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TMI Blog2004 (7) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... , partial exemption as applicable to automobiles of less than 1600 CC under Notification No. 83 of 1977 was also allowed. 2. These imports were subsequently taken up for investigation by the Directorate of Revenue Intelligence in November, 1989. Very briefly stated, the investigation indicated that the cars were actually of higher CC, the prices declared in the invoices were misdeclared lower values than the actual purchase prices/commercial prices, the imports had been basically organized and managed by Shri Sadiq A. Futehally, proprietor of Ashiya Motors. The main evidence thrown up by the investigation was that, when most of the imported cars were subjected to test at IIT, Bombay and other institutions, actual cubic capacity of the engines were found to be 1800 etc. (when the declared CC was 1595); Codes (regarding features of the cars) affixed in the boots of the cars confirmed the test findings/showed the real c.c.; Service records kept by M/s. Ashiya Motors for individual cars in question also showed that these cars were at higher engine capacity than 1600 cc and this was also confirmed by Shri Futehally and his service engineer. With regard to import policy, the main e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action value (the prices paid to Volkswagen) or according to the Tourist Price Lists of the manufacturer and duty as payable on those values demanded. It is further pleaded that since the actual duty evasion was higher than the amounts determined in adjudication, the penalties were also required to be enhanced on the importers as well as Mr. Futehally. Shri Futehally is in appeal contending that he was only an agent of foreign supplier and had nothing to do with the offences in relation to the cars, since he had only facilitated the import and helped the importers and buyers with regard to sale, maintenance etc. The persons in whose names the imports were made are in appeal praying for setting aside the penalties imposed on them. Purchasers of the cars are in appeal contending that they had no connection with the alleged offences and as bona fide purchasers of the cars, they should not have been deprived of the cars or made to pay the evaded duty. 5. As the issues are common and evidence and appeals are interconnected, we heard all these cases together, extensively between 2nd June to 4th June 2004 and 21st June to 22nd June, 2004 when a elaborate presentation of the evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the importers and Shri Futehally that even if the value declared in the invoices are rejected, the correct value to be taken is the Export Prices to India as disclosed by the German manufacturer in their price lists sent to C.C., Bombay. It is being pointed out that the foreign supplier had developed a fully tropicalised version of Audi cars for India and that car was less than 1600 cc. The price of the car was also indicated in the Export Price Lists. Learned Senior Counsel for the appellants has emphasised that such a price list of the manufacturer cannot be rejected, at all, and even if the invoice price is rejected, the Export Price Lists should form the correct basis for valuation. It is also pointed out that adjudication orders accepted those prices after considering the entire material on record and the testimony of the officer of Volkswagen during adjudication. With regard to Tourist Prices, the explanation is that these prices are for persons who took delivery of the cars from the manufacturers' outlets in Europe and for that reason these are domestic sale prices and not export prices. It is being pointed out that Customs Valuation Rules prohibit the use of domes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the contention that Tourist Price list is for domestic sales, the ld. SDR has pointed out that such a contention is contrary to Volkswagen's own version that these prices are for sales to foreign visitors who visit their outlets, buy these cars and take them back to their countries and that such sales are under Export division and that such sales are made even to Australia. 11. The detailed examination of the evidence on record and the submissions leave us in no doubt that the invoices and Export Prices are not at all representing the correct prices of the cars in question. The invoices completely lack in particulars about the models in question, the features which are incorporated and their costs. Instead, they vaguely described the cars as particular models with air-conditioning. It is unbelievable that an item like car which is always priced and sold with regard to features would be so vaguely described by a company in the manner it has been done in the invoices. Same is true of the Export Price also. Tests and examination of these imported cars have shown that the cars in question do not have any resemblance to a standard tropicalised version. The mention of full featu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at cars are sold even to buyers from Australia under this scheme. It is also his testimony that these sales are also treated in the company as exports. We have also seen, as a matter of fact, in the case of Bhaskar N. Shetty that the payment made from Osaka came close to the price mentioned in the Tourist Price List. In these circumstances, we feel that the Tourist Prices are export prices and they could form the basis for assessment of the goods. Further, these prices cannot be an incorrect