The three-month limitation for converting shipping bills under Circular 36/2010-Cus is ultra vires to Section 149 of the Customs Act, 1962. Mere declaration of intent to use Advance Authorization does not constitute availment if imports were not actually made.

SOMESH ARORA

1. M/s. Metalloys Recycling Limited, Andheri Mumbai ("Appellant") are engaged in the manufacture and export of high-grade non-ferrous metal products (Brass and Copper Billets). The Appellant is a recognized "Three-Star Export House" and holds an Authorized Economic Operator (AEO-T2) certification.

1.1 The Appellant was granted Advance Authorization (AA) License No. 0310833435 dated 16.12.2019, entitling duty-free import of 2,120 MT raw material. Between October 2019 and February 2022, the Appellant exported 30 consignments, declaring initial intent on the Shipping Bills to claim Advance Authorisation benefit, under the expectation of subsequent replenishment imports.

1.2 As per appellant, outbreak of COVID-19 pandemic severely crippled global supply chains. Overseas suppliers of metal scrap were unable to fulfil their obligations due to container shortages and port closures, making physical import of authorized 2,120 MT commercially and logistically impossible. To meet strict international export deadlines, they statedly steered its sourcing strategy, procuring required raw materials from domestic Indian market upon full payment of domestic taxes (GST). The official Customs Item Wise Ledger shows that out of 2,120 MT limit, they imported only 463.315 MT raw materials. A forensic Chartered Accountant Certificate confirming that export goods were manufactured out of duty-paid domestic inputs, calculating eligible Duty Drawback of Rs. 37,60,451.71.

1.3 As per appellant, they applied for conversion of 30 Shipping Bills from AA to DBK under Section 149 of the Customs Act which was arbitrarily rejected by Commissioner vide OIO No. AHM-CUSTM-000-PR-COMMR-60-2024-25 dated 03.01.2025, incorrectly equating "declaration of intent" with "actual availment" (Paras 14 & 15 of the impugned order) and rigidly applying an ultra vires three-month time bar under Circular 36/2010-Cus (Paras 18 & 19 of the order).

2. The Appellant submits that impugned Order is legally unsustainable, cryptic, and passed in violation of the parent statute and binding judicial precedents.

2.1 Rebuttal to OIO paras 14 & 15: Mere declaration of intent does not constitute actual availment of benefit-

• In Paragraphs 14 and 15 of the Impugned Order, the Adjudicating Authority held that the Appellant was disqualified from conversion of shipping Bills under Paragraph 3(e) of the Circular 36/2010-Cus solely because the Appellant "declared at respective places in the Shipping bill that they intend to claim Advance Authorization benefits". The Adjudicating Authority committed a grave error of law by conflating a procedural declaration of future intent with the actual consummation of a financial benefit.

• The tangible "benefit" of the AA Scheme is the duty-free import of raw materials. If the import leg of the transaction is severed or unutilized, the export leg is mathematically and legally devoid of any benefit.

2.2 The Adjudicating Authority's assertion of "availment" is factually unsustainable in view of irrefutable, contemporaneous documentary evidence furnished by Appellant:

• The Customs EDI Ledger for AA License No. 0310833435 unequivocally establishes that appellant imported only 463.315 MT against entitlement of 2,120 MT leaving massive balance of 1,657 MT left completely unutilized. One cannot "avail" an import exemption without actually importing the goods.

• Independent statutory certification explicitly confirms "Non-Availment of Double Benefit". It correlates domestic tax invoices for indigenous procurement with the exported billets, proving that domestic duties were suffered and calculating the legitimate Duty Drawback due at Rs.