2011 (7) TMI 997 - AT - Customs

Redemption fine for violation of the provisions of Sections 111(m) and 111(o) of the Customs Act 1962 importation of the car - mis-declaring the model No. of the car Held that - appellants themselves have arranged the loan for the car and were having possession of the car under lease agreement as the vehicle imported under Transfer of Residence scheme are not allowed to be sold for two years. When the appellants are in possession of the car and arranged loan for the importation of the car the appellants are the owner of the car and there is violation of Transfer of Residence scheme in the purchase of the car within two years of the importation. Therefore it cannot be held that the appellants are bona fide purchaser of the car. car is liable to be confiscated. redemption fine reduced.

Summary

Issues:
Imposition of redemption fine and penalties under Sections 111(m), 111(o), and 112 of the Customs Act, 1962.

Analysis:
The case involved appeals against the imposition of redemption fine and penalties on the appellants for violating Sections 111(m) and 111(o) of the Customs Act, 1962. The Directorate of Revenue Intelligence received information about luxury motor vehicles being imported under the Transfer of Residence Scheme by misdeclaring the year of manufacture. It was discovered that the appellants arranged a loan against a Toyota Land Cruiser, which was imported by another individual under the scheme. The investigation revealed discrepancies in the model number and the timing of the transfer of ownership to the appellants. The vehicle was confiscated, and redemption was allowed upon payment of a fine of Rs. 5.5 lakhs, with penalties imposed on both appellants.

The appellants contended that they were unaware of the misdeclaration and had not violated the scheme's conditions. They argued that they were bona fide purchasers and cited precedents to support their case. However, the Revenue argued that the appellants took possession of the car immediately after importation, arranged the loan, and were considered the owners due to a lease agreement with the importer. The Revenue maintained that the adjudicating authority's decision to confiscate the car and impose fines was justified.

After considering the arguments, the judge found that the appellants were indeed the owners of the car and had violated the Transfer of Residence scheme by purchasing the vehicle within two years of importation. The judge noted that the appellants' reliance on previous cases was not applicable to the current situation. While reducing the redemption fine to 2.5 lakhs, the judge confirmed the penalties imposed on the appellants for violating Section 111(o) of the Customs Act, 1962.

In conclusion, the appeals were disposed of with the decision to reduce the redemption fine and uphold the penalties.