CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL CHENNAI
REGIONAL BENCH – COURT No. I
Legal Robe 40978 of 2024
(Arising out of Order-in-Appeal Seaport C. Cus. II No.1064/2024 DATED 19.11.2024 passed by Commissioner of Customs (Appeals-II), Chennai)
Kamalakanth Dhandayuthapani
Versus
Commissioner of Customs, (Port-Import)
APPEARANCE:
For the Appellant : Shri. N. Viswanathan, Advocate
For the Respondent: Shri. N. Satyanarayanan, Authorised Representative
CORAM:
HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)
FINAL ORDER No.40294/2025
DATE OF HEARING: 26.02.2025 DATE OF DECISION: 28.02.2025
The appeal has been preferred by the Appellant assailing the impugned order in appeal dated 19.11.2024 by which the Appellate Authority has upheld the Order-in-Original No.105376 of 2024 dated 01.06.2024 whereby the Adjudicating Authority has ordered confiscation of the vehicle imported under section 111 (d) of Customs Act, 1962 with an option to re-export the confiscated vehicle on payment of redemption fine of Rs.2,50,000/- under section 125 (1) of the Customs Act, 1962 along with the applicable duties and also imposed penalty of Rs. 5,00,000/- on the appellant under section 112 (a) of the Customs Act, 1962.
2.The facts in brief are that the appellant filed Bill of Entry No.9156400 dated 17.06.2022 for the clearance of used vehicle “Land Rover/Range Rover V8 supercharged, Red Colour” being used motor vehicle imported under Transfer of Residence (T.R) which was appraised by M/s. Valueguru Chartered Engineers and Valuers Pvt Ltd., confirming its second-hand status. Despite claiming TR eligibility, the appellant, faced challenges in providing necessary documents. Therefore, he admitted a lack of availability of the documents, expressing desire to keep the car by paying fine and penalty due to T.R. non-compliance. In the original proceedings the Adjudicating Authority vide order no.101601/2023 dated 17.04.2023 noted that the importers sought clearance of the used motor vehicle under TR. The Adjudicating Authority observes that Licensing notes of Chapter 87 (3) (I) (a) states that the conditions of sl.no. 1 & 2 of the licensing notes are not applicable for individuals coming to India for permanent settlement after two years continuous stay abroad, provided that the car has been in the possession of the individual for a period of minimum one year abroad. However, when asked to provide the document evidence of fulfilment of the said conditions of T.R, the appellant had replied that he has lost the passport. The Adjudicating Authority has stated that the department had ascertained travel history from FRRO of the Ministry of Home, which on perusal indicated that the appellant had not stayed for a continuous period of two years even though the vehicle was registered at UK. The Adjudicating Authority has also stated that during the personal hearing the appellant had submitted that he did not have any additional documents other than those already submitted to prove that the car is imported under TR and has also stated that he had no intention to re- export the car and requested that the car may be released on imposing of fine and penalty as he was not fulfilling the TR conditions. The Adjudicating Authority then finds that the appellant/importer is an Indian citizen holding Indian Passport, Aadhar Card and Pan card and that during his business travel has purchased the said car at UK, and that therefore the issue of T.R and permanent settlement to India are not involved and thus the benefit of Transfer of Residence Rules is not applicable to the subject import. Thereafter, relying on the import policy conditions of Chapter 87, Adjudicating Authority finds that the appellant has not fulfilled the required policy conditions as more specifically stated in the said order. The Adjudicating Authority therefore orders for absolute confiscation of the goods imported and imposed a penalty of Rs.5,00,000/- on the appellant.
