2024 (10) TMI 1078 - HC - Customs

Correctness, legality and propriety of the inaction in bringing a logical end as per law to the detailed and credible information given by the Petitioner - seeking declaration that the SVB orders, and orders of assessment and clearance of goods for home consumption obtained by Respondent nos.5 to 7 pursuant thereto or otherwise under Sections 17, 18 (2) and 47 of the Customs Act, 1962, having been obtained by the private Respondents 5 to 7 by material suppression - direction to Respondents to forthwith investigate the matter of continued massive undervaluation and mis-declaration of material particulars to evade customs duty in import of new Luxury Cars from such related parties - direction to official Respondents to inquire into the continued inaction by the concerned officer/s causing huge revenue loss. HELD THAT - The Petitioner, who claims to be an informer, is seeking to bring before the Court information, which according to him, will be useful for the Customs Authorities and the Director of Revenue Intelligence in respect of import of cars in India. Once such a matter which involves technical expertise, the matters of import duties, the pricing across countries and various factors that go before international pricing, it is not possible for this Court in writ jurisdiction to arrive at determinative findings. Rights of the Respondents to pursue their statutory remedies also cannot be prejudiced. The statutory authorities were called upon to look into the information. Such course of action was adopted by the Hon ble Supreme Court when the Petitioner brought before them certain information. The Hon ble Supreme Court did not directly issue any specific direction to the private parties, but only called upon the statutory authorities to look into the information brought forth by the Petitioner - Pursuant to information supplied by the Petitioner in respect of the Respondent No. 5- Mercedes, the Director of Revenue Intelligence and the Customs Authorities have looked into the matter and have not found any violation. Even if they do, the methodology and procedure under the governing statute will have to be followed. The Petitioner, who claims to be an informer, has filed these proceedings himself against the private Respondents and the statutory authorities. The dispute between the private Respondent and the statutory authorities, if any, will be resolved through the mechanism provided under the governing statute. We are not inclined to grant any special status higher than that of an informer like any other citizen to the Petitioner. No case is made out of any collusion or mala fides on the part of the statutory authorities. Such collusion and mala fides cannot be casually intended and must be substantiated. Merely by raising suspicion about the merits of the stand taken by the Director of Revenue Intelligence and the Customs Authorities, directions cannot be issued against the private Respondents and the Director of Revenue Intelligence. If such casual assertions are accepted and the directions are given on the basis that the Director of Revenue Intelligence and the Customs Authorities, who are represented through the learned Additional Solicitor General, have colluded with the private Respondents, then it would be a serious matter on the part of these Respondents and their officers. Without any material, therefore, such observations and directions cannot be issued. It is clear that valuation and pricing of these cars is a complex matter and is governed by various factors. Therefore, the Special Valuation Cell is also set up which consists of experts. As regards the Petitioner s expertise in the subject, we have not been shown anything to demonstrate the same. Having called upon the Customs Authorities and the Director of Revenue Intelligence to look into the information supplied by the Petitioner, the matter cannot be taken forward in writ jurisdiction. Therefore, there are no material before us to reach a conclusion that the Director of Revenue Intelligence and the Customs Authorities have deliberately not looked into the information supplied by the Petitioner. This Court cannot in a writ jurisdiction give any direction in respect of future imports. The Petitioner himself as an informer cannot abuse the status granted by this Court to convert this litigation into a witch hunt against the private Respondents. Thus, on the basis of material supplied by the Petitioner, substantial investigation has taken place, substantial judicial time has been spent upon the same and the proceedings cannot go on merely because the Petitioner insists that they should go on - petition dismissed.

Summary

Issues Involved:

1. Whether the information and material provided by the Petitioner are relevant for ascertaining undervaluation and mis-declaration of luxury car imports.
2. Whether there is prima facie evidence of undervaluation and mis-declaration by the Respondents.
3. Whether the Respondents' relationship with foreign suppliers influenced the declared transaction value.
4. Whether the Special Valuation Branch (SVB) orders were obtained through misrepresentation and are void.
5. Whether the transfer pricing orders for income tax purposes bind customs authorities.
6. Whether the Petitioner's locus and bona fides affect the maintainability of the petition.
7. Whether the petition is barred by delay and laches.
8. Whether the Petitioner is entitled to any relief under Article 226 of the Constitution.
9. Whether the writ petition and interim applications should be allowed or dismissed.

Detailed Analysis:

1. Relevance of Information and Material:
The Petitioner alleged massive undervaluation and mis-declaration in the import of luxury cars by Respondents, claiming that the declared transaction values were influenced by the relationship between the Respondents and foreign suppliers. The Petitioner provided various documents, including price lists and comparative data from other countries, to support these claims. However, the Respondents and authorities argued that the information was generic, speculative, and not actionable under the Customs Valuation Rules, 2007, which prioritize transaction value over deemed value.

2. Prima Facie Evidence of Undervaluation:
The Respondents contended that the Petitioner failed to provide credible evidence of undervaluation. Investigations by the Directorate of Revenue Intelligence (DRI) found no evidence of undervaluation or mis-declaration. The authorities emphasized that the transaction value should be accepted unless there are genuine doubts, which were not substantiated by the Petitioner's submissions.

3. Influence of Relationship on Transaction Value:
The Petitioner claimed that the relationship between the Respondents and their foreign suppliers influenced the transaction value. However, the Respondents submitted that the transaction values were determined based on arm's length pricing and were accepted by the SVB and income tax authorities. The authorities found no evidence of flow-back of funds or influence due to the relationship.

4. Validity of SVB Orders:
The Petitioner argued that the SVB orders were obtained through misrepresentation and should be declared void. The Respondents countered that the SVB orders were passed after detailed scrutiny and that no misrepresentation or suppression was found. The authorities stated that the SVB orders were subject to appeals and that the Petitioner had not provided any new evidence to challenge them.

5. Transfer Pricing Orders:
The Petitioner contended that transfer pricing orders for income tax purposes should not bind customs authorities. The Respondents and authorities argued that the transfer pricing study confirming arm's length pricing could be relied upon for customs valuation in the absence of contrary evidence.

6. Locus and Bona Fides of the Petitioner:
The Respondents questioned the Petitioner's locus and bona fides, citing past proceedings against him and alleging that the petition was filed for personal gain. The Supreme Court had previously recognized the Petitioner's locus but directed the High Court to proceed without entering into the question of locus. The High Court noted the Petitioner's role as an informer but found no basis to grant him any special status.

7. Delay and Laches:
The Respondents argued that the petition was barred by delay and laches, as the Petitioner approached the court years after the alleged inaction by the authorities. The High Court agreed that there was an unexplained delay in filing the petition.

8. Relief Under Article 226:
The High Court held that the Petitioner could not seek relief under Article 226 to compel the authorities to act on his information, especially when the authorities had already investigated and found no evidence of wrongdoing. The court emphasized that it could not review the decision of the executive but only the decision-making process.

9. Conclusion:
The High Court dismissed the writ petition and connected interim applications, finding no merit in the Petitioner's claims. The court noted that the Petitioner had not provided credible evidence to support his allegations and that the authorities had conducted thorough investigations. The court also highlighted the importance of maintaining the integrity of the customs valuation process and the need for credible evidence before initiating investigations. The court kept all contentions open for consideration by the adjudicating authorities in accordance with law.