IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 28TH MAY 2009 / 7TH JYAISHTA 1931 Cus.Appeal.No. 5 of 2005() -------------------------- AGAINST THE FINAL ORDER NO.1558 & 1559/2004 of CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE .................... APPELLANT/RESPONDENT: ----------------------------------------- THE COMMISSIONER OF CUSTOMS, CUSTOMS HOUSE, COCHIN-9. BY ADV. SRI.P.GOPINATH MENON,SC,CEN.BOARD OF EX RESPONDENT(S): APPELLANT: ------------------------- JAYA SINGH VIJAYA JHAVERI, A-9, FERREIRA MANSON, SITLADEVI TEMPLE ROAD, MAHIM, MUMBAI-400 016. ADV. SRI.P.A.AUGUSTIAN FOR R1 SRI.T.R.JAGADEESH FOR R1 SRI.P.A.AUGUSTIAN FOR R SRI.T.R.JAGADEESH FOR R THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 28/05/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... Cus. Appeal No.5 of 2005 .................................................................... Dated this the 28th day of May, 2009. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel appearing for the appellants and counsel appearing for the respondent. Respondent imported a custom made Ferrari car from Singapore on a declared value of US$ 70000. the marine insurance value of the car was US$ 107395. In view of the difference, the department investigated the matter and got confirmation from manufacturer of the car that car was sold to the supplier in Singapore namely, Hong Seh Motors Pvt. Ltd. for US$ 107395 vide invoice dated 9.5.2002. However, since respondent obtained orders from this court for immediate adjudication and release of the car, the car was released on payment of duty based on the estimation value available in the insurance taken by the respondent. It is seen that assessment is on a value of UK Stg PDS 80,07,659. The respondent filed appeal to the Commissioner of Customs(Appeals) who dismissed the same. The department on conclusion of investigation ordered 2 confiscation of the vehicle and released it on payment of redemption fine of Rs.7.5 lakhs and personal fine of Rs.2.5 lakhs. Against the order of Commissioner (Customs), the respondent filed appeal before the Tribunal which was heard along with the appeal filed by the respondent against assessment of duty at higher amount. The Tribunal though confirmed the valuation adopted by the department for the purpose of levy of duty, cancelled the confiscation order for the reason that there is no misdeclaration of value justifying confiscation under Section 111(d) and 111(m) of the Customs Act. The respondent appears to have accepted the order of the Tribunal confirming valuation. However, department filed this appeal against the order of the Tribunal cancelling confiscation order and release on payment of redemption fine for the reason that there is misdeclaration of value. 2. While the case of the appellant is that misdeclaration is self- evident from the fact that manufacturing company sold the car at US$ 107395 to the importer in Singapore who in turn sold the car to the 3 respondent at a price of around 70% of the purchase value, the case of the respondent is that discount is quite usual in automobile business and the car was initially earmarked for another customer and on his failure to lift the car, the respondent purchased it at a discount. However, we do not find any evidence adduced by the respondent on any of these aspects. On the other hand it is clear from the records that the original invoice of the manufacturer to the importer at Singapore was on 9.5.2002 and the car reached Kochi in the name of the respondent in the third week of July 2002. On the face of it, the import of Singapore party would have been after contracting sale to the respondent because the time lag between the manufacturer's supply and the time taken for the two transactions and for reaching the car in Kochi is around two months. Therefore, the case that the car remained unsold in the hands of the party in Singapore and later they sold it at a discount to the respondent is prima facie unbelievable. We notice the Tribunal has accepted enhanced valuation for the car as it was satisfied 4 that the value declared in the invoice was correct. However, in order to sustain confiscation order for misdeclaration, the Tribunal wanted evidence from the Singapore supplier and for failure of the department to prove the excess payment of invoice value by the respondent to the Singapore supplier, the Tribunal cancelled the confiscation order. In our view, it is illogical that a person who is a party to undervaluation and sale of car at lower than the actual price will give evidence to the department to prove the case that the invoice raised by him on the respondent is a bogus one and that they received underhand payment of the differential price. It is also to be noted that the respondent has not produced evidence for payment of even the invoice value. The only reasonable inference possible is that it is an arranged transaction between the Singapore supplier and the respondent for import of the car by misdeclaring it's actual value in the invoice. We, therefore, reverse the order of the Tribunal and uphold the order of confiscation and release on redemption fine. However, considering the fact that 5 assessment itself is on higher value and duty is paid on the estimated value, we modify the confiscation order by cancelling the personal penalty and by reducing the redemption fine from Rs.7.5 lakhs to Rs.6 lakhs. The appeal is disposed of as above. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms