Cus - Given proximity of date of manufacture and date of import, it cannot be said that said car ceased to be new car and became 'second hand' car at time of its import – Order of CCESC giving benefit of 21/2002-Cus cannot be said to be perverse: High Court
By TIOL News Service
NEW DELHI, JUNE 09, 2016: THE Settlement Commission by its order dated 31.08.2015 allowed the application filed by the Respondent thereby granting the benefit of Notification No. 21/2002-Customs to settle the differential customs duty at Rs.7,44,174/-(to be appropriated from the amount of Rs.30 lakhs already deposited); interest of Rs. 2,79,974 (which is also to be adjusted); imposed fine of Rs. 75,000 in lieu of confiscation; penalties of Rs.75,000 and Rs.20,000& granted immunity from prosecution.
The case of the DRI is that it received information regarding a syndicate of persons including one Mr. JatinAhuja fraudulently importing high end luxury cars on a large scale from various foreign clients by mis-declaring these cars as new cars whereas such cars were sold and registered in the country of export prior to being exported to India and thus fell in the category of second hand cars, thereby attracting higher rate of custom duties than what was paid.
Based on the above, a SCN was issued to the Respondent and others calling them to show cause as to why the assessable value should not be re-determined at Rs.1,57,56,213/-; differential customs duty of Rs.89,76,347/- should not be demanded; the benefit of Notification 21/2002-Cus should not be denied; the car should not be confiscated and penalties and interest should not be imposed; appropriation of amount of Rs.30 lakhs already paid.
An application was filed before the Settlement Commission on 19th November 2014 admitting the duty liability on account of under valuation to the tune of Rs.3,73,298 but it contested the allegation concerning wrongful availment of the exemption notification 21/2002-Cus.
The DRI, in response to the above application, filed a detailed report before the Settlement Commission.
However, as mentioned,the Settlement Commission gave directions in the manner as indicated above.
The DRI is before the Delhi High Court against this order of the Settlement Commission and draws attention to the order passed by the Supreme Court on 20th January 2014 in Special Leave Petition (Civil) No. 243-244 of 2014 (Commissioner of Customs, Chennai v. RohanAnirudhaSeolekar) where the question involved concerns the import of a vehicle which had been registered in the U.K. prior to its import and whether the Notification No. 21/2002-Cus would be applicable. Inasmuch as since the matter is under consideration by the Supreme Court, therefore, the issue arising in the present petition should be deferred, the counsel for the Revenue submitted.
The High Court observed that a view has been taken in Commissioner of Customs (Import & General) New Delhi v. Buhariwal Logistics - 2015-TIOL-2901-HC-DEL-CUS on the very same issue concerning importing of high end luxury cars from U.K. In that case, the car was registered in the U.K on 28th March 2008 and a few days thereafter, it was cleared by Customs in India on 4th April 2008 on payment of duty on the basis that it was a new car.
Further, in the case of Commissioner of Customs (Import) VsNoshire Moody - 2012-TIOL-391-HC- MUM-CUS the High Court had noted that registration of the car in the U.K. was “only to comply with the requirement of the licensing authorities in the U.K. who require registration even for the purposes of exportation.”
After extracting the facts recorded by the CCESC, the High Court also observed –
++ The CCESC has also noted in para 29.6 of the impugned order that on a scrutiny of the documents it transpired that the car in question was manufactured by M/s. Ferrari Italy on 8th July 2009 and finished on 23rd July 2009. It was subsequently shipped to the U.K. and purchased by M/s. Graypaul Motors Ltd., Society Nottingham on 27th July 2009. It was sold to GurpalChawla on 17th August 2009 and then exported through M/s. A.K. International (IE) Ltd. to M/s. Jay Polychem India Ltd. under B/E dated 19th August 2009. Given the proximity of the date of manufacture and the date of import of the car, it cannot be said that the said car ceased to be a new car and became a 'second hand' car at the time of its import.
++ Consequently, the impugned order of the CCESC giving the benefit of the Customs Notification No. 21/2002-Cus dated 1st March 2002 and determining the differential customs duty to the tune of Rs 7,44,174 cannot be said to be perverse and warranting any interference by this Court. Other directions issued by the CCESC regarding interest, penalty and fine in lieu of confiscation and granting immunity from prosecution to the Respondent also do not require interference by this Court.
The Writ petition was disposed of.
(See 2016-TIOL-1110-HC-DEL-CUS)