3.Aggrieved by the Impugned Order the appellant preferred an appeal before the Commissioner of Customs (Appeals-II) on various grounds. The Appellate Authority vide Order-in-Appeal No.147/2024 dated 08.02.2024 found force in the Appellant’s argument that no vehicle could have been registered in the UK by non-resident /visitor unless proof of residence is produced, and the fact that the vehicle was registered in UK as admitted by the Adjudicating Authority would ipso facto mean that the appellant was a resident of UK. Thereafter, referring to Public Notice No.3(RE-2000)/1997-2002, dated 31.03.2000, the Appellate Authority finds that passenger cars/jeeps/multi utility vehicles etc. which are in the restricted category may be imported without a license on payment of full customs duty by individuals coming to India for permanent settlement after 2 years continuous stay abroad. Noticing that the Lower Authority has relied upon the communication received from the Assistant Director, Central Foreigners Bureau, Bureau of Immigration, New Delhi to come to the conclusion that the condition of continuous stay abroad as required under import policy condition 3(I) of chapter has not been fulfilled, and that no Show Cause Notice was served to the appellant and further that the communication received from the Assistant Director, Central Foreigners Bureau, Bureau of Immigration, New Delhi was not made available to the appellant, the appellate authority found that the impugned order was violative of the principles of natural Justice. It was also found that the appellant was not given an option to redeem the car after imposing penalty in the impugned Order-in-Original and that it appeared too harsh, as the appellant brought the car after filling valid Bill of Entry under Section
46. Therefore, the Appellate Authority remanded the matter to the Original Authority for passing an order afresh. However, in the remand proceedings the Lower Authority after recording that the importer vide their letter dated 05.03.2024 and 15.04.2024 had requested to adjudicate the case without issuing Show Cause Notice and personal hearing, with a request to take lenient view on imposing fine and penalty, there after held that the subject import is in violation of the policy conditions for import of vehicles under chapter 87 of the ITC HS classification and that the only course of action would be to uphold the sanctity of the import regulations and serve the larger public interest, which in this case is re-export of the imported vehicle. Holding thus, the Adjudicating Authority yet again ordered confiscation of the vehicle, but gave the importer only the option to re-export the confiscated vehicle on payment of redemption fine of Rs.2,50,000/-. Further a penalty of Rs.5,00,000/- under Section 112 (a) of the Customs Act was also imposed. Aggrieved by the said order, the appellant preferred an appeal before Commissioner of Customs (Appeals-II), who concurred with the adjudicating authority and found that the appellant had not given further documents to substantiate the appeal to claim for release of a vehicle. The appellate authority finding no infirmity in the impugned order upheld the same. Aggrieved by the impugned Order-in-Appeal, the appellant is before this Tribunal.
4.The learned counsel, Shri. N.Vishwanathan, appeared and argued for the appellant. The learned counsel draws attention to the appellate authority’s earlier order dated 08.02.2024 wherein it was observed that the appellant was not given an option to redeem the goods after imposition of the penalty especially when the appellant had imported the car after filing the BE. The learned counsel submitted that it is settled position of law that once the goods imported is not prohibited for import but are only restricted for import then the goods can be allowed to be redeemed on payment of the applicable duties and reasonable fine and penalties whereas in this case the lower adjudicating authority had failed to exercise his discretion judiciously and fairly and instead put the appellant to onerous condition of re- export which he never sought for and which condition in the light of the fact having shifted his residence permanently to India was not also possible to be carried out and the learned lower appellate authority too had failed to take note of these facts and verbatim confirmed the order of the original authority. The learned counsel submitted that the lower appellate authority ought to have taken note of the fact that the original authority had completed ignored his direction issued in the earlier order and such failure has resulted in gross injustice to the appellant. It is the submission of the learned counsel that the lower appellate authority also failed to take note of the language used in Section 125 of the Customs act in terms of which the adjudicating authority shall give redemption except in the case of import involving prohibited goods and therefore has traversed beyond the statutory mandate to order redemption only for re-export which is not proper and correct.
5.Shri. N. Satyanarayanan, learned authorised representative, reiterated the findings of the appellate authority.
