Dir. of Revenue Intelligence vs Better Deal Machineries (P) Ltd.

The short question that arises for consideration in these writ petitions by the Directorate of Revenue Intelligence (''DRI'') and the Commissioner of Customs, Petitioner Nos. 1 and 2 respectively is whether the Customs & Central Excise Settlement Commission (''CCESC'') is justified in allowing the settlement application filed by the respondent, M/s. Better Deal Machineries (P) Ltd., by its impugned order dated 19th June, 2014 and 30th March, 2015 thereby granting the benefit of Notification No. 21/2002-Cus., dated 1st March, 2002 to the respondent.

W.P. (C) No. 746/2015 pertains to the impugned order dated 19th June, 2014 allowing the application of the respondent and settling the customs duty at Rs. 73,62,967/- to be appropriated from the amount already deposited; the interest on the settled duty as to be calculated by the Revenue and adjusted from the amount deposited; imposed penalty of Rs. 4,00,000/- and fine of Rs. 2,00,000/- in lieu of confiscation; and granted immunity from the prosecution to the petitioner. W.P. (C) No. 7779/2015 pertains to the impugned order dated 30th March, 2015 allowing the application of the respondent to settle the differential customs duty at Rs. 12,99,987/- to be appropriated from the amount of Rs. 30,00,000/- already deposited by the respondent; the interest on the settled duty as to be calculated by the Revenue and adjusted from the amount deposited; imposed penalty of Rs. 5,00,000/- and fine of Rs. 5,00,000/- in lieu of confiscation; and granted immunity from the prosecution to the respondent.

Facts in W.P. (C) No. 746/2015 :

The background facts in this writ petition are that the DRI, Delhi Zonal Unit, New Delhi received information regarding a syndicate of persons including one Mr. Sumit Walia fraudulently importing high end luxury cars on 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 customs duties than what was paid.

It is stated that searches were conducted at the various premises of Mr. Sumit Walia situated in Delhi and NCR on 26th April, 2011 and several incriminating documents, laptop, pen drives, etc., were recovered. Some imported cars were also recovered. From the scrutiny of the various documents, it was found that one Aston Martin V8 Vantage Coupe which was imported by Bill of Entry No. 908571, dated 20th February, 2008 in the name of one Mr. Rahul Lahiri, a resident of Janakpuri, Delhi. The invoice No. 9216, dated 12th February, 2008 raised by M/s. A.K. International (IE) Limited, United Kingdom (U.K.) in respect of the said car was also recovered where the cost, interest and freight (''CIF'') price for the said car was declared as GBF 61260 and the duty was discharged on concessional rate of basic customs duty at 60% by declaring it as a new car.

Based on the above facts, a show cause notice (''SCN'') dated 19th/21st February, 2013 was issued to the respondent and others calling upon them to show cause as to why the assessable value should not be redetermined at Rs. 74,28,153.11/-; the benefit of Notification dated 1st March, 2002 as amended, should not be denied; the car should not be confiscated under Section 111(d) and 111(m) of the Customs Act, 1962 (''CA''); differential customs duty of Rs. 63,33,178/- and interest thereon under Section 28AA of the CA should not be recovered and penalty under Sections 112, 114A and 114AA of the CA should not be levied and differential duty of Rs. 42,84,526/- deposited should not be appropriated to the Government account.

The respondent then filed a Settlement Application No. 3854 of 2013 before the CCESC, New Delhi on 10th September, 2013. The respondent admitted the duty liability on account of undervaluation to the tune of Rs. 9,84,236/- but it contested the allegation concerning wrongful availment of exemption notification.

The DRI, in response to the above application, filed a detailed report before the CCESC dated 6th November, 2013.

By the impugned order dated 19th June, 2014, the CCESC gave directions in the manner as indicated hereinbefore.

Facts in W.P. (C) No. 7779/2015 :

This petition impugns an order dated 30th March, 2015 passed by the CCESC allowing Settlement Application No. 4120 of 2014 of the respondent. The facts leading to this order are that pursuant to the aforementioned information received in relation to the import of high end luxury cars by Mr. Sumit Walia and his associates, the search conducted at his various premises on 26th April, 2011 and the scrutiny of the various documents recovered, it was found that one Porsche Panamera 4S was imported by Bill of Entry No. 783133, dated 22nd March, 2010 in the name of one Mr. Manish Dev Sharma, a resident of Yusuf Sarai, Green Park, Delhi. The invoice No. 45400, dated 11th March, 2010 raised by M/s. Continental Motors, U.K. in respect of the said car was also recovered where the CIF price for the said car was declared as GBF 64500 and the duty was discharged on concessional rate of basic customs duty at 60% by declaring it as a new car.

