2024(06)LCX0128

Kolkata Tribunal

Emami Agrotech Limited

Versus

Commissioner of Customs (Port)

Customs Appeal No. 75759 of 2023 decided on 26-06-2024

IN THE CUSTOMS

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

REGIONAL BENCH – COURT NO.1

Customs Appeal No.75759 of 2023

(Arising out of Order-in-Appeal No.Kol/Cus/Port/KS/572/2023 dated 28.07.2023 passed by Commissioner (Appeals) of Customs, Kolkata)

M/s Emami Agrotech Limited
Emami Tower,687,Eastern Metropolitan
Bypass, Anandapur,East Kolkata,Pin-700107                Appellant

VERSUS

Commissioner of Customs (Port), Kolkata
15/1, Strand Road, Kolkata-700001                       Respondent

APPERANCE :
Shri Arvind Baheti, Chartered Accountant for the Appellant
Shri Ashish Mishra (Commissioner) & Shri Subrata Debnath, Authorized
Representatives for the Respondent

CORAM:
HON’BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL)
HON’BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL)

FINAL ORDER NO.76173/2024

DATE OF HEARING : 07 .06.2024
DATE OF PRONOUNCEMENT : 26.06.2024

Per Ashok Jindal :

By way of this appeal, the appellant has challenged the impugned order.

2. The facts of the case and the datewise sequence of events are as under :

06.09.2021 & 20.09.2021 :-

M/s. Emami Agrotech Limited, the appellant herein, filed 7 Nos. of Bills of Entry for Warehousing (hereinafter referred to as “Into-Bond BOEs”) with respect to the import of two consignments of Crude palm oil of Edible Grade.

21.09.2021 & 28.09.2021 :-

The Appellant filed 10 Nos. of Bills of Entry for Home Consumption (hereinafter referred to as “Ex-Bond BOEs”) in connection with the 7 Into-Bond BOEs on the EDI Portal. The Customs duty involved in the Ex-Bond BOEs was Rs. 47.82 Crores.

08.10.2021 :-

The Appellant made an application before the Ld. Principal Commissioner of Customs (Port) for the withdrawal/cancellation of the Ex-Bond BOEs and reinstatement of Into-Bond BOEs in light of the ensuing festive season due to which the production and sales would remain depressed with manpower shortage and stretched finances.

20.10.2021 & 25.10.2021 :-

Reminder letters with respect to the above were addressed to the Ld. Principal Commissioner of Customs (Port).

13.10.2021 :-

Notification No. 48/2021 – Customs and Notification No. 49/2021 – Customs were issued, whereby the Basic Customs Duty (“BCD”) and Agricultural Infrastructure and Development Cess (“AIDC”) on the subject goods were reduced from 2.5% to “Nil” and 20% to 7.5% respectively with effect from 14 October 2021.

27.10.2021 :-

The Ld. Assistant Commissioner of Customs, Appraising Group rejected the request of withdrawal/cancellation of the Ex-Bond BOEs on the ground that the reasons mentioned in the Application dated 08 October 2021 were inadequate.

01.11.2021 :-

The Appellant furnished detailed justification with respect to its request for cancellation/withdrawal of the Ex-Bond BOE and continuation of the Into-Bond BOE duly supported by the Warehousing provisions and a CA Certificate endorsing the depressed production and sales data during the festive period.

03.11.2021 :-

The Appellant addressed a letter to the Ld. Chief Commissioner of Customs (Port), informing him about the factual matrix and seeking his intervention in the issue.

04.12.2021 :-

The Ld. Adjudicating Authority once again rejected the request of the Appellant based on the contention that the cancellation of the ExBond BOEs would result in substantial revenue loss to the department.

11.01.2022 :-

The Writ Petition bearing W.P.A. No. 20577 of 2021 filed on 15 December 2021 challenging the communications dated 27 October 2021 and 4 December 2021 was disposed by the Ld. Single Judge vide Order dated 11 January 2022 setting aside the rejection letter and remanding the matter back to the Customs Authority for a speaking Order and directing release of the goods on payment of 50% duty in cash and the balance 50% by way of Bank Guarantee (BG) subject to satisfaction of the authority.