6.Heard both sides and perused the appeal records. The matter is before this Tribunal after the second round of litigation before the lower authorities. In the first round of litigation, the adjudicating authority has found that the appellant is not entitled to the benefit of T.R. and thus for violation of the policy conditions, had ordered absolute confiscation of the vehicle without an option to redeem and had also imposed a penalty. It is seen that upon appeal, the Commissioner Appeals has referring to Public Notice No.3(RE- 2000)/1997-2002, dated 31.03.2000, found that passenger cars/jeeps/multi utility vehicles etc. which are in the restricted category may be imported without a license on payment of full customs duty by individuals coming to India for permanent settlement after 2 years continuous stay abroad. The appellate authority has found the absolute confiscation without the option to redeem the vehicle on payment of fine too harsh and had remanded the matter with such observations only to comply with the principles of natural justice, having found that the adjudicating authority had relied on certain documents procured with respect to the appellant’s stay abroad behind the appellant’s back. Since the appellant had in the earlier round of litigation before the adjudicating authority already conceded that he had no further documents to substantiate that he had fulfilled the T.R. conditions and had further requested that the car may be released on imposing of fine and penalty as he was not fulfilling the TR conditions, stating that he had no intention to re- export the car, it appears that the appellant waived the requirement of issuance of SCN and personal hearing and requested the adjudicating authority to be lenient while adjudicating the matter, presumably with the intention of getting the car released at the earliest.
7. While the question whether the adjudicating authority could have given a go by to the directions of the appellate authority while remanding the matter to adhere to the principles of natural justice, merely upon the appellant’s request, itself is moot, nevertheless, the adjudicating authority has ignored the appellate authority’s finding that passenger cars are in the restricted category of items that can be imported. The adjudicating authority has also ignored the appellate authority’s finding that the absolute confiscation without the option to redeem the vehicle on payment of fine was too harsh. In fact, the adjudicating authority, has put the appellant in a worse off position for having preferred the appeal, by giving only an option to re-export, and that too on payment of redemption fine of Rs.2,50,000/-. The penalty of Rs.5,00.000/- imposed earlier in the first round of adjudication, was once again maintained. Shockingly, the very same appellate authority, despite the appellant drawing attention to the appellate authority’s own findings rendered in the earlier round of litigation, chose to completely ignore the same and has mechanically reproduced the findings of the lower authority verbatim while upholding the impugned order in original, thus exhibiting an appalling non application of mind.
8.Be that as it may, the fact remains that indisputably, the appellant has been unable to evidence that the appellant has fulfilled the conditions of the T.R. as was conceded before the lower adjudicating authority; and indisputably, the appellant is therefore also unable to evidence compliance of the conditions of ITC (Hs) Schedule I- import policy appended to chapter 87, that are required to be adhered while importing a passenger vehicle, a restricted item.
9. However, that does not translate into a power to the customs authorities to give re-export as the sole option upon imposing a redemption fine, as if compelling a re-export. It is seen that a division bench of this Tribunal has held in the decision in HBL Power Systems Ltd v.CC, Vishakapatnam, 2018 (362) ELT 856 (Tri- Hyd) as under:
8.We find in the case laws relied upon by the Learned Departmental Representative, the Adjudicating Authority “permitted re-export of goods” and the question was whether redemption fine can still be imposed and the decision was that redemption fine can still be imposed. The question before us is different as the importer does not want to re- export the goods and the adjudicating authority, in his Order compels him to do so by giving a conditional redemption of goods. Such a case arose in the case of Amba Lal v. Union of India & Others [1983 (13) E.L.T. 1321 (S.C.)], where the Hon’ble Apex Court did not examine this issue because the Learned ASG representing the Revenue conceded to the decision of the Hon’ble High Court that the Collector cannot impose conditions while allowing redemption.
9.In other words, the Adjudicating Authority permitting re-export of confiscated goods is different from the compelling re-export of the goods by passing an Order. Section 125 of the Customs Act reads as follows:
“125. Option to pay fine in lieu of confiscation. —
(1)Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods for, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit :
Provided that, without prejudice to the provisions of the proviso to sub- section (2) of section 115, such fine shall not exceed the market price of
the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2)where any fine in lieu of confiscation of goods is imposed under 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.”
10.A plain reading of the above section shows that it does not confer upon the Authority passing the Order any power to impose any conditions while allowing redemption of goods.
