2005 (8) TMI 118 - HC - Customs

Summary

Issues:
- Conversion of bond bill of entry into home consumption bill of entry
- Justification of CEGAT in upholding Order-in-Original
- Request for reconversion of assessed bill of entry into bond bill of entry
- Impact on revenue due to reconversion

Conversion of bond bill of entry into home consumption bill of entry:
The applicant, a 100% export-oriented unit, imported goods under a scheme for duty-free clearance. Initially, a bond bill of entry was filed, but due to delays in obtaining necessary documentation, the applicant requested conversion to a home consumption bill of entry for duty payment. The customs authorities accepted this request, and the goods were assessed for duty. However, the applicant failed to pay the duty within the stipulated time, leading to interest accruing on the unpaid duty amount.

Justification of CEGAT in upholding Order-in-Original:
The Assistant Commissioner of Customs rejected the applicant's request to reconvert the assessed bill of entry into a bond bill of entry, citing potential revenue loss. The Commissioner of Customs (Appeals) allowed the appeal, emphasizing the policy of duty exemption for 100% EOU imports. However, the CEGAT reversed this decision, upholding the original refusal to reconvert the bill of entry. The court found that the applicant's delay in clearing the goods and subsequent request for reconversion were not justified, leading to the denial of the application.

Request for reconversion of assessed bill of entry into bond bill of entry:
After a significant delay, the applicant sought reconversion of the assessed bill of entry into a bond bill of entry to clear the goods under the 100% EOU scheme without duty payment. The CEGAT, in line with the Assistant Commissioner's decision, denied this request, considering the potential revenue loss and the applicant's failure to adhere to duty payment timelines.

Impact on revenue due to reconversion:
The court concluded that permitting reconversion of the bill of entry would result in revenue loss, as the applicant had initially opted for duty payment upon conversion to a home consumption bill of entry. Despite the applicant's argument regarding the intent of duty-free clearance under the EOU scheme, the court emphasized the obligation to pay duty within the specified timeframe and the consequences of failing to do so. The denial of the reconversion request was upheld, considering the facts and legal provisions under the Customs Act.

In summary, the court rejected the applicant's plea for reconversion, emphasizing the importance of timely duty payment and the potential revenue implications of allowing such requests. The judgment highlighted the applicant's initial choice to pay duty upon conversion to a home consumption bill of entry, leading to the denial of the application for reconversion.