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TMI Blog2025 (5) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... en Choksey was also recorded on 22.02.2012 and that of Basab Paul was recorded on 05.03.2012. The appellant executed an indemnity Bond for 100% of the ascertained value of the car along with bank guarantee of 25% for provisional release of the seized car. On 12.03.2012, Show Cause Notice was issued by DRI to the appellant and the importer and others. After due process, the Adjudicating authority held that the imported car was second-hand car and re-determined its Value and Customs Duty payable by the importer. He also confiscated the car and ordered it to be redeemed upon payment of redemption fine of Rs.2,00,000/- and imposed penalty of Rs.1,00,000 on the appellant. Being aggrieved by the Order in Original, the appellant filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) has remanded the matter to the Adjudicating authority after holding that the appellant would be required to pay the Customs Duty in terms of Section 125(2) of the Customs Act 1962. The operative part of the order reads as under : "17. I also find that provision of Section 125(2) can be reckoned if the department is unable to invoke Section 28. Here, the lower authority directed Shri Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to be firmed up at Rs.55 lakh. It is stated on record that the appellant issued three cheques totaling Rs.45 lakh towards the stated purchase of the said vehicle in favour of M/s Octaga Green Power and Sugar Company Limited - the importing firm, a company of Shri Basab Paul. At the time of its delivery, the vehicle carried a temporary registration number and had approximately covered 2000 kms. It is also on record that neither the intermediary Shri Haren Choksey nor the stated importer Shri Basab Paul had supplied the original documents of the vehicle to the appellant and a dispute is said to have arisen between the concerned parties, the balance amount of Rs.10,00,000/-, of the negotiated amount is said to have remained unpaid. It also flows from records that requisite NOC for registration with RTO, Maharashtra was not given to the appellant, as a result he had to pay fine, penalty and interest upon registration of the said vehicle at RTO Surat, whereby the said luxury vehicle came to be registered in the name of the appellant vide registration number GJ/5C/E5009. 4. Investigations have also brought it to fore, that the imported car being not new was liable for duty at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - CIF (assessable value of Rs.30,59,391/-) should not be demanded and recovered under the provisions of Section 28(1) of the Customs Act, 1962, with interest under the provisions of section 28AB of the Customs Act, 1962; (Section 28AA after 08.04.2011) (vi) the said vehicle with a declared value of Rs.26,27,591/- CIF (ascertained value Rs.30,29,100/- CIF) should not be confiscated under the provisions of section 111(d) of the Customs Act, 1962 {read with Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 and provisions of Rules 11, 14(1) and 14(2) of the Foreign Trade (Regulations) Rule 1993 and the Import Licensing Notes appended to chapter 87 of the ITC (HS), under the provisions of para 2.12 of the Foreign Trade Policy 2004-2009 and 2.8 of the Hand Book of Procedures} and section 111(m) of the Customs Act, 1962; (vii) penalty under Section 112(a), Section 112 (b), Section 114A and Section 114AA of the Customs Act, 1962 should not be imposed on him in relation to the said vehicle; (viii) duty amount of Rs.18,21,788/- and interest amounting to Rs.7,56,167/- paid at the time of seeking provisional release of the impugned vehicle should not be appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer before permitting the redemption of goods, firstly, to assess the market value of the goods and then to levy any duty or charge payable on such goods apart from the redemption fine that he intends to levy on sub-clause (1) of that Section". 7. Material findings of the adjudicating authority, relevant to the context herein, are extracted as here under : "8.6 it is on record that the vehicle was manufactured in Slovakia, and name of first purchaser is Mr. R.Guy, address Birch Grove, Coombe Park Kingston, upon Thames, KT27JB, U.K. Further, it is also on record that it was shipped by Audi Zentrum Hamburg Raffay GMbH & Co. Germany. These facts have not been contested by the learned advocate on behalf of Shri Dipesh Shah. The vehicle, which was manufactured in Slovakia and first registered in U.K. and then was shipped from Singapore to India (Kolkata). The learned advocate did not discuss the journey of the vehicle from U.K. to Singapore. The information on record also indicates that the invoice was issued by Audi Zentrum Hamburg. The learned advocate on behalf of the noticee failed to appreciate this fact and did not through any light, as, how the vehicle once sold to an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabricated and the plea to consider the car as new on the basis of invoice submitted to Customs at the time of clearance is not sustainable and ratio of case laws quoted is not applicable in this case. ..... 