11.The scope of Section 125 of the Act is limited by the words in which it is framed and it is not open to the adjudicating authority or the Tribunal (who are creatures of the statute) to stretch, modify or restrict the scope of this Section; they are bound by it. Hon’ble Supreme Court and High Courts can and do examine the validity of the laws and subordinate legislations and pass judgments annulling or modifying them by neither the officers nor the Tribunal, as creations of the statute cannot do so. This position has been explained clearly by the Hon’ble Supreme Court in UOI v. Kirloskar Pneumatics Company 1996 (84)
E.L.T. 401 (S.C.) in which it was held as under:
“According to these sub-sections, a claim for refund or an order of refund can be made only in accordance with the provisions of Section 27 which inter alia includes the period of limitation mentioned therein. Mr. Hidayatullah submitted that the period of limitation prescribed by Section 27 does not apply either to a suit filed by the importer or to a writ petition filed by him and that in such cases the period of limitation would be three years. Learned Counsel refers to certain decisions of this Court to that effect. We shall assume for the purposes of this appeal that it is so, notwithstanding the fact that the said question is now pending before a larger Constitution Bench of nine Judges along with the issue relating to unjust enrichment. Yet the question is whether it is permissible for the High Court to direct the authorities under the Act to act contrary to the aforesaid statutory provision. We do not think it is, even while acting under Article 226 of the Constitution. The power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State Act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27, whether before or after amendment. May be the High Court or a Civil Court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Article 226 or the power of a Civil Court. No such delegation or conferment can ever be conceived. We are, therefore, of the opinion that the direction contained in Clause (3) of the impugned order is unsustainable in law.”
12.We also find that not only Section 125 but no Section of the Customs Act, 1962 gives any officer the power to compel anyone to import or export or re-export. This Section also does not give the Adjudicating Authority the right to give a conditional redemption saying “you can redeem only if you agree to re-export”. In case of prohibited goods the adjudicating authority has only two options:
(a)to allow redemption on payment of fine; or
(b)to not allow redemption.
13.In view of the above, we find that the condition in the Order-in- Original that the goods should be re-exported after redemption is liable to be set aside and we do so.
10.It is seen that the aforesaid decision of the Tribunal has been affirmed by the High Court of Andhra Pradesh as reported in CC, Vishakapatnam v.HBL Power Systems Ltd, 2019 (367) ELT 154 (A.P).
11.It is seen that for violation of the import policy with respect to car imports, a division bench of this Tribunal has held that absolute confiscation is not warranted in its decision in J. S. Gujral v Commissioner of Customs, Chennai, 2017 (258) ELT 383 (Tri- Chennai). The relevant portion is as under:
“8. In this regard, we find that the import of car is not prohibited. Therefore, the adjudicating authority ordering for absolute confiscation has not given justified findings for absolute confiscation. In this regard, we find from several Tribunal’s decisions and Hon’ble High Court’s decisions, where the goods are not prohibited, absolute confiscation is not warranted. We rely on the decision of the Hon’ble CESTAT Mumbai in the case of Yakub Ebrahim Yuseph v. CC, Mumbai (supra) held that regarding absolute confiscation of such goods which are not prohibited in detail by referring all the previous
decisions made by the Apex Court, various High Courts and other judicial forums in this regard and held as follows:-
“the prohibition relates to goods which cannot be imported by any one, such as arms, ammunition, addictive substance viz. drugs. The intention behind the provisions of Section 125 is clear that import of such goods under any circumstances would cause danger to the health, welfare or morals of people as a whole. This would not apply to a case where import/export of goods is permitted subject to certain conditions or to a certain category of persons and which are ordered to be confiscated for the reason that the condition has not been complied with. In such a situation, the release of such goods confiscated would not cause any danger or detriment to public health.”
The above view is also supported by the Hon’ble High Court of Calcutta in its decision in the case of CC (Preventive), West Bengal v. India Sales International reported in 2009 (241) E.L.T. 182 (Cal.).
