The Commissioner of Customs (Imports) vs Shri Ganji Mallaiah

V.C. Daga, J.—This appeal, filed by the appellant Revenue u/s 130 of the Customs Act, 1962 ("Act" for short) against the order dated 7th July, 2004 passed by the Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai ("Tribunal" for short) was admitted by this Court vide order dated 11th August, 2005 to consider the following substantial question of law:

Whether on the facts and circumstances of the case and in law, the Tribunal erred in holding that the post importation condition of "no sale for a period of 2 years" stipulated in the Public Notice No. 3(RE2000) 19972000 dated 31st March, 2000 does not imply that the importer should be owner of the vehicle and hence there is no violation of the provisions stipulated in the Public Notice?

Factual Matrix:

The facts, in nutshell, are that one M/s. Gokuldas Hansraj Shipping Pvt. Ltd., CHA filed bill of entry on 13th February, 2001 on behalf of the respondent for clearance of one Toyota Cynos car under transfer of residence, claiming benefit of Public Notice No. 3(RE2000) 19972002 dated 31st March, 2000, relevant part of which reads as under:

In exercise of powers conferred under paragraph 4.11 of the Export and Import Policy, 19972002, and in supersession of Public Notice No. 3(PN/9701) dated 31.03.97, as amended from time to time, the Director General of Foreign Trade hereby amends the Policy/ procedure for the import of car and automobile vehicles, effective from 01.04.2000, as under:

Passenger car/jeeps, Multi utility vehicles etc. which are in the restricted category may be imported without a licence on payment of full Customs duty by the following categories of importers:

(a) Individuals coming to India for permanent settlement after two years; continuous stay abroad;

(b) - (i) ... ... ... ...

... ... ... ...

... ... ... ...

On verification of the documents along with bill of entry, the Customs found that initial registration of the vehicle was in the month of November, 1996; whereas cancellation thereof was on 14th November, 2000 by Kanto Transportation Bureau, Japan. The Customs, finding import of the car contrary to the public notice dated 31st March, 2000, recorded statement of the respondent u/s 108 of the Act on 24th April, 2001; wherein the respondent, inter alia; stated that he was from Andhra Pradesh holding Indian Passport No. T950743 issued by the Passport Office at Hyderabad on 15th March, 1995; that he left for Dubai on 13th April, 1997 and started working there as a Carpenter; that he visited India on 17th November, 1999 and stayed for a period of five months; that he went back to Dubai and, finally, arrived in Mumbai Airport from Dubai for permanent settlement in India; that he had neither used any vehicle in Dubai nor had imported any vehicle in India and explained that after one week of his arrival in India one Tukaram and Srinivas came to him and asked him to permit them to import some light bulbs from Dubai by using his passport; that he agreed to their proposal for monetary consideration of Rs. 5,000/- and, ultimately, according to him, his passport and signatures were misused by them for importing Toyota Cynos car in India. He, thus, submits that except signing some papers and documents as directed by S/Shri Tukaram and Srinivas for some monetary consideration he did not take part in importing the car.

The Customs acting upon his explanation chose to issue show cause notice. In reply to the show cause notice, the same contentions based on the above statements were reiterated by the respondent. The show cause notice was adjudicated upon by the Joint Commissioner of Customs holding that the respondent is not entitled to benefit of the public notice and/or terms thereof and that importation of the said vehicle was prohibited as such it was held to be liable for confiscation under 111(d), and also u/s 111(o) of the Act for violation of the condition of postimportation. That is how the vehicle was absolutely confiscated and the penalty of Rs. 25,000/ was imposed on the respondent and Rs. 50,000/ on one Sujit Sattam, CHA u/s 112(a) of the Act.

Aggrieved by the aforesaid orderinoriginal, appeal was preferred by the respondent. The Commissioner of Customs (Appeals), vide his order dated 16th March, 2004, rejected the appeal and confirmed the orderinoriginal.

Aggrieved by the aforesaid orderinappeal, the respondent filed second appeal before the Tribunal. The Tribunal, vide its order dated 7th July, 2004, was pleased to allow the appeal and set aside the orderinappeal holding that it was neither necessary for the respondent to prove as to how funds were arranged by him nor it was necessary to prove the possession, ownership or user of the subject vehicle in the country of exportation during the period when the passenger/ respondent stayed abroad. The order of confiscation and penalty was set aside. Vehicle was directed to be released to the importer after collection of duty assessed thereon.

