Full Judgment Text
2012:BHC-AS:10193-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.2426 OF 2012
Commissioner of Customs (Import) ..Petitioner.
versus
Noshire Moody ..Respondent.
….
Mr. A.S. Rao for the Petitioner.
None for the Respondent.
….
CORAM : DR.D.Y.CHANDRACHUD &
MRS. MRIDULA BHATKAR, JJ.
26 April 2012.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
1. These proceedings arise from a decision of the Settlement Commission
under the provisions of Section 127C(5) of the Customs Act 1962.
2. The Respondent imported a Ferrari under a bill of entry dated 14 February
2008 at Nhava Sheva. He claimed the benefit of an exemption notification
21/2002CUS dated 1 March 2002 on the basis that it was a brand new vehicle.
The DRI commenced an investigation on intelligence information which it
received that the vehicle was second hand and was registered with the Driver
and Vehicle Licensing Agency (DVLA) in the United Kingdom prior to its
importation. The benefit of the exemption notification was alleged to be wrongly
claimed on that basis. A notice to show cause was issued to the Respondent on
21 December 2009 by the Additional Director General in the DRI. The
Respondent made an application before the Settlement Commission on 18 August
2010, by which he accepted a further duty liability of Rs.61.32 lacs over and
above the duty paid in the amount of Rs.72.61 lacs at the time of import. Interest
thereon was also paid. Before the Settlement Commission, the contention of the
jurisdictional commissioner was that the vehicle was registered in the United
Kingdom and that in order to suppress the fact that the vehicle was already
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registered and was being shipped from United Kingdom, instead of Italy which
was the country of manufacture, the Respondent had produced a fake invoice
dated 24 December 2007 to hide the identity of the U.K. Ferrari dealer.
3. The Settlement Commission has in its order noted that notification
21/2002CUS dated 1 March 2002 uses the words “new , which have not been
registered anywhere prior to importation”. In the U.K. registration of motor
vehicles bought for export is a requirement mandated under law. The Central
Board of Excise and Customs issued a circular on 11 January 2005, circular
1/2005 to deal with this situation by which field formations were directed
“to verify whether the registration is a formality or not and to compare the
date of dispatch of the car with the date of registration and that such
temporary registration was not interfering with the Notification benefit”.
4. The Settlement Commission noted that the purpose and intent of the
exemption under the notification as brought out in a budget speech of the
Finance Minister and a budget explanation note of 200102 is to discourage the
import of second hand cars by fixing a higher rate of duty. The CBEC circular,
however, clarifies that a mere documentary registration for enabling transit and
shipment of a vehicle will not disqualify the motor vehicle from exemption. In
this background, the Settlement Commission observed that unless the exemption
notification were to be given a workable meaning so as to exclude registration for
transit, the notification would become unworkable for import of motor vehicles
from such countries where temporary registration is mandatory before
exportation of the vehicle. Insofar as the facts are concerned, the Settlement
Commission has noted that the car was imported by the U.K. dealer of Ferrari,
Italy and sold to M/s. Hyperformance Cars Ltd., U.K. on 18 December 2007. The
car was entered for export to India at the relevant port on 20 December 2007 and
the consignment left for India on 30 December 2007 under a bill of lading. There
is a finding of fact that the car was not used in the U.K. and was registered in the
U.K. on 11 January 2008 only to meet the transit requirement from Italy to India
through the U.K.
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5. On these facts as found by the Settlement Commission, the finding that
the benefit of the exemption under notification 21CUS/02 dated 1 March 2002
was admissible cannot be faulted. On the issue of undervaluation the Settlement
Commission has noted that the redetermined assessable value of the car is
Rs.1.18 Crores. The Respondent admitted the allegation of undervaluation by
accepting the redetermined value of Rs.1.18 Crores. The differential duty liability
after extending the benefit of the notification was also admitted and the
differential duty was paid in full together with interest of Rs.13.63 lacs. The duty,
as observed by the Settlement Commission, was deposited even prior to the
issuance of a notice to show cause. On these facts, the Settlement Commission
determined the differential customs duty liability at Rs.61.32 lacs in accordance
with law and also recorded that the entire interest had been paid. A penalty of
Rs.3 lacs and Rs. 2 lacs was imposed respectively, in lieu of confiscation and upon
the Respondent, invoking the show cause notice, while granting immunity from
penalty in excess of the aforesaid amount.
6. Counsel appearing on behalf of the Revenue submits that the car which
was imported was not a new car within the meaning of the exemption
notification. Whether a vehicle is or is not new is a pure finding of fact. The
facts which have been found by the Settlement Commission indicate that the car
was in fact a new car which was transshipped from the manufacturer in Italy to
the Ferrari dealer in the U.K. who sold the car to a dealer in the U.K. The
Respondent purchased the car from the dealer in the U.K. The Settlement
Commission has noted that the 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. The car was not used in the
U.K. The finding that the vehicle was a new motor vehicle is not perverse or
contrary to the evidence. The Respondent made a fair and candid disclosure and
accepted the undervaluation and paid the differential duty together with interest.
7. In this view of the matter, no case for interference has been made out
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having regard to the limited scope for interference in an order passed by the
Settlement Commission. The order of the Settlement Commission is not shown to
be perverse or contrary to law. The Petition is accordingly dismissed.
There shall be no order as to costs.
(Dr. D.Y. Chandrachud, J.)
(Mrs. Mridula Bhatkar, J.)
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