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TMI Blog2024 (10) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 - Purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. - NITIN JAMDAR ABHAY AHUJA, JJ. For the Petitioner : Mr. Prakash Shah a/w Mr. Mihir Mehta, Mr. Durgaprasad Poojari i/b PDS Legal, Advocates. For the Respondent No. 4 : Mr. Devang Vyas, ASG a/w Mr. Pradeep Jetly, Senior Advocate a/w Mr. Jitendra B. Mishra, Mr. Sheelang Shah, Mr. Ashutosh Mishra, Mr. Rupesh Dubey, Advocates for Respondents No. 1 to 3/ Union of India 8 a/w. Ms. Jaymala J. Ostwal a/w Mr. Siddharth Chandrashekhar, Advocates. For the Respondent No. 5: Mr. Rafique Dada, Senior Advocate a/w Mr. Prasad Paranjape, Ms. Dhruvi Shah i/b. Lumiere Law Partners. For the Respondent No. 6 : Mr. Darius Shroff, Senior Advocate a/w Mr. Anay Banhatti, Ms. Asmita Gupta, Advocates. For the Respondent No. 7 : Mr. Prasad Paranjape a/w Ms. Dhruvi Shah i/b Lumiere L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Hon ble Supreme Court, the Apex Court on 15th July, 2016, had passed an order permitting the Petitioner to file all the relevant documents before the authorities viz. Additional Director, Directorate of Revenue Intelligence (the DRI ), Mumbai, within eight weeks, with a further direction that in case the authority is convinced that information given by the Petitioner is credible, he shall take appropriate action as advised in law. 3. In pursuance of the aforesaid order passed by the Hon ble Supreme Court, the Petitioner submitted documents before the said authority on 9th September, 2016. 4. It has been the case of the Petitioner that despite the order of the Hon ble Supreme Court dated 15th July, 2016, and lapse of considerable time, the authorities did not take action and therefore, the Petitioner had to approach this Court by way of this Writ Petition seeking a direction to the authorities to forthwith investigate the matter of the purported massive undervaluation and mis-declaration of material particulars allegedly resulting in evasion of customs duty in import of luxury cars. 5. Since as per order of the Hon ble Supreme Court dated 29th March, 2023 the question of lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier Manufacturer s Price List for every Standard Car and its accessories and fittings, details of sale and price settled by Seller with other related Group Companies / unrelated buyers in other Countries such as UK or UAE, and price at which supply made directly to any unrelated person in India. 7. To the said Interim Application, the Respondents have also filed replies dated April-2023 as directed by this Court. Having considered the averments in the Interim Application and the prayers made therein on 25th April, 2023, this Court had observed that in deciding the Application, the merits of the Petition would have to be substantially heard and therefore, the same be listed along with the Petition. Accordingly, this Application has been considered in the context of the Writ Petition. 8. We have heard the learned Counsel and the learned Senior Counsel for the Petitioner as well as the Respondents, and also the learned Additional Solicitor General of India at length over a period of one year and given our thoughtful consideration to the submissions. 9. Mr. Prakash Shah, learned Counsel for the Petitioner would submit that despite there being a published price list containing sale pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Supreme Court contained in order dated 15th July, 2016, the Petitioner approached the Bombay High Court by filing the present Writ Petition seeking the above directions to the authorities to forthwith investigate the matter of continued massive under-valuation and mis-declaration of material particulars resulting in evasion of customs duty in the import of new luxury cars. 13. The Respondent No. 1 is the Union of India. Respondent No. 2 is the Central Board of Customs and Indirect Taxes viz. the CBIC and the Apex Body for administering the levy and collection of Indirect Taxes of the Union of India. Respondent No. 3 is the DRI an Intelligence and Enforcement Agency of the Union of India inter alia for collecting information and for investigation concerning matters of evasion of taxes. Respondent No. 4 is the Director General of Valuation and functions for Departments like Respondent No. 2, concerning matters of customs valuation including monitoring and examining the quality of orders passed by Special Valuation Branches (SVBs) which investigate cases of related party imports and co-ordinate with income tax authorities on Transfer Pricing and Customs Valuation by sharing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion that the prayers in the Writ Petition as well as in the interim application, give rise to 17 main issues for adjudication on merits for considering the prima facie case that there is continued massive under-valuation and mis-declaration of material particulars resulting in evasion of customs duty in import of luxury cars in India and that the Respondent No. 3 has chosen not to investigate or after investigation decided not to take any action in accordance with law concerning import of luxury cars by Respondents No. 5 to 7 from their related parties, which issues are set out hereunder : (I) Whether the information, data and material produced by the Petitioner, which were not produced by the private respondents and suppressed from assessing officer as well as from SVB, are relevant for ascertaining the circumstance surrounding sale, as per the SVB Circulars dated 23.02.2001 and 09.02.2016 and circular dated 07.05.1990, issued by the Board, the Customs Valuation Rules issued by the Central Government, and Article 17 of the Agreement on implementation Article VII of GATT, inter alia for doubting and rejecting declared transaction value? This, information, data and material, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f luxury cars from related party by the private respondents at ridiculously low declared value, in import of other luxury cars such as Bentley (manufacturer related to Respondent No. 6) and Rolls Royce (manufacturer related to Respondent No. 7), etc which are imported directly by unrelated dealer / consumer, the declared price are comparable to UK price of dealer available from same websites or Industry Publications. (II) Whether the said representative information data and material produced by the Petitioner, suppressed by the private respondents, and ignored by the officers of revenue, prima facie shows ex facie ridiculously low value declared for assessment of Customs Duty by private respondents in their imports from related party to evade Customs Duty ? (III) Whether the imported cars in CKD or FBU were generally sold and offered for sale, even to unrelated parties, at the same ridiculously low price declared by Respondent nos.5 to 7? (IV) Whether the abnormal discount in price offered for CKD and FBU cars by the Foreign Supplier is exclusive for their subsidiary in India, as compared to its subsidiaries in other countries, to evade high Customs Duties in India applicable at si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U at 49K Euro, CKD 66K Euro and unrelated party import at 111K in 2016 (page 749), and despite email dated 23.06.2020 by an officer of DRI to Respondent No. 5 still asking why price of CBU is lesser than CKD (Page 759), and response of Respondent No. 5 in para 10 of Reply Affidavit that .the difference in price is supported with well accepted legal principles of Customs valuation (Page 720), accepted without any justification by officer of DRI, would merit acceptance of this Hon ble Court without looking into investigation report based on such alleged legal principles of Customs valuation which do not exist? (X) Whether issuance of orders of SVB, assessment and clearance, and the alleged investigation by officers of DRI were mechanial with culpable negligence, merely by accepting undertaking / indemnity / statements, without considering / following the requirements stipulated in - (i) SVB circulars no. 11/2021-Cus dated 23.02.2001 and paragraph 29 of Annexure A and paragraphs 8 to 12 of Annexure B thereof, SVB Circular No. 5/2016-Cus dated 09.02.2016 and in particular questions 4, 5, 2, 5.3, 5.4 and 5.5 (Annexure A to the Circular) and the Pricing Pattern (in Annexure B to the Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is warranted for which the petitioner can also extend his cooperation? (XV) Whether, ignoring such massive under valuation in imports of Luxury cars and not even investigating and preventing the same in accordance with law, would set at naught the avowed policy of Central Government in larger public interest for compelling the foreign manufacturers of Cars to manufacture them in India, by having higher rate of Customs Duties for FBU imports, lower rate for CKD imports, and further lower rate for Parts imports ? (XVI) Whether prima facie case is made out for passing any interim direction to the Respondent No. 2- Central Board of Indirect Taxes to forthwith take appropriate steps as prayed to safeguard revenue in these related party imports in terms of Circulars issued by it ? (XVII) Whether the writ petition and the prayers in the IA are to be allowed to redress the public injury and to enforce the public duty of the official Respondents ? 17. Mr. Shah would submit that above 17 issues merit serious consideration and adjudication by this Court and therefore the prayers in the Petition as well as in the Interim Application be granted. SUBMISSIONS OF RESPONDENT NO. 5 18. On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Customs, Mumbai, reported in 2000 (122) E.L.T. 321 (SC). Mr. Dada would submit that a price list is really no more than a general quotation. It does not preclude discounts on the listed price. That in fact, a discount is calculated with reference to the price list. A discount is a commercially acceptable measure, which may be resorted to by a vendor for a variety of reasons including stock clearance and that it is erroneous to reject the transaction value and can not be a reason by itself. 