Transfer of Residence car imports: post-import no-sale restriction cannot separately sustain penalties after prior confiscation and penalty.

Imported vehicles under the Transfer of Residence scheme may not attract separate penalties on subsequent transferees where the original importer has already suffered confiscation, redemption fine and penalty for breach of the import condition. The commentary notes that, in such circumstances, the post-import no-sale restriction is not required to be separately enforced to sustain action under Section 112(b) of the Customs Act. It also states that the earlier violation of the possession condition under the relevant import licensing note was treated as decisive, and the subsequent proceedings against the persons dealing with the car were not warranted.

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Issues: Whether penalties under Section 112(b) of the Customs Act, 1962 were sustainable against persons who acquired and dealt with a motor car imported under the Transfer of Residence scheme after the importer had already suffered confiscation, redemption fine and penalty for the original import violation, and whether the two-year no-sale condition continued to apply.

Analysis: The car had originally been imported under the Transfer of Residence scheme in breach of the possession condition, and the importer had already faced confiscation, redemption fine and penalty. On that footing, the importer was treated as not being entitled to the TR concession for the purpose of insisting upon the post-import no-sale restriction. The substantive issue was governed by the import licensing condition under Section XVII of Chapter 87 of Import Licensing Note No. 3, and the earlier decision holding that once penalties are imposed for violation of the import condition, the no-sale condition need not be enforced, was followed as directly applicable.

Conclusion: The penalties on the appellants were not warranted. The impugned order was set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Where an imported vehicle under the Transfer of Residence scheme has already been confiscated and penalised for violation of the import condition, the post-import no-sale restriction cannot be separately enforced against subsequent transferees so as to sustain penalties on that basis alone.

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