Full Judgment Text
2024 INSC 933
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2024
(Arising out of SLP (C) No.16123 OF 2018)
NALIN CHOKSEY APPELLANT
VERSUS
THE COMMISSIONER OF CUSTOMS,
KOCHI RESPONDENT
O R D E R
Leave granted.
2. Being aggrieved by the judgment dated 03.04.2018 passed
by the High Court of Kerala at Ernakulam in Customs Appeal
No.18/2009, the appellant is before this Court. By the said
judgment, the High Court allowed the Customs Appeal filed by
the respondent-Department answering the questions in favour
of the Revenue and against the appellant herein.
3. Briefly stated, the facts are that one Sri Jalaludheen
Kunhi Thayil had imported the vehicle in question being a
Porsche Carrera Car on 28.06.2002. The said car was later sold
Digitally signed by
RADHA SHARMA
Date: 2024.12.05
11:39:47 IST
Reason:
Signature Not Verified
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to one Sri Shailesh Kumar in the year 2003. Subsequently, the
appellant herein is stated to have purchased the said car in the
month of October, 2004. It is stated that in the year 2006, the
appellant, along with the importer Sri Jalaludheen Kunhi
Thayil, the first possessor Sri Shailesh Kumar and a broker
named Sri Haren Choksey who was the brother of the
appellant, was served with the Show-Cause Notice dated
27.06.2007 demanding short-levied customs duty to the tune of
Rs.17,92,847/-. The said Show-Cause Notice was issued under
Section 28(1) read with Section 124 of the Customs Act, 1962
[“Customs Act”] and stated that it was a case of deliberate
misdeclaration of model and the year of manufacture, along
with tampering with the chassis number of the imported car for
the purpose of under invoicing and under valuation of the
vehicle and evading the payment of the differential duty of
customs amounting to Rs.17,92,847/-. The appellant replied to
the same by letter dated 24.07.2007. This was followed by an
order-in-original dated 29.01.2008 passed by the Commissioner
of Customs, Cochin. The Commissioner of Customs confirmed
the demand of duty of Rs.17,92,847/- being the duty short-
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levied and short-paid on the imported vehicle and ordered the
confiscation of the car with an option of redemption of the
confiscated car on payment of fine and the differential duty.
The demand was raised jointly and severely against the
importer and the appellant.
4. Being aggrieved by the said order, the appellant herein
preferred Appeal No. C/311/2008 before the Customs, Excise
and Service Tax Appellate Tribunal, South Zonal Bench at
Bangalore (“Appellate Tribunal”), which was allowed in favour of
the appellant herein vide Final Order No.1235/2008 dated
23.09.2008. The Appellate Tribunal held that the appellant
herein is a bonafide purchaser who had not purchased the car
from the original importer and therefore, he had no role in the
import of the car or in the misdeclaration or in any offence
connected with the import. Consequently, the appeal preferred
by the appellant was allowed.
5. Being aggrieved by the said order of the Appellate
Tribunal, the Department filed the Customs Appeal No.18/2009
before the High Court of Kerala. As already noted, by the
impugned order dated 03.04.2018, the High Court set aside the
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order passed by the Appellate Tribunal by allowing the said
appeal. The High Court, while answering the questions of law in
favor of the respondent herein, observed that the payment of
short-levy of duty is a necessary consequence of redemption of
the goods under Section 125 of the Customs Act and since the
appellant herein had exercised the option to redeem the goods,
he was liable to pay the customs duty despite being a
subsequent purchaser. Hence, this appeal before this Court.
6. We have heard learned counsel for the appellant and
learned senior counsel for the respondent-Department and
perused the material on record.
7.