basis for valuation in view of the testimony of the representative of Volkswagen during adjudication that Government of Germany does not permit sales at a lower price for export than the domestic sale price. In view of these, we accept the revenue's appeals as far as the valuation of the cars is concerned. We hold that re-valuation of the cars should be done on the Tourist Prices List and differential duty computed accordingly and payment model. The basic tourist price for the model in question plus the cost of additional features should form the FOB value of a car. To this may be added the elements towards freight, insurance etc. to make it the price for supply at the place of import. The diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le has been correctly held by the adjudicating authorities to be dominant and pivotal in bringing about the evasion of duty. Therefore, imposition of penalty on him is amply justified. Taking into account the commonality of the evidence and other features of the case, we are of the opinion that a consolidated penalty would be appropriate. Accordingly, penalty on Shri Futehally is fixed at Rs. 60 lakhs regard to all the imports covered by this order. 15. With regard to penalty on the importers, we have already found that they were willing parties to fraudulent imports, with the sole aim of earning commission from the deal. They were consciously taking part in the violation of law. Therefore, we find no reason to interfere with penalties imposed. We also do not find it necessary to increase the penalties imposed on them. 16. An issue which has come up during the hearing is as to whether differential duty is liable to be paid in those cases by the persons in whose names the import took place or by the person from whom the cars were seized. The importers have submitted that the position is clear in law. Section 125(2) of the Customs Act states that the persons redeeming con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried in appeal and the Apex Court by its judgment dated 27-9-2002 in Civil Appeal No. 6260-6265 of 2000 [(Union of India v. Onkar S. Kanwar & Ors.) - 2002 (145) E.L.T. 266 (S.C.)] has upheld the decision of the Kerala High Court. Relying upon the said decision of the Apex Court, Mr. Bulchandani vehemently and forcefully contended that the case of the Petitioner is squarely covered by the said decision of the Apex Court and the Petitioner is entitled to succeed on the basis of the said decision. In our opinion, as stated above, the decision of the Apex Court is wholly distinguishable on facts because, firstly, in that case, the main noticee had paid fifty per cent of the entire tax arrears; whereas in the instant case, the main noticee has not paid tax arrears payable on Clove Bud oil. Thus, in the case before the Apex Court, there was total settlement of tax arrears whereas in the present case, there is only partial settlement. Secondly, in that case the Apex Court after analysing the provisions of K.V.S.S., 1998 and K.V.S.S. (Removal of Difficulties) Order, held as follows : "In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. C/190/95-A CC v. Abdull Habib Khan & Ors C/643/94-A. S.A. Futehally v. CC O.I.O. CAO/99/94-CAC, dated 10-1-94 passed by CC, (Mumbai). 1,33,780 1595 2,34,645 1800 RU 6,94,199 2. C/295/94-A CC v. Anil Seth & Ors C/751/93-A Anil Seth v. CC C/777/93-A. S.A. Futehally v. CC O.I.O. CAO/64/93 CAC, dated 20-3-93 passed by CC, (Mumbai). 1,57,858 1595 2,95,940 1840 NE Test by IIT, Mumbai 8,82,541 3. C/247/94-A CC v. Arjunlal Wadhwa & Ors C/778/93-A. S.A. Futehally v. CC O.I.O. CAO No. 69/93 CAC, dated 16-3-93 passed by CC, (Mumbai). 1,45,249 1595 2,81,928 1800CC NE Sticker in car Says Model 894042 8,41,895 4. C/248/94-A CC v. Atul Mehta & Ors C/1800/93 Hindustan Dorr Oiver v. CC C/1817/93 Atul Mehta v. CC, C/672/93-A S.A. Futehally v. CC O.I.O. CAO No. 17/93-CAC, dated 14-3-93 passed by CC, (Mumbai) 1,35,362 1600 2,35,710 1800CC RU 7,03,879 5. C/284/94-A CC v. Bhaskar Narayan Shetty & Ors C/ Rajiv Dhand v. CC,C/673/93-A S.A. Futehally v. CC O.I.O. CAO No. 18/93-CAC dated 30-3-93 passed by CC, (Mumbai) 1,30,940 1595 2,27,537 1800 RU Test by IIT, Mumbai 6,79,473 buyer died - abated 6. C/424/93-A CC v. Benjamin Simon Hasardo & Ors C/574/93-A S.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,700 1900 NE Test by Anna Universtiy, Madras 8,20,661 17. C/162/94-A CC v. P.K. Vasodevon & Ors, C/443/93-A S.A. Futehally v. CC O.I.O. CAO No. 10/93-CAC, dated 29-1-93 passed by CC, (Mumbai) 1,41,829 1595 2,42,100 1800 NE Sticker found in car declared model as 894043 7,17,172 18. C/252/94-A CC v. Rahul Kapoor & Ors, C/671/93-A S.A. Futehally v. CC O.I.O. CAO No. 97/93 CAC dated 14-3-93 passed by CC, (Mumbai) 1,66,660 1595 3,20,359 1800 NE 9,56,655 19. C/250/94-A CC v. Sanjeev Seth & Ors, C/763/93-A S.A. Futehally v. CC O.I.O. CAO No. 64/93 CAC dated 20-3-93 passed by CC, (Mumbai) 1,59,881 Claimed Ntfn. 88/77 here below 1600 CC 2,96,681 1780 NE Test by IIT, Mumbai 8,85,947 20. C/331/94-A CC v. Subhash C.V & Ors, C/576/93-A S.A. Futehally v. CC O.I.O. CAO No. 16/93 CAC dated 21-3-93 passed by CC, (Mumbai) 1,28,402 1595 2,67,470 1800 NE 7,98,719 21. C/338/94-A CC v. T.K. Chatterjee & Ors, C/ 674/93-A S.A. Futehally v. CC O.I.O. CAO No. 15/ 93-CAC, dated 11-5-93 passed by CC, (Mumbai) 1,51,773 1595 2,98,303 1800 NE Test by IIT, Mumbai 8,90,791 22. C/283/94-A CC v. Vasanta Vaidyanathan & Ors, C/571/93-A S.A. Futehally v. CC O.I.O. CAO N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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