25. As regards the specific allegations made by the Petitioner Mr. Dada has referred to the following table : Sr.No. Petitioner s allegation Respondent No. 5 s response 1. Two cars of same model have vast difference in prices. Import price of armoured car is three times more than the Base Model of the car. Also huge difference in import Two cars of same model can also price and sale price. (Page 20, 21 - Para 17, Para 18 and 19} Independent importers are importing the cars from dealers in Germany at showroom prevailing in Germany. Respondent No. 5 is importing from manufacturer. Two cars of same model can also have price differences because of the additional features embedded in the cars. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back. The transaction has again been examined wherein the Respondent No. 5 furnished submissions explaining its pricing method along with several documents viz. General Distributor Agreement between the parent company and respondent No. 5, Bill of Entry, Annual Reports for the last three financial years, Transfer Pricing report for the Assessment year 2017-18 and several other documents. The Commissioner of Customs (Import) had taken the same into consideration while issuing the Investigation Report dated 09th June, 2020 wherein they have accepted the transaction value. The aforesaid documents are also examined by Respondent No. 3. {Page 727-728-Para 26} 6. SVB orders have been obtained by Respondent No. 5 through misstatement and suppression of facts. There is active connivance by the high-ranking officials {Page 67, 68-Ground R and S} All checks and balances are provided in the Act itself. There is robust assessment process. Provisions are there in case there is duty short-leived or collected. There is no misdeclaration and suppression. An exhaustive list of documents was submitted before Respondent No. 5 in the year 2005 before passing the SVB order, further the SVB order has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of investigation in the case involving 20 cars as above. It is also submitted that the Petitioner on receipt of Show Cause cum Demand Notice as mentioned Sr No. (ii) above approached the Additional Bench of the Settlement Commission, Mumbai and admitted that he had committed breach of the EPCG License and customs notification No. 49 of 2000 dated 27th April, 2000 and, was willing to pay customs duty liability as demanded. Thereafter, the final order dated 10th April, 2003 was passed by the Settlement Commission, wherein the Settlement Commission granted immunity to the Petitioner from fine, penalty, prosecution. It is submitted that the Petitioner, paid the full amount of differential customs duty along with interest. 28. Mr. Jetly, learned Senior Counsel has submitted that the Petitioner was involved in smuggling of high value cars. 29. Learned Senior Counsel has submitted that the Petitioner is also an offender under the Foreign Trade (Development and Regulation) Act 1992, for which, the above cases were booked against him and a Detention Order although was also issued against him under the COFEPOSA Act, 1974, but was later quashed by this Court. 30. Mr. Jetly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight weeks hence. Thereafter, the said authority shall intimate the petitioner so that the petitioner can appear and explain and answer the queries of the authorities. As further agreed to by learned Counsel for the parties, the petitioner shall also cooperate as Mr. Nanda would emphatically put forth that the petitioner has filed this writ petition for the national cause. If the Additional Director, DRI, Mumbai Zone is convinced that there is credible information given by the petitioner, he shall take appropriate action, as advised in law. The writ petition is accordingly disposed of. There shall be no order as to costs. 34. Mr. Jetly, learned Senior Counsel has further submitted that by letter dated 9th September, 2016, the Petitioner has submitted certain information along with annexures to the DRI and that the same was examined by the DRI. Mr. Jetly would submit that the Petitioner had made a request for expeditious preliminary enquiry for considering registration of Information Report/DRI-1 and commencing investigation into alleged cognizable offences punishable under the Customs Act for the alleged evasion of customs duties in the import of luxury cars whether as Fully Buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that despite a detailed investigation, no case of evasion on duty of importation of luxury cars on under-stated values by Respondent No. 5 could be made out. 39. Mr. Jetly, would submit that thereafter, by three separate letters dated 27th May, 2019, 10th July, 2019 and 19th August, 2019, the Petitioner was requested to furnish additional information / documents (if any) in his possession to substantiate the charges of undervaluation. However, it is submitted that the Petitioner failed to respond to any of the aforesaid letters. 40. It is submitted that after examining all documents, records and the relevant legal provisions and pronouncements, the Investigation against Defendant No. 5 was closed on 16th September, 2020 after a period of almost four years of investigation. It is submitted that the investigation was supervised at various times by two Deputy Directors, Four Additional/Joint Directors and Two Principal Additional Directors General. 41. Mr. Jetly, would submit that meanwhile, Civil Writ Petition (PIL) No. 9425/2020 was filed by one Arvind Alaru vs Union of India Ors. before the High Court of Rajasthan, wherein the Petitioner above named was made a favoring Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 by the Income Tax (Transfer Pricing) authorities Pune in respect of Respondent No. 5 for AY 2015-16 and AY 2014-15 have been scrutinized. In both the said Orders, the Income Tax authorities have not disturbed the Arm's Length Price of transactions as reported by Respondent No. 5. Further, scrutiny of the Financial statements of Respondent No. 5 for the past years does not indicate any remittance / transfer of funds to Daimler AG (related to import of cars), over and above the Import invoice value. Besides, all the Agreements entered between Daimler AG and Respondent No. 5, have been scrutinized thoroughly. However, no provision relating to any flow back of fund from Respondent No. 5, Pune to Daimler AG, Germany (other than towards the Invoice Value of the cars) or any other consideration for the foreign supplier relatable to import of cars was noticed. Scrutiny of the Agreements (between Daimler AG and Respondent No. 5, Pune) and the Financial Statements of MBIPL, Pune indicate that there are several Agreements viz. Agreement for Assistance, Long Term Consultancy Agreement etc. by which various services like IT, Financing, Planning, Legal, Insurance etc. ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction value in terms of Section 14 of the said Act, read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. It is submitted that further, from the enquiry conducted by the DRI, it does not appear that Respondent No. 5, Pune have made any mis-representations in the proceedings before the SVB, New Custom House, Mumbai. 50. Mr. Jetly would submit that the Petitioner has specifically admitted and recognized that in a PIL being D B Civil WP (PIL) 9425 of 2020 filed by one Mr. Arvind Alaru before the Rajasthan High Court is pending after issuance of notice, wherein the Petitioner herein was made Respondent No. 5 as the first informant of the issue raised in the said PIL. Mr.Jetly would submit that it appears that the PIL was filed at the behest of the Petitioner which is why he was joined as a friendly Respondent. Unless the Petitioner had not disclosed the fact of filing DRI-I to Shri Arvind Alaru, he would have no way of coming to know about that fact. 51. Mr. Jetly, learned Senior Counsel has submitted that the Petitioner has solely placed reliance upon the information given by him to DRI in furtherance of contents of the Writ Petition (Criminal) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the Respondents about locus and bona fides of the Petitioner. What is placed before us is not a public interest litigation. We had put to the learned Counsel for the Petitioner that the Petitioner shall at least disclose full particulars about himself so as to satisfy conscience of the Court that the Petitioner is indeed prosecuting this petition in larger public interest litigation and is not a mere busy body. Inspite of repeated stating so, the learned Counsel for the Petitioner has refused and therefore, it is not possible for us to pass any order unless the Petitioner discloses all the particulars as above. 3. Remove the petition from board. To come up in regular course. 4. At this stage of dictation; The learned Counsel for the Petitioner tenders apology and states that additional affidavit giving all particulars about the Petitioner and whether the Petitioner had taken social causes, whether any action is taken against him etc., from which the Court can discern that the Petitioner is a bona fide litigant will be filed within one week from today. 5. Earlier order recalled. Stand over to 19th December 2022. 