9.The above citation is squarely applicable to the facts of the present case. Further we find that on identical issue of import of car, the Tribunal in the case of Subramanyam Iyer Ratnam v. Commissioner of Customs, Bangalore (supra) held that absolute confiscation is unjustified by relying the Hon’ble Madras High Court’s order in Sunshine International & Another
v. CC, Madras – 1993 (42) ECC 282 (Mad.). The Hon’ble Madras High Court held that “Customs authorities cannot take a different view with regard to import of goods as to whether to confiscate completely or to grant an option to pay a fine”. Even if it is held that the car is liable for confiscation, the subject car should be released on a nominal redemption fine as done by adjudicating authorities/appellate authorities all over India.
10.Further, this Tribunal’s Bench in the case of Sarguroh Azam Gulzar Khan v. CC (Seaport-Import), Chennai in the Final Order No. 181/2010, dated 11-2-2010 also held that absolute confiscation is not warranted.
Therefore, we hold that the adjudicating authority in the present case ordering for absolute confiscation is not justified. Accordingly, we hold that the order of absolute confiscation ordered by the adjudicating authority is modified into an order of confiscation with an option for redemption of vehicle on payment of redemption fine and appropriate customs duty on such clearance.”
12.Similar view has been taken by this Tribunal after discussion of facts, as can be seen from the decisions in Depe Global Shipping Agencies P Ltd v CC (Import), Nhava Sheva, 2017 (345) ELT 248 (Tri-Mumbai) and CC Cochin v Methwani Manish Shewaran, 2009 (246) ELT 580 (Tri-Bang).
13.It is also apposite to cite the decision of the Honourable Apex Court in Commissioner of Customs v Atul Automations Pvt Ltd, 2019 (365) ELT 465 (SC) at this juncture, wherein, noting the fundamental distinction between what is prohibited and what is restricted, it was held that a harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will not detract from the redemption of such restricted goods imported without authorisation upon payment of the market value. The relevant paragraph is as under:
“9. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Section 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 provides for confiscation of goods in the event of contravention of the Act, Rules or
Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act also. Section 18A of the Foreign Trade Act reads that it is in addition to and not in derogation of other laws. Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The MFDs were not prohibited but restricted items for import. A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorisation upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. We therefore, find no error with the conclusion of the Tribunal affirmed by the High Court that the respondent was entitled to redemption of the consignment on payment of the market price at the reassessed value by the Customs authorities with fine under Section 112(a) of the Customs Act, 1962.” (emphasis supplied)
14.Therefore, this Tribunal is of the view that the order of confiscation and imposition of penalty in the appellant’s case cannot be faulted. However, confining the option only to re-export on payment of redemption fine is opposed to the decisions aforementioned and is decidedly untenable. It is pertinent to note that in case the appellant chooses not to pay the redemption fine and re-export as per the option given, then by such confiscation, the Department on auction
sale is bound to get an amount invariably lesser than the duty amount which the importer would otherwise have remitted had the importer been permitted to redeem the vehicle on payment of fine. Therefore, this Tribunal is of the view that the appellant is required to be extended the option to redeem the vehicle on payment of redemption fine, which is also in line with the decisions aforecited.
15.In view of the discussions above, as well as in adherence to the ratio of the decisions of this Tribunal and Higher judicial forums cited above, the order of confiscation with an option to re-export on payment of redemption fine is hereby modified into an order of confiscation with an option of redemption of the vehicle. Given the facts and circumstances of this case, the penalty imposed under Section 112(a) is also reduced to Rs.1,00,000/- (Rupees one lakh only). The quantum of duties as applicable and redemption fine to be imposed in lieu of confiscation should be re-determined by the adjudicating authority, within a period of 3 months from the receipt of this order and on extending a reasonable opportunity to the appellant of being heard, for which purpose the matter is remanded to the adjudicating authority. Given that the appellant has been subjected to this process of prolonged litigation, which in itself is a punishment, the adjudicating authority is requested to consider the request, if any, from the importer for issuance of a certificate for waiver of detention and demurrage charges.
16.Thus, the appeal is disposed by way of remand on the above terms.
(Order pronounced in the open court on 28.02.2025)
(AJAYAN T.V.)
Member (Judicial)
Leave a Reply