Shri Nalin Choksey vs Commissioner Of Customs (Import) ...

(Arising out of Order-in-Appeal No. 263/MCH/ADC/GR.VB/2013 dt. 10.04.2013 passed by the Commissioner of Customs (Appeals) Mumbai-I )

For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical)

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1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : of the Order?

4. Whether Order is to be circulated to the Departmental : authorities?

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Shri Nalin Choksey : Appellant

VS

Commissioner of Customs (Import) Mumbai : Respondent

Appearance

Ms. Kiran Doiphode, for Appellant

Shri Chatru Singh Assistant Commissioner (A.R) for respondent

CORAM: Mr. P.S. Pruthi, Member (Technical)

Date of hearing : 20/02/2015 Date of pronouncement : /2015

ORDER NO.

The appellants appeal is directed against the impugned Order-in-Appeal in which the Commissioner has dismissed their appeal against the Order-in-Original which imposed a penalty of Rs.3,00,000/- on the appellant under Section 112(a) of the Customs Act, 1962.

2. The facts are that the appellant who is engaged in the business of buying and selling of cars was approached by one Mr. Sunil Lulla who was interested in purchase of an imported vehicle. The appellant help in clearance through Customs of a vehicle Toyota Land Cruiser imported by Shri Toparapu Narsaiah under Transfer of Residence Rules (TR) vide Bill of Entry dt. 22.9.2003, and arranged the sale of the vehicle to Shri Sunil Lulla. Later, it was found by CIU that the impugned vehicle was cleared by mis-declaring the year of manufacture to Customs as 1997 instead of the actual year of manufacture which is November 1999. It was alleged by the department that the vehicle was sold in violation of no sale for 2 years condition for import of cars under TR Rules. It was also alleged that the year of manufacture was wrongly declared to avail the higher depreciation on the import value leading to less payment of duty. Show cause notice was issued resulting in the order of Additional Commissioner who re-determined the value and confirmed demand of duty and interest on the re-determined value. It was also recorded in the Additional Commissioners order that Shri Sunil Lulla had approached the Settlement Commission who passed the final order No. 92/CUS/HDS/2009 dt. 28.10.2009. It was further recorded in Additional Commissioners Order that Shri Sunil Lulla had complied with the aforesaid final order and paid the differential duty of Customs amounting to Rs. 7,12,169/- along with interest of Rs.2,38,430/- redemption fine of Rs.40,000/- and penalty of Rs.10,000/-. As per Additional Commissioners Order no further action was required to be taken as far as Shri Sunil Lulla is concerned. Therefore, it is clear from the Additional Commissioners order that Shri Sunil Lulla was considered to be the importer and no further action was proposed against him after the settlement of his case in the Settlement Commission. However, penalty of Rs.3,00,000/- was imposed on the appellant Shri Nalin Choksi under Section 112(a) of the Customs Act. Penalties were also imposed by the Additional Commissioner on other co-noticees. But only the appellant Shri Nalin Choksi is in appeal before us.

3. Heard both sides.

4. The Ld. Counsel for the appellant submitted that the appellant is only a bona fide broker dealing in imported cars on commission basis and was not aware of the date of manufacture of the said car. Further, he was only involved in giving the vehicle on lease to Mr. Sunil Lulla. There was no physical sale by the importer and the vehicle continued to be registered in the name of the importer Mr. Toparapu Narsaiah for 2 years. Further, the vehicle was on hypothecation to Indian Overseas Bank for a loan of Rs.19,00,000/- granted to Mr. Sunil Lulla, Managing Director of M/s. Eros Multimedia Ltd. According to her, the appellant cannot be held responsible for violation of post importation conditions which are fastened on the importer.

4.1. The next contention on the Ld. Counsel is that various judicial pronouncement have held that once a case is settled in the Settlement Commission, the same cannot be reopened for co-noticees and the case is to be considered as fully settled in totality. She relied on the Tribunal decisions in the cases of S.K. Colombowala Vs. Commissioner of Customs (Import), Mumbai 2007 (220) E.L.T. 492 (Tri.-Mumbai), Vijay R. Bohra Vs. Commissioner of C. Ex. Daman 2010 (260) E.L.T. 290 (Tri.-Ahmd.) and Gautam Pukhraj Bafna Vs. Commissioner of Customs, Mumbai 2014 (314) E.L.T. 305 (Tri.-Mumbai).