55. This Court had also recorded that what was placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time the matter could not be taken up. 58. It appears that in the meanwhile, the Petitioner approached the Hon ble Supreme Court of India against the order dated 29th November, 2022 as well as order dated 27th January, 2023 and after hearing the Counsel for the Petitioners, the Hon ble Supreme Court, by order dated 29th March, 2023, in view of the record that the Supreme Court had entertained the writ petition filed by the Petitioner under Article 32 of the Constitution of India and passed order dated 15th July, 2016 thereon being satisfied that the Petitioner had locus to approach the High Court for the reliefs claimed in the Writ Petition filed by him and being of the considered opinion that the interest of justice would stand served if, a bench would be nominated to hear the writ petition expeditiously within a period of three months, since the issue involved had lot of cascading effect on the revenue, directed the High Court to proceed to consider and decide the writ petition in accordance with law on its own merits without entering into the question of locus of the Petitioner to maintain the writ petition. 59. Accordingly, on 3rd April, 2023 the Court passed the following ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the amendments, the learned Counsel for the Respondents state that amendment can be granted but adequate time be given to the Respondents to deal with the amended prayers and pleadings which have been sought by way of amendment. 4. Accordingly, we allow Interim Application No. 1553/2022 and Interim Application (L) No.9540/2023. As regards the adding of Directorate of Revenue Intelligence, Bangalore as party Respondent is concerned, the amendment to be carried out forthwith. The learned Counsel appearing for Respondent No. 3-Directorate of Revenue Intelligence waives notice on behalf of the added Respondent. As regards other amendments are concerned, the same be carried out within one week. Since the amendments are moved on application, re-verification is dispensed with. 5. In view of nature of prayers sought by way of amendment, learned counsel for the Respondents seek time to file additional reply, to which the Petitioner has no objection for granting time to the Respondents to file additional reply. Additional reply to the added portion of the petition to be filed before the next date. 6. In view of the ensuing Summer Vacation from 5th May 2023 to 4th June 2023, list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be passed. 65. On 23rd June, 2023, the following order was passed where it was recorded that the learned Counsel for the Petitioner had completed his arguments : Matter is heard by this specially constituted Bench. The learned Counsel for the Petitioner has completed his arguments. He states that compilation of judgments with emphasis on passages relied upon would be filed by the next week. Stand over to 7th July 2023 for arguments of the Respondents. 66. On 7th July, 2023, the following order was passed as the arguments of learned Senior Counsel for the Respondents No. 5 and 7 were yet to be concluded. The arguments of the learned Senior Advocte for the Respondent Nos.5 and 7 to be continued on the next date. 2. Stand over to 21st July 2023 at 2.30 p.m. 67. On 28th July, 2023, the Special Bench had recorded that arguments had been concluded on behalf of the Petitioner and thereafter the arguments on behalf of the Respondent No. 5 as above were also over. The contention of the Respondent No. 5 was that the investigation had already been conducted and concluded by the DRI and that there is no need for further investigation. 68. During the said hearing, this Bench had put a query to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of these Respondents and the material placed now on record by the Petitioner would be examined and further that if the Petitioner intended to file any additional material, he could give the same within a particular time, and after examining the said material thoroughly, the Hon ble Court would be informed of the course of action the D.R.I would propose to take. 74. Learned ASG would submit that the Petitioner submitted certain information in respect of Respondent No. 6 and Respondent No. 7 through an email dated 16th August, 2023. 75. That thereafter, after thoroughly examining all the information submitted by the Petitioner in respect of Respondents No. 6 and 7, preliminary objections have been raised as to the maintainability of the issues raised in respect of Respondents No. 6 and 7. 76. Learned ASG would submit that the Petitioner has submitted that Respondent No. 6 is importing Luxury Cars viz. 'Porsche', 'Audi', Lamborghini etc. from related parties viz. M/s. Automobili Lamborghini, Italy, M/s. Audi, Germany and PORSCHE Middle East Africa FZE, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment of customs duty, has undergone a lot of changes since its inception. Prior to 2007, the concept of deemed value was very significant as the then Section 14 (1) of the Customs Act, 1962 stated that the value of the imported goods shall be the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade. That therefore, prior to 2007, the assessing officer ought not to see the actual value of the goods, but the value at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time and place of import. Similarly, the words in the course of international trade it is submitted are also of great importance. The assessing officer ought to see the value of the goods not for each specific transaction, but the ordinary value which the goods would have in the course of international trade at the time and place of their import. That India continued to have the deeming provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988. 81. It is submitted that in 2007, Section 14 of the Customs Act was amended vide the Finance Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted goods is the transaction value of such goods, that is, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, where the buyer and seller of the goods are not related and the price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf. 83. Learned ASG has submitted that Rule 12 of CVR, 2007 empowers the assessing officer to reject the transaction value declared by the importer. However, this power is to be exercised sparingly and only in cases where there lie genuine doubts related to the authenticity of the declared value. That this principle was followed in a catena of judgments of the Apex Court which held that the transaction value cannot be rejected except for the grounds laid down under the Valuation Rules. Learned ASG has relied upon the decision of the Hon ble Supreme Court in the case of Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] where the Hon ble Supreme Court, in Para 18 of its decision, has held that, It is only in case where the doubt of the proper officer persists after conducting e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribe that no value shall be determined under the provisions of Rule 9 (2) based on the price of goods in the domestic market of the country of exportation. c) Also, the GATT valuation agreement states that valuation based on the price of goods in the domestic market of the country of exportation would go against the principle that valuation procedures should not be used to combat dumping. d) The cars available in other countries may not be similar in specifications/technology and, hence, it is otherwise also not reasonable to compare the prices of cars merely based on similarity of description. 87. It is also submitted that the Petitioner has erred in making a comparison of the price of one-off cars imported by unrelated parties in India with the cars imported by Respondents 6 and 7 in India. That hundreds of cars are imported into India by the related parties i.e., Respondents 6 and 7 as compared to one or two cars by unrelated parties. It is submitted that the value of goods can only be compared if they are contemporaneous and of similar commercial quantity. Transaction value declared by the importers cannot be rejected merely based on import by an unrelated party without con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch towards Technical know-how/Technological Transfer Fees , has not been included in the value of the imported cars. It is also submitted that, presently, the issue is pending before the Hon'ble Supreme Court of India. 90. That all the Bills of Entry filed by Respondent No. 6 for the import of cars, parts, and accessories, have been assessed provisionally since then. 91. It is further submitted that Respondent No. 7 also has been issued with a Show Cause Notice vide F.No. DRI/DZU/JRU/19/ENQ-1(INT-1)/2014/ 679-690 dated 29th May, 2015 by the D.R.I., Delhi Zonal Unit. In this case, too, the Show Cause Notice has been issued based on very specific intelligence with the department that the Brand Promotion Expense incurred by Respondent No. 7 on behalf of their related foreign supplier has not been included in the value of the cars imported by them unlike in the present case where the Petitioner is levelling sweeping allegations without any concrete evidence sufficient to cause investigation into the matter. Further, it informed that the Bills of Entry filed by Respondent No. 7 for the import of cars are being assessed provisionally at present. 92. Learned ASG submit that the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASG relies upon the decision of the Hon ble Supreme Court in the case of Mirah Exports Pvt. Ltd. v. Collector of Customs 1998 (98) E.L.T. the Supreme Court has held that: The legal position is well settled that the burden of proving a charge of undervaluation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge. Ordinarily, the Court should proceed on the basis that the apparent tenor of the agreement reflect the real state of affairs and what is to be examined is whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price. [See: Union of India Vs. Mahindra Mahindra (supra), at p. 487 In the present case, the only evidence that was adduced by Revenue in support of the charge of under-valuation is the price list No. 8102 dated February 15, 1981 which was found during the course of search in the premises of Skefko, etc. that was conducted by the officers of the enforcement Directorate on or about June 22, 1983. 