By TIOL News Service

MUMBAI, MAR 13, 2013: LATE Shri Satpal Singh, father of Shri Inderpal Singh Gujral had imported a brand new Hummer H3 car from Thailand at a declared price of USD 42,000/- CIF. Since the Type Approval Certificate/COP from the Country of origin was not submitted as required under Import Licensing Notes on ITC (HS) classification, the car was confiscated and a redemption fine of Rs, 4,00,000/- and personal penalty of Rs. 1,50,000/- were imposed. The Commissioner (Appeals) reduced the same to Rs. 50,000/- and Rs. 10,000/- respectively.

On payment of the above RF & penalty, the car was cleared and subsequently registered with the RTO.

Later on, the car was sold to one Shri Rajkumar Kukreja through Shri Raju Mishra of Sai Motors.

After getting hold of some Hummers in possession of film stars, the DRI came into the picture in the case of the present appellant too. The "Hummer SUV" had to face the music once again.

The car was seized and an investigation commenced on the allegation that it was one of the old & used high end cars/SUVs fraudulently imported by certain operators and that the imported car was old but was mis-declared as new to evade legitimate customs duty.

The SCN issued to the Shri Inderpal Singh Gujral, son of Late Satpal Singh was adjudicated whereby the declared value was rejected and benefit of exemption notification No. 21/2002-Cus was also denied. The vehicle was allowed to be redeemed on payment of redemption fine of Rs. 4 lakhs and penalty on both the appellants were also imposed.

The appeal filed by Shri Inderpal Singh Gujral and Shri Jang Bahadur Singh Gujral on whom penalty was imposed for aiding and abetting and mis-declaration and illegal importation of car were rejected by the Commissioner(A) so they are before the CESTAT.

The appellant submits -

++ the transaction value has been rejected on the ground that the appellant has suppressed the value of optional accessories, namely, power sliding glass sun roof, navigation package, which were not shown in the invoice of car, therefore, the value of car is mis-declared. However, at the time of clearance of the car, the same was inspected by the proper officer and as per the examination report, there is a clear finding that the car is new one and accessories are standard accessories; there is no allegation that the examination officer had colluded with the importer at the time of examination; vehicle was seized almost after one year of the importation and therefore, it cannot be alleged that the accessories found at the time of seizure of the car were available at the time of import.

++ navigation package is considered as installed in the vehicle as optional accessory and the value of the same viz. was Rs. 1,52,646/- was added to the cost of such item and customs duty itself on the said item is payable to Rs. 2,54,919/-. The said navigation system is available in India at a cheaper price of around Rs. 50,000/- therefore, no prudent man will purchase the vehicle with navigation system, which will cost more than Rs. 4 lakhs.

++ after allowing provisional release of the car, on examination it was found that there was no such navigation system available in the car as stated in the panchanama and the appellant had made a complaint of the same.

++ The adjudicating authority has relied on the imports of those cars made from UK and presently in this case the car has been imported from South Africa, therefore, the same cannot be considered as identical goods as the same are to be imported from the very same country.

++ Moreover, there is no allegation in the show-cause notice that the said import is lowest among contemporaneous imports to adopt its value as assessable value. He further submits that the very same car was imported by M/s. Jindal Industries in the year 2010 on payment of customs duty of Rs. 21,48,419/- and the importer in the present case was paid Customs duty of Rs. 19,38,965/- in the year 2008. In both the cases, the origin of car is South Africa. The value of car which is imported in April 2008 must be lower than the value of car imported in 2010.

++ The adjudicating authority in one bill of entry No. 681599 after due investigation found that the approximate value of the said car isUSD 30,000 whereas in the present case late Shri Satpal Singh has already declared the value of the car isUSD 42,000. Therefore, the allegation of undervaluation is not sustainable.

++ As regards the allegation that the car is used one and old is also not sustainable. The allegation is on the ground that the car was initially with Oman Trading Company and thereafter it was purchased by the importer. As per the import licensing note 1(1) (b) to classify the vehicle as used car, it should be registered for use in abroad before its export into India. The vehicle was not registered for use before export to India. Moreover, no evidence has been adduced to that effect and at the time of import car. The car was duly examined by the proper officer who found that car is new one thereafter the car was allowed to be cleared for home consumption. Therefore, the allegation that car is old one is not sustainable and benefit of Notification No. 21/2002-Cus is available to the appellants.

