2013 (4) TMI 711 - AT - Customs

Confiscation u/s 111(d) - violation of Exim policy - misdeclaration of value and other material particulars - whether the Toyota Landcruiser vehicle imported vide B/E No. 986965, dated 1-9-2008 is liable to confiscation and if so, under what provisions - Held that - As regards the undervaluation of the car, the same is clearly established. The admission by both Mr. Rehman Shaikh and Mr. Shaikh Safder in their statements clearly show the value to be US 108000 and the invoice for US 64000 dated 31-7-2008 submitted to the Customs to be a fabricated one. It is also a settled position in law that admitted facts need not be proved as held by the Hon ble High Court of Madras in the case of Govindasamy Raghupathy 1997 (6) TMI 356 - MADRAS HIGH COURT . - Thus misdeclaration and liability to confiscation under Section 111(m) of the Customs Act, 1962 is clearly established. In the light of these evidences, the determination of value at US 108000 as the purchase price by the adjudicating authority cannot be faulted. Liability to confiscation under Section 111(d), an IE code was required for the importer and the de facto importer Mr. Rehman Shaikh did not have any such code. Therefore, violation of Section 7 of FTDR Act, 1992 and Rules 2(c), 11 and 14 of Foreign Trade (Regulations) Rules, 1993 is also established. Consequently, provisions of Section 111(d) are attracted. Thus liability to confiscation stand clearly established in this case. Consequently both the appellants Mr. Rehman Shaikh and Mr. Shaikh Safder are liable to penalty under the provisions of Section 112(a) and Section 114AA for the commissions and omissions in rendering the car liable to confiscation Even if the goods have been disposed of during the pendency of adjudication proceedings, the Revenue could not have appropriated the entire sale proceeds. This Tribunal in the case of Yakub Ibrahim Yusuf (supra) had held that in a case where goods have been sold without giving option of payment of redemption fine to importer, importer was entitled to return of sale proceeds with deduction for redemption fine and penalty and duty was not required to be deducted as there was no actual redemption of goods. Therefore, in the present case, where the goods were seized before clearance from the customs, the option to pay fine in lieu of confiscation should have been given to the person who in the view of the Revenue was the real owner/importer. Since no such option has been given, the matter has to go back to the original adjudicating authority. Liability to confiscation of the impugned car under the provisions of Section 111(d) and 111(m) of the Customs Act, 1962 and the liability to penalty of both the appellants under Sections 112(a) and 114AA of the said Act is upheld - However, we remand the matter to the original adjudicating authority to give a finding as to whether the goods are prohibited or not after taking into account the type approval certificate issued by DGFT, New Delhi, vide letter dated 18-1-2010 (if necessary, after verifying the veracity of the same) and if the goods are found not prohibited, to consider grant of option to redeem the goods on payment of fine and penalty to the owner/importer of the car - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Liability of the Toyota Landcruiser to confiscation.
2. Misdeclaration of the value of the imported vehicle.
3. Imposition of penalties on the appellants.
4. Legality of absolute confiscation without redemption.
5. Refund of sale proceeds of the auctioned vehicle.

Detailed Analysis:

1. Liability of the Toyota Landcruiser to Confiscation:
The primary issue was whether the Toyota Landcruiser imported under B/E No. 986965, dated 1-9-2008, was liable to confiscation. The investigation by the Directorate of Revenue Intelligence (DRI) revealed fraudulent import activities by Mr. Rehman Shaikh, who used third-party names to import vehicles. Specifically, the vehicle in question was imported in the name of Mr. Shaikh Safder, who admitted to lending his name for monetary consideration. The adjudicating authority concluded that the car was liable to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962, for violating Exim policy and misdeclaring the value.

2. Misdeclaration of the Value of the Imported Vehicle:
The investigation uncovered that the declared value of USD 64,000 was significantly lower than the actual purchase price of USD 108,000. Both Mr. Rehman Shaikh and Mr. Shaikh Safder admitted in their statements that the invoice presented to Customs was fabricated to evade customs duty. The adjudicating authority determined the value of the vehicle to be USD 108,000 based on contemporaneous imports and the admissions of the involved parties, thereby establishing the misdeclaration.

3. Imposition of Penalties on the Appellants:
Penalties were imposed on both Mr. Rehman Shaikh and Mr. Shaikh Safder under Sections 112(a) and 114AA of the Customs Act. The Tribunal upheld these penalties, citing the clear involvement of both appellants in the fraudulent importation and misdeclaration of the vehicle's value. Mr. Shaikh Safder's conduct, including his failure to clear the vehicle through Customs and his lack of response to notices, further supported the imposition of penalties.

4. Legality of Absolute Confiscation Without Redemption:
The adjudicating authority ordered the absolute confiscation of the vehicle without providing an option for redemption. The Tribunal found this to be incorrect, noting that cars are not prohibited items for import. The Tribunal referenced Section 125(1) of the Customs Act, which mandates offering an option to pay a fine in lieu of confiscation unless the goods are prohibited. Since the adjudicating authority did not establish that the vehicle was prohibited, the Tribunal ruled that the option to redeem the goods should have been given, particularly to Mr. Rehman Shaikh, identified as the de facto importer.

5. Refund of Sale Proceeds of the Auctioned Vehicle:
The vehicle was auctioned during the pendency of the proceedings. The Tribunal held that the sale proceeds should be returned to the importer, after deducting the redemption fine and penalty. Citing the case of Yakub Ibrahim Yusuf, the Tribunal emphasized that the importer is entitled to the sale proceeds minus the specified deductions. The matter was remanded to the original adjudicating authority to determine the real owner/importer and to verify the authenticity of the type approval certificate issued by DGFT, New Delhi.

Conclusion:
The Tribunal upheld the liability to confiscation and penalties but remanded the case to the original adjudicating authority to verify whether the goods were prohibited and to determine the real owner/importer for the purpose of granting an option to redeem the goods on payment of fine and penalty. The sale proceeds of the auctioned vehicle were to be refunded to the actual owner/importer after the necessary deductions. The appeals were allowed by way of remand.