95. It is submitted that therefore, the price list of the foreign supplier/ manufacturer is not a proof of transaction value invariably, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory provisions. Learned ASG emphasizes that the Petitioner has not provided an iota of credible and specific information to suggest that the S.V.B orders were fraudulently obtained by Respondents No. 6 and 7. 98. It has been submitted that the Petitioner has also submitted that the valuation of the Luxury Cars imported by Respondent No. 6 and Respondent No. 7 is done based on a Transfer Pricing Order can bind the Customs Authorities to ascertain Pricing Order obtained for the purpose of Income Tax and no such Transfer Pricing Order can bind the Customs Authorities to ascertain the correct value for the purpose of levy, assessment, and collection of Customs Duty. 99. Learned ASG would submit that since the prime reason for seeking prayers for carrying out of an investigation in the matter was undervaluation, the study of Transfer Pricing by Income Tax confirming the Arm's Length Price can be very much relied upon. It is emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents No. 6 and 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Countries, comparison of the prices of luxury cars when supplied by the concerned related party to the unrelated parties in India with the prices of cars supplied to the Respondents No. 6 and 7 and Transfer Pricing having been examined, it has been found that the information is not actionable in terms of the prevailing legal position. 103. Learned ASG submits that the Petitioner has invoked the extraordinary jurisdiction of this Court without a clear understanding of the Customs Valuation Rules and has also leveled various sweeping allegations against the Respondents without furnishing any credible documentary evidence to initiate an investigation. 104. Learned ASG submits that therefore, it is evident that the writ petition filed by the Petitioner is totally misconceived, lacking in proper understanding of the Customs Valuation Rules, misleading, and devoid of any substance which appears to have been filed with an oblique motive and that the same is liable to be dismissed with exemplary costs. SUBMISSIONS OF RESPONDENTS NO. 6 105. Learned Senior Counsel for Respondent No. 6 submits that the Respondent No. 6 is an entity which is resultant of amalgamation of three entities v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in terms of the rules made in this behalf and the rules framed thereunder are based on the concept of 'transaction value as enshrined in the WTO Valuation Agreement. Because of this inherent contradiction in the two concepts, namely, 'deemed value' and transaction value', practical difficulties were being faced in implementation of the valuation under the provisions of the Act and therefore it was felt that the concept of deemed value had to be substituted with the concept of transaction value . Accordingly section 14 was substituted with a view to provide that the value of the imported goods and export goods shall be the transaction value of such as determined in accordance with the rules made in this behalf. That therefore with the amendment to section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ( Customs Valuation Rules ), the concept of deemed value no longer exists and has been replaced with the concept of transaction value . Thus the value of imported goods has to be the transaction value that is the price actually paid or payable for the goods when so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for export to UAE. The Petition has purported to compare the price of car purchased by Porsche Middle East Africa FZE, Dubai for import into Dubai. (iv) Mr. Shroff would submit that Rule 12 provides when proper officer under Customs has reason to doubt the declared import value and that as settled in Century Metal Recycling Private Limited v Union of India 2009 (367) ELT 3 (SC)], that rejection of the transaction value has to be done sparingly and only with evidence and a doubt to justify detailed enquiry under the proviso to section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of certain reasons and not mere ipse dixit. It is not permissible to subject imports on mere suspicion because one is distrustful and unsure without reasonable and certain reasons as that would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods. 112. Mr. Shroff would submit that comparison with the purchase price of car purchased by Porsche Middle East and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder; c. Pg. 94 [Para 34 (1) (vii)] of Petitioner's Rejoinder in I.A.] (vii). Further, he has wrongly stated during oral arguments that the said facts are not in dispute . This is an untenable submission considering the fact that that the issue is very much disputed by Respondent No. 6 in the below mentioned affidavits filed by Respondent No. 6: a. Pg. 529 - 532 (paras 36, 37 and 39), and Pg. 541 [para 57(iii)] of R.6's Reply; b. Pg. 1267 - 1269 (paras 2 to 5) R.6's Additional Affidavit; c. Pg. 1224 (para 16) of R.6's Affidavit; d. Pg. 17 (Para 27) of R.6's Affidavit in reply to Interim Application of the Petitioner. (viii). The Petitioner had neither provided the said data to DRI, including vide his letter dated 9.01.2015 at Exh A, Pg. 89 of Petition, nor provided before the Hon'ble Supreme Court; and the said data is being provided for the first time in the present petition before this Hon'ble Court. As the present petition was filed premised on purported inaction on part of DRI, the said data besides being wholly irrelevant cannot be now relied upon as stated in Respondent No. 6's Submissions at Pg. 17 (para 27) of Respondent No. 6's Affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to Indian customers as compared to customization options offered in Dubai. 113. Mr. Shroff further submits that with respect to the grievance made by the Petitioner to the purported non production of suppliers/manufacturers price list, it is submitted that the same is without any basis. Learned Senior counsel submits that: (i) In the letter dated 09th January, 2015 issued by Petitioner to Respondent No. 3 [at Exh A, Pg. 89 of Petition], the petition filed before the Hon'ble Supreme Court, and in the present Petition - no reference has been made by the Petitioner to any foreign supplier's / manufacturer's price list in the context of imports by Respondent No. 6. Accordingly, no allegations can be made against Respondent No. 6 by reference to any purported price lists [see Pg. 535 (Paras 44 and 45) and Pg- 540 [Para 57(v)] of Respondent No. 6's Reply]. (ii) That for the first time, the Petitioner has in his Rejoinder in I.A. (L) No. 9504 of 2023 filed before this Court on 29th April 2023, at Pg. 81 (para 11) made reference to a document in German language (without English translation) stated to be Price List of June 2016 for variants of A8 model of Audi AG, German ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questionnaire set out at Pg. 310 (para 9). b) Circular 5/2016 dated 09th February, 2016 - Pgs. 297 to 307 of Petitioner's Rejoinder: As per Q 5.5, 5.6 and Q5.7 of the Questionnaire [Pg. 301] it is apparent that there could be several different basis for arriving at the invoice price, and where import price is not as per price list, then question of furnishing any price list does not arise. c) Petitioner has incorrectly submitted that as per Circular 11/2001 it was mandatory to provide price list, the said Circular being applicable in respect of the SVB Order dated 15th January, 2009 of Respondent No. 6. (vi) Mr. Shroff submits that it is settled law as per the Compilation of Judgments submitted by Respondent No. 6, as regards reference to suppliers/manufacturer's price list for the purpose of Customs valuation, following position emerges - a) For making reference to price-list, there has to exist a supplier's/ manufacturer's price list providing for import prices and/ or the recommended selling prices of the importer; b) The price lists provide general quotations which are subject to negotiations, and which do not preclude discounts, and cannot be the sole reason f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try. (iii) As stated above, Rule 9 of the Customs Valuation Rules [at Pg-438 of Petition] expressly prohibits determination of value on the basis of the price of the goods on the domestic market of the country of exportation . (iv) Where the price of goods in the domestic market of the country of exportation itself cannot be considered, then question of considering price of goods in the domestic market of a third country (other than the manufacturer's country and importer's country) does not arise. (v) That additionally, the retail price in the domestic market of another country is not comparable for several reasons, inter alia - a. Firstly, import prices of cars for different countries can be different (for reasons discussed earlier); b. Secondly, the purchase price offered to actual consumers are significantly more than the import price paid by the importer. Imported cars reaches the ultimate customer through supply chain comprising of importer, dealer, etc. Each entity in the supply chain carries out certain functions, deploys assets and bears certain risks and there are associated costs incurred. Further, there are local taxes on sale of goods. 115. As regards, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data provided by the Petitioner in this regard related to Respondent No. 5 and admittedly do not concern imports made by Respondent No. 6 as they pertain only to import of Mercedes cars. 120. The Petitioner vide its letter dated 09th January, 2015 issued to Respondent No. 3 [at Exh A, Pg. 89 of Petition] given information in relation to imports by Tata Motors Pvt. Ltd. [at Pgs. 101-102] which information is similar in nature to the information provided in respect of imports by Respondent No. 6. However, the Petitioner has selectively targeted Respondent No. 6 and certain other importers, by making baseless and reckless allegations. 