Customs duty liability cannot be fastened on subsequent purchasers who were not importers; penalties fall with the duty demand.

Customs duty liability under Section 28 of the Customs Act attaches only to a person who answers the statutory description of an importer. A subsequent purchaser of imported cars or motorcycles, who was not involved in importation, does not become liable merely because the goods later came into his possession, and Section 125 does not extend duty recovery against such a person when the owner is known. Ownership of a motor vehicle depends on registration under the Motor Vehicles Act, and a purchaser whose name was not on the registration could not be treated as owner in law. On that basis, differential duty and consequential penalties could not be fastened on the purchasers, and joint and several recovery against them was unsustainable.

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Issues: Whether differential customs duty and penalties arising from alleged misdeclaration of the year of manufacture of imported cars and motorcycles could be fastened on subsequent purchasers or co-owners, including on a joint and several basis with the importers.

Analysis: The liability to pay customs duty under Section 28 of the Customs Act, 1962 depends on whether the person proceeded against answers the statutory description of an importer. The inclusive definition of importer under Section 2(26) covers an owner, beneficial owner, or a person holding himself out to be the importer only during the period between importation and clearance for home consumption. A subsequent purchaser, who was not involved in importation, does not fall within that definition merely because the vehicle later came into his possession. The scope of Section 125 of the Customs Act, 1962 also does not extend to fastening duty liability on such a purchaser when the owner is known. Ownership of a motor vehicle is determined by registration under Section 2(30) and Section 49 of the Motor Vehicles Act, 1988, and where the registration did not stand in the purchaser's name, he could not be treated as the owner in law. On that basis, the demand of differential duty against purchasers was unsustainable. Since the demands had also been confirmed jointly and severally and the purchasers could not be made liable, the consequential penalties imposed on them also could not survive.

Conclusion: The purchasers could not be fastened with the customs duty liability or penalties for the alleged misdeclaration, and the joint and several recovery against them was unsustainable.

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