12.01.2022 to 18.01.2022 :-

The Appellant wrote to the department for release of goods enclosing Demand Draft dated 17 January 2022 for a sum of Rs.23.91 Crores and a “BG” dated 17 January 2022 for an equivalent amount along with interest of Rs.52,38,528/- for the period upto 17 January 2022 under Section 61(2) of the Customs Act, in compliance with the Order dated 11 January 2022 passed by the Hon’ble Calcutta High Court.

21.01.2022 :-

Instead of releasing the consignment, the Ld. AC passed an exparte Order dated 21 January 2022 rejecting the prayer of the Appellant for cancellation of the Ex-Bond BOEs on the premise that it would entail a revenue loss of Rs.22.25 Crores if those were cancelled and fresh BOE for home consumption was filed on 17 January 2022 for clearance of the warehoused goods.

03.02.2022 :-

The Appellant challenged the Order dated 21 January 2022 for violating the principles of natural justice in a Writ proceeding bearing W.P.A. No. 1348 of 2022 which was disposed by the Ld. Single Judge on the ground of existence of an alternate appellate remedy in law.

16.02.2022 :-

Notification No.16/2022–Customs was issued whereby AIDC on the subject goods was further reduced from 7.5% to 5 %.

01.03.2022 :-

The Ld. Division Bench of the Hon’ble Calcutta High Court was pleased to set aside the Order dated 21 January 2022, directing the authorities to release the subject goods and pass a speaking order in the said matter.

10.03.2022 :-

Two letters of even date were filed for release of the Warehouse goods along with a Manual Bill of Entry for home consumption by assessing the customs duties to the tune of Rs.20,26,59,739/- and a Draft of Rs.1,02,20,754/- towards the payment of interest for the period from 18 January 2022 to 10 March 2022, basis which the warehouse goods were released.

19.04.2022 :-

The Appellant vide its letter dated 19 April 2022 furnished a break-up of sum of Rs.23.91 Crores (duty-wise split) along with the amount of refund of Rs.3.64 Crores to which the Appellant would be entitled to if its application for cancellation/substitution of the Ex-Bond BOE was allowed.

08.09.2022 :-

The Ld. Adjudicating Authority passed Order No. KOL/CUS/AC/GR. I/PORT/45/2022 once again rejecting the application of the Appellant for cancellation of the Ex-Bond BOEs and re-instatement of the IntoBond BOE, interalia holding that the same is not covered by Section 46(5) or under any other express provision of the statute.

28.07.2023 :-

The Ld. Appellate Commissioner passed the Impugned Order in Appeal bearing No. KOL/CUS/PORT/KS/572/2023 reiterating the grounds and contentions of the Ld. Adjudicating Authority and rejecting the prayer of the Appellant. Hence, the present appeal.

3. The ld.Counsel for the appellant submits that Section 46(5) of the Customs Act specifically permits substitution of BOE for home consumption for BOE for warehousing or vice versa subject to meeting the conditions prescribed therein:

a) The interests of the Revenue are not prejudicially affected.

b) There should be no fraudulent intention.

3.1 He further submits that Substitution of a BOE with another BOE in the context of electronic portal (EDI system) would necessarily entail deletion of such other BOE and making the new BOE operative. To support this, he relied on the decision of the Hon’ble Apex Court in the case of West UP Sugar Mills Association Vs. State of Uttar Pradesh (2002) 2 SCC 645]

3.2 He further contends that BOE stands defined in Section 2(4) of the Customs Act to mean a BOE referred to in Section 46. Therefore, applicability of Section 46(5) cannot be excluded to a BOE filed for home consumption of warehoused goods under Section 68 of the Customs Act.

3.3 Further, he submits that the twin conditions prescribed under Section 46(5) stood complied by the Appellant on the date of its application i.e. 8 October 2021, as there was no loss of revenue either with respect to duty or with respect to interest, given that Section 61(1)(c) permits continuation of goods in the warehouse for a period of 1 year and interest under Section 61(2) gets attracted only after a period of 90 days from the date of order of deposit of goods in the warehouse, which in the instant case was September 2021. Further, there was no fraudulent intention as the Appellant could not have foreknown the subsequent reduction in the rate of duty with effect from 14 October 2021 and the same is also not the case of the department.

