2014 (12) TMI 1230 - Commission - Customs

Imposition of penalties u/s 112(a) & 114AA and fine u/s 125 of the Customs Act, 1962 - Confiscation of seized goods u/s 111 ibid - Import of second hand car by declaring as new - Held that - car is liable to confiscation u/s 111(d) and 111(m) ibid. Appellant admitted making a payment of ₹ 7 lakhs by cash to the said supplier of the vehicle, over and above the recorded amounts involved in importing the vehicle and that out of this amount only an amount of ₹ 1 lakh was related to post-import activities. He also admitted that he had to make payment of the remaining amount of ₹ 6 lakhs without knowing the purpose for such payment. Such undocumented payment, made underhand in cash, does not appear to be bona fide expenditure towards import of the car and accordingly, for these reasons, the submissions by the applicant, that he had no knowledge that it was a used car cannot be accepted. The applicant, thus, does not deserve full immunity from penalty and fine. Also the applicant has admitted the amount of duty demanded in the SCN and cooperated with the Commission during the settlement proceedings. The entire amount of the admitted duty liability has also been paid by the applicant and he has also deposited the interest demanded thereon. The Revenue has not disputed the interest amount as worked out and paid by the applicant. Therefore, the Bench settles the case under Section 127C of the Act. The above immunities from penalty and prosecution to the applicant are granted under sub-section (l) of Section 127H of the Act subject to the provisions contained in sub-sections (2) and (3) of Section 127H ibid. The immunities are granted only to the applicant who has approached the Settlement Commission.

Issues Involved:
1. Classification of the imported vehicle as new or used.
2. Denial of benefit under Notification No. 21/2002-Cus.
3. Levy of differential duty.
4. Levy of interest on differential duty.
5. Confiscation of the vehicle.
6. Imposition of penalties under Sections 112(a), 112(b), and 114AA of the Customs Act, 1962.
7. Adjustment of security deposit against penalties and fines.

Issue-wise Detailed Analysis:

1. Classification of the Imported Vehicle:
The primary issue was whether the 2006 RHD Toyota Landcruiser VX 4.2 (Diesel) imported by the applicant should be classified as a new or used vehicle. The applicant declared it as new, but investigations revealed it was previously registered in the UK, making it a used vehicle per Licensing Note No. 1(1) to Chapter 87 of ITC (HS). The vehicle was thus liable to confiscation under Section 111(d) of the Customs Act, 1962.

2. Denial of Benefit Under Notification No. 21/2002-Cus:
The SCN proposed denying the benefit of Notification No. 21/2002-Cus, which provided concessional duty rates for new vehicles. Since the vehicle was used, the merit rate of duties totaling approximately 167% was applicable.

3. Levy of Differential Duty:
The SCN demanded a differential duty of Rs. 10,74,010/- in addition to the Rs. 22,44,452/- already paid. The applicant admitted to the short payment and requested appropriation from the deposited amount of Rs. 29,83,283/-.

4. Levy of Interest on Differential Duty:
Interest amounting to Rs. 8,25,327/- was demanded under Sections 28AB and 28AA of the Customs Act, 1962. The applicant admitted this liability and requested appropriation from the deposited amount.

5. Confiscation of the Vehicle:
The vehicle was liable to confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962. The Bench ordered the vehicle's confiscation but allowed the applicant to redeem it on payment of a fine of Rs. 1,00,000/-.

6. Imposition of Penalties:
The applicant was liable for penalties under Sections 112(a), 112(b), and 114AA of the Customs Act, 1962. The Bench imposed a penalty of Rs. 1,00,000/- on the applicant, considering the circumstances and the applicant's cooperation during the settlement proceedings.

7. Adjustment of Security Deposit:
The amounts of duty, interest, penalty, and fine were to be adjusted from the Rs. 20,00,000/- deposited by the applicant during the investigation and the security deposit of Rs. 9,83,283/-. The jurisdictional Commissioner was instructed to complete the appropriation within 30 days.

Conclusion:
The Bench settled the case under Section 127C of the Customs Act, 1962, on the terms that the applicant pays the settled customs duty of Rs. 10,74,010/-, interest of Rs. 8,25,327/-, and a penalty of Rs. 1,00,000/-. The vehicle was ordered to be confiscated but could be redeemed on payment of a fine of Rs. 1,00,000/-. The applicant was granted immunity from prosecution under the Act. The bank guarantee/bond was to be released upon fulfillment of these conditions. The order applied only to the applicant, not to other noticees mentioned in the SCN. The applicant was informed that the settlement order would be void if obtained by fraud or misrepresentation of facts.

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