121. Mr. Shroff would submit that relevance of transfer pricing reports for the purpose of Customs Valuation (the Petitioner is alleged that Transfer Pricing is irrelevant and that accepting the transfer price is not correct). It is submitted that this is a totally erroneous submission for the following reasons: (i) As per Rule 3(3)(a) of Customs Valuation Rules, there is requirement to examine circumstances surrounding the sale. [Pg. 436 of Petition] (ii) Circular 5/2016 [at Pg. 302 of Petitioners Rejoinder Affidavit] requires importer to submit Transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation before the SVB authorities, (iii) Any order passed in such adjudication proceedings would then be subject to appeal proceedings by aggrieved person or relevant Customs authorities under section 128 or section 129A of the Customs Act. 126. It is submitted that the Petitioner is seeking to circumvent the proceedings and procedures under the Customs Act, which should not be permitted by the this Court in its writ jurisdiction. 127. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No. 6 is erroneous. 128. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities. 129. It is submitted by Mr. Shroff that in appeal proceedings from the SVB Order, Respondent No. 6 has succeeded before the Tribunal, and the Customs authorities have filed an appeal from the Tribunal's Order before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Petition] stated that the Petitioner had not provided any concrete or prima facie evidence in support of his allegations, and that there was no credible evidence [Pg. 1236 (paras 4 and 5) of Reply of Respondent No. 3]. ii. Vide letters dated 9.9.2016 [Exh B at Pg. 105 of Petition] and 25.11.2016 [Exh C at Pg. 114 of Petition] filed subsequent to the Hon'ble Supreme Court's Order dated 15.07.2016, no information and material furnished by Petitioner pertaining to Respondent No. 6 but only as regards Respondent No. 5. iii. As admitted by the Petitioner [at Pg. 17 (para 13) of the Petition] - If information regarding Respondent No. 5 (Mercedes) would have been found credible and investigation would show that information recorded would result in detention and recovery of duty; then recording separate DRI-1 statement for investigation into other importers was to be considered. iv. Detailed investigation conducted against Respondent No. 5 [Pgs. 691 to 696 (para 8) of Reply of Respondent No. 5] v. Thorough investigation conducted and concluded by Respondent No. 3 [at Pgs. 1240 and 1241 (paras 10 and 12) of Reply of Respondent No. 3]. d) The Petitioner's statement that Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was any suppression or fraud by the Respondent No. 6 before the SVB authorities which should not be permitted. 140. Mr. Shroff, learned senior counsel for the Respondent No. 6 urges this Court that the conduct of the Petitioner should dis-entitle him from any reliefs from this Court. 141. Petitioner s role, if at all, can be that of an informant, and should have been confined to furnishing of the information to Respondent No. 3. (i) This is also as per Hon ble Supreme Court s Order dated 15th July, 2016 [Exh F@ Pg. 413]. 142. The Petitioner has been unduly seeking to compel the conduct and conclusion of investigation by statutory authorities (Respondent No. 3) as per Petitioner s agenda (i) by making reckless and baseless allegations based on irrelevant material and truthful statements, (ii) by bringing frivolous proceedings before different Courts, and (iii) for improper motives. 143. These proceedings have been initiated for personal gains by way of monetary reward. This is clear from the following : (i) Exh A at page 89 (ii) Pgs. 136, 170, 189 and 193 of the Petition proceedings before Hon ble Supreme Court. (iii) Circular 20/ 2015 Guidelines for grant of reward at Pgs.348 to 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned senior counsel submits that subsequent to the Petitioner furnishing of information and Petitioner's visits to Respondent No. 3, all in 2015 and 2016, there has been inordinate delay of more than 5 (five) years with the present Petition having been filed in January 2022, and no explanation whatsoever provided by the Petitioner in the Petition for the interregnum period. That the Petitioner had furnished information to Respondent No. 3 stated to be relevant as to Respondent No. 6's imports only in January 2015 (i.e., letter dated 09th January, 2015 [Exh. A at Pg.89] and the present Petition filed in January 2022 has been filed after an unexplained delay of 7 (seven) years. 149. In reply to the Petitioner's oral arguments Mr. Shroff has also made additional submissions on behalf of the Respondent No. 6 as under : a) The Respondent no. 6 (Skoda Auto Volkswagen India Pvt. Ltd.) is filing these Additional Submissions with the permission of this Court, specifically in reply to the oral arguments made by the Petitioner on 5th July 2024. The Additional Submissions are in addition to the synopsis of submissions ( Written Submissions ) submitted on behalf of Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is credible information given by the Petitioner, he shall take appropriate action, as advised in law. ii. Further, the Petitioner had submitted its letters dated 9.9.2016 [Exh B at Pg. 105 of the Petition] and 25.11.2016 [Exh C at Pg. 114 of the Petition] to the Additional Director, DRI, Mumbai Zonal Unit. iii. The Petitioner has, on the basis of the Hon'ble Supreme Court's said order, and the above-referred communication with the DRI, Mumbai Zonal Unit, premised the present Petition on the alleged inaction on the part of the Respondent no. 3, i.e., the DRI. iv. Where the Respondent no. 3 has, on examination of the material furnished by the Petitioner, in its Reply [at para 5, Pg. 1236. Reply of Respondent No. 3] stated that the Petitioner did not provide any concrete or prima facie evidence in support of his allegations of undervaluation , and in its Additional Affidavit in Reply [at Pgs. 1283 and 1284 of Respondent No. 3's Additional Affidavit in Reply] stated the material to be extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules , and as the Bangalore Zonal Unit is only a sub-ordinate unit of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities have not examined the pricing pattern of the imports by Respondent No. 6 stands belied on perusal of para 5.1 and 5.2 of the SVB Order whereas the sales pattern and price pattern are examined. [Pgs. 206 to 208 of the Petition] f. The Hon'ble Supreme Court's decision in Varsha Plastics Pvt. Ltd. v. Union of India [Pgs. 81 to 91 of the Petitioner's compilation of cases] which was referred by the Petitioner to support reference to foreign journals, is clearly distinguishable as in the said case the imports were made in July 2000, and the scope of section 14 of the Customs Act prior to its amendment in 2007 was examined [Refer paras 2, 15, 19, 20, 35 and 37 of said decision]. In 2007, section 14 of the Customs Act was amended and there was a sea-change from the earlier section 14 with the concept of deemed value replaced by the concept of transaction value . Prior to the amendment the ordinary value in the course of international trade was to be seen, whereas, post-amendment the transaction value i.e., price actually paid or payable for the specific transaction) was to be considered. [Refer submissions at para B (1) of Respondent No. 6's Written Submissions; Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial parameters to be applied such as quantity of offtake, model number, year of sale or features of the car. 154. With respect to para (p)(i) at page no. 52 of the Petition, where the table seeks to compare assessable values in India with the FOB price of Right-Hand Drive (RHD) vehicle published on the website, purportedly applicable in the UK, it is submitted that the same is dealt with by the Respondent No. 7 in para 65 at page no. 794 in the Affidavit in reply dated 08th April 2022. That the assessable value cannot be compared with the FOB price or list price, which is meant for the ultimate customer, that too in a different geography and further evidently of a model with a different configuration i.e. RHD. It is further submitted that the difference between the assessable value and the final list price published on the website meant for the ultimate buyer will comprise of various elements such as duties, taxes, expenses, margins, overheads, and therefore again such a comparison is as good as comparing apples with oranges. 155. With respect to para (ii) at page 54 of the Petition, which seeks to compare the values declared in the two Bills of Entry, it is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny event it is stated that the Department is in appeal against the said orders which appeal is pending and that for some of the subsequent years, the S.V.B. orders are pending. 160. In response to the Petitioner s submission that the valuation of the Luxury Cars imported by Respondent No. 6 and Respondent No. 7 is done based on a Transfer Pricing Order can bind the Customs Authorities to ascertain Pricing Order obtained for the purpose of Income Tax and no such Transfer Pricing Order can bind the Customs Authorities to ascertain the correct value for the purpose of levy, assessment, and collection of Customs Duty, it has been submitted that since the prime reason for seeking prayers for carrying out of an investigation in the matter was undervaluation, the study of Transfer Pricing by Income Tax confirming the Arm's Length Price can be very much relied upon. It has been emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents No. 6 and 7 to the Income Tax Authorities and the SVB are contradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the cars sold and purchased by the related parties from other Countries, comparison of the prices of luxury cars when supplied by the concerned related party to the unrelated parties in India with the prices of cars supplied to the Respondents No. 6 and 7 and Transfer Pricing having been examined, it has been found that the information is not actionable in terms of the prevailing legal position. 