3.4 He further submits that when the twin conditions stood complied with by the Appellant, discretion under Section 46(5) could not have been exercised arbitrarily but fairly and equitably. If facts and circumstances exist which require exercise of discretion in a particular way, there is an obligation and/or duty to exercise discretion in that way. He relied on the following decisions : (i) IFB Industries Limited Vs. Union of India 2017 (353) E.L.T. 322 (Del.) & (ii) Union of India Vs. Raj Grow Impex LLP – 2021 (377) E.L.T. 145 (SC).

3.5 He further submits that cancellation/withdrawal of a BOE is allowed in terms of serial no.4 of the Standing Order No.16/2020 dated 16 June 2020 which lays down the SOP for Deletion or Cancellation of Bill of Entry in the system.

3.6 He further submits that in any event, cancellation/withdrawal of BOE has not been specifically prohibited under the provisions of the Customs Act. It is a settled principle in law that every procedure is to be understood as permissible till it is shown to be prohibited. [Rajendra Prasad Gupta Vs. Prakash Chandra Mishra-(2011) 2 SCC 705 (SC).

3.7 Again, he submits that in any event, the right to present/file the Ex-Bond BOEs include the right to cancel/withdraw the same in absence of any specific prohibition with respect to the same in terms of the provisions of Section 21 of General Clauses Act.

3.8 It is his further submission that the condition of the interest of the revenue not being prejudiced must be ascertained as on the date of the making the application i.e., 08 October 2021 when the notifications reducing the rate of duty were not in existence and not with reference to subsequent events. Had the application of the Appellant been allowed as on the date of filing of the same, there would have been no loss of revenue. Furthermore, there was no loss of interest on the part of revenue as on the date of filing of the application as the application for cancellation was made within a period of 90 days as required under Section 61 (2). To support, he relied on Circular No.15/2009 – Cus. dated 12 May 2009.

3.9 He further submits that any other interpretation would render Section 46(5) otiose as the department may sit over any application in anticipation of reduction in rates to allege loss to the revenue.

3.10 The Assessee cannot be made to suffer due to the inaction and delays on the part of the Department. Further, the Department also cannot be allowed to take advantage of its own wrong-doing as per the decision of this Tribunal in the case of Sesu International Vs. Commissioner of Customs, Sheva – 2003 (159) E.L.T. 161 (Tri. – Mumbai)].

3.11 It is his further contention that BOE stands self assessed as soon as it is filed on the EDI portal. Therefore, it cannot be said that a self assessed BOE becomes final for all times to come. Substitution under Section 46(5), appeal under Section 128, Amendment under Section 149 can all have the effect of modification of a self assessment. Reliance in this regard is being placed on the judgement:

A. Sony India Private Limited Vs. Union of India 2022 (379) E.L.T. 588 (Telangana) – Affirmed – 2023 (385) E.L.T. 93 (SC)

B. ITC Limited Vs. Commissioner of Central Excise, Kolkata – 2019 (368) E.L.T. 216 (SC)]

Consequently, the Appellant could not be precluded from seeking substitution of the Ex-Bond BOE’s on the ground of having self assessed the duty.

3.12 It is further contended by the ld.Counsel for the appellant that Section 15(1)(b) cannot be read in isolation but with Section 68. In the instant case, the goods were not cleared from the warehouse for home consumption on the strength of the Ex-Bond Duty, which was sought to be cancelled/substituted by the Appellant and the subject matter of the present dispute. Therefore, Section 15(1)(b) cannot be interpreted in a manner so as to render the provisions of Section 46(5) otiose.

3.13 On the contrary, the warehoused goods were subsequently cleared by filing manual BOEs on 10 March 2022, with reference to which an out of charge order was granted. Therefore, the rate of duty is to be determined as on the date of filing of the manual BOEs i.e., the reduced rates in terms of the aforesaid notifications.

3.14 He, therefore, submits that non-permitting substitution would result in a situation whereby customs duty would be recovered from the Appellant, which is not otherwise payable when the Appellant had already reduced the prices of refined palm oil with effect from 14 October 2021.

