2026 (3) TMI 1546 - AT - Customs

Cross-objections survive appeal withdrawal, while misdeclared vehicle imports justify confiscation but usually not absolute confiscation.

Cross-objections under Section 129A(4) of the Customs Act, 1962 are treated as an independent statutory proceeding and remain maintainable even if the ... Maintainability of cross-objections - legality of the order of absolute confiscation of the imported vehicle - imported vehicle, declared as used but found to be new and imported without compliance with import-policy and vehicle-law requirements - Redemption fine in lieu of absolute confiscation. Whether the cross-objections filed by the respondent are maintainable for consideration on merits after the withdrawal of the departmental appeal on account of the Government Litigation Policy relating to monetary limits. - HELD THAT:- Section 129A (4) of the Customs Act provides that a respondent, though he may not have filed an appeal, may file cross-objections against any part of the order appealed against and such cross-objections shall be disposed of by the Tribunal as if they were an appeal presented within the time specified. Thus, the statutory scheme clearly contemplates that cross-objections may be treated as an independent proceeding once they are filed. The legal position is well settled that the withdrawal or dismissal of the main appeal does not automatically render the cross-objections infructuous where the cross-objector seeks independent relief against the impugned order. The Tribunal held that under Section 129A(4), cross-objections, once filed, are to be treated as if they were an appeal presented within time. On that statutory scheme, withdrawal of the main appeal does not by itself render the cross-objections infructuous where the respondent seeks independent relief against the impugned order. Since the respondent had challenged the legality of absolute confiscation, the cross-objections raised a substantive controversy requiring adjudication on merits. [Paras 8] The cross-objections were held maintainable and were taken up for decision on merits notwithstanding withdrawal of the Revenue appeal. Whether the imported vehicle is liable for confiscation under Section 111(d) of the Customs Act, 1962 and whether the adjudicating authority was justified in ordering absolute confiscation of the vehicle.- HELD THAT:- The facts of the case indicate that the imported goods consist of a Toyota Land Cruiser Prado TZ-G Right-Hand Drive vehicle imported under Import General Manifest dated 02.10.2018 and declared as a used vehicle in the import documents. The consignment remained uncleared for a considerable period as no Bill of Entry was filed by the importer. Subsequently, the vehicle was examined and referred to the Automobile Association of Southern India (AASI) for valuation and certification. The AASI report dated 11.03.2021 certified that the vehicle was brand new and unused, having an odometer reading of only 8 kilometres. Based on the said report, the department concluded that the vehicle had been mis-declared as used instead of new and that the conditions prescribed under Chapter 87 of the Import Policy read with the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989 had not been complied with. On this basis, the adjudicating authority ordered absolute confiscation of the vehicle under Section 111(d) of the Customs Act, 1962. The Tribunal accepted that the vehicle had been declared as used but was found to be brand new, and that the prescribed conditions under the import policy and allied motor vehicle law had not been complied with; on that basis, confiscation under Section 111(d) was sustainable. However, it held that the vehicle was not absolutely prohibited goods but goods imported in breach of regulatory conditions. Applying the principle stated in Union of India vs Sampat Raj Dugar [1992 (1) TMI 103 - SUPREME COURT], Commissioner of Customs vs Atul Automations Pvt. Ltd. [2019 (1) TMI 1324 - SUPREME COURT], Union of India vs Raj Grow Impex LLP [2021 (6) TMI 778 - SUPREME COURT], PNP Polytex Pvt. Ltd. vs Commissioner of Customs [2013 (10) TMI 809 - CESTAT MUMBAI], Kemper System (India) Pvt. Ltd. vs Commissioner of Customs [2014 (5) TMI 407 - CESTAT MUMBAI] and Consolidated Manufacturing & Marketing Co. vs Commissioner of Customs [2008 (7) TMI 366 - CESTAT, NEW DELHI], the Tribunal held that such breach may justify confiscation but does not ordinarily warrant denial of redemption in the absence of exceptional reasons. The order of absolute confiscation was therefore found excessive and disproportionate, and was modified by granting redemption on payment of redemption fine together with applicable duty and interest, while leaving the reduced penalty undisturbed. [Paras 9, 10] Confiscation under Section 111(d) was upheld, but the order of absolute confiscation was set aside and substituted with release on payment of redemption fine, applicable customs duties and interest. Final Conclusion: The Tribunal held that the respondent's cross-objections were maintainable despite withdrawal of the departmental appeal. While sustaining confiscation of the imported vehicle under Section 111(d), it set aside absolute confiscation and directed release on payment of redemption fine, along with applicable duty and interest, without disturbing the reduced penalty. Issues: (i) Whether cross-objections filed by the respondent survive for consideration on merits after withdrawal of the departmental appeal under the Government Litigation Policy. (ii) Whether the imported vehicle, declared as used but found to be new and imported without compliance with import-policy and vehicle-law requirements, is liable for confiscation under Section 111(d) of the Customs Act, 1962, and whether absolute confiscation was justified or redemption ought to have been allowed.Issue (i): Whether cross-objections filed by the respondent survive for consideration on merits after withdrawal of the departmental appeal under the Government Litigation Policy.Analysis: Section 129A(4) of the Customs Act, 1962 treats cross-objections as an independent statutory proceeding and requires them to be disposed of as if they were an appeal filed in time. Once cross-objections are duly filed, withdrawal of the main departmental appeal does not automatically extinguish the respondent's challenge to the adverse part of the order. The respondent's objection to absolute confiscation therefore required independent adjudication.Conclusion: The cross-objections were maintainable and had to be decided on merits notwithstanding withdrawal of the departmental appeal.Issue (ii): Whether the imported vehicle, declared as used but found to be new and imported without compliance with import-policy and vehicle-law requirements, is liable for confiscation under Section 111(d) of the Customs Act, 1962, and whether absolute confiscation was justified or redemption ought to have been allowed.Analysis: The vehicle was found to have been mis-declared as used and imported in breach of the regulatory conditions governing import of motor vehicles. Such violation attracts confiscation under Section 111(d) of the Customs Act, 1962, but the goods were not held to be prohibited goods in the strict sense. In the absence of exceptional reasons, and having regard to the statutory scheme of redemption under Section 125 of the Customs Act, 1962, absolute confiscation was considered excessive. The appropriate course was confiscation with an option to redeem on payment of redemption fine and applicable duties.Conclusion: Confiscation under Section 111(d) was upheld, but absolute confiscation was set aside and redemption was directed on payment of redemption fine and applicable duties.Final Conclusion: The respondent succeeded to the extent that the vehicle was not to remain absolutely confiscated, while the finding of confiscability was sustained and the matter was finally disposed of by allowing redemption on specified monetary terms.Ratio Decidendi: Cross-objections under Section 129A(4) of the Customs Act, 1962 survive the withdrawal of the main appeal, and goods imported in breach of regulatory import conditions but not absolutely prohibited should ordinarily be released against redemption rather than subjected to absolute confiscation.