Legal principle

Where an innocent purchaser of a fraudulently imported vehicle pays the customs duty, interest and redemption fine settled by the Settlement Commission and holds Section 127H immunity, the vehicle's registration cannot be cancelled on the sole ground of the vendor's original fraud, for the purchaser is entitled to ordinary registration under Section 40 of the Motor Vehicles Act and extreme measures fail the test of proportionality.

Court decision

The Bombay High Court allowed the writ petition: the orders dated 9 September 2025 (Appellate Authority) and 27 March 2025 (Registering Authority) cancelling the certificate of registration were quashed and set aside and the certificate of registration was restored, with no order as to costs — a ruling in favour of the petitioner.

Facts

The petitioner purchased a Nissan petrol car from one Meenarani Devi for Rs.1,22,50,000; the car had been fraudulently imported in the name of a diplomatic officer, Mr. Jong Yong Ryong, availing the customs duty exemption under Notification No.03/1957-Cus. dated 8 January 1957 on the strength of an allegedly forged bill of entry. The DRI seized the car in August 2021 and it was provisionally released by the Deputy Commissioner of Customs (Import), Chennai on a bond of Rs.32,35,50,000 plus bank guarantee of Rs.70,85,745. On the petitioner's settlement application under Section 127C(5) of the Customs Act, 1962, the Settlement Commission by order dated 8 May 2024 settled customs duty at Rs.66,00,420 with interest of Rs.35,77,789, confiscated the car but allowed redemption on a fine of Rs.5,00,000, and granted immunity from penalty and prosecution under Section 127H subject to payment; the petitioner paid and the car was released. The ACB then seized the vehicle again (C.R. No.18 of 2023 re the forged bill of entry), and a Special Judge under Section 457 CrPC returned it to the petitioner on a bond of Rs.75,00,000. Thereafter the Deputy RTO, by order dated 27 March 2025, cancelled the car's Certificate of Registration under Section 55(5) of the Motor Vehicles Act, 1988, and the appellate authority dismissed the petitioner's appeal on 9 September 2025.

Key provisions

• Section 127C(5), Customs Act, 1962 — Procedure on receipt of an application under Section 127B
• Section 127H, Customs Act, 1962 — Power of Settlement Commission to grant immunity from prosecution and penalty