3.15 Finally, he prays for setting aside the impugned order by allowing the Application of the Appellant for substitution of Ex-Bond BOEs with Into-Bond BOEs and as a consequential relief, refund the excess duties of Customs of Rs.3,64,79,723/- and interest thereon and cancellation of the Bank Guarantee of Rs.23,91,39,462/-.

4. The ld.A.R. for the Revenue has justified the impugned order and he has submitted that in view of the decision of the Hon’ble Bombay High Court in the case of Jain Irrigation Systems Vs. Commissioner of Customs, Nhava Sheva reported in 2005 (189) ELT 277 (Bom.), the reconversion of home consumption Bill of Entry into Into-Bond Bill of Entry, was denied by the Hon’ble Bombay High Court. Therefore, the Ex-Bond Bill of Entry cannot be converted into Into-Bond Bill of Entry.

5. Heard both the parties and considered the submissions.

6. We find that the sole issue before us is that whether in terms of Section 46 (5) of the Act, the appellant is entitled for coversion of ExBond Bill of Entry into Into-Bond Bill of Entry or not ?

7. For better appreciation of facts, some relied upon provisions of the Customs Act, 1962 and Circular, which are related to decide this issue in hand, are extracted herein below :

“Section 2 (4) “bill of entry” means a bill of entry referred to in section 46;

Section 46 (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa.

SECTION 47. Clearance of goods for home consumption. — [(1)] Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption :

[ [Provided that such order may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria :

Provided further that] the Central Government may, by notification in the Official Gazette, permit certain class of importers to make deferred payment of said duty or any charges in such manner as may be provided by rules.]

[(2) [The importer shall pay the import duty -

(a) on the date of presentation of the bill of entry in the case of self-assessment; or

(b) within one day (excluding holidays) from the date on which the bill of entry is returned to him by the proper officer for payment of duty in the case of assessment, reassessment or provisional assessment; or

(c) in the case of deferred payment under the proviso to sub-section (1), from such due date as may be specified by rules made in this behalf,

and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paid or short-paid till the date of its payment, at such rate, not less than ten per cent. but not exceeding thirty-six per cent. per annum, as may be fixed by the Central Government, by notification in the Official Gazette.]

[Provided that the Central Government may, by notification in the Official Gazette, specify the class or classes of importers who shall pay such duty electronically :

Provided further that] where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section : ]

[[Provided also that] if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section.]

Section 61 (c) in the case of any other goods, till the expiry of one year from the date on which the proper officer has made an order under sub-section (1) of section 60 :

Section 61 (2) Where any warehoused goods specified in clause (c) of sub-section (1) remain in a warehouse beyond a period of ninety days from the date on which the proper officer has made an order under sub-section (1) of section 60, interest shall be payable at such rate as may be fixed by the Central Government under section 47, on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods :

SECTION 68. Clearance of warehoused goods for home consumption. — [Any warehoused goods may be cleared from the warehouse] for home consumption, if -

(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;

[(b) the import duty, interest, fine and penalties payable in respect of such goods have been paid; and]

(c) an order for clearance of such goods for home consumption has been made by the proper officer :

[ [Provided that the order referred to in clause (c) may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria :

Provided further that] the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of [ * * * ] penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon : ]

[ [Provided also that] the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.]

Circular No. 15/2009-Cus., dated 12-5-2009
F.No. 473/01/2007-LC
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi

Subject : Levy of Interest under Section 47(2) of the Customs Act, 1962 for delayed payment of duty in respect of clearance of goods from a bonded warehouse - Regarding.

A reference is invited to Section 47(2) of the Customs Act 1962, which provides that where the importer fails to pay the import duty within 5 working days from the date on which the Bill of Entry for home consumption is returned to him for payment of duty, he shall pay interest on the amount of duty till the date of payment of the duty, at the rate fixed by the Central Government. A doubt has been raised whether such interest under Section 47(2) is payable on goods deposited in a warehouse and for which a Bill of entry for home consumption is filed under Section 68 of the said Act, if the importer fails to pay the duty within 5 working days from the date on which such Bill of Entry filed under Section 68 is returned to him for payment of duty.

2. The matter has been examined by the Board. As per Section 46 of the Customs Act, 1962, the importer of any goods, other than goods intended for transit or transshipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. The provision regarding payment of interest for delayed payment of duty after the return of Bill of Entry is contained in Section 47 which reads as under :

“(1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption.

