2019 (5) TMI 272 - HC - Customs

Demanding differential custom duty on account of correct valuation of the car - confiscation of Car - import of second hand car - importer of the car not traceable - Transfer of Residence Rules - liability of importer vs liability of subsequent owner - HELD THAT - It is an admitted position that since then the said car is in possession of the DRI as the option to redeem has not been exercised. The importer of the said car is Mr. Dholakia who had filed the bill of entry and cleared the said car on payment of customs duty as assessed by the Officers of the customs - The demand of duty could only be made upon the importer of the goods and not upon the person in whose possession / ownership the confiscated goods were found when the owner/ possessor of the confiscated goods does not seek to redeem the offending goods u/s 125 of the Act - decided in favor of the appellant and against the respondent Revenue. Penalty u/s 112(a) of the Customs Act,1962 - HELD THAT - It is not the case of the Department that the appellant had done any act or omission which has rendered the goods confiscated u/s 111 of the Act. There is no finding in the impugned order or even allegation in the showcause notice to the above effect. Similarly, the basis of the Revenue's contention that the appellant had abetted the illegal import of the said car by having financed the same is contrary to the facts on record - the appellant could not have in any manner abetted improper importation of the said car by financing it. Consequently, there is no basis to impose a penalty u/s 112(a) of the Act upon the appellant. Appeal allowed in toto - All issues decided in favour of the appellant and against the respondent Revenue.

Summary

Issues:
Challenge to order under Section 130 of the Customs Act, 1962 by the appellant regarding duty demand, penalty upheld by the Tribunal.

Analysis:
The appeal challenged an order by the Customs, Excise and Service Tax Appellate Tribunal regarding duty demand and penalty under the Customs Act, 1962. The appellant raised substantial questions of law, questioning the correctness of upholding the duty demand from the appellant, penalty imposition, and the failure to delete the duty demand since the vehicle was confiscated with an option to redeem. The appeal was admitted for final disposal based on the narrow controversy involved.

The case involved the import of a Toyota Land Cruiser Prado, initially imported under the Transfer of Residence Rule 2002 by Mr. Dholakia, then sold to Mr. Oberoi, and subsequently to the appellant. The car was seized by the Directorate of Revenue Intelligence (DRI) in 2007, leading to a demand for differential duty jointly on the importer, the first buyer, and the appellant as the second buyer. The Commissioner of Customs confirmed the duty demand, confiscating the car with an option to redeem and imposing a penalty on the appellant.

The Tribunal upheld the duty demand and penalty, considering the mis-declaration of the car's year of manufacture and the appellant's role as the financier. The Court analyzed the arguments presented by both parties, emphasizing the importer's liability for duty payment and the requirement for the owner to pay redemption fine and other costs for confiscated goods. Citing previous judgments, the Court concluded that duty demand could only be made on the importer and not on the possessor of confiscated goods who did not seek redemption.

Regarding the penalty imposed under Section 112(a) of the Act, the Court found no basis for the appellant's involvement in financing the illegal importation, as the appellant had obtained a loan to purchase the car in 2005, not finance its initial import in 2002. The Court rejected the Revenue's contention of abetment by the appellant and ruled in favor of the appellant against the penalty imposition.

In conclusion, the Court answered the substantial questions of law in favor of the appellant, ruling against the duty demand and penalty imposition. The appeal was disposed of accordingly, with no order as to costs.