2015 (1) TMI 669 - AT - Customs

Transfer of Residence Rules - Import of Cars - Assessee contends that he declared the particulars based on the invoice given by the dealer and there was no attempt to mis-declaration with an intention to evade payment of Customs duty - Demand of differential duty u/s 125 - Interest u/s 28AB - Confiscation of goods under Sections 111 (d), 111(m) and 111 (o) - Redemption fine - Penalty u/s 114A - Held that - It is not in dispute that the appellant had violated the provisions of Transfer of Residence Rules by returning to Dubai before completing the required period of stay in India. It is also not in dispute that the year of manufacture is May 2003 as the same has been certified by the manufacturer of the car on the basis of the chassis and engine number. Therefore, violation of Transfer of Residence Rules, and mis-declaration of material particulars, that is, the year of manufacture is clearly established. As regards the 15% trade discount on the list price, there is no evidence led by the appellant that the said discount is available uniformly to all purchasers. Since the cars are sold through the dealers, it is the dealer who gets the discount and not the retail purchaser and therefore, adopting the list price for determination of the assessable value cannot be said to be incorrect. There is no time limit specified for demand of duty under Section 125. - in the present case since the goods have been seized and confiscated under the provisions of under Section 111 (m) and 111 (o), liability to differential duty would automatically arise. In view of the said position, the liability to pay differential duty as demanded in the impugned order is clearly sustainable in law. Appellant had not intended to sell the car and the car is still in the custody of the of the appellant and therefore, considering the total cum duty value of about ₹ 59 lakhs, the redemption fine of ₹ 10 lakhs appears to be much on the higher side. Accordingly we reduce the redemption fine to ₹ 5 lakhs from ₹ 10 lakhs as confirmed in the impugned order. Demand of interest of ₹ 9,50,316/-, Section 125(2) does not provide for payment of interest. Further in the present case, interest has been demanded under the provisions of Section 28AB; the said Section 28AB will come into picture only when the duty demand is confirmed under Section 28 of the Customs Act and therefore, the provisions of Section 28AB has no role to play in the present case. Similarly, we notice that penalty has been imposed under Section 114A; the said Section applies only when duty demand is confirmed under Section 28A (1) of the Customs Act. In the present case the duty demand has been confirmed under Section 125 and therefore, the question of invoking Section 114A for imposition of penalty on the appellant is clearly unsustainable in law. Accordingly, we set aside the same. - Decided partly in favour of assessee.

Summary

Issues:
Violation of Transfer of Residence Rules, Misdeclaration of year of manufacture, Differential duty demand, Confiscation of goods, Imposition of penalty, Demand of interest, Redemption fine amount.

Violation of Transfer of Residence Rules:
The appellant imported a car under Transfer of Residence Rules but returned to Dubai before completing the required stay in India. The year of manufacture was found to be May 2003, not 2001 as declared. The misdeclaration of material particulars was established, leading to a violation of Transfer of Residence Rules. The appellant's argument of declaring based on dealer's invoice was rejected as the manufacturer's list price and depreciation were considered for valuation.

Misdeclaration of Year of Manufacture:
The appellant declared the year of manufacture based on the dealer's documents, but the manufacturer confirmed it to be May 2003. The valuation was based on the manufacturer's list price, and depreciation was applied. The differential duty demand of Rs. 20,81,411 was upheld as the misdeclaration was proven.

Confiscation of Goods:
The car imported under Transfer of Residence was found liable for confiscation due to misdeclaration of material particulars and violation of Transfer of Residence Rules. The provisions of Section 111(m) and 111(o) were attracted, justifying the confiscation of the vehicle. The appellant's argument against the confiscation was dismissed.

Imposition of Penalty:
A penalty of Rs. 30,31,727 was imposed on the appellant under Section 114A of the Customs Act. However, since the duty demand was confirmed under Section 125, not Section 28A(1), the penalty imposition was deemed unsustainable in law. The penalty under Section 114A was set aside.

Demand of Interest:
Interest of Rs. 9,50,316 was demanded under Section 28AB, which applies when duty demand is confirmed under Section 28. As the duty demand was confirmed under Section 125, the demand for interest under Section 28AB was deemed inapplicable and set aside.

Redemption Fine Amount:
A redemption fine of Rs. 10 lakhs was imposed, which was reduced to Rs. 5 lakhs considering the total value of the car and the appellant's intention not to sell it. The reduced redemption fine was upheld. The demand towards interest under Section 28AB and the imposition of penalty under Section 114A were set aside as unsustainable in law.

This judgment upheld the differential duty demand, reduced the redemption fine, set aside the demand for interest and penalty, and disposed of the appeal accordingly.