(2) Where the importer fails to pay the import duty under subsection (1) within five days excluding holidays from the date on which the bill of entry is returned to him for payment of duty, he shall pay interest at such rate, not below ten per cent and not exceeding thirty six per cent, per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty till the date of payment of the said duty”.

3. A harmonious reading of the above provisions indicates that the provisions of Section 47(1) are applicable to the goods entered for home consumption by filing a bill of entry accordingly, and the interest liability for delayed payment of duty after the return of Bill of Entry is attracted on import duty as assessed under Section 47(1) on such goods.

4. In case of goods deposited in a warehouse and being cleared for home consumption, the entry for clearance (i.e. ex-bond Bill of Entry) is made under Section 68. As per Section 68 of the Act, the importer of any warehoused goods may clear them for home consumption, if

(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;

(b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and

(c) an order for clearance of such goods for home consumption has been made by the proper officer.

5. Section 68 is a self-contained provision dealing with the clearance of goods from a warehouse for home consumption and this provision does not contain a reference to payment of interest on delayed payment of duty after return of Bill of Entry.

6. Further, as per the provisions of Section 61(2), interest on warehoused goods is payable when they remain in the warehouse beyond the permitted warehousing period specified in Section 61(1). Such interest is payable on the amount of duty payable at the time of clearance of the goods from the expiry of the said warehousing period (including such extended period), till the date of payment of duty on the warehoused goods. Thus, when a provision has been made for warehousing of imported goods, without payment of interest for a specified period, it is not the intention to charge interest within the said interest-free period, even if duty is paid after 5 days after return of the ex-bond Bill of Entry. Interest in any case is chargeable if the warehoused goods remain in the warehouse beyond the permitted period for the period from the expiry of the said period till the date of payment of duty on the warehoused goods.

7. In view of the foregoing, it is clarified that the provisions of Section 47(2) are not attracted in case of clearances made under Section 68. Consequently, no interest is liable to be paid on goods deposited in a warehouse and being cleared for home consumption by filing the Bill of Entry prescribed under Section 68 of the Act, ibid, for delayed payment of duty i.e. if the importer fails to pay the duty within 5 working days from the date on which such Bill of Entry is returned to him for payment of duty. However, interest on warehoused goods is payable when they remain in a warehouse beyond the period specified in sub-section (1) of Section 61 as per provisions of sub-section (2) of Section 61.

8. Wide publicity to this Circular may be given by way of issuance of public notice and standing order.

9. Difficulties, if any, faced in the implementation of this circular, may be immediately brought to the notice of the Board.

10. Please acknowledge receipt.

11. Hindi version follows.”

8. In this case, the facts are not in dispute that initially, on 06.09.2021 & 20.09.2021, the appellant filed Bills of Entry for warehousing in respect of imported goods, namely Crude Palm of Edible Grade. Further, the appellant filed Bills of Entry for home consumption on 21.09.2021 and 28.09.2021. But on 08.10.2021, the appellant filed an application for withdrawal/cancellation of the Ex-Bond Bills of Entry filed on 21.09.2021 & 28.09.2021 and reinstatement of Into-Bond Bill of Entry. By way of Notification No.48/2021-Customs dated 13th October, 2021 and Notification No.49/2021-Customs dated 13th October, 2021, the rate of duty was reduced, which are effective from 14th October, 2021. Thereafter, the request made by the appellant on 08.10.2021, was rejected on 27.10.2021. Finally, it was rejected on 04.12.2021, which was challenged before the Hon’ble Calcutta High Court by way of a Writ Petition and the Hon’ble High Court directed to release of the goods on payment of 50% duty in cash and balance 50% by way of Bank Guarantee subject to satisfaction of the adjudicating authority. The appellant approached to the authorities below, but again the prayer for cancellation of Ex-Bond Bills of Entry was denied holding that there is a revenue loss. The said order was again challenged before the Hon’ble High Court. In the meantime, another Notification No.16/2022- Customs dated 12.02.2022, came into effect and further reduced the rate of duty and the Hon’ble High Court vide its Order dated 1st March, 2022, directed the authorities to release of the subject goods and pass a speaking order

8.1 In view of the direction of the Hon’ble High Court, the appellant paid the duty of 50% in cash and also filed a Bank Guarantee of equivalent amount for release of the goods.

