The Bombay High Court has held that the condition under Tariff Act imposing import of second hand in India only through customs port at Mumbai is redundant.
The court upheld the order of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), in which it was held that the inclusion of condition (1)(II)(d)(iv) of Chapter 87 of the Tariff Act was redundant and superfluous and allowed the appeal by expunging the said condition as a requirement of provisional release. Condition (1)(II)(d)(iv) of Chapter 87 of the Tariff Act states that the import of second hand or used vehicles shall be subject to the conditions that whoever being an importer or dealer in motor vehicles who imports or offers to import a second hand or used vehicle into India shall import of the vehicles shall be allowed only through the customs port at Mumbai.
The respondent-assessee filed a bill of entry for clearance of one motor vehicle, “Toyota Hiace Commuter Van 2750cc,” with an invoice value of USD 40,200 (C&F). The assessable value of the vehicle was Rs. 28,74,545, having a declared duty of Rs. 18,16,713. The vehicle was seized by SIIB(I) on the belief that the vehicle was liable for confiscation under Section 111(d) of the Customs Act, 1962. The vehicle was examined by SIIB(I), and since the preliminary investigation revealed it to be a second-hand vehicle and not new as declared by the importer, the department held that the import is in violation of the policy condition (1)(II)(d)(iv) of Chapter 87 of the Customs Tariff Act, 1975.
The assessee requested the provisional release of the vehicle on payment of duty. The Deputy Commissioner of Customs informed the appraising group with a copy to the assessee that they have no objection to the provisional release of the vehicle as per the provisions of Circular No. 35/2017-Cus dated August 16, 2017 on payment of customs duty of Rs. 18,16,713.
The assessee filed an appeal before the Commissioner (Appeals), JNCH, which was rejected by an order in appeal. An appeal was preferred to the Customs Excise and Service Tax Appellate Tribunal (CESTAT), and the appeal was allowed by an order dated December 7, 2022. The CESTAT held that the inclusion of condition (1)(II)(d)(iv) of Chapter 87 of the Tariff Act was redundant and superfluous and allowed the appeal by expunging the condition as a requirement of provisional release.
The assessee has paid duty of Rs. 18,16,713, submitted a bond equal to the value of the goods, including the duty amount, and a bank guarantee equal to 50% of the duty. The bank guarantee has been renewed and will be renewed as per the requirements of the provisional release.
The court held that the policy condition is not just for the sake of regulating imports and exports of the country but to ensure that the imported goods are compliant with the regulatory measures and the vehicle complies with all the stipulations for operation and running on Indian roads.
The court, while dismissing the department’s appeal, held that the inclusion of conditions mandating new vehicles and prohibiting second-hand vehicles under the Tariff Act is superfluous. The second hand vehicle has already been registered with the competent authority under the Motor Vehicles Act, 1988. If the vehicle did not comply with the stipulations for operation and running on Indian roads, certainly the vehicle would not have been registered under the Motor Vehicles Act, 1988.
Case Details
Case Name: Commissioner of Customs v/s Modern Trading & Logistics LLP
Citation: Customs Appeal No.18 Of 2023 With Interim Application (L) No.14158 Of 2023 In Customs Appeal No.18 Of 2023
Judges: K.R. Shriram & Jitendra Jain
Court: Bombay High Court
