2025 (1) TMI 361 - AT - Customs

Jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue a SCN under the Customs Act, 1962 - confiscation of the bike and also imposition of penalty on the ground that the bike was smuggled into India and the documents provided along with the said bike are fake - HELD THAT - Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S CANON INDIA PVT. LTD. 2024 (11) TMI 391 - SUPREME COURT (LB) now held that DRI Officers have jurisdiction to issue show cause notice under Section 28 of the Customs Act. The appellant states that Department has failed to discharge its burden to prove that the said bike was smuggled into India and being non-notified good, burden is on the Revenue to prove the case. The appellant is genuine buyer of the bike which was registered in the name of another buyer. The concerned bike is registered in the fake name and other documents also found fake. Appellant purchased the bike with a price more than Rs. 13 lakhs in Rs. 5,70,000/- and paid in cash Rs. 5 lakhs without ascertaining the actual owner or registered owner. Bike is find goods as the appellant stated in his statement dated 24.10.2011 that he is interested in owning super bikes and went Marine Drive, Mumbai on a Sunday to attend super bikes assemble held by owners of such motor bikes. Therefore, the appellant is well aware about bikes. In these facts and circumstances, it is clear that appellant is not bonafide purchaser. Hon ble Supreme Court in NALIN CHOKSEY APPELLANT VERSUS THE COMMISSIONER OF CUSTOMS, KOCHI 2024 (12) TMI 687 - SUPREME COURT held that as per Section 125(1) of the Customs Act and the possession of the vehicle can be made liable only when the owner of the goods is not known. In this case, owner of the vehicle is unknown and appellant is possessor of the vehicle. Therefore, he is liable to pay the duty. Conclusion - The possession of the vehicle can be made liable only when the owner of the goods is not known. In this case, the owner of the vehicle is unknown and appellant is possessor of the vehicle. Therefore, he is liable to pay the duty. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The judgment addresses the following core legal questions:

Whether the Directorate of Revenue Intelligence (DRI) officers have jurisdiction to issue a show cause notice under the Customs Act, 1962.
Whether the appellant, as a purchaser of a motorcycle allegedly smuggled into India, can be held liable for penalties under the Customs Act.
Whether the documents related to the motorcycle, including the registration certificate and insurance papers, are genuine or forged.
Whether the valuation of the motorcycle by customs authorities is justified.
Whether the appellant qualifies as a bona fide purchaser of the motorcycle.
Whether the burden of proof regarding the smuggling of the motorcycle lies with the Department or the appellant.

2. ISSUE-WISE DETAILED ANALYSIS

Jurisdiction of DRI Officers:

Legal Framework and Precedents: The judgment references the Supreme Court's decision in Commissioner of Customs Vs M/s Canon India Pvt Ltd., which confirms the jurisdiction of DRI officers under Section 28 of the Customs Act.
Court's Interpretation and Reasoning: The Tribunal acknowledges the jurisdiction of DRI officers, aligning with the Supreme Court's interpretation.
Conclusion: The Tribunal concludes that the DRI officers have the jurisdiction to issue the show cause notice.

Liability of the Appellant:

Legal Framework and Precedents: The Customs Act provisions, particularly Sections 112(b) and 125, are central to determining liability.
Court's Interpretation and Reasoning: The Tribunal emphasizes that the appellant purchased the motorcycle without verifying the authenticity of the documents and the ownership.
Key Evidence and Findings: The motorcycle's registration and insurance documents were found to be forged, and the appellant failed to ascertain the true owner.
Application of Law to Facts: The Tribunal applies the law by holding the appellant liable due to the possession of a vehicle with forged documentation.
Conclusion: The appellant is liable under the Customs Act due to the lack of bona fide purchase evidence.

Genuineness of Documents:

Key Evidence and Findings: The documents provided by the appellant, including the registration certificate and insurance papers, were determined to be fake.
Court's Interpretation and Reasoning: The Tribunal supports the findings of the lower authorities regarding the forged nature of the documents.
Conclusion: The documents are conclusively found to be forged.

Valuation of the Motorcycle:

Legal Framework and Precedents: The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, guide the valuation process.
Court's Interpretation and Reasoning: The Tribunal agrees with the valuation determined by the customs authorities based on evidence from Honda Motorcycle and Scooter India Pvt Ltd.
Conclusion: The valuation of the motorcycle is upheld as justified.

Bona Fide Purchaser Status:

Key Evidence and Findings: The appellant's actions, such as purchasing the motorcycle without verifying the seller's identity and the authenticity of the documents, negate the claim of being a bona fide purchaser.
Court's Interpretation and Reasoning: The Tribunal finds that the appellant, being aware of the nature of such transactions, cannot claim bona fide purchaser status.
Conclusion: The appellant is not considered a bona fide purchaser.

Burden of Proof:

Legal Framework and Precedents: The burden of proof lies with the Department to establish smuggling in the case of non-notified goods.
Court's Interpretation and Reasoning: The Tribunal finds that the Department met its burden by demonstrating the forged nature of the documents and the appellant's failure to verify the seller's identity.
Conclusion: The burden of proof is deemed to have been discharged by the Department.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "The possession of the vehicle can be made liable only when the owner of the goods is not known. In this case, the owner of the vehicle is unknown and appellant is possessor of the vehicle. Therefore, he is liable to pay the duty."
Core Principles Established: The judgment reinforces the principle that purchasers of vehicles with forged documentation and unknown ownership cannot claim bona fide status and are liable under the Customs Act.
Final Determinations on Each Issue: The Tribunal dismisses the appeal, upholding the findings of the lower authorities regarding jurisdiction, liability, document forgery, valuation, and the appellant's status as a non-bona fide purchaser.

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