2024 (12) TMI 687 - SC - Customs

Undervaluation - Evasion of Customs Duty - allegation of deliberate misdeclaration of model and the year of manufacture along with tampering with the chassis number of the imported car for the purpose of under invoicing and under valuation of the vehicle - demand of differential duty - Confiscation - redemption fine - owner of the vehicle - importer of the car in question. Whether the appellant herein is the importer of the car in question? - HELD THAT - On a reading of the definition of the expression importer under clause (26) of Section 2 of the Customs Act an importer can include an owner a beneficial owner or any person holding himself out to be the importer. But these personae would fall under the above definition only during the time between the importation of goods and the time when they are cleared for home consumption. Admittedly the appellant was not the importer of the car in question nor was the appellant involved in the process of importation of the car. The car was neither imported for his benefit nor on his behalf. It was Sri Jalaludheen Kunhi Thayil who was the importer from whom no recovery of the differential duty had been made. The appellant herein is only a subsequent purchaser of the said vehicle from a person who had purchased the same from the importer. Thus the appellant cannot be charged for paying customs duty under Section 28 of the Customs Act as an importer or owner of the goods within the meaning of the definition of importer. Owner of the vehicle - HELD THAT - On reading of provisions of the Motor vehicles Act 1988 which defines owner under Section 2(30) of the said Act would indicate that when a motor vehicle stands registered in the name of a person he would be the owner of the said motor vehicle. Section 49 of the Motor Vehicles Act 1988 deals with the necessity for registration. Admittedly in the instant case the car in question has not been registered in the name of the appellant herein but the registration certificate continues to be in the name of the original importer Sri Jalaludheen Kunhi Thayil. Therefore the latter is the owner of the vehicle in law. It may be that there has been a transfer of the vehicle from Sri Jalaludheen Kunhi Thayil to Sri Shailesh Kumar from whom the appellant has purchased the vehicle. However there is no ownership in law which can be recognized insofar as the appellant herein is concerned inasmuch as his name has not been entered in the registration certificate concerning the vehicle in terms of the provisions of the Motor Vehicles Act 1988. Hence the appellant herein cannot be construed to be the owner of the vehicle and hence he does not fall within the scope and ambit of Section 125 of the Customs Act 1962 - in the instant case it is an admitted position that the ownership of the vehicle in law is still with the importer Sri Jalaludheen Kunhi Thayil and thus the owner of the vehicle is known. Confiscation of vehicle - HELD THAT - The very initiation of the proceedings against the appellant herein under the provisions of Customs Act by summoning him by issuance of Show-Cause Notice and subsequent seizure and confiscation of the vehicle in question are not in accordance with law and are unlawful. The impugned judgment of the High Court Show- Cause Notices and other proceedings initiated against the appellant herein being not in accordance with law stand quashed. The order of the Appellate Tribunal dated 23.09.2008 stands restored. Appeal allowed.

Summary

Issues:
1. Interpretation of Sections 28, 124, and 125 of the Customs Act, 1962.
2. Liability of subsequent purchaser for customs duty.
3. Definition of "importer" and "owner" under the Customs Act and Motor Vehicles Act.
4. Confiscation of goods and payment of redemption fine.
5. Lawfulness of proceedings against the appellant.

Analysis:

The Supreme Court heard an appeal challenging the High Court's judgment in a customs duty matter. The appellant, a subsequent purchaser of a car, was served with a Show-Cause Notice for short-levied customs duty. The appellant argued that he was not the importer and therefore not liable to pay customs duty. The respondent contended that the appellant, as the possessor of the car, was the owner and thus liable for the duty. The Court examined the definitions of "importer" and "owner" under the Customs Act. It concluded that the appellant, not being the importer, could not be charged for customs duty under Section 28. The Court also analyzed Section 125, stating that the appellant was not the owner of the car as per the Motor Vehicles Act, as he was not registered as the owner. Therefore, the appellant was not liable to pay the duty or redemption fine.

The Court quashed the proceedings against the appellant, ruling them unlawful as the appellant was not the legal owner of the car. The High Court's judgment was set aside, and the order of the Appellate Tribunal in favor of the appellant was restored. The Court clarified that the respondent Department could proceed against the actual importer and owner of the car. The appeal was allowed, and no costs were awarded.