164. We do not find any material which prima facie suggests that the said Respondent has not cooperated with the investigation and/or interfered with the same or the decision making process or that there has been any suppression or a mis-declaration or undervaluation or any collusion or connivance. The allegations levelled by the Petitioner against the Respondent authorities appear to be unfounded. 165. The Petitioner has also approached this Court without availing of alternate remedy by filing appropriate proceedings before an appropriate forum of the Respondents No. 1 to 3. 166. It has also been submitted that therefore the aforesaid Petition is not maintainable, is totally misconceived, misleading and devoid of substance, and has been filed with an oblique motive, hence, same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar issue is already pending before the Rajasthan High Court for its decision in Civil Writ Petition (PIL) No. 9425 of 2020 raising similar issues which was filed by one Arvind Alaru vs Union of India Ors. before the High Court of Rajasthan, wherein the Petitioner being the informant was made a favouring/friendly Respondent i.e. Respondent No. 5 in the Petition. Hearing in the said case has already taken place and the answering Respondent was directed vide order dated 03rd September, 2020 to indicate the actions taken based on the directions given by the Hon ble Supreme Court in Criminal Writ Petition No. 20 of 2016 filed by the Petitioner. DRI filed its reply before the Rajasthan High Court on 25th November, 2020 and although statedly the next hearing in the Petition was due on 13th May, 2022, no further update is available. (iv) That before the Hon'ble Supreme Court, the Petitioner had submitted that his intention behind challenging the valuation was to get reward as per the guidelines laid down under Circular No. 20/2015-Cus dated 31st July, 2015. Allegations against Respondent authorities and their response (v) The Petitioner has levelled various allegations against of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forth that the petitioner has filed this writ petition for the national cause. If the Additional Director, DRI, Mumbai Zone is convinced that there is credible information given by the petitioner, he shall take appropriate action, as advised in law. The writ petition is accordingly disposed of. There shall be no order as to costs. (x) By letter dated 9th September, 2016, the Petitioner submitted certain information along with annexures to the DRI requesting for expeditious preliminary enquiry for considering registration of Information Report/DRI-1 and commencing investigation into alleged cognizable offences punishable under the Customs Act for the alleged evasion of customs duties in the import of luxury cars whether as FBUs or in CKD/SKD form when imported from related parties. (xi) The information furnished in the letters was general in nature containing sweeping allegations against five corporate houses, which was examined by the DRI. (xii) Since the Petitioner had expressed desire that he would like to place further material on record to assist the investigation, Petitioner was invited to attend the office of the DRI and the Petitioner thereafter visited the office on 4th Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation was supervised at various times by two Deputy Directors, Four Additional/Joint Directors and Two Principal Additional Directors General. (xix) On behalf of Respondent No. 5 it has been submitted that the Petition is hit by delay and laches. The Petitioner did not participate in investigation after 2016. That the DRI closed the investigation proceedings in 2020 after finding no evidence of undervaluation. The Petitioner approached this Court in 2022 i.e. 2 years after closure of investigation and after almost 6 years of disposal of its case raising similar grievance before the Hon'ble Supreme Court. (xx) And therefore the allegation of inaction by DRI is incorrect. The Respondent No. 5 has made elaborate submissions in this regard in its Affidavit-in-reply dated 21st April, 2023 wherein they have stated that a detailed investigation was conducted. (xxi) Orders passed under Section 92CA (3) of the Income Tax Act, 1961 by the Income Tax (Transfer Pricing) authorities Pune in respect of Respondent No. 5 for AY 2015-16 and AY 2014-15 have been scrutinized and the Income Tax authorities have not disturbed the Arm's Length Price of transactions as reported by Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g into consideration and after thorough examination of the evidences placed by the Petitioner and evidences found during the investigation and with the approval of the Additional Director General, DRI, Mumbai, decided to close the investigation for want of any incriminating material indicating evasion of customs duty as alleged by the Petitioner. Before closure of the investigation, three letters were sent to the Petitioner dated 27th May, 2019, 10th July, 2019 and 19th August, 2019 seeking the additional information / documents pertaining to the enquiry being conducted by DRI, MZU into import of SUVs and vehicles caused by Respondent No. 5, however, statedly the Petitioner chose not to reply to any of the said letters and as the department did not find any incriminating evidences even after thorough investigation spanning over a period of almost four years, the investigation in the matter was closed after sharing the Investigation Report with DG, DRI, New Delhi. (xxvi) As regards the specific allegations made by the Petitioner against Respondent No. 5, Mr. Dada, Learned Senior Counsel has referred to the table in paragraph 25 above. (xxvii) It has been submitted by the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the material thoroughly the Court would be informed of the course of action the DRI intended to take. Accordingly, the learned Senior Counsel for the Petitioner submitted that if there was any additional material the same would be given to the DRI within a period of three weeks with a copy to the concerned private Respondents and the learned Senior Counsel for the DRI had stated that the DRI would take 6 weeks after the Petitioner submitted the additional information. Accordingly, at the request of the learned Senior Counsel for the DRI, the matter was stood over to 05th October, 2023. By the said order, the learned Senior Counsel for the Petitioner agreed that in view of the aforesaid course of action, the Petition could not be decided within the time limit of 3 months stipulated by the Hon ble Supreme Court and if necessary, the Petitioner would request for an extension. The said order dated 28th July, 2023 is usefully quoted as under: This Petition is specially assigned to this bench. 2. On the last occasion the learned Counsel for the Petitioner had concluded his arguments. Thereafter, the arguments on behalf of Respondent No. 5 were over. The contentions of Respondent No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file any additional material, he could give the same within a particular time, and after examining the said material thoroughly, the Hon ble Court would be informed of the course of action the DRI would propose to take. 173. The Petitioner submitted certain information in respect of Respondents No. 6 and 7 through an email dated 16th August, 2023. 174. The Petitioner's claim has been observed to be general like all luxury car imports by various multinational brands and is not specific. The Petitioner had submitted that Respondent No. 6 is importing Luxury Cars viz. 'Porsche', 'Audi', Lamborghini etc. from related parties viz. M/s. Automobili Lamborghini, Italy, M/s. Audi, Germany and PORSCHE Middle East Africa FZE, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Similarly, the Petitioner had also alleged that Respondent No. 7 was importing Luxury Cars from related parties, mainly BMW AG, Germany, whether as Fully Built Units (FBUs) or in Completely Knocked Down (CKD) condition by mis-declaration and suppression of material particulars from the Customs Authorities and that the said Respondents are importing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade and that therefore, prior to 2007, the assessing officer was not to see the actual value of the goods, but the value at which such goods or like goods were ordinarily sold or offered for sale for delivery at the time and place of import. Similarly, the words in the course of international trade were relevant. The Assessing Officer was to see the value of the goods not for each specific transaction, but the ordinary value which the goods would have in the course of international trade at the time and place of their import. That India continued to have the deeming provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988 till 2007. Section 14 of the Customs Act was amended vide the Finance Act, 2007 to value goods on the basis of transaction value as against deemed value. With the amendment of Section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation Rules, 2007 ( CVR ), the concept of transaction value became relevant and not deemed value. As per the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia cannot be a basis for the valuation of cars at the time of import of the same into India. It is submitted that the same is specifically barred by Rule 9 (2) of the Customs Valuation Rules, 2007 which states that No value shall be determined under the provisions of this rule on the basis of -(v) - the price of the goods for the export to a country other than India. b) Further, Customs Valuation Rules, 2007 also prescribe that no value shall be determined under the provisions of Rule 9 (2) based on the price of goods in the domestic market of the country of exportation. c) Also, the GATT valuation agreement states that valuation based on the price of goods in the domestic market of the country of exportation would go against the principle that valuation procedures should not be used to combat dumping. d) The cars available in other countries may not be similar in specifications/technology and, hence, it is otherwise also not reasonable to compare the prices of cars merely based on similarity of description. Provisional and not final assessment of Bills of Entry 183. According to the Respondent Authorities, comparison of the price of one-off cars imported by unrelated parties in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible documentary evidence is available with the department and that a Show Cause Notice vide F.No. DGCEI/MZU/I IS'C'/30-81/06 dated 31st March, 2008 was issued to Respondent No. 6 by the DGCEI, Mumbai in respect of valuation. 