1994 (1) TMI 134 - AT - Customs

Summary

Issues Involved:
1. Confiscation of the vehicle under Sections 111(d) and 111(o) of the Customs Act, 1962.
2. Imposition of penalty under Section 112 of the Customs Act, 1962.
3. Legality of the appellant's purchase and possession of the vehicle.
4. Department's action of auctioning the vehicle during the pendency of the appeal.
5. Whether the appellant had knowledge or was complicit in the illegal importation of the vehicle.

Issue-wise Detailed Analysis:

1. Confiscation of the Vehicle:
The vehicle in question, a Mercedez Benz Van, was seized by DRI officers because the appellant could not produce any legal documents for its import/acquisition. It was found that the vehicle had been imported by a German tourist under Carnet-de-passage but was not re-exported, making it unlawfully retained in India. Consequently, a show cause notice was issued for its confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962. The Collector ordered absolute confiscation of the vehicle valued at Rs. 1,15,000. The Tribunal upheld the confiscation, stating that the illegal importation could not be regularized by subsequent purchasers unless customs duty was paid.

2. Imposition of Penalty:
The appellant contested the imposition of a penalty of Rs. 28,750 under Section 112 of the Customs Act, arguing that he was a bona fide purchaser without knowledge of the vehicle's illegal status. The Collector imposed the penalty, stating that the appellant's actions showed a willful disregard for the law. However, the Tribunal differentiated between confiscation and personal penalty, noting that penalty depends on personal involvement in the illegal importation. The Tribunal ultimately set aside the penalty, citing insufficient evidence of the appellant's connivance or abetment in the illegal importation.

3. Legality of the Appellant's Purchase and Possession:
The appellant claimed to have purchased the vehicle in good faith from an individual named Ramgopal, with proper registration documents. The Department argued that the vehicle was transferred based on bogus No Objection Certificates (NOCs) and forged documents. The Tribunal noted that the appellant failed to take necessary precautions and acted negligently by purchasing a foreign vehicle at a low price without verifying its legal status. Despite this, the Tribunal found no conclusive evidence of the appellant's involvement in the forgery or his knowledge of the vehicle's illegal importation.

4. Department's Action of Auctioning the Vehicle:
The appellant objected to the Department auctioning the vehicle during the pendency of the appeal, especially since a stay order had been granted. The Department justified the auction, stating that the interim order only waived the pre-deposit and did not stay the operation of the confiscation order. The Tribunal did not provide a specific ruling on this issue but focused on the legality of the confiscation and penalty.

5. Knowledge or Complicity in Illegal Importation:
The Department argued that the appellant should have been aware of the vehicle's illegal status due to the nature of the transaction and the use of bogus documents. The Tribunal, however, emphasized that suspicion alone could not replace concrete evidence. The Department failed to provide evidence linking the appellant to the illegal importation or the forgery of documents. Therefore, the Tribunal extended the benefit of doubt to the appellant and set aside the penalty.

Separate Judgments:
- The Vice President disagreed with the Member (Judicial), arguing that absolute confiscation and penalty were justified due to the appellant's negligence and the use of bogus documents. The Vice President emphasized that the appellant should have taken precautions given the nature of the transaction.
- The third Member (Technical) concurred with the Member (Judicial), stating that the Department failed to provide sufficient evidence of the appellant's complicity in the illegal importation. The third Member agreed to set aside the penalty while upholding the confiscation of the vehicle.

Final Order:
In view of the majority opinion, the Tribunal upheld the confiscation of the vehicle but set aside the penalty imposed on the appellant, extending the benefit of doubt to the appellant.