1996 (2) TMI 207 - AT - Customs

Summary

Issues Involved:
1. Confiscation and penalties under Section 111(d) and (m) of the Customs Act, 1962.
2. Allegations of undervaluation, mis-description, and trading in CCPs.
3. Legality of imports by Non-Resident Indians (NRIs) under the Import Policy Handbook and Imports (Control) Order.
4. Determination of penalties and confiscation for two specific imports.

Detailed Analysis:

1. Confiscation and Penalties under Section 111(d) and (m) of the Customs Act, 1962:
The Collector of Customs confiscated two cars under Section 111(d) and (m) of the Customs Act, 1962, imposing a redemption fine of Rs. 5 lakhs each and penalties of Rs. 5 lakhs each on the two importers and the common appellant. Additionally, a penalty of Rs. 16,000 was levied on the appellant for the import of certain spare parts. The Collector also determined the value of the cars and spare parts. The appellant challenged the imposition of two sets of penalties of Rs. 5 lakhs each.

2. Allegations of Undervaluation, Mis-description, and Trading in CCPs:
The Directorate of Revenue Intelligence received information about mis-description and under-invoicing of imported Audi cars. The investigation revealed that M/s. Ashiya Motors traded in CCPs and imported cars using dummy importers like K.D. Sunny and Quazi S. Ahmed, violating the Import Policy Handbook, Imports (Control) Order, and conditions stipulated in the CCP. Show cause notices were issued based on these allegations.

3. Legality of Imports by Non-Resident Indians (NRIs) under the Import Policy Handbook and Imports (Control) Order:
The importers were NRIs who fulfilled the requirements for importing cars under CCPs. The main contention was whether the imports were genuine or if M/s. Ashiya Motors used the importers as dummies. The Import Policy Handbook allows NRIs returning to India for permanent settlement to import vehicles purchased with their earnings abroad. The Handbook does not restrict the sale of imported cars by NRIs.

4. Determination of Penalties and Confiscation for Two Specific Imports:

Quazi S. Ahmed:
The Collector held that Quazi S. Ahmed imported the car not for personal use but for sale through the appellant. The statement of Quazi S. Ahmed indicated that he intended to sell the car for profit. However, the Tribunal found that there was no material to show that Quazi S. Ahmed transferred his licence or violated any legal provisions. The Tribunal noted that the Import Policy does not restrict the purpose of import by NRIs and that an agreement to sell before importation does not violate the conditions of the CCP. Consequently, the Tribunal set aside the order of confiscation, redemption fine, and penalty in regard to Quazi S. Ahmed's car.

K.D. Sunny:
K.D. Sunny's case was different. His statements revealed that he allowed M/s. Ashiya Motors to use his name for a consideration of Rs. 50,000, indicating that M/s. Ashiya Motors was the real importer. The Tribunal concluded that this was not a genuine import by an NRI but an abuse of the import facilities extended to NRIs. However, the Tribunal found the penalty of Rs. 5 lakhs excessive and reduced it to Rs. 1 lakh.

Conclusion:
- E/Appeal No. 1869/92-A related to Quazi S. Ahmed's car was allowed, and the penalty of Rs. 5 lakhs was set aside.
- C/Appeal No. 1871/92-A related to K.D. Sunny's car was partially allowed, and the penalty was reduced from Rs. 5 lakhs to Rs. 1 lakh.