8.2 On 08.09.2022, again the application for cancellation of Ex-Bond Bills of Entry was rejected holding that the same is not covered by Section 46 (5) of the Act. The said order was challenged by the ld.Commissioner (Appeals), who held in the impugned order that if in this case, the Bills of Entry for home consumption was allowed to be withdrawal/cancellation and the fresh Bills of Entry for home consumption was allowed for clearance of the same from warehouse, i.e.the impugned goods, there will be a substantial loss of revenue, which means that the ld. Commissioner (Appeals) himself is of the opinion that the conversion of home consumption Bills of Entry can be allowed/cancelled and reinstated the warehouse Bills of Entry. But he held that if the same is done, then there will be a substantial loss of revenue in terms of Section 46 (5) of the Customs Act, 1962.

8.3 We find that the Bill of Entry is to be filed under Section 46 of the Act and Section 46 (5) of the Act, provided that the proper officer may permit substitution of Bill of Entry for home consumption for a Bill of Entry for warehousing or vice versa if there is no loss of revenue and there should not be any fraudulent intention .

8.4 Section 68 of the Act provided for clearance of warehoused goods for home consumption that as per the said provision, the appellant was required to file Bill of Entry for home consumption in the prescribed form and to pay import duty, interest, fine and penalties payable in respect of such goods for home consumption and order for clearance of such goods is to be made by the proper officer. Further, the owner of the impugned goods, may, at any time, before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty on the said goods.

8.5 In this case, it is not disputed that initially, the appellant has filed Bills of Entry for warehousing, if the Bills of Entry has been filed for warehousing, then Section 68 of the Act shall come into force for clearance of the said goods for home consumption. In terms of Section 68, the conditions are to satisfy that the duty, interest and penalty should be paid and an order of clearance of such goods for home consumption has to be made by the proper officer.

8.6 Admittedly, in this case, the appellant filed the Bills of Entry for home consumption, but neither the duty was paid nor any order for clearance of such goods for home consumption was made by the proper officer and in the meantime, the appellant filed an application for withdrawal of Ex-Bond Bills of Entry and reinstatement of Into Bond Bills of Entry.

8.7 In that circumstances, it is required to be seen that the application filed by the appellant on 08.10.2021, can be considered under Section 46 (5) or not ?

9. The provisions of Section 46 (5) of the Act are applicable in a case where Ex-Bond Bill of Entry, Into Bond Bill of Entry or vice versa, can be permitted if there is no revenue loss or there is no fraudulent intention.

10. Therefore, it is a fit case for consideration of the request made by the appellant on 08.10.2021 in the light of the provisions of Section 46 (5) of the Act.

11. We find the case law cited by the ld.A.R. for the Revenue in the case of Jain Irrigation Systems (supra), is not applicable to the facts of this case as in that case, the assessment of the said goods was done and allowed to be cleared for home consumption under Section 6 of the Act, which is not in the case in hand. Therefore, the said decision in the case of Jain Irrigation Systems (supra) is not applicable to the facts and circumstances of the present case and have no relevance in this case.

12. We find that the impugned order itself, the ld.Commissioner (Appeals) has observed that if the request of the appellant is to be considered under Section 46 (5) of the Act, then there will be a substantial loss of revenue and the said order has attained finality. Therefore, the issue is before us that for consideration of the claim of the appellant for withdrawal/cancellation of the Ex-Bond Bills of Entry and reinstatement of Into Bond Bills of Entry on 08.10.2021, whether there is a revenue loss to the Revenue or not ?

13. Admittedly, on 08.10.2021, there is no change of rate of duty and till three months, in terms of Section 61 (2) of the Act, the appellant is not required to pay any interest.

14. Therefore, we have to examine the issue in the light of the CBEC Circular dated 12th May, 2009 which prescribed that in case of goods deposited in a warehouse and being cleared for home consumption, the following conditions are to be satisfied :

“(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;

(b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and

(c) an order for clearance of such goods for home consumption has been made by the proper officer.

