ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 02.04.2026
CESTAT Chennai Allows Conversion of Shipping Bills u/s 149
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a pivotal judgment in the case of M/s. β YSI Automotive India Pvt. β Ltd. vs. The Commissioner of Customs, Chennai-IV Commissionerate. β This case revolved around the conversion of Shipping Bills under the Export Promotion Capital Goods (EPCG) scheme, and the Tribunalβs decision has set a significant precedent for exporters navigating similar challenges. β
Case Overview
The appeal was filed by M/s. YSI Automotive India Pvt. β Ltd., represented by its Managing Director, against the Order-in-Original No. β 08/2023 dated 03.01.2023, issued by the Commissioner of Customs, Chennai-IV. β The dispute arose when the appellant sought to amend their Shipping Bills or obtain a βNo Objection Certificateβ under Section 149 of the Customs Act, 1962. β The request was to convert their Shipping Bills from Drawback Shipping Bills to Drawback Shipping Bills with EPCG Authorization, as their exports through M/s. β Glovis India Ltd. qualified as third-party exports. β
Initially, the Commissioner of Customs rejected the request through a non-speaking order (Order-in-Original No. β 73204/2020 dated 16.01.2020). This prompted the appellant to approach the Honβble High Court, which quashed the Commissionerβs order and directed the Commissioner to reconsider the matter and pass a speaking order. β Despite this directive, the Commissioner once again rejected the appellantβs claim, citing procedural issues related to the lack of physical examination of the goods under the EPCG scheme. β
Key Legal Issue β
The central legal question in this case was whether the mention of the EPCG license number on the Shipping Bills was mandatory or whether the appellant could rely on other contemporaneous and supporting evidence to establish the fact of export under the EPCG scheme. β
Arguments Presented
- Appellantβs Argument: The appellant argued that their request for conversion of Shipping Bills was valid and supported by evidence, including βNo Objectionβ letters from M/s. β Glovis India Ltd., which endorsed the appellant as their supporting manufacturer. β They also contended that the conversion would not impact the duty element and that the lack of physical examination was beyond their control, as the Risk Management System (RMS) selects consignments for examination. β
- Respondentβs Argument: The Commissioner of Customs rejected the request, stating that Shipping Bills under the EPCG scheme are typically selected for examination by the RMS. β Since the Shipping Bills in question were not filed under the EPCG scheme, the required physical examination was not conducted, and the absence of this examination was deemed crucial for denying the conversion. β
Tribunalβs Observations
The Tribunal, comprising Honβble Member – Judicial and Honβble Member – Technical, made the following key observations:
- Compliance with High Court Directions: The Honβble High Court had earlier directed the Commissioner to consider all materials furnished by the appellant and pass a speaking order. β However, the Commissioner failed to adequately address the factual aspects, such as the endorsement of Shipping Bills by M/s. β Glovis India Ltd. and the absence of any impact on the duty element due to the requested conversion. β
- Circulars Supporting Conversion: The Tribunal referred to Circular No. β 36/2010 dated 23.09.2010 and Circular No. β 6/2002 dated 23.01.2002, which allow the conversion of Shipping Bills from one Export Promotion Scheme to another, subject to prescribed examination procedures. β The appellant met the requirements of these circulars, and the only reason for rejection was the lack of physical examination, which was beyond the appellantβs control. β
- Non-Examination Not a Valid Ground for Rejection: The Tribunal emphasized that the non-examination of Shipping Bills due to procedural requirements cannot be held against a bona fide claimant like the appellant. β The RMS system selects consignments for examination, and the appellant had no role in preventing customs authorities from conducting the examination. β
- Precedent from Karnataka High Court: The Tribunal cited the decision of the Honβble High Court of Karnataka in Principal Commissioner of Customs, Bengaluru vs. M/s. β Louverline Blinds (Order dated 30.07.2025 in Customs Appeal No. β 4 of 2022), which supported the appellantβs case and reinforced the principle that procedural lapses should not penalize genuine claimants.
Final Judgment
After thoroughly reviewing the case, the Tribunal found no merit in the impugned order and set it aside. β The appeal filed by M/s. YSI Automotive India Pvt. β Ltd. was allowed, providing relief to the appellant and establishing a significant precedent for similar cases. β
Key Takeaways from the Judgment
- Importance of Procedural Fairness: The judgment highlights the need for customs authorities to ensure procedural fairness and consider all relevant evidence before rejecting claims. β
- Role of Circulars: The Tribunalβs reliance on Circular No. β 36/2010 and Circular No. β 6/2002 underscores the importance of adhering to established guidelines for the conversion of Shipping Bills under different export promotion schemes. β
- Impact on Exporters: This decision is a positive development for exporters who face challenges in converting Shipping Bills due to procedural issues. β It reinforces the principle that genuine claimants should not be penalized for factors beyond their control. β
Conclusion
The CESTAT Chennaiβs decision in favor of M/s. β YSI Automotive India Pvt. β Ltd. is a landmark ruling that upholds the principles of justice and fairness in customs-related disputes. It serves as a reminder to both exporters and customs authorities to prioritize transparency and compliance with established legal frameworks. This case will undoubtedly serve as a guiding precedent for similar disputes in the future, ensuring that procedural lapses do not hinder the rights of genuine claimants.
Source: CESTAT Chennai
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