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of <h1>Court Upholds Duty Demand, Confiscation, and Penalty Set Aside under Customs Act</h1> <h3>DELTA AIR LINES INC. Versus COMMISSIONER OF CUSTOMS, AIR CARGO, MUMBAI</h3> DELTA AIR LINES INC. Versus COMMISSIONER OF CUSTOMS, AIR CARGO, MUMBAI - 2004 (177) E.L.T. 925 (Tri. - Mumbai) Issues Involved:1. Duty demand confirmation for violating Ad-hoc Exemption Order.2. Confiscation of imported line scan systems.3. Imposition of penalty under Sections 111(o) and 112 of the Customs Act.Analysis:1. Duty Demand Confirmation:The judgment confirmed a duty demand of Rs. 11,13,324 against the appellants for violating condition (a) of Ad-hoc Exemption Order No. 267. The violation occurred when the appellants sold line scan systems imported for Delhi and Mumbai airports to M/s. United Airlines in September 1995. The appellants did not contest the duty demand, which had already been paid by them. They only contested the confiscation and penalty aspects of the case.2. Confiscation of Imported Line Scan Systems:The Ad-hoc Exemption Order exempted two x-ray machines imported by M/s. Pan American World Airways Inc., subject to the condition that the machines would not be sold or disposed of without prior approval from the Department of Revenue. After the closure of Pan American World Airways Inc., Delta Air Lines Inc. (the appellants) took over the operation and subsequently closed their own operation in November 1995, with United Airlines taking over. As the sale of operations and assets, including the x-ray machines, was not approved by the Department of Revenue, the contravention of the exemption condition was established, justifying the confiscation of the line scan systems. The tribunal upheld the confiscation, considering the contravention as technical in nature and thus set aside the penalty imposed under Section 112 of the Customs Act.3. Imposition of Penalty:Although the tribunal upheld the confiscation of the line scan systems due to the established contravention of the exemption condition, it deemed the contravention as purely technical. Consequently, the tribunal concluded that imposing a penalty was not warranted in the circumstances of the case and thus set aside the penalty imposed under Section 112. The appeal was partly allowed on this basis.In summary, the judgment confirmed the duty demand against the appellants for violating the Ad-hoc Exemption Order, upheld the confiscation of the imported line scan systems due to the contravention of the exemption condition, and set aside the penalty imposed under the Customs Act, considering the contravention as technical and not warranting a penalty.
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