GATEWAY DISTRIPARKS LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) M /s. Gateway Distriparks Ltd. (CVS) have filed the appeal against the confirmation of differential duty along with interest and penalty under section 112(b) of the Customs Act, 1962. Shri Yusuf Poonawala, Shri Sanjay R. Surshetwar and Shri Sanjay Chhabriya have also filed appeals for imposing penalties under section 112(b) of the Act. The facts of the case are that a new Mercedes Benz car which was imported through Nhava Sheva port and was lying in the premises of the CFS pending customs examination and clearance, was smuggled out from there and was found in the premises of Shri Sanjay Chhabriya in whose name the impugned car was manifested. In the place of the new Mercedes Benz car, an old Toyota Corolla car was substituted in the CFS. The impugned order passed by the adjudicating authority brings out the details of investigation carried out by the Special Investigation and Intelligence Wing of the Customs. For being concerned with the illegal activities connected with the smuggling of the impugned new Mercedes Benz car without customs examination, assessment and payment of duty, and substitution of the same by an old car in the customs licensed CFS, various penalties have been imposed on all the appellants. The adjudicating authority has also demanded the differential duty from the private operator in charge of the CFS. He has also appropriated the sale proceeds of the Mercedes Benz car and Toyota car after ordering confiscation of both the cars. Against this order, the appellants are before us.

(2.) SHRI T. Vishwanathan, learned counsel appearing on behalf of CFS submits that the impugned car was absolutely confiscated. Therefore, duty is not imposable on them as per the decision of the hon'ble Bombay High Court in the case of Union of India v. Shri Harkishandas Narottam Hospital in W.P. No. 388 of 2005 dated April 13, 2005. He further submitted that under section 45(3) of the Customs Act, the liability shifted on the custodian in limited circumstances, i.e., pilferage but in this case the pilfered car has been recovered and auctioned by the Customs Department and therefore, there is no pilferage or theft at all. The provisions of section 45(3) cannot be invoked for demand of duty. He submitted that the findings of the adjudicating authority in the impugned order is that Shri Yusuf Poonawala and Shri Rehman Shaikh clandestinely removed the car from the CFS without payment of duty and without the knowledge of the appellants and without the knowledge of the Customs Department. Therefore, the adjudicating authority held that they are responsible in substituting the new car, with an old Toyota car, in the container lying in the CFS. There is a further finding that the CFS had no role in the clandestine removal of the new car and substitution of the old car. The adjudicating authority has categorically held that the proposal to initiate action under section 135 is dropped. Having held so, the Commissioner imposed penalty under section 112(b) of the Customs Act. From the above findings, none of the acts were undertaken by the appellants is related to the imported car as per section 112(b) of the Customs Act. It is held that the appellants did not possess any knowledge that the imported car is liable for confiscation. In fact the appellants have not dealt with the imported car at all. Therefore, he relied upon the following decisions wherein it is held that in the absence of mens rea penalty is not imposable under section 112(b):

(3.) ON behalf of Shri Sanjay Chhabriya, it is submitted that the adjudicating authority in the impugned order has held that the possession of the car was technical and such innocent possession cannot be grounds of penalty under section 112(b) unless it is proved that the same was with the knowledge of its liability to confiscation, which has not been established in this case. It is further submitted that the adjudicating authority has categorically held that: