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Commissioner of Custom (Import & General) , New Delhi Versus Buhariwal Logistics & Another

2015 (12) TMI 1149 - DELHI HIGH COURT

Levy of penalty on CHA / agent, broker - Import of high end luxury cars from various foreign suppliers by mis-declaring as new - Undervaluation of goods - Imposition of penalty under sections 112(a) and 114AA of Customs Act, 1962 - Demand of differential duty - Held that:- Court noted that the CCIG proceeded to adjudicate the SCN in question, as far as Respondent No. 1 is concerned, without recording the statement of anyone on behalf of Respondent No. 1. Further Respondent No. 1 was not confront .....

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sed on Respondent No.1. - There was no finding, based on the evidence on record, that Respondent No. 1 was aware of the illegal import in which the G-card holder was involved. Considering that it was a question of penalty, there ought to have been some tangible material to show that Respondent No. 1 was aware of the acts of its employee/agent, Mr. Prince. As rightly pointed out, if Respondent No. 1 was found to have acted in breach of Regulation 19 (8) of CHALR 2004, that might call for a separa .....

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. International and cleared through customs on 4th April 2008 on payment of duty on the basis that it was a new car. It was ultimately sold to Respondent No. 2 on 21st April 2008. The CCIG sought to place the onus on Respondent No. 2 to show how the prior registration in UK, though stated for the purpose of onward sale to India, “has helped the transport authorities of UK for allowing the export of the impugned car.” There was no warrant for shifting the burden to prove the negative to Responden .....

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aushik, Senior Standing Counsel For the Respondents : Mr. Sanjay Kantawala, Advocate for R-1. Mr. Chidananda Urs B.G. Advocate for R-2. ORDER 1. This is an appeal by the Commissioner of Customs (Import), under Section 130 of the Customs Act, 1962 ( Act ), against the impugned order dated 17th December 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Appeal Nos. C/58871 & 60232/2013-CU (DB). 2. Respondent No. 1 is M/s. Buhariwal Logistics of New Delhi and .....

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, there was an obvious loss of revenue as a result of such import. Moreover, according to the Appellant, it was revealed that that Mr. Walia was also involved in under-invoicing the value of these vehicles at the time of import thereby evading the differential customs duty. A search was conducted in the premises of Mr. Walia and various documents were found. From the documents it appears that among several cars, one was Mercedes Benz GL 320 Cdi car, the bill of entry for which had been filed in .....

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entioned vehicle after import had been sold to Respondent No. 2 who was a resident of Bangalore, Karnataka . Initially, a show-cause notice ( SCN ) was issued on 24th April 2012 to several persons including Mr. Walia and Respondent No. 1 herein. As far as Respondent No. 1 was concerned, it was asked to show cause through its G-card holder, Mr. G.S. Prince, why the penalty under Sections 112 and 117 of the Act should not be imposed on them. 5. Subsequently, a corrigendum was issued to the above S .....

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and Section 117 of the Customs Act, 1962 should not be imposed on him. 6. On 3rd April 2013, summons was issued for recording of the statement of Mr. Vishwas Uday Singh Laad, Respondent No.2 herein, who was the ultimate purchaser of the car in question. A SCN was issued on 5th April 2013 to Mr. Sumit Walia, Mr. Tarun Kumar and Respondent No. 1 (on jointly and several basis) requiring them to explain why the valuation of the car at ₹ 19,58,526.35 should not be rejected and why the assessabl .....

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ey were also asked to show cause why the car in question should not confiscated under Section 111 (m) and Section 111 (d) of the Act and why the differential duty of ₹ 68,59,92, along with interest on the delayed payment should not be demanded and recovered. 7. On the basis of the above SCN, an enquiry was held and an Order-In-Original passed by the Commissioner of Customs (Import and General) ['CCIG'] on 18th July 2013 inter alia, re-determining the assessable value of the car as .....

