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Kishorebhai R Zaveri Versus Commissioner of Customs (Import) , Mumbai

2016 (1) TMI 838 - CESTAT 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 manufacture of the car was rnis-declared. - Held that:- duty cannot be demand .....

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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 of the Commissioner is not sustainable in law. - Order of confiscation is s .....

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acts 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 declared as ₹ 5 lacs. In Adjudication, the Additional Commissioner de .....

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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 Section 112(a). 2.1 Later. DRI conducted enquiries from the present owner of the .....

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ss 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 manufactured in September, 1999 whereas the car was declared as of 1994 model at .....

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f 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 bough .....

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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 judgment of Hon'ble Apex Court in case of Commissioner of Customs Vs. Fin .....

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on 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 Trust Versus Commissioner of Customs (ACC, Mumbai [2006 (201) E.L.T. 555 (Bom. .....

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icer 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. Initially during the investigations by DRI, General Motors India P Ltd. Gurgaon c .....

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dicated 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, it is clear that the department intended to recover duty from the importer. .....

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en 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 confirm the demand against the present owner under Section 125(2). The Commi .....

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onal 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 provisions of Section 1 25(2) of the Act cannot substitute for the provisions of Se .....

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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 wh .....

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e 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 provisions of sub-section (2) of Section 25 of the Act are an exception to this pr .....

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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 Jagdish Cancer & Research Centre-2001(132) ELT 257(SC)] and Tribunal in .....

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9;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 different. In the present case duty has been demanded from importer who ac .....

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. 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 Sect .....

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he 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 fact that after issuing a notice as contemplated under Section 124 of the .....

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ion 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 enquiry as to the market value of the goods and released the same after a ha .....

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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 circumstances of this case. 7. For the reasons stated above, we are of the opinio .....

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on 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 strange that Customs waived the no-sale condition before the clearance from C .....

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. 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 the correct year of manufacture. We find that the present case as well as th .....

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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 Commissioner found an easy way out by saddling the second purchaser with d .....

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