185. That unlike in the present writ petition where the Petitioner is demanding a roving inquiry based on mere hunches and accusations without any credible documentary evidence that is actionable, the aforesaid Show Cause Notice was based on very specific intelligence with the department that USD 45 million, which was paid by Respondent No. 6 to M/s. Skoda Auto AS, Czech towards Technical know-how/Technological Transfer Fees , has not been included in the value of the imported cars. It has been submitted that, presently, the issue is pending before the Hon'ble Supreme Court of India. 186. That all the Bills of Entry filed by Respondent No. 6 for the import of cars, parts, and accessories, have been assessed provisionally since then. 187. Respondent No. 7 was also issued a Show Cause Notice vide F.No. DRI/DZU/JRU/19/ENQ-1(INT-1)/2014/ 679-690 dated 29th May, 2015 by the D.R.I., Delhi Zonal Unit based on very specific intelligence with the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not based on a price list and therefore the allegation of non-submission of price list would not be relevant. 191. That, therefore, prima facie, there doesn't appear to be any misrepresentation or suppression as alleged by the Petitioner. 192. That even if it is assumed that a price list exists and is not submitted, it does not lay ground for the rejection of the transaction value declared by Respondents No. 6 and 7. In Mirah Exports Pvt. Ltd. v. Collector of Customs 1998 (98) E.L.T. the Supreme Court has held that, The legal position is well settled that the burden of proving a charge of undervaluation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge. Ordinarily, the Court should proceed on the basis that the apparent tenor of the agreement reflect the real state of affairs and what is to be examined is whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price. [See: Union of India Vs. Mahindra Mahindra (supra), at p. 487 In the present case, the only evidence that was adduced by Revenue in support of the charge of under-valuation is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioner is unmindful of the fact that the question in the present petition is not so much as to whether the declared value can be rejected or not, but whether there are reasonable grounds to reject the transaction value declared by Respondents No. 6 and 7 in accordance with the statutory provisions. Respondent No. 6 196. The material relied upon by the Petitioner is extraneous and irrelevant for the purposes of custom's valuation and there is no suppression before the customs/SVB authorities. Impermissible to compare the prices in the domestic market of other countries 197. The new Customs Valuation Rules inter alia, provide that: (i) Rule 3(3)(a) and Rule 3(3)(b) provide when transaction value is to be accepted where the buyer and seller are related. (ii) If the transaction value cannot be accepted, then value is to be determined by proceeding sequentially through rules 4 to 9. (iii) Rule 9, which is the residual method for valuation, provides for the value to be determined using reasonable means consistent with the principles and general provisions of the Customs Valuation Rules, and expressly excludes certain basis for determining the value. In fact Rule 9 (2) expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices of cars imported by Porsche Middle East are cars admittedly for UAE delivery . (ii) These cars are imported by Porsche Middle East for use in the domestic market in Dubai. These cars are not exported to India. This is clear from the invoices and sea-way bills which have been annexed by the Petitioner and which show supply by Porsche Germany to Porsche Middle East, where port of departure is in Germany and port of destination is UAE. (iii) As the Petitioner did not provide the bills of entry along with the corresponding invoices and certificate of origin in respect of imports made by Respondent No. 6, Respondent No. 6 filed an Additional affidavit dated 30 June 2023 in which Respondent No. 6 has provided (a) bills of entry, (b) corresponding invoices and (c) certificate of origin in respect of the imports of Porsche cars imported by Respondent No. 6 in India as referred by the Petitioner at paras (i) to (iv) at Pgs. 45 to 47 of Petition. Documents produced in the Additional Affidavit clearly show that the cars imported by Respondent No. 6 in India, though sold by Porsche Middle East to Respondent No. 6 for sale in the Indian market, are shipped by Porsche AG, Germany directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomic factors, such as the demand pattern of the customers within the market, the competitive factors and its impact on retail prices; The nature of operations of the importer within the country; along with the functions and risks assumed by the importing entity, along with associated costs. Whether the importer deploying assets, and bearing risks in relation to stock risk, working capital risk, etc. and incurring costs in relation to promotion and marketing costs, nature of overhead costs, etc. The supply chain for import, distribution and retail sale adopted within the country; and the margins and costs associated at each leg of such supply chain, including rates of taxes and duties in the market. Any specific regulatory requirements in the country requiring the cars to be built with certain country-specific features / configurations. b) Even for cars of the same model, there could be various options available. Also, basic features of the cars keep on updating at regular intervals- therefore, there are different generations of the same model of the car. A different generation of car may be sold in UAE (for example, third generation Porsche MACAN) when different generation of car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that was passed on 15th January, 2009 against Respondent No. 6, and therefore this document cannot be the basis for alleging any suppression before the SVB authorities. (iii) The import prices of Respondent No. 6 are not on the basis of any price list and therefore there was no requirement to furnish any purported price list before SVB authorities. (iv) As per the SVB Circulars, the importer is required to provide price list only where the import prices are as per price list; (v) This Court s attention has been drawn to - a) Circular 11/2001 dated 23rd February, 2001 - Pgs. 308 to 313 of Petitioner's Rejoinder in I.A. (L) No. 9504 of 2023 to submit that: As per Q22 of Questionnaire [Pg. 311], from the wording of the said question itself, it is clear that there could be several different basis for arriving at the invoice price. The documents listed at Pgs. 312-313 are to be given to the SVB authorities only if those documents are relevant in the facts of the importer's case. It is not the case of the SVB authorities that there was suppression on the part of Respondent No. 6 or 7. The consequences for the importer not furnishing complete reply to the SVB questionnaire set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties is false to his knowledge and are made to deliberately mislead this Court. (viii) There being a price list for dealer tools and dealer equipment imported by Respondent No. 6 from Volkswagen AG cannot be the basis to infer that there exists price list of Audi AG for supply of cars to Respondent No. 6. The prices for dealer tools and dealer equipment are applicable to all dealers and such tools/ equipment are not on country specific requirements/configurations as in the case of cars. It is submitted that the said document is therefore wholly irrelevant. 204. With respect to comparison by the Petitioner with retail prices in the UK, it has been submitted that: (i) Respondent No. 6 has in its pleadings pointed out that such comparison is not legal and hence such documents and pleadings made by the Petitioner are irrelevant (ii) There is no Rule, or method of valuation, under the Customs Valuation Rules which allow comparison with retail price of goods in the domestic-market of another country. (iii) It is reiterated that Rule 9 of the Customs Valuation Rules expressly prohibits determination of value on the basis of the price of the goods on the domestic market of the country of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hini car referred at pg. 51 of Petition. c) Bills of entry of unrelated importers cannot be available with Respondent No. 6. 207. Imports at different commercial levels and at different quantity levels cannot be compared. 