2007 (12) TMI 232 - HC - Customs

Whether penalty levied on Mr. Yahoo could be recovered from the petitioner or whether the imported vehicle could be retained by the Customs for recovery of the personal penalty levied on Shri Yahoo? Held that - Since the penalty levied on Shri Yahoo under Section 112(a) is a personal penalty, it cannot be recovered against the importer or against the goods. The O.P. is therefore allowed declaring that the personal penalty imposed on Shri Yahoo vide Ext.P1 order cannot be recovered from the petitioner or against the vehicle imported by him. It would be open to the respondents to proceed for recovery against the defaulter personally in exercise of powers conferred under Section 142 of the Customs Act.

Summary

Issues:
Confiscation of imported vehicle under Customs Act - Redemption fine and personal penalty - Recovery of penalty from importer or third party - Detention of imported vehicle for penalty recovery.

Analysis:
The judgment pertains to the confiscation of a Toyota Land Cruiser Jeep imported by the petitioner under Sections 111(d) and 111(m) of the Customs Act. The Customs ordered the release of the vehicle upon payment of a redemption fine and personal penalty as per Section 125 of the Customs Act. The final adjudication order imposed penalties on individuals involved in the illegal import, including the petitioner and two others. The petitioner and one individual remitted their penalties, but another individual, Mr. Yahoo, did not. This non-remittance led to the Customs refusing to release the vehicle, prompting the petitioner to file a petition seeking a declaration that the penalty imposed on Mr. Yahoo should not be recovered from the petitioner.

The court considered whether the penalty on Mr. Yahoo could be recovered from the petitioner or if the imported vehicle could be detained for this purpose. It was noted that the penalty on Mr. Yahoo was personal and related to abetment, making it not recoverable from the importer or any other person. The judgment emphasized that the Customs Act does not create a charge for personal penalties on imported vehicles. The release of confiscated vehicles is governed by Section 125 of the Act, allowing importers to pay fines in lieu of confiscation. The petitioner had already paid all necessary fees and penalties for the vehicle's release. The court referenced a Supreme Court decision highlighting the distinction between penalties in rem and in personam under the Customs Act.

Consequently, the court allowed the petition, declaring that the personal penalty on Mr. Yahoo could not be recovered from the petitioner or the imported vehicle. The Customs authorities were advised to pursue recovery against the defaulter personally under Section 142 of the Customs Act. The judgment acknowledged the valuable assistance provided by the Amicus Curie appointed by the court in the case.