1. We are concerned in this appeal with the liability to pay duty by VXL India Ltd., the appellant before us, on a Cadillac Seville car. The car was imported in November, 1992 by Rashmiben Patel. Clearance was claimed and allowed under the provisions of Open General Licence (OGL for short) Appendix 6, Item 52 of the Import Policy. This permits importation of motor vehicles without a licence by a person who has been in possession and use of the car for a year prior to its importation. Subsequent to its clearance, the car was sold by the importer to the appellant through a broker.
2. Enquiries by the Directorate of Revenue Intelligence (DRI) subsequent to the clearance of the car showed that the car was manufactured not in 1989 as declared to the customs, but in 1992. These enquiries also showed that Rashmiben Patel, the importer, had been living in the USA when the car was imported, and had not taken any steps to transfer her residence to India. Notice was therefore issued to Rashmiben Patel and the appellant before us. The notice proposed to determine the value of the car by depreciating from the price of a car manufactured in 1992, in place of the value that had been determined during the clearance by depreciating from the price of a car made in 1989, and consequent recovery of differential duty of Rs. 17,02,5857-.
It also proposed confiscation of the car on the ground that the provisions of the OGL would not be available for the clearance of the car on the ground that the car having been imported two months after its manufacture and the importer not having transferred her residence to India, the condition of one year's possession abroad and permanent settlement in India were not satisfied.
3. Rashmiben Patel did not answer the notice. The Commissioner records that the officers could not locate her residence. Bisham Kriplani, who had held her power of attorney also could not be found and also did not answer the notice. The appellant before us replied that it was the purchaser in good faith of the car, and could not be saddled with the consequences of the wrongful acts of the importer.
4. The Commissioner passed his order confiscating the car under clauses (m) and (d) of Section 111 of the Act, but permitting its release to the appellant before us on payment of duty, and imposing penalties on Rashmiben Patel and Bisham Kriplani. Hence this appeal.
5. The contention that the appellant was a bona fide purchaser of the car may be true, but it does not absolve it of the consequences that may attach themselves to the car for the wrongful import. On the facts narrated by the Commissioner, which are not rebutted before us, it would follow that the car has unauthorisedly been imported, rendering it liable to confiscation under clause (d) of Section 111 of the Act on account of the O.G.L. provision not being available, and under clause (m) because of misdeclaration of the value and of the year of manufacture. It is the appellant who is the owner of the car and who, if it wished to redeem it, would have to pay the fine, if any, fixed in lieu of confiscation. The contention that the appellant was an innocent purchaser is of no avail, any more than a person who buys, however innocently, stolen goods can resist these goods being taken away from him and being restored to the original owner. Therefore, if any redemption fine had been ordered to be paid, the appellant would have had to pay it.
6. However, the Commissioner has not determined any fine for redemption, taking into account, as he says, bona fide purchase by the appellant. What he has demanded is duty and that too solely on the ground that the duty cannot be recovered from the importer. He has confirmed the demand for duty under Sections 28 and 125 of the Act.
7. Section 28 of the Act provides for recovery of duty short levied on imported goods. Clause (2) of Section 125 of the Act provides that where any goods are ordered to be confiscated, the owner of the goods shall, in addition to redemption fine, be liable to pay any duty payable. In our judgment, both these provisions cannot be invoked simultaneously. It is the importer of goods who is liable to pay duty on the goods that he has imported. Customs duty is a duty on import.
Hence, obviously, no one else normally be required to pay that duty.
The definition of the term "importer" in Section 2 of the Act as including at any time between the importation of the goods and their clearance for home consumption, their owner is significant. It is evidently intended to provide for recovery of duty on goods imported by one person, deposited in a bonded warehouse and cleared by another to whom they are sold or otherwise transferred. By this definition, that second person is deemed to be the importer of the goods and hence liable to pay duty. The provisions of Sub-section (2) of Section 25 of the Act are an exception to this principle. These provisions have evidently been introduced in order to recover duty on goods which have been imported in an unauthorised manner without having been declared on their arrival in the country. However it is not permissible, where the importer is known and in fact has been issued a notice proposing recovery of duty, simultaneously to demand duty from another person who is not the importer. The provisions of Section 125(2) of the Act are not intended to be used as a substitute for the provisions of Section 28 when circumstances prevent resort to that section. The demand for duty before us is therefore without authority of law.