2013 (4) TMI 711 - AT - Customs

Toyota Landcruiser liable for penalties under Customs Act, remand for prohibited goods verification. Auction proceeds to be refunded.

SHAIKH SAFDER Versus COMMR. OF CUSTOMS, NHAVA SHEVA

SHAIKH SAFDER Versus COMMR. OF CUSTOMS, NHAVA SHEVA - 2014 (314) E.L.T. 497 (Tri. - Mumbai) Issues Involved:1. Liability of the Toyota Landcruiser to confiscation.2. Misdeclaration of the value of the imported vehicle.3. Imposition of penalties on the appellants.4. Legality of absolute confiscation without redemption.5. Refund of sale proceeds of the auctioned vehicle.Detailed Analysis:1. Liability of the Toyota Landcruiser to Confiscation:The primary issue was whether the Toyota Landcruiser imported under B/E No. 986965, dated 1-9-2008, was liable to confiscation. The investigation by the Directorate of Revenue Intelligence (DRI) revealed fraudulent import activities by Mr. Rehman Shaikh, who used third-party names to import vehicles. Specifically, the vehicle in question was imported in the name of Mr. Shaikh Safder, who admitted to lending his name for monetary consideration. The adjudicating authority concluded that the car was liable to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962, for violating Exim policy and misdeclaring the value.2. Misdeclaration of the Value of the Imported Vehicle:The investigation uncovered that the declared value of USD 64,000 was significantly lower than the actual purchase price of USD 108,000. Both Mr. Rehman Shaikh and Mr. Shaikh Safder admitted in their statements that the invoice presented to Customs was fabricated to evade customs duty. The adjudicating authority determined the value of the vehicle to be USD 108,000 based on contemporaneous imports and the admissions of the involved parties, thereby establishing the misdeclaration.3. Imposition of Penalties on the Appellants:Penalties were imposed on both Mr. Rehman Shaikh and Mr. Shaikh Safder under Sections 112(a) and 114AA of the Customs Act. The Tribunal upheld these penalties, citing the clear involvement of both appellants in the fraudulent importation and misdeclaration of the vehicle's value. Mr. Shaikh Safder's conduct, including his failure to clear the vehicle through Customs and his lack of response to notices, further supported the imposition of penalties.4. Legality of Absolute Confiscation Without Redemption:The adjudicating authority ordered the absolute confiscation of the vehicle without providing an option for redemption. The Tribunal found this to be incorrect, noting that cars are not prohibited items for import. The Tribunal referenced Section 125(1) of the Customs Act, which mandates offering an option to pay a fine in lieu of confiscation unless the goods are prohibited. Since the adjudicating authority did not establish that the vehicle was prohibited, the Tribunal ruled that the option to redeem the goods should have been given, particularly to Mr. Rehman Shaikh, identified as the de facto importer.5. Refund of Sale Proceeds of the Auctioned Vehicle:The vehicle was auctioned during the pendency of the proceedings. The Tribunal held that the sale proceeds should be returned to the importer, after deducting the redemption fine and penalty. Citing the case of Yakub Ibrahim Yusuf, the Tribunal emphasized that the importer is entitled to the sale proceeds minus the specified deductions. The matter was remanded to the original adjudicating authority to determine the real owner/importer and to verify the authenticity of the type approval certificate issued by DGFT, New Delhi.Conclusion:The Tribunal upheld the liability to confiscation and penalties but remanded the case to the original adjudicating authority to verify whether the goods were prohibited and to determine the real owner/importer for the purpose of granting an option to redeem the goods on payment of fine and penalty. The sale proceeds of the auctioned vehicle were to be refunded to the actual owner/importer after the necessary deductions. The appeals were allowed by way of remand.