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TMI Blog2016 (1) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... schief played by the importer. His bonafides are confirmed by the Commissioner, who did not impose any penalty on him. But the Commissioner found an easy way out by saddling the second purchaser with duty and imposing a penalty on the importer to try and safeguard Revenue. However he has ignored the fact that legal provisions must be followed strictly. Order of the Commissioner is not sustainable in law. - Order of confiscation is set aside. Duty demand, redemption fine and penalty on appellant are also set aside. - Decided in favor of appellants. - Appeal No. C/372/06 - Final Order No. A/3671/2015-WZB/CB - Dated:- 10-11-2015 - P. S. Pruthi, Member (T) And Ramesh Nair, Member (J) For the Appellant : Shri S N Kantawala, Adv For the Respondent : Shri Chatru Singh, Asstt Commissioner (AR) ORDER Per P S Pruthi This appeal arises from Order-in Original dated 30/12/2005 passed by Commissioner of Customs(Import), Mumbai. 2. The facts are that one Cadillac Seville STS car having Chassis No. 1G6KY5498XU905860 bearing Registration No. DL 5CB 3573 was imported from UAE by Shri. Iqbal Mohammad(the importer) and cleared from Customs against Bill of Entry no. 1471 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revealed that Shri. Iqbal Mohammad, the importer, had received ₹ 50 lacs from M/s. HFCL as payment for the car. A show cause notice was issued to the importer and the appellant. The case was adjudicated by the Commissioner vide the impugned order. The car was confiscated under Sections 111(d) and 111(m) of the Customs Act, 1962 read with Section 3(3) of the FTDR Act, 1992. It was allowed to be redeemed on payment of redemption fine of ₹ 10 lacs. On the revised assessable value worked out on basis of 1999 model car, differential duty was confirmed under Section 125(2) against the owner of the car i.e. appellant. Penalty was imposed on the importer Shri. Iqbal Mohammad but no penalty was imposed on the appellant. 3. Heard both sides. 4. Ld. Counsel Shri. Sujay Kantawala appeared for the appellant. He submitted that the appellant had bought the car from M/s. HFCL and made payment by cheque. However M/s. HFCL were not even made a noticee to the show cause notice. He stressed that no malafide is indicated or alleged against appellant, who is a bonafide second purchaser of the car and was not aware that the model of the car was of 1994. The documents in his possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of both sides. 7. This is a case where an imported car has been confiscated twice. The second confiscation arose because DRI found that the year of manufacture of the car was rnis-declared. Initially during the investigations by DRI, General Motors India P Ltd. Gurgaon could not provide the price of the vehicle as the same was sold by the dealer in Tokyo, Japan. However, on further request by DRI to take up the matter with General Motors, Japan. General Motors, Gurgaon intimated that the year/month of manufacture of the vehicle was September, 1999. They also informed the sale price of the vehicle and this sale price has been relied upon by the Commissioner to arrive at the assessable value in terms of valuation provisions under the Customs Act and the case adjudicated again. 7.1 Essentially there are two issues to be decided. The first is that when the show cause notice demanded duty both from the importer i.e. Shri. Iqbal Mohammad as well as the owner (the appellant) under Section 28 of the Customs Act, 1962, can the liability to duty be fixed by the adjudicating authority only on the owner in terms of Section 125(2) of the Customs Act. Uptill the stage of show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal (now CESTAT) for authoritative decision of this Court in the question framed in Para 8, reading as under: Whether the Tribunal was right in law in deciding that the duty ought to be collected from the original importer of the goods who is absconding and that the buyer of the goods has no liability towards payment of duty while buying such tainted goods? 2. The contention raised in the aforesaid question is dealt with by the Tribunal in Para 7 of its order [2000 (122) E.L.T. 710 (Tribunal)], which reads as under: Section 28 of the Act provides for recovery of duty short-levied on imported goods. Clause (2) of Section 125 of the Act provides that where any goods are ordered to he confiscated, the owner of the goods shall, in addition to redemption fine, be liable to pay any duty payable. In our judgment, both these provisions cannot be invoked simultaneously. It is the importer of goods who is liable to pay duty on the goods that he has imported Customs duty is a duty on import. Hence, obviously, no one else normally be required to pay that duty. The definition of the term 'imported' in Section 2 of the Act. ns including at any time between the importatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different. In the present case duty has been demanded from importer who actually imported the car. Therefore decision in VXL India applies in the present case. 7.3 We also place reliance on the decision in the case of Tata Infotech Ltd vs Commissioner 2000(117) ELT 252 (Tribunal) which held that 15. The order of the Collector, which has been reproduced in the Tribunal's decision, is almost identically worded in its relevant portions with the order before us. We find the reasoning by that where the particulars of the importation are known, it is under Section. 28 and not under Section 125(2) that duty will have to be recovered is eminently reasonable. The relevant portions of sub-section (2) of Section 125 demanding duty on confiscated goods entitled to be redeemed were introduced in 1985. Harmonizing the two, Section 125 would appear to come to play in cases where notice cannot be issued under Section 28 for the reason that there was no documentation relating to details of imports of the goods. In that event the provisions of sub-Section(2) of Section 125 would be applicable i.e. in cases where goods are ordered to be confiscated, without the point of their legal import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124 is issued against the original importer who was permitted by the Department to redeem the goods under Section 125 of the Act and sell the same in the open market. In this background, we are of the opinion that the action of the Department to initiate proceedings against the appellant, who is a bona fide purchaser of the redeemed goods for value, is unjust and hence not sustainable in the facts and circumstances of this case. 7. For the reasons stated above, we are of the opinion that the initiation of proceedings under Section 111 (m) of the Act is liable to be quashed. Consequently, we allow these appeals, quash the orders impugned herein and the fine and duty, if any, collected from the appellant for redemption of the goods is directed to be refunded. No costs. In our considered view, the above judgment applies to the present case. Records indicate that, the car was examined on first Check basis on the directions of the Assessing Officer. But curiously the examination report is not on record. The column pertaining to year of manufacture in the Bill of Entry was blank. It was incumbent on the Assessing Officer to get the declaration on Bill of Entry regarding year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions must be followed strictly as held in the case of VXL India Ltd. (supra). 8.1 The Commissioner distinguished the judgment in the case of Mohan Meakin Ltd (supra) by relying on the case of R.C. Fabrics Put. Ltd (supra). We find that both judgments are passed by a three Member Bench and have a common Hon'ble Judge. Further, although the judgment in case of R.C. Fabrics Put. Ltd.(supra) was delivered later, it did not make any reference to the case of Mohan Meakin Ltd(supra) which remains good Law. The facts of the R.C. Fabrics Put Ltd. are also different. In that case a test report dated Nov/Dec 1999 on the basis of which proceedings were re-opened could not be taken into consideration, when the Order was first passed on the note sheet by the Asstt. Collector on 21 Sept, 1990. In the present case the first Adjudicating Authority did not resort to any market inquiry and therefore failed to arrive at the correct assessable value. This inaction on his part does not permit reopening of the matter on the same issue of valuation. We find that the judgment of Hon'ble Apex Court in the case of Mohan Meakin Ltd (supra) holds the fort. The same view is reiterated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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