208. It is submitted that reference by the Petitioner to import of 'Bentley' cars cannot be the basis to allege undervaluation of imports by Respondent No. 6 of Audi, Porsche and Lamborghini cars. 209. The Petitioner vide its letter dated 09th January, 2015 issued to Respondent No. 3 has given information in relation to imports by Tata Motors Pvt. Ltd. which information is similar in nature to the information provided in respect of imports by Respondent No. 6 but Petitioner has selectively targeted Respondent No. 6 and certain other importers, by making baseless and reckless allegations. 210. Relevance of transfer pricing reports for the purpose of Customs Valuation (the Petitioner has alleged that Transfer Pricing is irrelevant and that accepting the transfer price is not correct). It has been submitted that this is a totally erroneous submission for the following reasons: (i) As per Rule 3(3)(a) of Customs Valuation Rules, there is requirement to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it jurisdiction. 215. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No. 6 is erroneous. SVB Orders pending in appeal and SVB Orders for subsequent period pending 216. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities. 217. That in appeal proceedings from the SVB Order, Respondent No. 6 has succeeded before the Tribunal, and the Customs authorities have filed an appeal from the Tribunal's Order before the Hon'ble Supreme Court which is pending before the Hon'ble Supreme Court. The SVB Order has attained finality in law, subject to issues in appeal proceedings. 218. It has been submitted that when the appeal proceedings from the SVB Order are pending before the Hon'ble Supreme Court, this Court should not be called upon to set aside the SVB Order. This Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted against Respondent No. 5 v. Thorough investigation conducted and concluded by Respondent No. 3. d) The Petitioner's statement that Respondent No. 3 has not investigated imports of Respondent No. 6 is belied, when on Respondent No. 3 carrying out thorough investigation it was found that the information being furnished by the Petitioner is not credible. e) In view of investigation by the DRI of Respondent No. 6's imports the Petitioner's statement is incorrect and misleading. f) Statedly the premise of the Petition as to alleged inaction on part of Respondent No. 3 based on data provided by Petitioner, stands belied. That the stated premise of the Petition being the alleged inaction on the part of the Respondent No. 3 is also noted by the Hon'ble Supreme Court in its Order dated 29th March 2023 in disposing of the Special Leave Petitions No. 6609- 6610 / 2023. g) It is submitted that subsequent to Hon'ble Supreme Court's Order dated 29th March 2023, the Petitioner has by seeking additional prayer sought to fundamentally change the nature and character of the proceedings by way of expanding the reliefs sought by challenging the SVB Orders. 224. That af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 231. It was submitted that the Petitioner had concealed material facts: (i) Petitioner did not disclose three letters (dated 27th May, 2019, 10th July, 2019 19th August, 2019) issued by Respondent No. 3 requesting for information and that Petitioner has not responded to these letters a) Pg.1221(para 12) of Additional Reply of Respondent No. 6 b) Pg. 696 (paras 11 and 12) of Reply of Respondent No. 5 c) Pg. 848 (para 15) of Petitioner's Rejoinder. (ii) Petitioner had not made efforts / attempts to find out relevant facts - re status of investigation by Respondent No. 3 after providing information in 2016, before filing the present Petition in February 2022. 232. Petitioner has been approaching different forums and resorting to Forum Shopping by bringing frivolous proceedings before different Courts. Pursuant to Hon'ble Supreme Court's Order of 15.07.2016, by relying upon the material submitted by Petitioner with Respondent No. 3, on 24 August 2020 Civil Writ Petition (PIL) No. 9425 of 2020 was filed before the Rajasthan High Court; (i) Petitioner herein was made Respondent no. 5 in the petition before Rajasthan High Court; (ii) Affidavit in Reply filed by Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal's decision in S.A. Futehally v. Commissioner of Customs [at Pg. 104 to 115 of Petitioner's compilation of cases] is distinguishable, and not relevant, inter alia for the following reasons - i. In that case, it would appear that imports were made by end- customers, and the appellant (S. U. Futehally) facilitated the imports by the said customers [refer paras 2, 3 and 4 of the decision]. The price- lists referred to in that case would relate to imports/ purchase by end customers. Whereas, in the present facts, Respondent No. 6 imports the cars which are subsequently sold to dealers on wholesale basis for further sale to end customers. ii. In that case the imports were made during 1987-89 from Volkswagen Germany. It is submitted that the availability of price lists referred in respect of imports in 1987-89, cannot be the basis to assume existence of price-lists for exports to India after a period of more than 20 years (SVB Order was passed on 15th January, 2009) when exports to India were under a distinct transaction structure. iii. From the record of the present case including material furnished by the Petitioner), there is no reference to manufacturer's pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssable Value in India as the assessable value will get added with customs duties, various taxes, expenses, over-heads, margins in India, which may become the basis to arrive at the list price in a country of ultimate sale. Therefore, comparing list price and assessable value that too in two different countries is like comparing chalk to cheese. 240. Where the Petitioner has enclosed a few invoices issued by the overseas BMW entity for delivery in UAE, it has been submitted that these supplies are made by the overseas entity to certain customer in UAE and that the Petitioner does not draw any analysis as to what exactly his case or contention is, by enclosing such invoices. That the sale by overseas BMW entity to a customer in UAE which is a different geography cannot be compared. Entity in every country will have its laws to be followed and other commercial parameters to be applied such as quantity of offtake, model number, year of sale or features of the car. 241. With respect to the table which seeks to compare assessable values in India with the FOB price of Right-Hand Drive (RHD) vehicle published on the website, purportedly applicable in the UK, it is submitted that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or suppression by the private parties nor any of the above submissions by the Respondents appear to be controverted with any credible evidence by or on behalf of the Petitioner. 246. On behalf of the Petitioner it has also been argued at the time of the closing of the arguments that, no separate affidavit was filed on behalf of the added Respondent No. 8. However, the learned ASG has submitted that he has made submissions on behalf of the Respondent Statutory Authorities and therefore, we do not think that it would be necessary for the Respondent No. 8 to file a separate affidavit. Moreover, it has been submitted on behalf of Respondent No. 6, which submissions have been adopted by Respondent No. 7 that the Petitioner's submission that DRI, Bangalore Zonal Unit, has not filed its submissions and its affidavit in the present proceedings, is of no relevance for the following reasons - i. The Petitioner had submitted its letter dated 09th January, 2015 [Exh A at Pg. 89 of Petition] to the Additional Director, DRI, Mumbai. In the Writ Petition (Cri.) No. 20 of 2016 filed before the Hon'ble Supreme Court, the Additional Director, DRI, Mumbai was Respondent no. 3 [at Pg. 145 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation. 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. Under the exercise of writ jurisdiction, therefore, we have chosen to adopt the same approach. 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. 250. As regards Respondents No. 6 and 7, information was not included in the Petition, but it was placed by way of additional affidavits. Since the information was placed before us for the first time, we had directed the Customs Authorities and the Director of Revenue Intelligence to examine the same. Both these departments, upon examination, have reported that they have not found anything objectionable in the conduct of the private Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain information to the notice of this Court and the authorities. Thereafter, it is for the statutory authorities to take the matter forward. In a writ jurisdiction, this Court cannot review the decision of the executive but only the decision making process. The issues raised by Mr. Shah would, therefore, be appropriately redressed before the authorities and forum under the relevant statutes and not before a Writ Court. 252. The matter also needs to be looked in another perspective. As regards the valuation of these imported vehicles is concerned, there is dispute. We are informed that some proceedings are pending before the Special Valuation Branch. Therefore, issuance of writ as sought for by the Petitioner would directly impact the pending proceedings and there is no reason as to why such course of action be adopted. Even otherwise, it is always open to any citizen including the Petitioner, if any credible material is found in future, to approach these authorities. This position is also made clear by the learned Additional Solicitor General. According to us, on the basis of material supplied by the Petitioner, substantial investigation has taken place, substantial judicial time h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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