CESTAT Reduces Customs Penalty to ₹5,000 Considering Demise of Importer’s Wife [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench (CESTAT), reduced the penalty imposed under the Customs Act, 1962, after considering the personal hardship faced by the importer and the absence of deliberate violation of law.

The appellant, Mallesh Cheekoti, since the year 2000 had been residing and working in the United Kingdom. Following the unfortunate demise of his wife, he decided to return to India permanently. At the duration of his stay, he purchased and possessed a BMW car, for nearly three years before being imported into India.

The vehicle was imported under a Bill of Entry dated 5.06.2014 as a used car. With he declared value of ₹5,00,000. However, the customs authorities rejected such declared value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, on the ground of non-production of the manufacturer’s invoice.

The value was re-determined based on Parker’s Guide and the benefit of Transfer of Residence (ToR) was denied on the ground that the appellant had stayed in India for more than the permissible period during the relevant two-year window.

Following the confiscation of the car under Section 111(d) of the Customs Act, 1962, read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, and provisions of the Central Motor Vehicles Act, 1988. A redemption fine of ₹1,00,000 and a penalty of ₹25,000 under Section 112(a) of the Customs Act, 1962 were imposed. The Commissioner (Appeals) upheld the order, leading to the present appeal before the Tribunal.

The appellant submitted that the import of the vehicle was not driven by any commercial intent but arose due to unavoidable personal circumstances following the death of his wife. And the vehicle had remained in the custody of the customs department since 2014 and had deteriorated substantially. Further, prayed for waiver of the redemption fine and reduction of penalty, since there was no wilful misdeclaration or intention to evade duty and that the lapse, if any, was purely technical and occurred due to lack of awareness of the procedural requirements.

The bench of P. Dinesha, Member, Judicial Member and Vasa Seshagiri Rao, Technical Member, observed that while the import did not comply with the prescribed legal requirements, the circumstances under which the import took place could not be ignored. The Bench noted that the appellant had returned to India permanently following the death of his wife and that the vehicle had remained under customs custody for several years.

The Tribunal accepted the appellant’s request not to redeem the vehicle and waived the redemption fine. Considering the penalty imposed under Section 112(a) of the Customs Act, 1962, the Bench held that although a technical violation existed, the facts of the case justified leniency. Considering the humanitarian aspect and absence of mala fide intent, the Tribunal reduced the penalty from ₹25,000 to ₹5,000.

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