Challenge against Application for Cancellation of Self Assessed Ex-bond bills of entry: Calcutta HC rules in favour of Customs Dept [Read Order]

The Commissioner of Customs (Port) filed an appeal against the final Order passed by the Customs, Excise and Service Tax Appellate Tribunal , Eastern zonal bench, Kolkata under Section 130 of the Customs Act, 1962 (the Act). M/S Emami Agrotech Limited,the respondent assessee filed 7 Into Bond Bills of Entry for warehousing in respect of imported goods, namely crude palm of edible grade.

The importers filed Ex- Bond Bills of Entry for home consumption against above mentioned Into Bond Bills of Entry. The customs duty involved in the Ex-Bond Bills of Entry was of ₹47.82 crores. On October 8, 2021, the importer filed an application for withdrawal/cancellation of the said Ex- Bond Bills of Entry filed on September 21, 2021 and September 28, 2021 and reinstatement of Into Bond Bill of Entry.

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Later, by way of notification number 48/2021 – CUS and notification number 49/2021 – CUS, rate of basic custom duty(BCD) was reduced from 2.5% to Nil and rate of agriculture infrastructure development CESS (AIDC) was reduced from 20% to 7.5% with effect from October 14, 2021. The importer made a request on October 8, 2021, which was rejected on October 27 2021 by the Assistant Commissioner of Customs, (Apprising Group-1) on the ground that the application dated October 8, 2021 was inadequate.

The importer filed manual Bill of Entry for home consumption by assessing the custom duty to the tune of 20.26crores and a draft of ₹1.02crores towards the payment of interest for the period from January 18, 2022 to March 10, 2022 on the basis of which the warehouse goods were released. On September 8, 2022, the adjudicating authority passed the order, rejecting the application for cancellation of Ex-bond bills of entry by holding that the same is not covered under section 46(5) of the Act or under any other express provision of the statute.

On challenge by the importer, the Commissioner of Appeals held that if the bills of entry for home consumption was allowed to be withdrawn/cancelled and the fresh bills of entry for home consumption was allowed for clearance of the impugned goods from warehouse, there would be a substantial loss of revenue.

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An appeal was filed before the CESTAT which was allowed by the Tribunal with the following observation, bill of entry is to be filed under section 46 of the customs act and section 46 (5) of the act, provides 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 absence of fraudulent intention.

The counsel appearing on behalf of the Revenue argued that section 46 (5) deals with mere modification of the type code of bill of entry on importation. In the instant case, type code of bill of entry is not getting modified on importation. Still, issue is cancellation of the same bill of entry after it has already been warehoused. Bill of entry for home consumption has already been filed, self-assessed for release therefore, importer’s request for withdrawal/cancellation of Ex- bond bill of entry and reinstatement of into Bond bill of entry cannot be considered under section 46(5) of the Customs Act, 1962.

Justice Chaitali Chatterjee Das observed that the further argument that section 46(5) allows the substitution of bill of Entry for home consumption with bill of Entry for warehousing and vice versa subject to the condition specified therein and had the request was allowed for substitution on the date of presentation of subsequent bill of entry for home consumption for clearance would have been relevant.

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However this argument found not to have been any basis as in terms of Section 68(b) and section 17 and 18 of the Act, once the self-assessment was made and no objection is raised by the authority against the self-assessment, the assessment reaches finality and only option left is to pay the duty as per section 15 of the Customs Act.

The bills of entries were self-assessed by the respondent importer and the department has accepted importer’s assessment without questioning the same or making any alterations and therefore the assessment has been completed as of 21.09.2021 and 28.09.2021 under such circumstances question of reopening the same would not arise.

The Chief Justice T.S. Sivagnanam found that the tribunal committed an error in not addressing the legal issue which fell for consideration, whether the power under Sub Section (5) of Section 46 was exercisable, in the facts and circumstances of the case and whether the interest is payable or not is not the question which is germane to the issue which fell for consideration before the tribunal.

The tribunal has allowed the application filed by the respondent importer for withdraw/cancellation of the Ex. bond bill of entry and re-instatement of Into-bond bill of entry, however, it has not referred to under which provisions of law or in other words under which provisions of the Customs Act this was permissible.

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