2025 (1) TMI 490 - AT - Customs

Reduction of redemption fine and penalty imposed under the Customs Act, 1962 - liability of appellant to pay Customs Duty - appellant is not the importer of motorbike - HELD THAT - It is not in dispute that the appellant was not the importer and was, therefore, not liable to pay duty on the motorbike under section 28 of the Customs Act. Although the Joint Commissioner held in his order-in-original that the appellant had, by depositing the amount of Rs. 5,00,000/- towards the duty during investigation, held himself out to be the importer and, therefore, must be considered as importer, this finding has been set aside by the Commissioner (Appeals) in the impugned order. The issue that the appellant is not the importer is settled. Confiscation of the goods - HELD THAT - It needs to be pointed out that for redemption fine to be imposed the goods must be confiscated in the first place. If goods are confiscated, the title of the goods passes to the Central Government. However, if an option of redemption is given to the appellant and the appellant chooses that option, then the title of the goods goes back to the appellant under section 125 of the Customs Act. Consequently, the appellant will also be liable to pay duty and other charges, as applicable by virtue of section 125 of the Customs Act. In this case, the Commissioner (Appeals) did not record any finding as to why the goods were liable for confiscation - There is also no finding anywhere in the order of the Joint Commissioner as to why the motorbike was liable for confiscation under what section. Reduction of redemption fine - HELD THAT - In the absence of any specific finding that the goods were liable for confiscation under any specific legal provision, the confiscation of the motorbike cannot be sustained. The confiscation of the motorbike, therefore, needs to be set aside. Consequently, the title of the goods shifts back to the appellant and motorbike need not be redeemed by paying any redemption fine by the appellant. Since the appellant is not liable to pay redemption fine under section 125 of the Customs Act, the appellant is also not liable to pay any duty and other charges under section 125 of the Customs Act. Levy of penalty - HELD THAT - Penalty under section 112 (a) and 112 (b) of the Customs Act can be imposed for acts and omissions which rendered the goods liable for confiscation under section 111 of the Customs Act. Since the confiscation is set aside, penalty imposed under section 112 of the Customs Act also needs to be set aside. Conclusion - i) In the absence of any specific finding that the goods were liable for confiscation under any specific legal provision, the confiscation of the motorbike cannot be sustained. ii) The appellant is not liable for customs duty, the confiscation and associated fines are set aside, and the appellant is entitled to a refund of the deposited amount with interest. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the appellant is liable to pay customs duty under section 28 of the Customs Act, 1962, given that he is not the importer of the motorbike.
Whether the imposition of redemption fine and penalty on the appellant under sections 125 and 112 of the Customs Act is justified.
Whether the confiscation of the motorbike was valid under the provisions of the Customs Act.
Whether the appellant is entitled to a refund of the amount deposited as duty during the investigation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability to Pay Customs Duty

Relevant Legal Framework and Precedents: Section 28 of the Customs Act deals with the recovery of duties not levied or short-levied. It is applicable to importers liable for customs duty.
Court's Interpretation and Reasoning: The court noted that the appellant was not the importer of the motorbike and thus not liable to pay customs duty under section 28.
Key Evidence and Findings: The Commissioner (Appeals) had already determined that the appellant was not the importer, and there was no cross-appeal by the Revenue against this finding.
Application of Law to Facts: Since the appellant was not the importer, the court concluded that he was not liable for customs duty.
Treatment of Competing Arguments: The Revenue did not contest the finding that the appellant was not the importer.
Conclusions: The appellant is not liable to pay customs duty under section 28 of the Customs Act.

Issue 2: Imposition of Redemption Fine and Penalty

Relevant Legal Framework and Precedents: Section 125 of the Customs Act allows for the imposition of a redemption fine in lieu of confiscation, while section 112 provides for penalties for improper importation.
Court's Interpretation and Reasoning: The court found that the confiscation of the motorbike was not justified as there was no specific finding or legal provision cited for its confiscation.
Key Evidence and Findings: The Joint Commissioner and Commissioner (Appeals) failed to specify the legal basis for confiscation.
Application of Law to Facts: Without a valid confiscation, the imposition of a redemption fine and penalties on the appellant was deemed inappropriate.
Treatment of Competing Arguments: The appellant argued against the imposition of fines and penalties, citing the lack of any act or omission on his part that would render the motorbike liable for confiscation.
Conclusions: The redemption fine and penalties imposed under sections 125 and 112 of the Customs Act are set aside.

Issue 3: Validity of Confiscation

Relevant Legal Framework and Precedents: Section 111 of the Customs Act outlines the circumstances under which goods are liable for confiscation.
Court's Interpretation and Reasoning: The court determined that the confiscation was not supported by any specific legal provision or finding.
Key Evidence and Findings: The orders from the Joint Commissioner and Commissioner (Appeals) lacked a clear basis for confiscation.
Application of Law to Facts: The absence of a legal basis for confiscation invalidated the action.
Treatment of Competing Arguments: The appellant contended that the confiscation was unjustified, and the court agreed.
Conclusions: The confiscation of the motorbike is set aside.

Issue 4: Refund of Deposited Amount

Relevant Legal Framework and Precedents: The court considered the nature of the deposit made by the appellant during the investigation.
Court's Interpretation and Reasoning: The court held that since the appellant was not the importer, the amount deposited could not be considered as duty.
Key Evidence and Findings: The appellant had deposited Rs. 5,00,000/- during the investigation.
Application of Law to Facts: The deposit was deemed refundable with interest as it was not a duty payment.
Treatment of Competing Arguments: The court did not find any compelling argument against the refund.
Conclusions: The appellant is entitled to a refund of the deposited amount with interest.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "In the absence of any specific finding that the goods were liable for confiscation under any specific legal provision, the confiscation of the motorbike cannot be sustained."
Core Principles Established: The liability for customs duty is contingent upon the status of being an importer. Confiscation and penalties must be grounded in specific legal provisions and findings.
Final Determinations on Each Issue: The appellant is not liable for customs duty, the confiscation and associated fines are set aside, and the appellant is entitled to a refund of the deposited amount with interest. The seized motorbike must be returned to the appellant.

← Previous Next →