Being aggrieved by the aforesaid order, the Revenue has invoked appellate jurisdiction of this Court to canvass the question of law extracted hereinabove.

In spite of notice, respondent did not appear. Mr.S.N. Kantawala was requested to act as Amicus Curiae.

Consideration:

Heard Mr. Jelty, learned Counsel for the appellant Revenue and Mr. Kantawala, Amicus Curiae. Both, in unequivocal terms, submits that the impugned order of the Tribunal is perverse as such liable to be quashed and set aside.

The public notice produced on record was issued in exercise of powers conferred under paragraph 4.11 of the Export and Import Policy, 19972002 laying down the procedure for import of cars and automobile vehicles, effective from 1st April, 2000. The passenger cars/ jeeps, multi utility vehicles etc. were put in the restricted category permitting their import without licence on payment of full customs duty by the categories of importers mentioned therein. One of such categories, extracted hereinabove, is of individuals coming to India for permanent settlement after two years continuous stay abroad. Such person is entitled to import only one vehicle with NO SALE condition of two years to be endorsed by the Customs Authorities on the passport/registration documents at the time of import and by the Regional Transport Authorities when such vehicle is presented for registration in India.

The aforesaid condition that no person shall be entitled to sell the vehicle imported while coming to India for permanent settlement after two years continuous stay abroad is pregnant with the condition that such person must be a owner or title holder of the vehicle. The right to sell vehicle after expiry of two years contemplates transfer of title arising from the transaction of sale and purchase. Transfer of title can only be done by a person holding title. Person having no title cannot transfer it to another person. In absence of title, he has no authority to sell or transfer the vehicle in favour of anybody. Under these circumstances, the Commissioner (Appeals) was perfectly justified in holding that the passenger or a person importing vehicle must be the owner of the vehicle for a period of two years during his continuous stay abroad and should continue to be the owner for next two years after importation of vehicle in India. The findings recorded by the Commissioner (Appeals) read as under:

v) Contrary to the Ld. Consultant''s claim that there is no corroborative evidence, and hence the passenger''s statement cannot be used, I observed that there are independent facts on record, which clearly corroborate the said statement. The facts revealed by the passenger in his statement that he was not the owner of the car and nor had he imported the car, get corroboration from the Cancellation Registration Certificate of the said car, issued by the Japanese Transport Authorities. This Cancellation Certificate indicates that the registration of the impugned vehicle was cancelled only on 14.11.2000 and till that time the owner of the said car was one Japanese National Ochiai Hidenori of Mastudo city of Japan. The passenger Shri Ganji Mallaiah before that, had already arrived in India on 10.10.2000 and therefore there was no question of him buying the car from a Japanese National settled in Japan while he worked in U.A.E. as a Carpenter on labour visa.

The aforesaid well considered findings were sought to be set aside by the Tribunal holding that it was not necessary for the importer to prove his ownership or title to the vehicle during his stay abroad and that he need not be the owner of the vehicle for next two years after importation thereof during is stay in India. The view taken by the Tribunal is absolutely perverse. The Tribunal could not have taken such a perverse view running contrary to the public policy leading to the issuance of the public notice.

The order of the Tribunal also suffers from nonapplication of mind since the Tribunal has directed release of vehicle after collection of duty assessed thereon forgetting the fact that as per the public notice, payment of full duty was a condition precedent and that the duty was duly paid by the importer. In the totality of the circumstances, the Tribunal ought to have used its common sense that a person working as carpenter/labourer in Dubai could not have owned or imported vehicle, that too from Japan, especially, in the light of his statement recorded u/s 108 of the Act; wherein he has clearly admitted that his passport was misused by someone. It was clearly an attempt on the part of the Tribunal to adopt perverse approach. The impugned order is, thus, unsustainable and liable to be set aside.

We place our appreciation on record for the valuable assistance given by Mr. Kantawala as Amicus Curiae.

In the result, appeal is allowed. Impugned order passed by the Tribunal is quashed and set aside. The orderinoriginal and orderinappeal are restored. Question of law framed is answered in favour of the Revenue and against the Assessee. The appellant Revenue shall take immediate steps to take custody of the vehicle and recover fine.