitted reply to SCN
dated 16.02.2016. In the said reply, the Appellant, inter alia,
submitted the following the request for conversion filed
appropriately and was granted for all shipping bills including
the impugned Shipping Bills by the Commissioner of Customs
(Sea) after due verification of all documents and duty
payments.

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In light of the same, and subsequent sanction of drawback by
Large Tax Payer Unit, there is substantial compliance with the
requirement of law, and hence, drawback must be sanctioned.
Without prejudice, even if the application for conversion was
filed before the wrong authority, it is settled position that the
date of filing such application shall be taken into account for
the purpose of computing the limitation of time by the proper
authority who is to consider the said application. In this
regard, reliance was placed on Rathi Steel and Power Ltd.
v. Commissioner of Central Excise, Ghaziabad, 2014-
TIOL-1401-CESTAT-DEL.
15.03.2016 Without considering the submissions, another letter was
issued with the approval of the Principal Commissioner
wherein it was proposed to reject the claim as time barred
29.03.2016 Personal hearing in the matter was conducted wherein the
Appellant appeared and made all submissions and prayed for
release of drawback
01.08.2016 However, the Ld. Principal Commissioner passed the impugned
Order in Original No. 697/2016-AIR dated 01.08.2016
rejecting the Appellant’s Drawback Claim. In the impugned
order, it was held that the application for conversion of the
impugned Shipping Bills was not filed before the jurisdictional
Commissionerate within the prescribed time limit as per the
provisions under Section 149 of the Customs Act read with the
Circular No. 36/2010-Cus. dated 23.09.2010.
The Impugned Order observed that the exporter has not
applied for conversion of the impugned Shipping Bills to the
jurisdictional Customs Commissionerate within the time limit
of three months as envisaged in the Circular 36/2010-Cus.
dated 23.09.2010 and thereby hits by time limitation. (Para
18 and 21)

B. The three shipping bills were converted from the Advance
Authorisation Scheme to the Drawback Scheme by the Commissioner
of Customs (Exports) vide letter dated 30.07.2012, after verification of
the relevant documents, and the drawback brand rate was
subsequently fixed on 26.12.2013.
C. Neither order was challenged by the Department, and their
validity could not be questioned at the stage of sanctioning drawback.
D. As held in Colossustex Pvt. Ltd. v. Union of India [2024 (387)
E.L.T. 277 (Bom.)] and CC (Exports), Tuticorin v. Regin Exports

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[2026 (4) TMI 804 (Mad.)], the three-month limit prescribed under
Circular No. 36/2010-Cus. dated 23.09.2010 was not enforceable, as
Section 149 of the Customs Act, 1962 did not prescribe such a
limitation.
E. The applications dated 26.03.2012 and 24.04.2012 were
supported by the requisite documents and that the impugned
conversion requests were filed after the ‘Let Export Order’ was given
to the respective Shipping Bills; the contrary finding in the impugned
order arose from confusing these applications with an earlier request
concerning different shipping bills.
F. Relying on Boving Fouress Ltd. Vs CCE [2006 (202) E.L.T. 389
(S.C.)], ITC Ltd. Vs CCE [2019 (368) E.L.T. 216 (S.C.)] and Estocorp
India Pvt. Ltd. Vs Union of India [2012 (275) E.L.T. 313 (Del.)], it
was submitted that an unchallenged conversion order could not be
reopened in subsequent drawback proceedings.
G. Denial of the substantive drawback benefit on procedural
grounds, despite conversion and brand-rate fixation, would defeat the
scheme's object and unjustly deprive the appellant of the benefit of
export-related duty relief.
H. The Ld. Counsel accordingly prayed that the impugned order be
set aside and the appeal allowed with consequential relief.
Submissions made by the Respondent-Revenue
3.2 Ld. Authorized representative Smt. O.M. Reena, submitted on
behalf of Revenue that:
A. The drawback claims relating to three shipping bills, viz., No.
6401581 dated 25.11.2011, No. 6505238 dated 02.12.2011 and No.

