2014 (5) TMI 446 - AT - Customs

Town seizures - whether customs duty is required to be paid by owner of goods - Date of seizure of goods in India - fine in lieu of confiscation for seizures Held that - As per provisions contained in Customs Act, 1962, the relevant date for determining the rate of duty is the date when the Bill of Entry is filed - In case of town seizures, such a date will not be available - Therefore, it will be impossible for adjudicating officer at the time of allowing redemption to determine rate of duty and accordingly the quantum of duty - It is rightly held by Commissioner (A) that assessee is not importer of goods - The word importer has to be read in context of the time between their importation and till they are cleared for home consumption, which is the time when the imported goods are in Customs area - Customs duty cannot be demanded in town seizures in addition to redemption fine from person from whose possession the smuggled goods are seized because the value/price of the seized/confiscated goods is deemed to include the duty element levied/leviable with respect to such goods and officer adjudicating the case has considered the same while imposing redemption fine. Reduction of Penalty Held that - The Commissioner (A) in his order reduced the penalties on the ground that the same has been imposed on a higher side - It has not been brought out in the grounds of appeal of the Revenue as to why findings given by Commissioner (A) are not acceptable Decided against Revenue.

Issues:
1. Reduction of penalty by Commissioner (Appeals)
2. Requirement of payment of Customs duty by the owner of the goods in town seizures
3. Definition of 'importer' under Section 2(26) of Customs Act, 1962

Issue 1: Reduction of penalty by Commissioner (Appeals)
The appeal was filed by the Revenue against the Order-in-Appeal reducing penalties imposed by the original adjudicating authority. The Revenue argued that there was no justification for the reduction and cited provisions of Sections 123 and 125 of the Customs Act, 1962, stating that appropriate duty should be paid by the person claiming to be the owner in town seizures. However, the Commissioner (Appeals) had reduced the penalties without any grounds provided by the Revenue to challenge the decision.

Issue 2: Requirement of payment of Customs duty by the owner of the goods in town seizures
The main issue was whether Customs duty is required to be paid by the owner of the goods at the time of granting an option for payment of fine in lieu of confiscation for seizures in town seizures. The Customs Act, 1962, specifies that the rate of duty is determined based on the date of filing the Bill of Entry, which is not available in town seizures. In such cases, the duty element is presumed to be included in the value of the confiscated goods, and no reduction on account of duty can be allowed. The definition of 'importer' under Section 2(26) includes any owner or person holding himself out to be the importer only between importation and clearance for home consumption in the Customs area. Therefore, Customs duty cannot be demanded in town seizures in addition to the redemption fine.

Issue 3: Definition of 'importer' under Section 2(26) of Customs Act, 1962
The definition of 'importer' is crucial in determining the liability for Customs duty between importation and clearance for home consumption. The term includes any owner or person holding himself out to be the importer during this period. Therefore, in the context of town seizures, where the duty element is presumed to be included in the value of confiscated goods, the Customs duty cannot be demanded separately from the person from whose possession the goods are seized.

In conclusion, the appeal filed by the Revenue was rejected based on the observations made regarding the reduction of penalties and the requirement of payment of Customs duty in town seizures as per the provisions of the Customs Act, 1962.

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