Customs duty liability attaches to the actual importer, not merely the transferor of an advance licence.

Customs duty liability followed the actual importer of the goods, and a person who merely held or transferred an advance licence could not be treated as the importer under Section 2(28) of the Customs Act, 1962. Since the goods were imported and cleared by the transferee company under the bill of entry, recovery of any short levy or non-levy lay against that importer and not against the appellant. The duty demand and penalty on the appellant were therefore unsustainable, and the Department was left free to proceed against the importer if advised.

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Issues: Whether duty demand and penalty could be fastened on the transferor of advance licences, when the imported goods were cleared by the transferee importer; and whether, on the facts, the appellant could be treated as the importer liable for recovery of any short levy or non-levy of duty.

Analysis: The goods were imported and cleared by the transferee company under the bill of entry, and it was therefore the importer within the meaning of Section 2(28) of the Customs Act, 1962. Mere possession or transfer of advance licences by the appellant did not make it the importer. If duty had escaped assessment or been short levied on the imported goods, recovery lay against the actual importer and not against the appellant.

Conclusion: The duty demand and penalty on the appellant were unsustainable.

Final Conclusion: The appeal succeeded and the order demanding duty and imposing penalty on the appellant was set aside, leaving the Department free to proceed against the importer if so advised.

Ratio Decidendi: Liability for customs duty follows the actual importer of the goods, and a person who merely holds or transfers an advance licence cannot be made liable for duty on imports cleared by another entity.

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