5. Section 68 is a self-contained provision dealing with the clearance of goods from a warehouse for home consumption and this provision does not contain a reference to payment of interest on delayed payment of duty after return of Bill of Entry.”

15. Admittedly, for clearance of goods under Section 68 of the Act, the provisions of Section 47 (2) are not attracted. We hold that the provisions of Section 47 of the Act, are not applicable in the present case as the appellant has initially filed in to Bond Bills of Entry for warehousing. Section 68 of the Act is applicable in this case. As after filing Ex-Bond Bill of Entry on 21.09.2021 & 28.09.2021, the condition of Section 68 of the Act, were not satisfied and as no assessment was done for clearance of goods in question, therefore, the application dated 08.10.2021 is required to be disposed off.

16. Admittedly, on 08.10.2021, there is no change in rate of duty and if the said application filed by the appellant would have been considered and disposed off on the same date, in that case, the appellant was entitled for withdrawal/cancellation of Ex-Bond Bill of Entry and reinstatement of Into Bond Bills of Entry. As the Revenue has not taken any action of the said application filed by the appellant and later on, the rate of duty has been reduced, in that circumstances, it cannot be said that there is loss of revenue due to reduction in rate of duty later on.

17. The Revenue cannot be allowed to take the benefit of their own wrong doing as held by this Tribunal in the case of Sesu International (supra), wherein this Tribunal has held as under :

“6. It is clear that, had the authorities acted with reasonable promptitude, the situation with which the appellant finds itself would not have arisen at all. The letter of the Directorate of Revenue Intelligence that we have referred to earlier makes it clear that the question of eligibility of the goods to exemption was under consideration from December, 1995 onwards. The notice, as we have noted, was issued on 23-5-1996 and that the Commissioner’s order was passed a year and a half later in January, 1997. The order of the Commissioner is based upon the literature relating to the product that the appellant had filed during the hearing held in December, 1996. There has thus been inordinate delay with the investigation and in the adjudication. But for this delay, the appellant would not have been deprived of the benefit of the exemption. It is a well settled principle of law that no authority can be taken advantage of its own wrong doing. The option offered to the appellant in the letter dated February 1996 is illusive and not real. We are of the view that the judgment of the Supreme Court in Priyanka Overseas Pvt Ltd v. Union of India - 1991 (51) E.L.T. 185, relied upon by the appellant also followed in a latter judgment in Kuil Fireworks Industries v. CCE - 1997 (95) E.L.T. 3 would apply. We reproduce below paragraph 2 of this judgment :

“Had the customs authorities passed order in accordance with law the same result would have followed as had been done on December 17, 1987 ... There is no valid reason as to why the same procedure should not have been followed in respect of the remaining goods in respect of which the bills of entry were filed on January 28, 1988 for debonding and clearance of goods. Merely because the officer failed to discharge his duties by making illegal demand for deposit of redemption fine, the appellant could not be held liable to pay duty. The appellant is therefore entitled to the delivery of goods without paying any duty as on January 28, 1988 no duty was payable on the goods.”

18. In view of the above observations, it is concluded that the application for withdrawal/cancellation of Ex-Bond Bill of Entry and reinstatement of Into-Bond Bill of Entry, was required to be considered by the authorities below in terms of Section 46 ( 5) of the Act immediately i.e on the date of filing of the said application. Further, on the said date i.e. 08.10.2021, there was no revenue loss and the interest of revenue has not been affected. Further, no fraudulent act is proved against the appellant. We allow the application filed by the appellant on 08.10.2021 for withdrawal/cancellation of Ex-Bond Bills of Entry and reinstatement of Into-Bond Bills of Entry. In that circumstances, the appellant is liable to pay duty on applicable rate at the time of clearance of goods for home consumption and required to pay interest, if any, in terms of Section 61 (2) of the Customs Act, 1962.

19. The duty is to be calculated accordingly and the same is liable to be paid along with interest if applicable at the time of clearance of goods and accordingly, the liability of the appellant is to calculate. If any excess duty has been paid by the appellant, the same is refundable to the appellant along with interest.

20. The appeal is disposed off in the above terms.

(Pronounced in the open court on 26.06.2024)

Sd/
(Ashok Jindal)
Member (Judicial)

Sd/
(K.Anpazhakan)
mm Member (Technical)