2007 (11) TMI 128 - AT - Customs

No evidence to show that the respondent was the importer or owner of goods- investigation has actually not unearthed who the real importers were - so legally the notice could not have been issued u/s 28 - Section 125(2) cannot be applied to a situation where there is no seizure and confiscation - duty can be demanded u/s 28 only on the person chargeable with duty and that person is an importer order of ad. authority of setting aside demand and interest is justified

Summary

Issues:
1. Demand of duty on the respondent for dealing in smuggled goods.

Analysis:
The Revenue appealed against an Order-in-Original passed by the Commissioner of Customs, Bangalore, which dropped the demand of duty on the respondent for dealing in smuggled computer parts. The Commissioner imposed a penalty under Section 112(b)(ii) of the Customs Act but did not demand duty due to lack of evidence showing the respondent imported the goods. The Revenue challenged this decision, arguing that duty is demandable from the owner of the goods, relying on case law precedent.

The investigations confirmed that the respondent was dealing in smuggled goods, leading to the imposition of a penalty under Section 112 of the Customs Act. However, the key issue was whether duty could be demanded from the respondent without evidence of importation. The Revenue invoked Sections 28 and 125(2) of the Customs Act to demand duty. Section 28 allows duty demand on the person chargeable with duty, typically the importer. Section 2(26) defines an importer as the owner or one holding himself out to be the importer.

In this case, there was no evidence proving the respondent was the importer or held himself out as one. The investigations revealed he received smuggled goods from Calcutta but did not establish him as the owner or importer. Section 125(2) applies when goods are seized and confiscated, allowing duty demand on the owner or the person from whom the goods were seized. Since there was no seizure or confiscation in this case, Section 125(2) did not apply.

Ultimately, the Tribunal held that duty can only be demanded under Section 28 on the person chargeable with duty, typically the importer. Without evidence showing the respondent imported the goods, duty could not be demanded from him. The case law cited by the Revenue pertained to seized goods, where Section 125(2) would apply. As there was no proof of importation by the respondent, the decision not to demand duty was deemed legally sound, and the Revenue's appeal was rejected.