2026 (2) TMI 49 - AT - Customs

Carnet temporary import exemption: tribunal finds no paid employment or gainful occupation; confiscation and penalties set aside

Carnet temporary import exemption was considered in light of whether the importer engaged in 'paid employment' or 'gainful occupation'; tribunal ... Confiscation of imported goods - Exemption for temporary import under carnet - Interpretation of 'paid employment' and 'gainful occupation' - Notification No. 296/76-Cus dated 2nd August 1976 - HELD THAT:- There is no bar on the applicability of carnet to an Indian citizen subject to being resident outside the country. The appellant, undoubtedly, is one such. There is neither allegation of the appellant having taken up ‘paid employment’ nor any evidence that the appellant had undertaken ‘gainful occupation’ on this particular visit to India. The company established by the appellant continued to operate even when he was outside the country and may not have involved any additional preoccupation of his time and effort in its pursuit of normal activities. There is no evidence that during his stay in India he had been specifically addressed to resolve any business matter for which he was compensated. Moreover, ineligibility attributed by the adjudicating authority would not be a threshold condition but intended to prohibit such activity while availing the benefit of the notification. The car was never cleared from customs control. Any allegation of ‘paid employment’ or ‘gainful occupation’ prior to the import of the car or after the export of the car is of no relevance to administration of the impugned notification. Thus, we find that the confiscation of the car under section 111 of Customs Act, 1962 does not have authority of law. Accordingly, the consequential fine, along with the penalties imposed on the appellant under section 112 of Customs Act, 1962, are set aside to allow the appeal. Issues: Whether confiscation of a vehicle and consequent fine and penalties under the Customs Act, 1962 were legally sustainable when the vehicle was imported under a valid CPD carnet and there was no evidence of the importer taking up paid employment or gainful occupation during the temporary visit, thereby affecting eligibility under Notification No. 296/76-Cus dated 2nd August 1976.Analysis: The exemption for temporary importation against a carnet is intended for residents ordinarily resident outside the country and is not barred to citizens who meet the residency condition. The proceedings record neither an allegation nor evidence that the importer took up paid employment or engaged in gainful occupation during the particular temporary visit; ownership of business entities and receipt of returns without evidence of active management or remuneration for specific services during the visit do not, by themselves, establish disqualifying gainful occupation. The vehicle remained in customs custody and was not used. Ineligibility under the notification must be founded on activity during the particular visit and not on unrelated past or future business dealings. Confiscation under Section 111 and consequential fines and penalties require legal authority which is absent where the exemption legitimately applies.Conclusion: Confiscation of the vehicle under Section 111 of the Customs Act, 1962 and the consequent fine and penalties under Sections 112 and 125 are set aside; the appeal is allowed in favour of the importer.