2002 (9) TMI 738 - AT - Customs

Issues Involved:
1. Confiscation of imported goods under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112(a) and (b) of the Customs Act, 1962.
3. Validity of the ownership and possession claims under Transfer of Residence (TR) rules.
4. Legitimacy of the importation process and the role of various individuals.
5. Examination of evidence and statements recorded.
6. Applicability and interpretation of relevant case laws.
7. Consideration of financial status and means of the importer.
8. Examination of the show cause notice and the procedural correctness.
9. Determination of quantum of penalties and fines.
10. Consideration for redemption of confiscated goods.

Detailed Analysis:

1. Confiscation of Imported Goods:
The Commissioner of Customs, Trichy, ordered the confiscation of a Land Rover car and other household articles valued at Rs. 26,71,200/- under Section 111(d) of the Customs Act, 1962. The goods were imported in the name of M. Chinnadurai, who claimed they were sent by his employer Bernard Raj. Chinnadurai stated he did not own the goods and was unaware of their contents. The adjudicating authority found that the importation was illicit, as Chinnadurai did not have the financial means or status to own such costly items, and the goods were essentially imported by Bernard Raj using Chinnadurai's name.

2. Imposition of Penalties:
Penalties were imposed under Section 112(a) and (b) of the Customs Act, 1962. M. Chinnadurai was fined Rs. 2.5 lakhs, and Bernard Raj was fined Rs. 5 lakhs. Another individual, B.N. Rajmohan, who did not appeal, was fined Rs. 2 lakhs. The penalties were based on the findings that Chinnadurai's name was used for the illicit importation of goods that belonged to Bernard Raj.

3. Validity of Ownership and Possession Claims:
The appellants argued that under Section 2(26) of the Customs Act, there is no legal requirement for the importer to be the owner of the goods. They also cited Public Notice No. 3(PN)/1997-2002, which allows the import of a car as unaccompanied baggage without stipulating ownership conditions. However, the adjudicating authority found that Chinnadurai did not possess or use the car abroad, and the goods were not in his possession, which is a necessary condition under the TR rules.

4. Legitimacy of Importation Process:
The adjudicating authority found that Bernard Raj orchestrated the importation using Chinnadurai's name. Statements from various individuals corroborated that Bernard Raj was the real owner of the goods. Chinnadurai's statements, recorded multiple times, consistently indicated that he did not own the goods and that they belonged to Bernard Raj.

5. Examination of Evidence and Statements:
The statements recorded from Chinnadurai and other individuals were crucial in establishing the facts of the case. Chinnadurai's statements were corroborated by others, including an Assistant Manager of Anand Freight Overseas (P) Ltd. and a Deputy General Manager of M/s. Forbes Gokak Ltd. The adjudicating authority found these statements credible and consistent.

6. Applicability and Interpretation of Case Laws:
The appellants cited several case laws to support their arguments, including decisions that goods brought as baggage and declared by the party should not be confiscated if there is no contravention of Section 111(d). However, the adjudicating authority found that these case laws did not apply to the facts of the present case, as the importation was found to be illicit and the importer did not possess or use the goods abroad.

7. Consideration of Financial Status:
The adjudicating authority considered Chinnadurai's financial status, noting that he was a laborer earning a small salary and living with 15 co-workers in a room. This financial status was inconsistent with owning a costly car like the Land Rover. The authority found that Chinnadurai's financial status supported the conclusion that he was not the real owner of the goods.

8. Examination of Show Cause Notice:
The show cause notice issued was found to be specific in invoking the provisions of Section 112(a) of the Customs Act. The adjudicating authority's order also cited the specific section under which penalties were imposed. The appellants' argument that the show cause notice was not specific was rejected.

9. Determination of Quantum of Penalties and Fines:
The adjudicating authority imposed penalties based on the findings of illicit importation. However, the penalties were later reduced by the appellate tribunal, considering Chinnadurai's financial status and the role played by Bernard Raj. Chinnadurai's penalty was reduced from Rs. 2.5 lakhs to Rs. 50,000/-, and Bernard Raj's penalty was reduced from Rs. 5 lakhs to Rs. 2.5 lakhs.

10. Consideration for Redemption of Confiscated Goods:
The appellate tribunal, in its majority order, set aside the absolute confiscation of the goods and remanded the case for de novo consideration. The adjudicating authority was directed to examine the redeemability of the goods under Section 125 of the Customs Act and re-examine the liability of the appellants to penal action under Section 112(a) of the Customs Act.

Majority Order:
The majority order set aside the absolute confiscation and remanded the case for de novo consideration to grant redemption of the confiscated goods, after affording an opportunity to the appellants and fixing the fine and penalty appropriately after considering all the facts and circumstances.

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