TaxTMI 
TaxTMI 
2026 (8) TMI 1404
X X X X Extracts X X X X
X X X X Extracts X X X X
....12 of Customs Act, 1962. Aggrieved by this order, the appellant is in appeal before the Bench. 2. The Learned Counsel for the appellant submits that the motorbike which was imported into India through the Indira Gandhi International Airport vide Bill of Entry No. 110190/29/5/2008 dated 29.05.2008 which was registered under the RTO Maharashtra with registration No. MH06 AR 8899. He further submits that the importer was M/s. Galaxy Trading as registered in the RTO records. He submits that he was in possession of Bill of Entry, insurance policy documents, challan No.99975892 dated 30.05.2008 and the sale letter signed by M/s. Galaxy Trading and he had purchased the bike from Mr. Mohammad in Bangalore on payment of Rs. 5,00,000/- in 2013 under bona fide belief since the above documents were made available to him. Hence, claims that no duty can be collected or redemption fine be imposed on him. Relies on the decision in the case of Commissioner of Customs (Import), Bombay vs. VXL India Ltd. 2006 (193) ELT 396; also relies on the decision in the case of Shanoob M.S. vs. Commissioner of Customs, Cochin: 2017 (358) E.L.T. 538 (Tri. - Bang.) and HCL HP Ltd. Vs. Commissioner of Customs: 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always call loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. (See Dr. Vimla v. Delhi Administration (1963 Supp. 2 SCR 585) and Indian Bank v. Satyam Febres (India) Pvt. Ltd. [1996 (5) SCC 550]. 10. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [1994 (1) SCC 1]. 11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Contract Act, 1872 defines "fraud" as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes "fraud" was described thus : (All ER p. 22 B-C) "fraud" is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false". But "fraud" in public law is not the same as "fraud" in private law. Nor can the ingredients, which establish "fraud" in commercial transaction, be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in Khawaja v. Secretary of State for Home Deptt. (1983) 1 All ER 765, that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation of statutory law. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of the fact with knowledge that it was false. In a leading English case Derry v. Peek [(1886-90) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t take chances. It means that the buyer must take care." (See Wallis v. Russell (1902) 21 R 585, 615). 22. "Caveat emptor is the ordinary rule in contract. A vendor is under no duty to communicate the existence even of latent defects in his wares unless by act or implication he represents such defects not to exist." (See William R. Anson, Principles of the Law of Contract 245 (Arthur L. Corbin Ed. 3d. Am. ed.1919) Applying the maxim, it was held that it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner. 23. Caveat emptor, qui ignorare non debuit quod jus alienum emit. A maxim meaning "Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. Hob. 99; Broom; Co., Litl. 102 a : 3 Taunt, 439. 24. As the maxim applies, with certain specific restrictions, not only to the quality of, but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title-deeds; at his peril if he does not. 25. Upon a sale of goods the g....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... apex court held as follows: "5. Confiscation of goods under Chapter XIV of the Act: The third circumstance where duty is collected is when goods are improperly imported into or exported out of India. Chapter XIV of the Act provides for confiscation of such goods and imposition of penalties under Sections 111 to 114. Section 111(o) is the specific instance for confiscation of goods for violation of conditions of exemption from payment of duty after the importation. These goods were not subjected to levy and collection of duty as they enjoyed the benefit of exemption. Upon detection of a violation, the legal consequences must and will follow and Chapter XIV provides for confiscations and penalties. 5.1 Confiscation of goods is appropriation of property by the revenue. The right, title and interest in the property, if any, is transferred and vested in the state under Section 126. Considering the serious consequences of such an action, authority and process of law mandated Article 300A, Parliament prescribed the procedure under Section 122A, adjudicatory authority under Section 122, obligated issuance of a show cause notice under Section 124 before confiscation. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods. (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. Explanation. - xx xx xx" 7. Issues : It is in the above referred 'context' that we will now interpret the 'text' of Section 125 to examine the following issues : (i) Whether there is a liability to pay customs duty when confiscated goods are redeemed after payment of fine under Section 125 of the Act? (ii) Whether, the liability to pay such duty will include the liability to pay interest on delayed payment under Section 28AB of the Act? 7.1 While answering these questions, we will have to explain the decision of this court in Jagdish Cancer case as it is argued to have ruled that duty in confiscation proceedings is payable only under section 125 and not under section 28, and if Section 28 does not apply, Section 28AB also will not apply. