2015 (1) TMI 621 - AT - Customs

Import of Car - Benefit of notification 21/2002 - Confiscation u/s 111(m) read with Rule 2(c), Rule 11; Rule 12, Rule 14(1) and Rule 14(2) - Undervaluation of goods - supplier and the appellant are brothers - Held that - department has obtained invoice from some source (informer). The said invoice in turn was sent to the manufacturer of the car who has confirmed the genuineness of the same. The details of the invoice have been given to the appellant. In fact, original of the said invoice or equivalent invoice should be available with the appellant or his brother. The appellant has not produced any evidence to counter the same. The very fact that the vehicle was purchased on 31st May 2008 from the manufacturer and was thereafter shipped in July 2008 from U.K., the said invoice or original invoice would be available with the appellant s brother i.e. supplier and it should have been possible for the appellant to produce the same during investigation or in reply to the show cause notice. The appellant could have obtained copy of the invoice from manufacturer in case it is lost. In fact this Tribunal did ask the appellant if he has got the invoice or can obtain the same from his brother supplier and matter adjourned. Vehicle is new as is evident from the odometer reading. The fact that the vehicle was registered prior to importation is only for the purpose of completing the formalities in that country. We also note that C.B.E. & C. Circular 1/2005-Cus., dated 11-1-2005 clarifies that when the registration in the country of export is done with a view to export the same that should not be come in way of extending the benefit of Notification No. 21/2002. In the present case also the registration has been done only with a view to transfer the vehicle to the port of export. We accordingly hold that the appellant will be eligible for the benefit of Notification No. 21/2002. Thus valuation and confiscation is upheld. Redemption fine and penalty are not excessive. As for benefit of notification 21/2002 is concerned, the same would be available - Decided partly in favour of assessee.

Issues Involved:
1. Valuation of the imported car.
2. Eligibility for the benefit of Notification No. 21/2002.
3. Confiscation of the car under Section 111(m) of the Customs Act.
4. Imposition of penalty and redemption fine.

Issue-wise Detailed Analysis:

1. Valuation of the Imported Car:
The appellant imported a Lamborghini Murcielago Roadster LP640 from M/s. Hyperformance Cars Ltd., U.K., declaring a CIF value of GBP 1,75,000. The Revenue contended that the declared value was under-declared. The Commissioner rejected the declared value and re-determined it based on an invoice obtained from an informer, which was confirmed by the manufacturer. The Tribunal upheld the Revenue's valuation, noting that the appellant and the supplier were related persons, and the appellant failed to produce the original invoice or any counter-evidence. The Tribunal held that the correct transaction value was represented by the invoice produced by the Revenue.

2. Eligibility for the Benefit of Notification No. 21/2002:
The appellant sought the benefit of Notification No. 21/2002, which applies to new motor vehicles that have not been registered anywhere prior to importation. The vehicle was registered in the U.K. before importation, leading the Commissioner to deny the benefit. However, the Tribunal found that the vehicle's odometer showed zero reading, indicating it was new. The registration was done to comply with U.K. export formalities, not for use in the U.K. The Tribunal referred to C.B.E. & C. Circular 1/2005-Cus., which states that registration for export purposes should not disqualify the vehicle from the notification's benefit. Thus, the Tribunal held that the appellant was entitled to the benefit of Notification No. 21/2002.

3. Confiscation of the Car under Section 111(m) of the Customs Act:
The Commissioner confiscated the vehicle under Section 111(m) of the Customs Act for mis-declaration of value. The Tribunal upheld the confiscation, noting that the appellant intentionally under-declared the value to evade customs duty. The Tribunal found a clear-cut suppression of the original invoice, which justified the confiscation under Section 111(m).

4. Imposition of Penalty and Redemption Fine:
The Commissioner imposed a penalty of Rs. 2.20 lakhs under Section 112 of the Customs Act and allowed the appellant to redeem the confiscated vehicle on payment of a fine of Rs. 5.50 lakhs. The Tribunal found the penalty and redemption fine to be appropriate and not excessive. The appellant's contention for adopting the dealer's import price in India or as per C.B.E. & C.'s instruction was rejected by the Tribunal, agreeing with the Revenue's stance.

Conclusion:
The Tribunal upheld the valuation and confiscation of the vehicle, along with the imposed penalty and redemption fine. However, it granted the benefit of Notification No. 21/2002 to the appellant. The appeal was disposed of in these terms.

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