8.8 Para 15 of the reply deals with penalty and states that their client is not liable to penalty under Section 112(a) or (b), Section 114A and 114AA as proposed in para 18(A) of the SCN as in para 17 role of all other co-noticees is discussed but nothing is alleged against our client. I have gone through the show cause notice, under para 17.2(a), it is mentioned that, "a criminal conspiracy was hatched by S/Shri Rajesh Jethani, Haren Choksey, Basab Paul and others to defraud the Government of India of its legitimate revenue, by causing fraudulent import of the Audi Q7 vehicle by resorting to mis-declaration of proper description and value. As pointed out by the advocate of the noticee - the role of Shri Dipesh Shah is only as a bonafide purchaser, hence his role is not attributed to importation in the show cause notice as he had come into picture after importation, i.e. sale of the vehicle to him. Therefore, he has not played any part in importation, filing documents/decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment for 4 weeks. However, two further hearings were granted on 10-12-12 and 27-12-12, there is no response from him. From the letter informing about approaching Settlement Commission and no reply being put forward it is inferred that Shri Basab Paul accepts the show cause notice and allegations therein, in principal. Further, he failed to avail any opportunity for personal hearing to put his case for testing, the charges against Shri Basab Paul are proved being remain unopposed by way of any reply or attending personal hearing by the noticee or his representative. 8. From the foregoing findings of the adjudicating authority, it is evident that the appellant is indeed the co-owner of the imported vehicle, the said vehicle is registered in his name. In view of the material facts as indicated above the contention of being a bonafide post import purchaser is a mere facade and a smokescreen set up to conceal and camouflage the actual identity of the importer and the role played by the appellant masquerading as a purchaser of the vehicle post import. 9. In appellate proceedings, the Commissioner(Appeals) however doubted the contention of appellant being a bonafide post import purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by the Commissioner (Appeals), goes against the statutory provisions of Section 28 and Section 114A and also contrary to his own findings at para 15 of the OIA. He states that it has come up very clearly in the OIO and OIA that the importer was Basab Paul and not the appellant, and that the Commissioner (Appeals) inspite of holding that the duty is recoverable from Basab Paul under Section 28, had held that if this recovery does not materialize, then the duty is to be recovered from the appellant under Section 125(2), for which purpose he remanded the matter to the Adjudicating authority. The appellant submits that for taking this stand and giving such direction to the Adjudicating authority, there exists no statutory power. 14. The Learned Advocate also cited case laws to the effect that no penalty is imposable on the appellant since he is a bonafide purchaser and not the importer. The appellant submitted that only Rs.10 lakh out of the total Rs.55 lakh was held back by him, since all the documents were not handed over by the Dealer. He states that therefore, the genuine transaction of the appellant cannot be questioned. 15. Without prejudice to the above submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to go through the relevant portion of Section 125(2) of the Customs Act 1962, which is extracted below : "125. Option to pay fine in lieu of confiscation.- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized,an option to pay in lieu of confiscation such fine as the said officer thinks fit: (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods." 21. A close look at the provisions of section 125(1) of the Customs Act, as extracted above would indicate that it rests on a twofold framework, as regards vesting of the option of redemption. These are : (i) The owner of the goods, and (ii) The person from whose possession or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91/- CIF (ascertained value Rs.30,29,100/- CIF) under the provisions of Section 111(d) of the Customs Act, 1962 [read with Section 11(1) of the Foreign Trade (Development and Regulation) act, 1962 and provisions of Rules 11, 14(1) and 14(2) of the Foreign Trade (Regulations) Rules, 1993 and the import licensing Notes appended to Chapter 87 of the ITC (HS), under the provisions of Para 2.12 of the Foreign Trade Policy 2004-09 and 2.8 of the Hand Book of Procedures] and Section 111(m) of the Customs Act, 1962, however, I give an option to redeem the vehicle, to the owner of the vehicle Shri Dipesh Shah under Section 125 of the Customs Act, 1962, on payment of Redemption fine of Rs.2,00,000/- (Rupees two lakh only)." [Emphasis supplied] 26. The appellant in proceedings before us has also held himself out to be, a bonafide purchaser of the said imported vehicle and hence the owner thereof. The vehicle is registered in the appellant's name with the RTO, Surat. The appellant by virtue of himself holding out to be a bonafide purchaser of the imported vehicle has thereby admitted and ascribed to himself the ownership rights of the vehicle. The adjudicating authority in para 8.8 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicle, going by various other piece of evidence like the awareness and knowledge of the market deals, the fact that the appellant chose not to return the vehicle back, despite the alleged dispute with the said importer. The learned authority has clearly taken note of the wordings of the statute made use of in section 125(1) while allowing redemption to the appellant. Section 125(2) automatically fastens the duty liability on the appellant. The question of having not completed and honoured the stated deal, if any, as was said to be made out between the alleged importer Shri Basab Pal and the appellant, in the absence of any formal written agreement on record, is of no significance in the matter. In view of the stated premise, we are of the view that there is nothing wrong in the order in appeal passed by the learned Commissioner(Appeals), whereby the Commissioner(Appeals) had remanded the matter to the lower authority for a denovo adjudication and the challenge thereto thus fails. An express finding concerning, what has been admittedly conceded by the appellant, claiming himself to be a "bonafide purchaser" aka the "owner" of the seized vehicle, redeemed by the appellant, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is passed for payment of customs duty along with an order of imposition of fine in