2012 (5) TMI 386 - HC - Customs

Import of brand new vehicle or not - exemption under notification no. 21/2002 CUS dated 1 March 2002 - held that - 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. - Decided in favor of assessee.

Summary

Issues:
1. Interpretation of exemption notification under Customs Act 1962.
2. Determination of undervaluation and differential duty liability.
3. Assessment of penalty and confiscation.

Interpretation of Exemption Notification:
The case involved the interpretation of notification 21/2002CUS dated 1 March 2002, specifically focusing on the term "new" in the context of importing a Ferrari. The Settlement Commission analyzed the requirement that vehicles must not have been registered anywhere prior to importation. It was highlighted that temporary registration for transit purposes may not disqualify a vehicle from exemption. The Commission examined the purpose of the exemption to discourage second-hand car imports and noted that mere documentary registration for transit may not affect the eligibility for exemption. Based on factual findings, it was determined that the imported car was new and met the criteria for exemption.

Determination of Undervaluation and Duty Liability:
Regarding undervaluation, the Settlement Commission found the redetermined assessable value of the car to be Rs.1.18 Crores, which was accepted by the Respondent. The differential duty liability was admitted and paid in full, along with the interest. The duty was deposited even before a show cause notice was issued. The Commission imposed a penalty in lieu of confiscation but granted immunity from penalty exceeding a certain amount. The overall duty liability was determined at Rs.61.32 lacs, and the interest was duly paid, reflecting compliance with legal obligations.

Assessment of Penalty and Confiscation:
The Respondent contended that the imported car was indeed new, as supported by the factual findings of the Commission. The registration in the U.K. was deemed necessary for compliance with local regulations, and the vehicle was not utilized in the U.K. The Commission concluded that the finding of the car being new was not flawed and that the Respondent cooperated by acknowledging undervaluation and fulfilling duty obligations. Ultimately, the Settlement Commission's decision was upheld, emphasizing the limited scope for interference in such matters. The judgment dismissed the petition without costs, indicating no grounds for challenging the Commission's order.

In conclusion, the judgment delved into the nuances of interpreting exemption notifications, determining duty liabilities, and assessing penalties in customs cases. The detailed analysis provided clarity on the application of legal provisions and factual assessments, ultimately upholding the Settlement Commission's decision based on the facts and legal principles presented during the proceedings.