Customs duty recovery from clearing agent requires prior failed recovery efforts against the importer before liability can shift.

Differential customs duty could not be recovered from a clearing agent under the limited machinery in Section 147 of the Customs Act unless recovery from the importer had first been attempted and shown to be not possible. Primary liability for the duty remained with the importer under Section 28, and Section 147(3) required the authority to form an opinion that the duty could not be recovered from the owner, importer or exporter. Mere difficulty in contacting the importer, or the fact that the amount had not yet been collected, was insufficient. In the absence of material showing failed recovery efforts against the importer, liability could not be fastened on the agent and the demand was quashed.

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Issues: Whether the differential customs duty could be recovered from the clearing agent under Section 147 of the Customs Act, 1962 without a clear finding that recovery from the importer was not possible.

Analysis: The primary liability for differential duty lay on the importer under Section 28. Recovery from a clearing agent was permissible only within the limited scope of Section 147(3), which required the Assistant Collector to be of the opinion that the duty could not be recovered from the owner, importer or exporter. Mere difficulty in contacting the importer or the fact that the amount had not yet been collected from him was not enough. The record did not show that all reasonable steps had been taken to recover the duty from the importer or that such recovery had failed. The condition for fastening liability on the agent was therefore not satisfied.

Conclusion: The demand on the clearing agent was not sustainable and was quashed.

Ratio Decidendi: Liability for customs duty cannot be fastened on a clearing agent under the proviso to Section 147(3) unless it is shown that recovery from the importer has been attempted and is not possible.

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