lieu of confiscation of goods, it shall only be referable to sub-section (2) of Section 125 of the Customs Act. It would not attract Section 28(1) of the Customs Act which covers the cases of duty not levied, short levied or erroneously refunded etc. The order for payment of duty under Section 125(2) would be an integral part of proceedings relating to confiscation and consequential orders thereon, on the ground as in this case that the importer had violated the conditions of notification subject to which exemption of goods was granted, without attracting the provisions of Section 28(1) of the Customs Act. [para 11]" [Emphasis supplied] 31 In fact the Larger Bench of the Tribunal in the case of Sumant Sood v. Commissioner of Customs, Chennai [2001 (134) E.L.T. 661 (T-LB) to a direct question referred to the Larger Bench for its consideration as to "whether the owner of the goods or the person or whose possession or custody goods were seized is liable to pay duty leviable on goods ordered to be redeemed on payment of fine", was answered in the affirmative. Further, even well before the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized has to suffer duty at the time of redemption of the confiscated vehicle. It is an option given to the owner of the confiscated vehicle which he has to exercise it. The provisions of sub-section (2) of Section 125 have not been qualified by the words that owner/person shall be liable to pay duty only in cases where "the importer is not known." We are of the view that once the owner of the confiscated goods exercises his option to redeem such goods, he has to suffer duty leviable thereon. Accordingly the Appellant has to pay duty payable in respect of the impugned car." 32. It is however a different matter that in view of divergent views of two co-ordinate benches, the issue was therein referred to the Larger Bench for resolving the difference, outcome of which is referred to in para 31 supra. 33. A reading of sub-sections (1) and (2) of Section 125 together makes it clear that liability to pay duty arises under sub-section (2) in addition to the fine under sub-section (1). Therefore, where an order is passed for imposition of fine in lieu of confiscation of goods, the payment of Customs duty shall only be referable to sub-section (2) of Section 125 of the Customs Act. It wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the Revenue was entitled to recover duty payable on such goods. It had further held that the fact of exercising of the said option or otherwise was irrelevant for the purpose [However this aspect of the order was later reversed by the apex court in Fortis Hospital case - 2015 (318) ELT 551(SC)]. In the said case it was categorically held that the owner of such goods (or the person referred in Section 125(1)) was liable to pay duty and charges thereon. 39. Yet another question that arises for consideration is the term "liable" and its meaningful expression as made use of in Section 125(2). In its judgement in Zunjarrao Bhikaji Nagarkar v. Union of India [1999 (112) E.L.T. 772 (S.C.)], the Hon'ble Supreme Court examined the meaning of the word "liable" in the context of section 11AC of the Central Excise Act, 1944 ("the person who is liable to pay duty as determined under sub-section (2) of section 11A shall also be liable to pay a penalty equal to the duty so determined:") and Rule 173Q of the Central Excise Rules, 1944, ("then, all such goods shall be liable to confiscation and the manufacturer, producer, registered person of a warehouse or a registered dealer, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2)) person concerned is liable to penalty. (emphasis added)" 40. It thus clearly flows that there is no discretion vested with the "owner", having availed redemption, for not to pay duty and charges as due in terms of section 125 (2) in itself. Payment of duty, under the circumstances has no bearing with the provisions of Section 28 of the Customs Act, that would ordinarily seek to recover duties not levied/not paid/short levied or short paid etc. It also be noted that the word used in the statute is "shall", making the factum of need to pay duty evidently binding and leaving no scope to read shall as "may" and thereby derive a leeway for the owner/redemnor of goods. 41. We are also not quite impressed with the argument of the Ld.Advocate for the appellants to state that Commissioner(Appeals) was shorn of any statutory power to remand the matter to the original authority imparting him certain directions in the matter. In this regard we invite reference to the provisions of section 128A of the Customs Act. Sub-section 3 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to bear in mind the law and act in accordance with the legal stipulations when adjudicating the matter. Thus, this argument of the appellant holds no sway and deserves to be dismissed forthwith. 42. The apex court in the case of Union of India vs. Umesh Dhaimode [1998 (98) E.L.T. 584 (S.C.)] had categorically held that the appellate authority was vested with powers of remand, as remand necessarily entailed annulling the decision under appeal. Relevant para of the said decision is quoted hereunder : "2. As the order under appeal itself notes, the aforesaid provision vested the appellate authority with powers to pass such order as it deemed fit confirming, modifying or annulling the decision appealed against. An order of remand necessarily annuls the decision which is under appeal before the appellate authority. The appellate authority is also invested with the power to pass such order as it deems fit. Both these portions of the aforesaid provision, read together, necessarily imply that the appellate authority has the power to set aside the decision which is under appeal before it and to remand the matter to the authority below for fresh decision." In view of the law as ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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