2016 (9) TMI 315 - HC - Customs

Restoration of the Redemption fine imposed earlier - section 125 of the Customs Act, 1962 - Held that - The Court notes that the Order-in-Original in this case did not make the ultimate purchaser i.e. the Respondent herein liable for payment of duty. The duty liability was fastened on to the first purchaser - the reduced amount of redemption fine upheld. Restoration of penalty - Held that - As far as the deletion of the penalty is concerned, the Department has failed to prove the involvement of the Respondent in the illegal import of the car in question - deletion of penalty upheld. Appeal rejected - decided against Revenue.

Summary

Issues:
Customs duty liability on the final purchaser, deletion of penalty imposed on the respondent, involvement of the respondent in the illegal import of the car.

Issue 1: Customs duty liability on the final purchaser
The Customs Department appealed against the CESTAT's order partly allowing the appeal filed by the Respondent Assessee regarding the short payment of customs duty on the import of high-end luxury cars. The Court noted that the duty liability was not imposed on the ultimate purchaser, i.e., the Respondent, as it was fastened on the first purchaser. The Assessee appealed on the redemption fine and penalty issue, and hence, the question of the Respondent being held liable for customs duty payment did not arise. The Court referred to Section 125 of the Customs Act 1962 to emphasize the duty payment aspect.

Issue 2: Deletion of penalty imposed on the respondent
The CESTAT confirmed the confiscation of the car, reduced the redemption fine, and deleted the penalty imposed on the Respondent. The Department failed to establish the involvement of the Respondent in the illegal import of the car. Consequently, the Court found the CESTAT's decision to delete the penalty reasonable, as there was no proof of the Respondent's participation in the illegal import. This led to the dismissal of the appeal and application.

Issue 3: Involvement of the respondent in the illegal import of the car
The Court highlighted that the Department did not provide evidence of the Respondent's involvement in the illegal import of the car. As a result, the CESTAT's decision to delete the penalty imposed on the Respondent was upheld, as there was no substantiated link between the Respondent and the illegal import activity. This lack of proof led to the dismissal of the appeal and application, as the Respondent's innocence in the illegal import was maintained by the Court.