2015 (11) TMI 758 - AT - Customs

Import of high end luxury cars from various foreign suppliers by mis-declaring as new - Undervaluation of goods - Imposition of penalty under sections 112(a) and 114AA of Customs Act, 1962 - Demand of differential duty - Held that - Appellant is a subsequent purchase of the car after importation in India and bona fide purchaser of the car. Further, we find that Appellant No.2 has contended the valuation of the car and submitted that the car is not an old car is not acceptable as the impugned order has not been challenged by Shri Sumit Walia and Shri Tarun Kumar, therefore, the said part of the order has attained finality. In these circumstances, we are not agreeing with the contentions of the ld. counsel of the Appellant No.2 that the car is new one and the value of the car is declared correctly. - car cannot be confiscated as appellant is a bona fide purchaser. We hold that the car has been confiscated for under-valuation and mis-declaration and the said part of the order has not been challenged by the importer. In these circumstances, the impugned car is liable for confiscation. We also find that the redemption fine imposed is highly excessive. Therefore, we reduce the redemption fine to ₹ 5 lakhs. On payment of such redemption fine, the car shall be released to Appellant No.2. Further we find that the appellant is the bona fide purchaser of the car and no statement of the appellant has been recorded and no role of the appellant has been discussed. Therefore, we hold that penalties under sections 112(a) and 114AA were not imposable on the appellant. In these circumstances, the appellant is entitled to take the possession of the car on payment of redemption fine of ₹ 5 lakhs. Penalty on the appellant has been dropped but the penalty on Shri G.S. Prince was imposed. Further we find that in the case of CC Vs. Vaz Forwarding Ltd.(2010 (12) TMI 503 - AHMEDABAD HIGH COURT), wherein the penalty was dropped on the CHA in absence of evidence of the knowledge of the CHA. Further, in the case of S.Y Ranade (supra), it was held that there is no evidence to prove the involvement of the CHA and an employee has suo moto acted for his personal greed and beyond the scope of his duty, therefore the employer, i.e., CHA cannot be penalised. - Appeal disposed of.

Summary

Issues Involved:
1. Imposition of penalties under various sections of the Customs Act, 1962.
2. Bona fide purchase and confiscation of the car.
3. Role and liability of the Customs House Agent (CHA) and its employee.

Issue-wise Detailed Analysis:

1. Imposition of penalties under various sections of the Customs Act, 1962:
The appellants, M/s. Buhariwala Logistics and Shri Vishvas Uday Singh Laad, faced penalties under sections 112(a), 112(b), and 114AA of the Customs Act, 1962, for their alleged involvement in the illegal importation of a high-end luxury car. The car was imported by mis-declaring it as new, under-invoicing its value, and thus evading higher customs duties. The adjudicating authority imposed penalties of Rs. 10 lakhs each on both appellants and confiscated the car, allowing its redemption on payment of Rs. 22 lakhs. The appellants challenged the penalties and confiscation, arguing their non-involvement in the illegal importation.

2. Bona fide purchase and confiscation of the car:
Appellant No.2, Shri Vishvas Uday Singh Laad, claimed to be a bona fide purchaser, having bought the car in good faith and without knowledge of its illegal importation. He argued that the car was imported by Shri Sumit Walia in the name of Shri Tarun Kumar, and subsequently sold to him after clearance from customs. He contended that the car was registered in the UK only for export purposes and thus classified as new per Board circular No.1/2005-Cus. The tribunal, however, held that the car was indeed under-valued and mis-declared as new, which was not challenged by the original importer. Consequently, the car was liable for confiscation. The tribunal reduced the redemption fine to Rs. 5 lakhs, acknowledging the appellant's bona fide purchase but upheld the confiscation due to the mis-declaration and under-valuation.

3. Role and liability of the Customs House Agent (CHA) and its employee:
Appellant No.1, M/s. Buhariwala Logistics, argued that no statement of any partner was recorded, and the penalty was based solely on the statement of their employee, Shri G.S. Prince, who acted independently for personal gain. The tribunal noted that in subsequent proceedings, penalties were imposed on Shri G.S. Prince, not on the appellant, indicating the appellant's lack of involvement. The tribunal referenced several precedents, including CC Vs. Vaz Forwarding Ltd. and S.Y. Ranade, which established that an employer (CHA) cannot be penalized for the independent actions of an employee beyond the scope of duty. Consequently, the tribunal set aside the penalty imposed on M/s. Buhariwala Logistics, recognizing that the employee acted without the appellant's knowledge.

Conclusion:
The tribunal acknowledged the bona fide purchase of the car by Appellant No.2 and reduced the redemption fine to Rs. 5 lakhs while maintaining the car's confiscation due to mis-declaration and under-valuation. For Appellant No.1, the tribunal set aside the penalty, recognizing that the employee acted independently and without the appellant's knowledge, thus absolving the appellant of liability. The appeals were disposed of accordingly.