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2016 (1) TMI 838 - CESTAT MUMBAI

2016 (1) TMI 838 - CESTAT MUMBAI - 2016 (343) E.L.T. 411 (Tri. - Mumbai) - Import of Car - demand of duty from the second purchaser - Additional Commissioner held the car liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Public Notice of DGPT for violation of post import condition of no sale. - demand of duty from the purchaser of car - This is a case where an imported car has been confiscated twice. The second confiscation arose because DRI found that the year of ma .....

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ho is the second purchaser, bought the car from the first purchaser i.e. M/s. HFCL after a year or so, was not at all aware of the mischief 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 .....

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ated 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. 147129 dated 18/9/2000. The car was shown to be of 1994 make in the vehicle export certificate No. 9/22/8873 dated 2/8/2000 issued by Traffic and Licence Directorate, UAE. The value of the car was .....

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elling the car for a period of two years after clearance. He requested for permission for sale of car due to financial problems. In the circumstances the Additional Commissioner held the car liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Public Notice of DGPT for violation of post import condition of no sale. Option was given to redeem the car on payment of redemption fine of ₹ 1.5 lacs and penalty of ₹ 50,000/- was imposed on the importer under Sectio .....

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laring the value of the car to be ₹ 56 lacs showed the name and address of the insured as Shri iqbal Mohammand, C/o. HFCL and RC was got issued in the name of M/s. HFCL again showing year of manufacture as 2000. Thereafter M/s. HFCL sold the car to the appellant and the ownership was transferred vide RC dated 6/12/2001 which also showed the year of manufacture to be 2000. The appellant paid ₹ 30 lacs to M/s. HFCL. Enquiry from 'General Motors' revealed that the car was manufa .....

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ections 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 Kant .....

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deleted. These particulars are verified by the Appraising Officer, Customs on the passport. He relied heavily on the Hon'ble Apex Court judgment in the case of Mohan Meakin Ltd. Versus Commissioner of Central Excise, Kochi [2000 (115) E.L.T. 3 (S.C.)] to state that once the car had suffered redemption fine and been adjudicated upon, it was impermissible to issue second show cause notice invoking the extended period under Section 28 of the Customs Act, 1962. Ld. Counsel also relied on the ju .....

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d reliance on Hon'ble Apex Court judgment in case of J.K. Steel Vs. Union of India [1978(2) ELT J355 (S.C.)] holding that mere invocation of wrong section does not vitiate the proceedings as long as exercise of power can be addressed to a legitimate source. He relied upon Hon'ble CESTAT judgment in the case of S. A. Futehally Vs. Commissioner of Customs, Mumbai [2004(178) ELT 861(Tri. Mumbai)]. He further relied on the Hon'ble Bombay High Court decision in case of Bombay Hospital Tru .....

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which it was held that principle of res judicata would not apply if the officer adjudicating the ease in the first instance did not have information regarding certain facts having bearing on the dutiability of the imported goods. 6. We have carefully considered the facts of the case and the contentions 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. Initia .....

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ue 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 notice, i .....

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nder Section 2(26) to mean "in relation to any goods at any time between their importation and the time when they are cleared for horns consumption, includes any owner or any person holding himself out to be the importer". In the present case there is no doubt that importer was not the appellant and therefore duty cannot be demanded from him under Section 28. 7.2 The question arises whether after demanding duty under Section 28 in the show cause notice, can the Adjudicating Authority c .....

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ods on payment of duty. The issue under consideration was payment of additional duty under Rule 10. In the circumstances, Hon'ble Apex Court held that the demand was confirmed under Rule 10 correctly. In the present case the situation is quite different. It is a well accepted principle "hat duty has to be demanded from the importer. The provisions of Section 125(2) are only an enabling provision which allow duty to be demanded if it has escaped payment at the initial stage. The provisio .....

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, 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-levi .....

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he term 'imported' in Section 2 of the Act. ns including at any time between the importation of the goods and their clearance for home consumption, their owner is significant. It is evidently intended to provide for recovery of duty on goods imported by one person, deposited in a bounded warehouse and cleared by another to whom they are sold or otherwise transferred. By this definition, that second person is deemed to be the importer of the goods and hence liable to pay duty. The provisi .....

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ction 125(2) of the Act are not intended to be used as a substitute for the provisions of Section 28 when circumstances prevent resort to that section. The demand for duty before us is therefore without authority of law." 3. We concur with the view taken by the Tribunal and do not think that the question referred to hereinabove needs any consideration at the hands of this Court." On the other hand Revenue places reliance on the judgments of the Hon'ble Supreme Court in the case of .....

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t. SLP filed against High Court Order in VXL India, was dismissed by Hon'ble Supreme Court. We find that the decision in VXL India is settled law and squarely applicable to the facts of the present case. The reliance by Revenue on case of S.A. Futehally (supra) is misplaced. In that ease the facts were that importers did not make any payments but had only signed papers to facilitate the obtaining of CCP but the entire import and sales were made by Futehally. The facts of the present case are .....

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hat 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 i .....

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stablished and the importer is known and duty was correctly demanded from the importer in the Show Cause Notice. 8. The next issue for our consideration is whether with the passing of first adjudication order by the Asstt. Commissioner, the principle of res-judicata will apply and prevent the second adjudication of the case. Ld. Counsel relies heavily on the Hon'ble Supreme Court judgment in case of Mohan Meakin Ltd (supra) in which it was held that: 6. In the instant case, it is an admitted .....

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ted and to collect all duty and other charges payable on the goods in question before releasing the goods on payment of redemption fine. Having released the goods thus into the market and permitting the sale of the same, in our opinion it is not open to the Collector to initiate another proceedings under another clause of Section 111 to recover the so-called differences in valuation of the imported goods front the ultimate bona fide purchaser for value. If the Collector failed to make a proper e .....

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the Act. Counsel for the respondent is unable to convince us why no notice under Section 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 circum .....

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sis 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 manufacture. There is no finding by the Commissioner as to how the endorsement in the passport as enclosed with the SCN shows the model year as 2000. This should have alerted the Adjudicating Authority. Further, it is st .....

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ary inquiries about the year of manufacture as well as the price of the car. Having made some enquiry, he passed the Order. Therefore the case could not be re-opened on the same issue of valuation only because the department comes up with fresh evidence regarding the true year of manufacture and the price. Revenue has tried to distinguish the facts of the present case with facts in the case of Mohan Meakin Ltd(supra) by taking a stand that there was clear fraud and suppression of not declaring t .....

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d in the "Blue Book". Because of inadequate enquiries, a bonafide 3rd party, purchaser cannot not he fixed with the duty liability and the car confiscated. The first purchaser was not even issued a show cause notice. The appellant who is the second purchaser, bought he car from the first purchaser i.e. M/s. HFCL after a year or so, was not at all aware of the mischief played by the importer. His bonafides are confirmed by the Commissioner, who did not impose any penalty on him. But the .....

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