Import compliance certificate requirement for new vehicles affirmed; redemption fine and penalty may be reduced for showroom-display imports.

An importer of a new motor vehicle must produce a valid compliance certificate for the vehicle model under the import licensing conditions and Rule 126 of the Central Motor Vehicles Rules, 1989; absence of that certificate constitutes breach of the import condition. The text also notes that, where the vehicles were imported for showroom display and brand promotion rather than sale, redemption fine and penalty were considered excessive and were reduced. The stated effect is that contravention of the import condition is affirmed, while the monetary consequences may be moderated in light of the surrounding circumstances.

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Issues: (i) Whether the import of the new motor vehicles was in contravention of the import licensing conditions for want of a compliance certificate under Rule 126 of the Central Motor Vehicles Rules, 1989. (ii) Whether the redemption fine and penalty imposed were liable to be reduced.

Issue (i): The import licensing note required production of a valid certificate of compliance for the vehicle model being imported. The requirement applied to an importer of a new vehicle, and the absence of such certificate amounted to breach of the import condition.

Conclusion: The import was held to be in contravention of the prescribed import conditions, and the finding against the assessee on this issue was sustained.

Issue (ii): Though the import conditions were breached, the vehicles had been imported for display in the showroom for brand promotion and not for sale. In that context, the redemption fine and penalty were considered excessive and were reduced.

Conclusion: The redemption fine was reduced to Rs. 1,50,000 in each case and the penalty was reduced to Rs. 1,00,000 in each case, in favour of the assessee.

Final Conclusion: The contravention finding was upheld, but the monetary consequences were substantially scaled down.

Ratio Decidendi: An importer of a new motor vehicle must satisfy the prescribed compliance certification requirement under the import licensing conditions, and where breach is established, redemption fine and penalty may be moderated if the circumstances show a lower degree of culpability.

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