During the course of submissions, learned counsel for the
appellant Sri Shashibhushan P. Adgaonkar drew our attention
to Section 28 as well as Section 124 of the Customs Act and
submitted that what is in issue herein is with regard to the
non-payment of the import duty in respect of the Porsche
Carrera car. The appellant is not the importer of the car but
only a subsequent purchaser. The liability to pay customs duty
is on the importer and not on a subsequent purchaser. Further,
the said car is a motor vehicle within the meaning of the Motor
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Vehicles Act, 1988. The appellant herein is in fact not the
owner of the car (goods) within the meaning of Sections 124
and 125 of the Customs Act, 1962 inasmuch as the appellant
herein does not fall within the scope and ambit of the
expression ‘ owner’ as defined under Section 2(30) of the Motor
Vehicles Act, 1988. This is because the appellant is not the
registered owner in terms of Section 39 and other relevant
provisions which are under Chapter IV of the Motor Vehicles
Act, 1988. In the absence of there being any registration
certificate issued in the name of the appellant herein
incorporating his name as owner of the vehicle, the appellant
cannot be construed to be the owner of the motor vehicle in
question. Therefore, according to learned counsel for the
appellant, the very initiation of the proceeding by the issuance
of the summons and Show-Cause Notice to the appellant is
vitiated. In the circumstances, the impugned order may be set
aside and the Show Cause Notice impugned as well as the
proceedings against the appellant herein may be dropped was
the submission on behalf of the appellant.
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8. Per contra , learned senior counsel Sri Rupesh Kumar
appearing for the respondent-Department drew our attention to
Section 28 as well as Section 124 of the Customs Act and
contended that the vehicle in question was seized when it was
in the possession of the appellant herein, and while it may be
that the vehicle has not been registered in the name of the
appellant as per the provisions of the Motor Vehicles Act, 1988
but the fact remains that the appellant is the owner of the
vehicle, that is the good, having regard to the fact that he had
admittedly purchased the same.
9. Therefore, the vehicle in question was rightly confiscated
from the appellant’s possession as insufficient customs duty
was paid by the importer and the other subsequent purchaser,
under Section 125 of the Customs Act. Thus, the appellant was
liable to pay the differential customs duty and all other
payments to the Department herein. Supporting the impugned
judgment, learned senior counsel submitted that there is no
merit in this appeal.
10.
We have examined the arguments advanced at the bar in
light of the facts of the present case. It is noted that the Show-
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Cause Notice was issued, inter alia , to the appellant herein
under Section 28(1) read with Section 124 of the Customs Act,
1962 on the premise that there had been a confiscation of the
goods, i.e., the car in question and if the appellant was
interested in redeeming it, an option was available under
Section 125 to pay the redemption fine and seek release of the
car. That according to the respondent Department, the
appellant has not complied with the provisions under the
Customs Act and instead has sought to evade the customs duty
payable by him; that in fact the vehicle in question was seized
from the possession of the appellant herein and thereafter
confiscated and therefore he was liable to pay the custom duty
as well as the redemption fine.
11. We have considered Section 28(1) of the Customs Act in
order to ascertain whether the appellant herein is the importer
of the car in question. On a reading of the definition of the
expression ‘importer’ under clause (26) of Section 2 of the
Customs Act. The definition reads as under:
“Section 2 – Definitions. - In this Act, unless the
context otherwise requires, -
x x x x
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(26) "importer", in relation to any goods at any time
between their importation and the time when they are
cleared for home consumption, includes any owner,
beneficial owner or any person holding himself out to
be the importer;”
12. As per the above inclusive definition, an “importer” can
include an owner, a beneficial owner or any person holding
himself out to be the importer. But these personae would fall
under the above definition only during the time between the
importation of goods and the time when they are cleared for
home consumption. Admittedly, the appellant was not the
importer of the car in question, nor was the appellant involved
in the process of importation of the car. The car was neither
imported for his benefit nor on his behalf. It was Sri
Jalaludheen Kunhi Thayil who was the importer from whom no
recovery of the differential duty had been made. The appellant
herein is only a subsequent purchaser of the said vehicle from a
person who had purchased the same from the importer. Thus,
the appellant cannot be charged for paying customs duty under
Section 28 of the Customs Act as an importer or owner of the
goods within the meaning of the definition of importer.
