2013 (1) TMI 506 - AT - Customs

Tribunal Upholds Vehicle Confiscation for Import Non-Compliance, Reduces Penalties

The Tribunal upheld the confiscation of vehicles for non-compliance with the import condition of direct shipment from the country of manufacture but ... Importation from the country of manufacture - transhipment and compliance with import policy - lex non cogit ad impossibilia - confiscation under section 111(d) of the Customs Act - redemption fine and penalty under section 112 of the Customs ActImportation from the country of manufacture - transhipment and compliance with import policy - confiscation under section 111(d) of the Customs Act - Whether vehicles routed through intermediate countries after shipment from the country of manufacture amounted to importation not 'from the country of manufacture' so as to warrant confiscation - HELD THAT: - Member (Technical) held that the policy condition that the vehicle 'be imported from the country of manufacture' could not be treated as complied with merely by proving the path of the goods through intermediate countries; acceptance of the appellants' documentary chain would render the condition redundant and it was not open to the Tribunal to rewrite policy. The Member accepted the Revenue's contention that the vehicles were imported in contravention of condition 2(II)(a)(iv) and therefore confiscation under section 111(d) was justified, though in view of related decisions and circumstances the redemption fine and penalty were reduced. (See reasoning at paras 11, 15 and 19.) [Paras 11, 15, 19]Finds contravention of the requirement to import from the country of manufacture; confiscation upheld with reduction of redemption fine to Rs.2,00,000 and penalty to Rs.1,00,000 in each case.Importation from the country of manufacture - transhipment and compliance with import policy - evidentiary link by bills of lading and customs documents - Whether shipment originating in the country of manufacture and reaching India via transhipment through other countries satisfied the policy requirement that vehicles be imported 'from the country of manufacture' - HELD THAT: - Member (Judicial) concluded that the policy language does not include the word 'directly' and therefore does not preclude importation via transhipment. Having reviewed the bills of lading, re export/import certificates from Dubai, Thai customs documents and car history reports, the Member found sufficient documentary proof that the vehicles originated from the country of manufacture (USA) and merely transhipped via UAE and Thailand. Applying principles of statutory interpretation (no addition or deletion of words; where two interpretations are possible, adopt the one beneficial to the importer) and noting absence of evidence that vehicles were used in intermediate countries, the Member held there was no violation of condition 2(II)(a)(iv). Consequently, confiscation and penalties were unjustified and were set aside. The Member also noted absence of mala fide and treated the issue as a bona fide interpretation of policy (paras 23-28). [Paras 23, 25, 26, 27, 28]Sets aside confiscation and penalties on the ground that importation via transhipment from the country of manufacture met the policy requirement; appeals allowed.Final Conclusion: The two members of the bench expressed a clear difference of opinion. Member (Technical) affirmed contravention of the 'country of manufacture' condition and upheld confiscation but reduced the redemption fine and penalty; Member (Judicial) held that importation originating in the country of manufacture and reaching India by transhipment satisfied the policy, set aside confiscation and penalties and allowed the appeals. The order records this difference of opinion without a conciliatory majority disposition in the text supplied. Issues Involved:1. Compliance with the import condition that vehicles must be imported from the country of manufacture.2. Requirement of Homologation Certificate and Type Approval Certificate.3. Legitimacy of confiscation, redemption fine, and penalties imposed on the importers.Detailed Analysis:Issue 1: Compliance with Import Condition (Country of Manufacture)The primary issue revolves around whether the vehicles were imported in compliance with the condition that they must be imported from the country of manufacture. The import policy mandates that vehicles should be imported directly from the country of manufacture. The first appellant, Mr. Mangilipalli Pradeep Ramu, imported a Cadillac Escalade valued at USD 61,500, shipped from Thailand, invoiced by a dealer in Dubai, and manufactured in the USA. Similarly, the other appellants imported Hummer H2 vehicles with analogous shipping routes.The Tribunal held that merely proving the path of the goods from the USA to UAE to Thailand and then to India does not satisfy the condition of direct import from the country of manufacture. The Tribunal emphasized that the import policy is formulated based on various trade considerations and international obligations, and it is not within the Tribunal's purview to alter these conditions. Therefore, the cars were rightly confiscated under section 111(d) of the Customs Act for violating this import condition.However, Member (Judicial) dissented, arguing that the policy does not explicitly require direct importation without transhipment. The interpretation should favor the appellants, especially when documentary evidence shows continuous movement from the USA to India. The vehicles were not used elsewhere, and the policy was later relaxed, reflecting legislative intent. Thus, the confiscation and penalties should be set aside.Issue 2: Requirement of Homologation Certificate and Type Approval CertificateThe appellants argued that obtaining these certificates from an international accredited agency in the USA was impossible because such an agency was not notified by the Government of India. They cited the maxim 'lex non cogit ad impossibilia' (the law does not compel the impossible) and referenced a similar case where the Delhi High Court upheld this view. The Tribunal agreed with the appellants, noting that the requirement was indeed impossible to fulfill and thus should not be grounds for confiscation.Issue 3: Legitimacy of Confiscation, Redemption Fine, and PenaltiesGiven the violation of the import condition regarding the country of manufacture, the Tribunal upheld the confiscation but reduced the redemption fine to Rs. 2,00,000 and the penalty to Rs. 1,00,000 for each appellant. This decision was based on the precedent set by the Delhi High Court regarding the impossibility of obtaining the required certificates.Member (Judicial) disagreed, stating that the appellants acted in good faith and the vehicles were imported from the country of manufacture, albeit through transhipment. The penalties and confiscation should be entirely set aside, considering the documentary evidence and the later policy relaxation.Conclusion:The Tribunal upheld the confiscation of the vehicles due to non-compliance with the import condition of direct shipment from the country of manufacture but reduced the fines and penalties. Member (Judicial) dissented, advocating for the complete setting aside of confiscation and penalties based on the interpretation of the import policy and the appellants' good faith actions. The difference of opinion was noted, and the matter was left for further adjudication.