5. Ld. AR reiterated the findings of the Commissioner (Appeals). Ld. AR stated that in the present case the adjudicating authority held that Shri Toparapu is the importer who did not approach the Settlement Commissioner hence ratio of the cases cited by the Ld. Counsel is not applicable. He relied on the judgment of the Honble Bombay High Court in the case of Yogesh Korani Vs. Union of India 2003 (159) E.L.T. 3 (Bom.), in which it was held that where the liability of main notice and co-noticee arise under two independent causes of action then the co-noticee cannot claim immunity on the basis of declaration made by the main noticee.

6. We have carefully considered the submissions of both sides. The provisions of Section 127A to 127N of the Customs Act, 1962 deal with the Settlement of cases. It is clear from Section 127B that an importer may make an application in relation to a case disclosing the full and true duty liability before the proper officer. In the present case, we find that the Additional Commissioner has not challenged the deposit of duty made by Shri Sunil Lulla. Therefore he has treated Shri Sunil Lulla as the importer. In other words he has consented that Shri Sunil Lulla is entitled to file an application before the Settlement Commission, as an importer.

The provisions of Section 127A(b) define a case, the provisions of Section 127F give exclusive jurisdiction to the Settlement Commission in relation to the case and Section 127J which provides that every order passed under Section 127C shall be conclusive?all lead to a reasonable conclusion that once a case has been decided in respect of the importer or the applicant by the Settlement Commission, it is not open to Revenue to proceed against other co-noticees. I agree with the reliance placed on the judgments of the Tribunal cited by the Ld. Counsel. It has been held in a catena of judgments including Majority opinion in the case of S.R. Colombowala (supra) that once the case of main noticee is settled, proceedings against other co-noticees will come to an end. The reliance placed by the Ld. AR on the Yogesh Korani case has not been properly appreciated. It was held in the said case that :

The provisions of K.V.S.S and the trade notces issued by various Commissionerate clearly show that the immunity to the co-noticees are available only when settlement offered by the principal noticee and the act of the co-noticee pertain to the same matter and 50% of the tax arrears that is due is paid. In other words, where the principal notice gets a case settled under K.V.S.S., it will provide immunity to all the co-noticees, provided the issues raised in the show cause notice/adjudication order pertain to the same matter. The word co-noticee will have to be understood in the sense of co-obligant, though it is loosely used in the trade notices as co-noticees. The concept of co-noticee contemplates an indivisible act of principal noticee giving rise to the liability on other noticees. In other words, if the liability of other noticees is flowing from distinct acts, then they cannot be termed as co-noticees. It there are multiple causes of action and the demand raised against the principal noticee and the co-noticee are based on separate and distinct causes of action, then the benefit of K.V.S.S. availed by the principal notice will not be available to such co-noticees.

But the circumstances of the case at hand are that the car was illegally got sold from the importer to Shri Sunil Lulla through the goodwill of the appellant. In other words, there are no multiple causes of action and the total action of sale is a indivisible act. Therefore, the said judgment has to be appreciated in this sense. Further, the case of S.K. Colombowala (supra) relied on the Apex Court judgment in the case of Union of India Vs.Onkar S. Kanwar 2002 (145) E.L.T.266 (S.C.) which held that We have heard the parties. In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where a declaration had been made in respect of a tax arrear and where in respect of the same matter a show cause notice had also been issued to any other person, then the settlement in favour of the declarant has to be deemed to be full and final in respect of other persons on whom show cause notices has been issued. It is settled law that when an appeal is pending there is no finality to the proceedings. The proceedings are then deemed to be continuing. The provisions of Kar Vivad Samadhan Scheme and the provisions of Settlement are similar and therefore the principle laid down in the case of Onkar S. Kanwar (supra) would apply in the present case.

Following various judicial pronouncements, I set aside the impugned order and allow the appeal with consequential relief, if any.

(Pronounced in court on /2015)

(P. S. Pruthi) Member (Technical)

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