2009 (7) TMI 7 - HC - Customs

Import of Second Hand Machinery Actual User Condition Violation of Condition Transfer of Second Hand Machinery illegally - the import would be exempted from the prohibition subject to Actual User Condition . If that condition is violated, provisions of S.111(o) of the Customs Act would be attracted. - There is no dispute that in this case, 16 second-hand printing machines, which fall in the category of second-hand capital goods, were imported in the name and in favour of the M/s.Classic Pack - all of them were offloaded initially at the premises of Baban Sharma and later on, 11 of those machines were found in the premises of Fayyaz Binding Works of Mohammed Illyas Qureshi. Remaining 5 machines out of that lot of 16 printing machines could not be located held that these machines are liable to confiscation under Section 111 and appellant is liable to be penalised.

Summary

Issues:
Violation of Import Policy and Conditions
Violation of Customs Act, 1962
Penalty Imposed under Section 112
Interpretation of Section 111(o) of the Customs Act

Violation of Import Policy and Conditions:
The judgment revolves around the import of second-hand printing machines under the "actual user" condition, which were later sold in violation of the import policy. The appellant, along with others, imported machines in the name of different parties but sold them illegally. The machines imported in the name of one party were found stored elsewhere, indicating a clear violation of the conditions attached to the import of such goods. The appellant's involvement in arranging finances, clearing consignments, and paying commissions further established the violation of the import policy.

Violation of Customs Act, 1962:
The Adjudicating Authority found the appellant and others guilty of violating the Foreign Trade (Development & Regulation) Act, 1992 along with the Export and Import Policy for the period 1996-97. This violation led to the imposition of penalties under Section 112(a) and Section 112(b) of the Customs Act, 1962. The judgment highlights the detailed investigation and statements recorded, which confirmed the illegal activities related to the import and sale of the printing machines.

Penalty Imposed under Section 112:
The Appellate Tribunal upheld the penalties imposed on the appellant and others after considering the evidence and arguments presented. Despite the appellant's contention that there was no violation of Section 111(o) of the Customs Act, the court found that the conditions attached to the import of second-hand capital goods were breached, justifying the penalties under Section 112. The judgment emphasizes the importance of adhering to the conditions specified in the Export and Import Policy to avoid penalties under the Customs Act.

Interpretation of Section 111(o) of the Customs Act:
The court analyzed Section 111(o) of the Customs Act, which deals with the confiscation of goods exempted from duty or any prohibition subject to conditions. It was established that the imported goods were subject to conditions under the Export and Import Policy, and the violation of these conditions rendered the goods liable for confiscation. The judgment clarified that the conditions of actual user and non-transfer of machinery within a specified period were crucial, and any breach led to the application of Section 111(o) and subsequent penalties under Section 112.

In conclusion, the appeal was dismissed based on the clear violations of the Import Policy, Customs Act, and the interpretation of relevant legal provisions. The judgment underscores the significance of complying with import conditions and the legal implications of breaching such regulations in international trade.