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13. We have also considered the reliance of the learned senior
counsel for the respondent on Section 125 of the Customs Act.
The relevant portion is 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 or, 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 where the proceedings are deemed to
be concluded under the proviso to sub-section (2) of
section 28 or under clause (i) of sub-section (6) of that
section in respect of the goods which are not prohibited
or restricted, no such fine shall be imposed:
Provided further 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.”
14. It is undisputed that there is a confiscation of the car in
question in this case and the import of the said car is not
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prohibited. Also, as per the aforesaid definition, the owner of
the goods, or where such owner is not known, the person from
whose possession or custody such goods have been seized,
shall be given the option to pay a fine in lieu of confiscation and
where such fine is imposed on the owner or the other person,
they shall be also liable to pay any duty and charges payable in
respect of such goods. However, firstly, the appellant is not the
owner of the car coming within the definition of importer under
the customs Act as discussed above. Secondly, in order that the
appellant is to be construed to be the owner of the vehicle in
question, it is necessary to advert to the provisions of the Motor
vehicles Act, 1988, which defines ‘owner’ under Section 2(30) of
the said Act. The said section reads as under:
“2. Definitions. - In this Act, unless the context
otherwise requires,
x x x
(30) “owner” means a person in whose name a
motor vehicle stands registered and where such
person is a minor, the guardian of such minor, and
in relation to a motor vehicle which is the subject of
a hire-purchase, agreement, or an agreement of
lease or an agreement of hypothecation, the person
in possession of the vehicle under that agreement;”
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15. A reading of the above would indicate that when a motor
vehicle stands registered in the name of a person, he would be
the owner of the said motor vehicle. Section 49 of the Motor
Vehicles Act, 1988 deals with the necessity for registration.
Admittedly, in the instant case, the car in question has not
been registered in the name of the appellant herein but the
registration certificate continues to be in the name of the
original importer Sri Jalaludheen Kunhi Thayil. Therefore, the
latter is the owner of the vehicle in law. It may be that there has
been a transfer of the vehicle from Sri Jalaludheen Kunhi
Thayil to Sri Shailesh Kumar from whom the appellant has
purchased the vehicle. However, there is no ownership in law
which can be recognized insofar as the appellant herein is
concerned inasmuch as his name has not been entered in the
registration certificate concerning the vehicle in terms of the
provisions of the Motor Vehicles Act, 1988. Hence, the appellant
herein cannot be construed to be the owner of the vehicle and
hence, he does not fall within the scope and ambit of Section
125 of the Customs Act, 1962. Further, the argument that the
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appellant can be made liable to pay the duty because the seized
car was in the possession of the appellant cannot also be
accepted, since as per Section 125(1) of the Customs Act, the
possessor of the car can be made liable only when the owner of
the goods is not known. However, in the instant case, it is an
admitted position that the ownership of the vehicle in law is
still with the importer Sri Jalaludheen Kunhi Thayil and thus,
the owner of the vehicle is known.
16. Consequently, the very initiation of the proceedings
against the appellant herein under the provisions of Customs
Act by summoning him by issuance of Show-Cause Notice and
subsequent seizure and confiscation of the vehicle in question
are not in accordance with law and are unlawful.
17. Hence, the impugned judgment of the High Court, Show-
Cause Notices and other proceedings initiated against the
appellant herein being not in accordance with law stand
quashed. The order of the Appellate Tribunal dated 23.09.2008
stands restored.
18.
It is however clarified that the quashing of the proceedings
as against the appellant herein would not come in the way of
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respondent-Department proceeding against the proper person,
namely, the importer and owner of the car in question.
19.
The appeal is allowed and disposed of in the aforesaid
terms.
20. No costs.
. . . . . . . . . . . . . . . . . . . . . . . . . . J.
[B.V. NAGARATHNA]
. . . . . . . . . . . . . . . . . . . . . . . . . . . J.
[NONGMEIKAPAM KOTISWAR SINGH]
NEW DELHI;
NOVEMBER 27, 2024.
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