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Issues:
1. Claim of duty-free import under Notification 13/81 for machinery. 2. Conversion of bill of entry for home consumption to warehousing. 3. Accrual of interest on goods. 4. Revenue implications and fraudulent intentions. 5. Decision on conversion request after bill of entry submission. Analysis: Issue 1: Claim of duty-free import under Notification 13/81 for machinery The respondent imported machinery for production of plastic pipes in November 1995 and filed a bill of entry for warehousing the goods into its 100% export-oriented units, claiming duty-free import under Notification 13/81. However, due to the lack of permission from the Development Commissioner, the goods were not cleared under this bill of entry. The department later granted permission to convert the bill of entry for home consumption, which was assessed to duty. The Commissioner (Appeals) acknowledged the respondent's eligibility for conversion based on its export activities and incurring demurrage on the goods, which led to the department challenging this decision. Issue 2: Conversion of bill of entry for home consumption to warehousing The Departmental Representative argued that interest accrued on the goods after seven days of the bill of entry return, amounting to Rs. 19 lakhs, which was more than the duty on the goods. The Assistant Commissioner denied the conversion request citing the revenue's interest. The respondent's Advocate contended that since no duty was payable under Notification 13/81, no interest loss occurred, emphasizing the distinction between interest and revenue. The Tribunal found that the intention to use the goods for export ceased to exist, and the delay in seeking conversion raised questions about the importer's motives, ultimately supporting the Assistant Commissioner's decision. Issue 3: Accrual of interest on goods and revenue implications The Tribunal clarified that interest on revenue payable is considered revenue, and the delay in obtaining the Development Commissioner's certificate did not justify the conversion to home consumption. The inability to utilize the goods in the export-oriented unit did not warrant the conversion, especially after a significant delay in seeking the change. The Tribunal emphasized that the interest of revenue should not be compromised, even for export promotion activities, and upheld the denial of the conversion request. Issue 4: Fraudulent intentions and relevance of import policy changes The Tribunal dismissed claims regarding changes in import policies and the appellant's export promotion intent, emphasizing the requirement to ensure revenue interests are not prejudicially affected before conversion requests are considered. The Commissioner's decision based on demurrage costs and export promotion activities was deemed insufficient to overlook the revenue implications, holding the respondent responsible for the demurrage costs due to its actions. Issue 5: Decision on conversion request after bill of entry submission After considering all facts and arguments, the Tribunal concluded that the Assistant Commissioner's denial of the conversion request was appropriate. The appeal was allowed, overturning the Commissioner (Appeals) decision and reinstating the Assistant Commissioner's order based on the revenue implications and the importer's actions leading to the demurrage costs. This detailed analysis of the judgment from the Appellate Tribunal CEGAT, Mumbai highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning behind the decision to uphold the denial of the conversion request.
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