2013 (1) TMI 506 - AT - Customs

Confiscation u/s 111(d) Penalty u/s 112 Appellant import a motor car manufactured in USA Invoiced by a dealer in Dubai Shipped from Thailand - Contravention of Import policy Vehicle should have been imported from the country of manufacture - This condition not complied with Held that - We are not in agreement with the contention that proving the path of the goods imported is sufficient to meet the condition that the goods should have been imported from the country of manufacture. The Import Policy is formulated having regard to various trade considerations of the country and international obligations. It is not for Tribunal to look into the merits and demerits of the import policy because the Tribunal does not have before it all the facts and constraints that result in a policy. We are also not able to agree with the contention that since the policy has been amended in December 2008, the amended position should be applicable for imports made in 2007. This argument if accepted will also lead to considerable difficulties to the Government in the matter of implementation of import policies from time to time which changes depending on various factors. Conditions not complied are - Homologation certificate - Type Approval certificate/Certificate of Conformity of Production (COP) Held that - There is some merit in the argument of the AR that there was one way of complying with the policy by not importing the car of USA make at all. Following the decision in case J. S. GUJRAL and ANR (2008 (10) TMI 27 - DELHI HIGH COURT) to be a case of maxim lex non cogit ad impossibilia which means that the law cannot ask a person to do the impossible. There is no reason to confiscate the car on this ground. There is no malafide established on the part of all the three appellants. The issue involved is bonafide issue of interpretation of legal provisions and the appellants could be under a bonafide belief that as the cars are being imported from the country of manufacture, there would be no violation of provisions of the policy. As such, that imposition of penalties upon the importers are neither warranted nor justified. The same are accordingly set aside. In view of the foregoing, impugned orders are set aside and appeals are allowed. Difference in opinion Whether confiscation of the vehicles is required to be upheld with an option to the appellant to redeem the same on the payment of redemption fine of Rs.2 lakhs in each case as held by Member (Technical) or the confiscation is to be set aside in Toto as held by Member (Judicial) Whether confiscation of the vehicles is required to be upheld with an option to the appellant to redeem the same on the payment of redemption fine of Rs.2 lakhs in each case as held by Member (Technical) or the confiscation is to be set aside in Toto as held by Member (Judicial)

Summary

Issues Involved:
1. Compliance with the import condition that vehicles must be imported from the country of manufacture.
2. Requirement of Homologation Certificate and Type Approval Certificate.
3. Legitimacy of confiscation, redemption fine, and penalties imposed on the importers.

Detailed Analysis:

Issue 1: Compliance with Import Condition (Country of Manufacture)

The primary issue revolves around whether the vehicles were imported in compliance with the condition that they must be imported from the country of manufacture. The import policy mandates that vehicles should be imported directly from the country of manufacture. The first appellant, Mr. Mangilipalli Pradeep Ramu, imported a Cadillac Escalade valued at USD 61,500, shipped from Thailand, invoiced by a dealer in Dubai, and manufactured in the USA. Similarly, the other appellants imported Hummer H2 vehicles with analogous shipping routes.

The Tribunal held that merely proving the path of the goods from the USA to UAE to Thailand and then to India does not satisfy the condition of direct import from the country of manufacture. The Tribunal emphasized that the import policy is formulated based on various trade considerations and international obligations, and it is not within the Tribunal's purview to alter these conditions. Therefore, the cars were rightly confiscated under section 111(d) of the Customs Act for violating this import condition.

However, Member (Judicial) dissented, arguing that the policy does not explicitly require direct importation without transhipment. The interpretation should favor the appellants, especially when documentary evidence shows continuous movement from the USA to India. The vehicles were not used elsewhere, and the policy was later relaxed, reflecting legislative intent. Thus, the confiscation and penalties should be set aside.

Issue 2: Requirement of Homologation Certificate and Type Approval Certificate

The appellants argued that obtaining these certificates from an international accredited agency in the USA was impossible because such an agency was not notified by the Government of India. They cited the maxim "lex non cogit ad impossibilia" (the law does not compel the impossible) and referenced a similar case where the Delhi High Court upheld this view. The Tribunal agreed with the appellants, noting that the requirement was indeed impossible to fulfill and thus should not be grounds for confiscation.

Issue 3: Legitimacy of Confiscation, Redemption Fine, and Penalties

Given the violation of the import condition regarding the country of manufacture, the Tribunal upheld the confiscation but reduced the redemption fine to Rs. 2,00,000 and the penalty to Rs. 1,00,000 for each appellant. This decision was based on the precedent set by the Delhi High Court regarding the impossibility of obtaining the required certificates.

Member (Judicial) disagreed, stating that the appellants acted in good faith and the vehicles were imported from the country of manufacture, albeit through transhipment. The penalties and confiscation should be entirely set aside, considering the documentary evidence and the later policy relaxation.

Conclusion:

The Tribunal upheld the confiscation of the vehicles due to non-compliance with the import condition of direct shipment from the country of manufacture but reduced the fines and penalties. Member (Judicial) dissented, advocating for the complete setting aside of confiscation and penalties based on the interpretation of the import policy and the appellants' good faith actions. The difference of opinion was noted, and the matter was left for further adjudication.