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a penalty of ₹ 10 lakhs was imposed under Section 112 (b) of the Act. 9. Both Respondent Nos. 1 and 2 herein filed separate appeals before the CESTAT. In the impugned common order dated 17th December 2014 in both appeals, the CESTAT held as under: (i) The car in question was initially imported for sale to M/s. Oswal in Ludhiana and later on purchased by Respondent No. 2 on 21st April 2008. Initially it had been imported by Mr. Walia in the name of Mr. Tarun Kumar on 4th April 2008. Respond .....

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redemption fine, the car would be released to Respondent No. 2. Since the statement of Respondent No. 2 was not recorded and since no role of Respondent No. 2 was discussed, the penalties imposed on him under Sections 112 (a) and 114AA of the Act were not justified. (iv) As far as Respondent No. 1, the CHA, was concerned, it was not aware of the import of the car in question by its agent, Mr. G.S. Prince, the G-Card holder. He had acted in his personal capacity to get monetary benefits from the .....

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hich proceedings can be initiated against them under the said Rules. Thus, while the penalty was imposed on Mr. Prince, the penalty against Respondent No. 1 was dropped. Consequently, even in the present proceedings Respondent No. 1 could not be penalized since it had no knowledge of the illegal import. 10. In the present appeal the following two questions have been urged by the Appellant for consideration by the Court: (i) Whether the CESTAT was correct in holding that no penalty should be impo .....

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iling of appeals by the Department in this Court in terms of the Instruction F. No. 390/Misc./163/2010-JC dated 17th August 2011 issued by the Central Board of Excise & Customs, New Delhi ( CBEC ). The minimum monetary limit below which an appeal shall not be filed by the Department in this Court was fixed at ₹ 10 lakhs. It has been clarified in the aforementioned instruction that for ascertaining whether a matter would be covered within or without the aforementioned limits, the determ .....

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ted 17th December 2014 passed by the CESTAT dealt with only the question of penalty. Therefore, as far as Respondents 1 and 2 are concerned, the present appeal does not involve any question of valuation or the corresponding customs duty. The first preliminary objection is accordingly rejected. 13. As regards the second preliminary objection, the Appellant is in appeal against the deletion by the CESTAT of the penalties of ₹ 20 lakhs levied on Respondent No. 2 and ₹ 10 lakhs on Respon .....

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ellant, that the CESTAT has, in the impugned order, proceeded entirely on the basis that in the order-in-original passed by the CCIG in certain subsequent SCNs had exonerated Respondent No. 1. It was not noticed that against those orders, appeals had indeed been filed by the Department before the CESTAT and the said appeals were pending. He accordingly, submitted that the impugned order should be set aside and the matter remanded to the CESTAT for a fresh decision on merits. 15. The Court finds .....

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of the CHALR 2004 it was required to exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as agents . According to him, the CHA would be held responsible for all acts or omissions of his employees in regard to their employment. 17. In the present case, the Court noted that the CCIG proceeded to adjudicate the SCN in question, as far as Respondent No. 1 is concerned, without recording the statement of anyone on behalf of R .....

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the knowledge of Respondent No. 1, no penalty can be imposed on Respondent No.1. 18. Mr. Kantawala then referred to the findings recorded in the order-in-original dated 18th July 2013. The Court finds that in the said order as far as Respondent No.1 is concerned, one reason for justifying the penalty is that Respondent No.1 had failed to verify the antecedents of the importer diligently so as to inform the Department in case of any adverse observation. The other reason is that it had failed to .....

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ion 19 (8) of CHALR 2004, that might call for a separate action to be initiated under those regulations. However, that by itself will not justify the imposition of penalty under Sections 112 and 114AA of the Act unless knowledge of the illegal acts of the agent/employee is able to be attributed to his employer/principal, i.e. Respondent No.1. 19. In the circumstances, the Court finds that the view taken by the CESTAT in the case of Respondent No.1 does not suffer from any illegality. 20. Turning .....

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is presence. This, therefore, did not warrant any adverse inference being drawn against Respondent No.2 as was done by the CCIG in the order-in-original dated 18th July 2013. Respondent No. 2 appeared before the officers of the Department, gave a statement and produced the documents in his possession. 21. From the facts placed on record by Respondent No.2 it appears that the car in question was manufactured in United States of America ( USA ) in 2007 and was sold to Mr. David Evans, an individua .....

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