Based on the above facts, a show cause notice (''SCN'') dated 18th November, 2013 was issued to the respondent and others calling upon them to show cause as to why the assessable value should not be redetermined at Rs. 1,08,53,351.53/-; the benefit of Notification dated 1st March, 2002 as amended, should not be denied; the car should not be confiscated under Section 111(d) and 111(m) of CA; differential customs duty of Rs. 48,42,102/- and interest thereon under Section 28AA of the CA should not be recovered and penalty under Sections 112, 114A and 114AA of the CA should not be levied; differential duty of Rs. 30,00,000/- deposited should not be appropriated to the Government account and the bank guarantee of Rs. 10,00,000/- furnished by Mr. Sanjiv Aggarwal, Director of the respondent-company should not be enforced and appropriated to the Government account.

The respondent then filed a Settlement Application No. 4120 of 2014 before the CCESC, New Delhi on 13th March, 2014. The respondent admitted the duty liability on account of undervaluation to the tune of Rs. 10,32,737/- but it contested the allegation concerning wrongful availment of exemption notification.

The DRI, in response to the above application, filed a detailed report before the CCESC on 29th/30th May, 2014.

By the impugned order dated 30th March, 2015, the CCESC gave directions in the manner as indicated hereinbefore.

Applicability of Notification No. 21/2002-Cus. :

Mr. Satish Aggarwala, learned counsel for the petitioner draws attention to the order passed by the Supreme Court on 20th January, 2014 in Special Leave Petition (Civil) Nos. 243-244 of 2014 (Commissioner of Customs, Chennai v. Rohan Anirudha Seolekar) where the question involved concerned the import of a vehicle which had been registered in U.K. prior to its import and whether the Notification No. 21/2002-Cus., dated 1st March, 2002 would be applicable. It is submitted that since the issue in the present petition is also being considered by the Supreme Court in the above SLP, the hearing of the present petition should be deferred to await the decision of the Supreme Court.

The Court finds that the decision of this Court in Commissioner of Customs (Import & General), New Delhi v. Buhariwal Logistics - 2016 (332) E.L.T. 278 (Del.) concerned the very same issue of import of high end luxury cars from U.K. In that case the car was registered in U.K on 28th March, 2008 and the few days thereafter it was cleared from the Customs in India on 4th April, 2008 on payment of duty on the basis that it was a new car. In those circumstances, the Court in that case was not prepared to accept the case of the DRI that the purchaser of the car had acted in connivance with the importer and he was aware of all the facts at the time of import. It was held that the Department had failed to discharge its prima facie onus of showing the involvement of the purchaser of the car with its importer. The Court''s attention has also been drawn to the decision of the High Court of Bombay in Commissioner of Customs (Import) v. Noshire Moody - 2014 (300) E.L.T. 205 (Bom.) where it is 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."

In the facts of W.P. (C) No. 746/2015, the car in question was sold to the authorised dealer M/s. Stratsone AML Hagley in November, 2007 where after it was purchased by M/s. AK international Ltd., UK. In the impugned order dated 19th June, 2014, the CCESC has recorded a finding of fact in Paragraph 17.5 as follows :

"17.5 In the present case, the car was sold by the manufacturer to the authorised dealer M/s. Stratasone AML Hagley in November, 2007. The car was in turn sold by the authorised dealer to M/s. A.K. International (IE) Ltd., U.K. on 11-2-2008 and registered on the same date with registration No. B057 GKN on 11-2-2008. At this time the Odometer reading was 5. The car was in turn sold by M/s. A.K. International to Shri Rahul Lahiri in India on 12-2-2008. It was exported on 14-2-2008 and the bill of entry for clearance at Delhi was filed on 20-2-2008. This shows that the car was exported within three days of its purchase from the authorised dealer. The period for which it remained in the showroom of the authorised dealer can clearly not be considered to have been used. The Bench also observed from the photocopy of the related bill of entry attached that the car has been assessed as new and customs duty charged accordingly. The customs authorities must presumably have examined all aspects before assessing the car as new and if this is to be now changed it would necessarily have to be on the basis of evidence of use or at least its registration for purposes other than transit."

In that view of the matter, given the proximity of the date of first registration of the car, i.e., 11th February, 2008 (which was to comply with the requirements of the UK laws) and date of import, i.e., 20th February, 2008, 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.

In the facts of W.P. (C) No. 7779/2015, it is revealed that the car in question was manufactured in Germany on 12th February, 2010 and subsequently sold and shipped to the dealer in the U.K. and thereafter was exported by M/s. Continental Motors, U.K. to India on 22nd March, 2010. Here again given the proximity of the date of manufacture of the car and date of its import, 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 orders of the CCESC dated 19th June, 2014 and 30th March, 2015 giving the benefit of the Customs Notification No. 21/2002-Cus., dated 1st March, 2002 cannot be said to be perverse warranting any interference by this Court. The other directions issued by the CCESC regarding interest, penalty, fine in lieu of confiscation and grant of immunity from prosecution also do not require interference by this Court.

The writ petitions are disposed of in the above terms.