2007 (4) TMI 340 - AT - Customs

Confiscation fine and penalty - import of Toyota Vehicle - prohibited goods - absence of homologation certificate - misdeclaration of value and description - whether the car imported by the appellant is liable for confiscation under Section 111(d) and 111 (m) and consequent penalty? Held that - the appellant has already discharged the duty liability as worked by the authorities and hence it was for the appellant to decide whether to re-export or clear the car for home consumption - Since it is a consistent practice to release the confiscated cars (which violate the norms of ITC (HS) Policy) for home consumption on payment of fine I do not see any reason to put the appellant in this case to any different yardstick - the confiscated car has to be released to the appellant for home consumption. Misdeclaration of the value - Held that - since the appellant is not challenging the assessed value it has to be held that there was mis-declaration of the value by the appellant and confiscation on this count is upheld. Even if it is held that there was misdeclaration it may be due to the fact the value of the cars keep on fluctuating in a short duration - There is also no contrary finding that the appellant is not going to use the car - redemption fine and penalty appears to be on higher side and is to be reduced. Appeal allowed in part.

Issues Involved:
1. Confiscation of the imported car under Section 111(d) and 111(m) of the Customs Act.
2. Requirement and non-production of the homologation certificate.
3. Imposition of fine for re-export versus home consumption.
4. Mis-declaration of the value and description of the car.
5. Quantum of redemption fine and penalty imposed.

Detailed Analysis:

1. Confiscation of the Imported Car:
The appellant imported a Toyota vehicle which was confiscated due to non-compliance with the Import Licensing Note to Chapter 87 of the ITC (HS) Policy, specifically para 2(II)(c) requiring a homologation certificate. The adjudicating authority concluded that the car was liable for confiscation under Section 111(d) and 111(m) of the Customs Act, which was upheld by the tribunal. Section 111(d) envisages confiscation if goods are imported contrary to prohibitions imposed under the Customs Act or any other law.

2. Requirement and Non-Production of the Homologation Certificate:
The appellant argued that the homologation certificate is typically required from dealers or importers under the EPCG scheme, not from individual importers. However, the tribunal found that the absence of this certificate violated the ITC (HS) policy, justifying the confiscation under Section 111(d) as the car was deemed a prohibited article.

3. Imposition of Fine for Re-Export versus Home Consumption:
The adjudicating authority allowed the car's redemption for re-export, but the appellant contended that redemption should permit home consumption. The tribunal referred to the judgment in Phoenix Overseas P. Ltd. v. Union of India, where it was held that once goods are confiscated, the owner should have the option to pay a fine for either home consumption or re-export. The tribunal also cited the Larger Bench decision in A.K. Jewellers v. Commissioner of Customs, Mumbai, supporting the appellant's stance that the adjudicating authority cannot impose re-export conditions if the fine is paid.

4. Mis-Declaration of the Value and Description of the Car:
The appellant did not challenge the valuation assessed by the authorities, acknowledging a mis-declaration of value. The tribunal upheld the confiscation on this ground but noted that the mis-declaration might be due to fluctuating car values and accepted the appellant's claim that the car was for personal use, not resale.

5. Quantum of Redemption Fine and Penalty Imposed:
The tribunal found the original fine and penalty excessive, considering the car was for personal use and had been incurring demurrage since September 2006. The tribunal reduced the redemption fine to Rs. 50,000 and the penalty to Rs. 50,000. The tribunal emphasized that the car should be released for home consumption within three days of fine payment and directed the appellant not to create any third-party interest for six months post-release.

Conclusion:
The tribunal concluded that the confiscated car should be released to the appellant for home consumption upon payment of a reduced fine and penalty. The decision underscored that the adjudicating authority's condition of re-export was incorrect, aligning with precedents that allow the importer to choose between home consumption and re-export upon paying the redemption fine.

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