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6564041 dated 07.12.2011, were correctly rejected on the ground that
the conversion of the shipping bills from the original scheme to the
Drawback Scheme had been allowed by the non-jurisdictional
Commissioner of Customs (Sea), although the exports fell within the
jurisdiction of the Air Commissionerate.
B. Secondly in terms of Circular No. 36/2010-Cus. dated
23.09.2010, the request for conversion was required to be made before
the Principal Commissioner of Customs (Air Cargo), being the proper
officer, within three months from the date of the respective Let Export
Orders. As the requests were held to be not filed before the proper
officer within the stipulated period, the drawback claims were rejected.
C. She hence prayed that the appeal may be rejected.
Discussion and Analysis
4. I have considered the submissions made by both sides and have
gone through the records. The issue is whether the drawback claim of
Rs 6,52,423/- for Air Export shipping bills Nos. 6401581 dated
25.11.2011, 6505238 dated 02.12.2011 and 6564041 dated
07.12.2011 was rightly rejected because conversion from Advance
Authorisation to Drawback was not sought before the jurisdictional Air
Commissionerate within three months of the respective ‘Let Export
Orders’.
5. The appellant sought conversion of 48 shipping bills, including
the three disputed bills, on 26.03.2012 and submitted the missing
export promotion copies and redemption letter on 24.04.2012. After
verification, the Commissioner of Customs (Exports) approved
conversion on 30.07.2012. The drawback brand rate was fixed on

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28.09.2013 and revised on 26.12.2013. Of the 21 bills covered by the
drawback claim, 18 were sanctioned and three were withheld.
6. Revenue rejected the claim because the Commissioner of
Customs (Sea), rather than the Air Commissionerate, had allowed
conversion, and no request was filed before the proper officer within
the three-month period under Circular No. 36/2010-Cus. dated
23.09.2010. The appellant submits that its request dated 26.03.2012
covered the disputed bills, whereas the earlier request dated
10.11.2011 concerned other bills. It also contends that the Circular
cannot override Section 149 of the Customs Act, 1962.
7. I find that the request dated 26.03.2012 covered the disputed
bills, with supporting documents supplied on 24.04.2012. The request
dated 10.11.2011 related to other bills. The impugned order therefore
wrongly treated the earlier request as the relevant application.
8. Conversion of the Shipping Bills was approved after verification,
and neither that approval nor the brand-rate fixation has been shown
to have been set aside or withdrawn. The issue now is whether
drawback can be refused on the jurisdictional and time-limit grounds,
not whether conversion should originally have been granted.
9. Section 149 of the Customs Act, 1962, as applicable at the
relevant time, allowed amendment after export on documentary
evidence existing at the time of export. It did not prescribe the three-
month limitation relied upon in the impugned order. A circular issued
by the Board cannot, by itself, introduce a statutory bar that is not
contained in the governing provision. The decisions relied on by the
Appellant— Colossustex Pvt. Ltd. Vs Union of India [2024 (387)

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E.L.T. 277 (Bom.); and CC (Exports), Tuticorin Vs Regin Exports
[2026 (4) TMI 804 (Mad.)]—support this position. Further as held by
the Apex Court manuals, circulars and guidelines are administrative
directions and cannot be regarded as law under Article 13 of the
Constitution. [See : Bidi Supply Co. Vs Union of India & Ors. - AIR
1956 SC 479 (para 9); Collector of Malabar & Anr. Vs Erimmal
Ebrahim Hajee - AIR 1957 SC 688 (paras 8,9); G.J. Fernandes Vs
The State of Mysore & Ors. - AIR 1967 SC 1753 (para 12)]
10. The conversion order dated 30.07.2012 remains unchallenged.
The drawback claim cannot be rejected by reopening that order at the
sanction stage without first dealing with it in accordance with law. The
subsequent brand-rate fixation supports the claim.
Conclusion
11. The rejection on these grounds is unsustainable. I therefore set
aside the impugned order and direct the jurisdictional authority to
process the drawback claim of ₹ 6,52,423/- for the three disputed bills
in accordance with law. The appellant is entitled to consequential relief
as per law. The appeal is disposed of accordingly.

(Order pronounced in open court on 30.10.2026)




Sd/-
( M. AJIT KUMAR )
Member (Technical)


Rex