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s itself. xx xx xx 8. ..... In the present case, the Deputy Collector, the competent authority, has chosen to give the owner of the goods, the respondent, option to pay, in lieu of confiscation, a fine. He has not confiscated the goods and, therefore, Section 184 is not operational in this context. In short, the obligation under section 20 is independent of the liability under Section 183. The order, dual in character, although clubbed together in a single document, is therefore valid in entirety. Even so, the confusion has been caused by the Deputy Collector failing to keep distinct the two powers and the two liabilities and thereby leading to avoidable jumbling. xx xx xx 10. However, we are prepared to gather from the order under attack two levies imposed in exercise of two distinct powers, as earlier explained. The import duty has been made a condition for the clearance of the goods. This is right and it is impossible to say that the said payment is not justified by Section 20. Likewise, the authority when it imposed a fine, was exercising its power under Section 183. We can readily see that he did not mean to confiscate the goods. He only pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exercised, the acceptance is subject to the conditions specified in Section 125. The primary condition is payment of fine in lieu of confiscation. Thus, this duty obligation is inextricably connected to the option to redeem the confiscated goods. In other words, it is a precondition for redemption. 8.6 The decision of this court in Fortis Hospital Ltd. v. Commr. of Customs, Import [(2015) 12 SCC 715 = 2015 (318) E.L.T. 551 (S.C.), hereinafter referred to as Fortis Hospital Case] affirms this position. In Fortis Hospital case, the owner of the confiscated goods chose not to exercise the option under Section 125. However, the revenue sought to recover the duty payable under Section 28 of the Act. Holding that this is impermissible, the court held that : "9...... It may be seen from the bare reading of the aforesaid Section that under Section 125(1) of the Act, option is given to the importer whose goods are confiscated, to pay the fine in lieu of confiscation and redeem the confiscated goods. Before this action is taken, show cause notice is to be issued under the provision of Section 124 of the said Act. This provision pertains to confiscation of goods and provides....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of notification No. 64 of 1988 dated 1-3-1988. As pointed out above, importer would be exempted from payment of import duty on hospital equipment only when the conditions contained in the said notification are satisfied. Some of the conditions, as pointed out above, are to be fulfilled in future. If that is not done and the importer is found to have violated those conditions, show-cause notice could always be given under the said notification on payment of duty, independent of the action which is permissible under section 124 and Section 125 of the Act. It is also important to mention that under certain circumstances mentioned in the notification, the importer can be asked to execute a bond as well. In those cases, action can be taken under the said bond when the conditions contained therein are violated. Therefore, if the Department wanted the Institute to pay the duty, which may have become payable, it could have taken independent action; de hors Section 124 of the Act, for payment of duty, simultaneously with the notice under Section 124 of the Act or by issuing composite notice for such an action. No doubt, it could have waited for option to be exercised by the Institute und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the notice in this case. Therefore, it is submitted on behalf of the Centre that demand of customs duty and the order for payment of the same is relatable to only Section 28(1) of the Customs Act, as also found by the CEGAT. That being the position, the notice was beyond time and not by a competent officer authorised to issue the same. The argument, as advanced, though seems to be attractive but on scrutiny, we find no merit in it ..........." 9.3 On the other hand, the Department defended its position by submitting as follows : "8. ....... It is submitted that the copy of the notice, as annexed, does not mention Section 28(1) of the Customs Act, in any case if it is taken to be there, as contended, that would make no difference. The submission is that sub-section (2) of Section 125 of the Customs Act provides that where any fine in lieu of confiscation of goods is imposed, the importer shall also, in addition, be liable to any duty and charges payable in respect of such goods." 9.4 It is in the context of the above-referred submissions, that the court considered the fact that an option under Section 125 was given and it was in fact exercised. Thus, the l....