2016 (6) TMI 433 - HC - Customs

Import of second hand cars mis-declaring them as new - Eligibility for grant of benefit of Notification No. 21/2002-Customs dated 1st March 2002 - Settlement Commission has granted the benefit of notification and immunity from the penalty and prosecution - Held that - by giving the proximity of the date of manufacture and the date of import of the car, 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. The impugned order of the CCESC giving the benefit of the Customs Notification dated 1st March 2002 and determining the differential customs duty to the tune of ₹ 7,44,174 cannot be said to be perverse and warranting any interference by this Court. Other directions issued by the CCESC regarding interest, penalty and fine in lieu of confiscation and granting immunity from prosecution to the Respondent also do not require interference by this Court. - Petition disposed of

Summary

Issues:
1. Whether the Customs & Central Excise Settlement Commission was justified in granting benefits to the Respondent.
2. Allegations of fraudulent import of high-end luxury cars.
3. Validity of the show-cause notice issued to the Respondent.
4. Settlement application filed by the Respondent.
5. Impugned order of the Settlement Commission.
6. Comparison with previous court decisions on similar issues.

Analysis:
1. The writ petition involved a question regarding the justification of the Customs & Central Excise Settlement Commission in granting benefits to the Respondent, Jay Polychem India Ltd. The benefits included settling the differential customs duty, interest adjustment, imposition of fines, penalties, and immunity from prosecution. The petition was filed by the Directorate of Revenue Intelligence and the Commissioner of Customs challenging the impugned order dated 31st August 2015.

2. The background facts revealed information about a syndicate fraudulently importing high-end luxury cars by mis-declaring them as new cars to evade higher custom duties. The investigation led to the recovery of incriminating documents and imported cars, including a Ferrari imported by the Respondent, which was declared as a new car to pay a concessional rate of basic customs duty.

3. A show-cause notice was issued to the Respondent calling for re-determination of assessable value, denial of benefits, possible confiscation of the car, recovery of differential customs duty, interest, penalties, and appropriation of the deposited amount towards the duty.

4. The Respondent filed a Settlement Application admitting duty liability due to undervaluation but contesting the wrongful availment of the exemption notification. The Directorate of Revenue Intelligence submitted a detailed report in response to the application before the Settlement Commission.

5. The impugned order dated 31st August 2015 by the Settlement Commission granted various directions favoring the Respondent, including the benefit of a Customs Notification and determining the differential customs duty amount.

6. The Court referenced previous judgments on similar issues, highlighting a case where the involvement of the purchaser of a car in connivance with the importer was not proven, leading to a decision against the Department. The Court also noted the details provided in the impugned order regarding the car's manufacturing and import history, concluding that the benefits granted by the Settlement Commission were not unwarranted or perverse, thereby dismissing the writ petition and upholding the impugned order.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the case and the Court's decision.