In the matter of imposition of penalty on Jang Bahadur Singh Gujral on the ground that Jang Bahadur Singh Gujral has arranged the money to pay duty of the car by late Shri Satpal Singh, it is submitted that giving lease or arranging for money for payment of duty does not constitute any offence for imposition of penalty under Section 112(a)/ 112(b) of the Customs Act, therefore, penalty on Shri Jang Bahadur Singh is to be set aside.

The Revenue representative reiterated the order of the lower authorities.

The Bench observed –

"12. In this case initially the vehicle was imported by late Shri Satpal Singh father of Shri Inderpal Singh Gujral, the appellant declaring the price of the vehicle asUSD 42,000 CIF. The goods were examined and at the time of clearance it was found that late Shri Satpal Singh has not submitted the type approval certificate COP from the country of origin as required under import licensing Notes to Chapter 87 of ITC (HS). Therefore, redemption fine and penalty was imposed. On payment of redemption fine and penalty, the vehicle was cleared. Later on DRI started investigation on the premise that vehicle is one of old high end cars/SUVs fraudulently imported by certain operators. After investigation, the allegation of undervaluation and mis-declaration were alleged. The allegation of undervaluation was made on the basis of invoice of the car wherein the optional accessories such as power sliding glass sun roof, navigation package, towing hook, chrome fuel doors, etc, were not shown in the invoice. We have examined the records, we are of the opinion that these accessories are optional accessories. Moreover, in this case, at the time of clearance of the car was examined by the officers of the department and as per the report, the car is new one and having standard accessories. In such a high value cars power sliding glass sun roof, towing hook and chrome fine doors are standard accessories. Further, the navigation package costs more than Rs. 4 lakhs. If it is imported with the car and the same is available in India at a cost of Rs. 50,000/-. Further, the car was imported by late Shri Satpal Singh, who is no more. Revenue is under the presumption that the navigation system was installed at the time of import of the car, as the same was found installed at the time of seizure of car. This is a presumption by DRI because there is an examination report available on records which shows that the car is new one having standard accessories. There may be another presumption that at the time of import there was no navigation system installed in the car and later on, late Shri Satpal Singh might have installed the navigation system in the car. In the absence of any concrete evidence produced by the revenue at the time of importation of car that there was navigation system installed, in the absence of such an evidence it cannot be presumed that navigation system was installed at the time of importation of car. Therefore, the allegation that the late Shri Satpal Singh has not declared the price of optional accessories at the time of importation is not sustainable in the absence of any concrete documentary evidence. Moreover, the reliance made by the adjudicating authority on the contemporaneous import of the car, we find that the reliance is placed on the car which is imported from UK and this car is imported from South Africa. Therefore, both the cars cannot be compared and the value of the car imported from UK cannot be relied upon. Moreover, in one of the Bill of Entry No. 681599, the adjudicating authority has found the value of the similar car isUSD 30,000 and in this case the appellant had shown the value of the car asUSD 42,000. Therefore, the allegation of undervaluation is not sustainable, accordingly, the demand raised on account of under valuation of the car is set aside.

13. The another allegation against the appellant is that the car is old and used, therefore, the appellant are not entitled the benefit of notification No. 21/2002. We have seen that the examination report at the time of importation which clearly shows that the car is new one and there is no evidence produced on record that before importation the car was registered anywhere outside India. The allegation is only on the presumption that after the manufacture of the car, the same was remained with the Oman Trading Company for some time thereafter it was imported to India. But the reason stated by the Ld. Counsel for the appellant that as the car was Left Hand drive which was converted into Right Hand drive. Therefore, the time gap is the time taken for the conversion from Left hand drive to Right hand drive only and the car was not registered before its importation. No evidence is produced by the revenue that before importation, the car was registered. In the absence of any concrete evidence, it cannot be said the car is old and used, therefore, the allegation that the car is old and used is not sustainable. Accordingly the denial of benefit of notification No. 21/2002 is also set aside.

14. We find that penalty on Shri Jang Bahadur Singh Gujral has been imposed on the ground that Shri Jang Bahadur Singh Gujral has arranged money for payment of duty of the car for late Shri Satpal Singh. In Customs Act, nowhere arranging for loan or giving the amount on lease for payment of duty of imported goods constitute an offence for imposition of penalty under Section 112A and 112B of the Customs Act. Therefore, the penalty on Shri Jang Bahadur Singh Gujral cannot be imposed. Accordingly, the same is set aside."

In fine, both the appeals were allowed with consequential relief.

(See 2013-TIOL-433-CESTAT-MUM)