IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 8TH APRIL 2009 / 18TH CHAITHRA 1931 Cus.Appeal.No. 17 of 2009() --------------------------- A.NO.9/2009 of CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE .................... APPELLANT:APPELLANT: ---------------------------------------- HARISH CHAPPA HASSAN, THROUGH HIS POWER OF ATTORNEY SHRI. FAROOKH KUTTIYANI, AMINA MANZIL, MASJID ROAD, CHANDRAGIRI, KALANAD VILLAGE, KASARAGOD. BY ADV. MR.P.A.AUGUSTIAN RESPONDENT(S): RESPONDENT: -------------------------------------------------- COMMISSIONER OF CUSTOMS, CUSTOMS HOUSE, COCHIN. BY ADV. SRI.ABRAHAM THOMAS,SC,CENTRAL BOARD-EXC THIS CUSTOMS APPEAL HAVING COME UP FOR ADMISSION ON 19/03/2009, THE COURT ON 08/04/2009 DELIVERED THE FOLLOWING: Kss C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------------------------------------------------ Customs Appeal NO: 17 OF 2009 ----------------------------------------------------------------------------------- Dated this the 8th April, 2009. JUDGMENT SURENDRA MOHAN, J. This appeal is filed challenging the order dated 12.1.2009 of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Bangalore in Appeal No: C/303/2008 filed by the appellant. As per the order under appeal, the proceedings of the authorities below, confiscating the vehicle that was sought to be imported by the appellant and imposing penalty on him have been upheld. The appellant had made a belated request for re- export of the vehicle, which also has been disallowed by the Tribunal, without any justification whatsoever, it is contended. The appeal is filed in the following facts and circumstances. 2. The appellant had been working in the Gulf countries for about eight years. Thereafter, he has returned to India. At the time of his return to India he wanted to import a Range Rover Car. He entrusted M/s. Al Wafrah Used Cars, Sharjah to arrange the shipment of a Range Rover Car for him. The car offered by them was a 1998 model Range Cover County. The car was imported for CUA 17/2009 2 the personal use of the appellant. As per the rules applicable, an NRI is entitled to import one used car under the Transfer of Residence scheme (TR Scheme) every five years provided, the car was in his possession for one year prior to its import. It is to be noted that the appellant had arranged with the transporter to ship a car that was not in his possession for one year prior to his departure as stipulated by the rules. According to him since used cars were available in the U.K at lower prices, the transporter had shipped the Range Rover Car from U.K to the Cochin Port. The car dealer/transporter in Dubai had handed over to the appellant the Vehicle Registration Certificate issued by the competent authority in the U.K. 3. On arrival at the Cochin Port, the appellant filed Bill of Entry No: 169871 on 28.11.2005 along with all the relevant documents including his affidavit and vehicle registration documents for customs clearance. However on examination of the car a Legend 'VOGUE' was found on the back side of the vehicle. Since the models 'VOGUE' and 'COUNTY' were different models, the customs authorities conducted a detailed examination of the CUA 17/2009 3 vehicle. It was thereupon found that a number of parts of the vehicle showed time clocks of the year 2002. The documents submitted for clearance of the car did not appear to be genuine. Further enquiry revealed that the model 'COUNTY' was a select edition model and the colours available were Epson Green, White Gold, Oxford Blue and Niagra Grey. Whereas, the vehicle imported was Silver in colour. The vehicle registration documents V5 submitted by the importer for clearance of the car showed that the car was registered as new in 1998 in the name of one Mr. T. Singh of Birmingham as a Range Rover County. The documents did not support the physical verification, which showed that the vehicle was a Range Rover Vogue with tell tale indications that it was a 2002 model vehicle. The misdeclaration has obviously been done with the object of evading customs duty payable under the Customs Act, 1962. Therefore the vehicle was seized on 2.1.2006 by the customs authorities. 4. It is alleged by the customs authorities that the documents presented by the appellant were created with the object of legitimising the misdeclaration that was perpetuated. Therefore, CUA 17/2009 4 the appellant was summoned by the authorities. Thereupon he gave a statement under Section 108 of the Customs Act. In his statement dated 23.1.2006 he stated inter alia that, before returning to India he had received a bonus of 68,000 dirhams from his employer, utilising which he decided to buy a car. For the purpose, he went with his cousin Rafique to M/s. Al Wafrah used car centre, saw different models of vehicles and selected a Range Rover of 1998 model which was offered to him for USD 17,500/-. He paid the money in cash three days before returning to India on the assurance of M/s. Al Wafrah that they would ship the vehicle from Sharjah within four months. He entrusted his cousin to follow up the matter in Dubai. The documents for clearing the vehicle were to be sent to Messrs. Cargo Clear International for clearance. On receiving information from his cousin, he had contacted the said agents and had signed some papers. According to him he had not seen the vehicle at any time. 5. The vehicle was examined in detail on 24.1.2006 under a mahazar in the presence of the appellant, the representatives of the agent and two independent witnesses. The examination showed CUA 17/2009 5 that the vehicle was Range Rover Vogue, as seen from the Legend on the rear portion of the vehicle and many of its parts had time clocks which showed the year of manufacture to be 2001/2002. Thereafter, a further statement of the appellant was recorded on 3.2.2006. He admitted that many of the parts of the car imported by him were showing time clocks of 2002, that the back portion of the same had VOGUE written on it etc. According to him he had placed the order for a 1998 model car and did not know why a different model had been despatched. Subsequently the appellant gave a further statement on 17.2.2006 where he has stated that as per information received from his cousin Rafique he had come to know that the vehicle that was shipped, was actually a 2002 model Range Rover VOGUE, that the vehicle was purchased from U.K since vehicles were available there for lower prices, that Rafique had made an additional payment of USD 9,000/- towards price of the vehicle, since the same was a later model. Later, the appellant produced an additional invoice in respect of the vehicle showing the additional amount paid by him and requested that the model of the car and value in the bill of entry be amended and the customs CUA 17/2009 6 duty of the car be assessed on the said basis. 6. Meanwhile, the customs authorities had requested Messrs. Navnit Motors Private Ltd., Thane, the authorised representatives of Land Rover in India to ascertain the year of manufacture of the imported vehicle based on the declared chassis number. As per their letter dated 10.3.2006 they informed that either the chassis number was wrong or there was no vehicle with such chassis number. This clearly indicated that manipulations had been done with respect to the vehicle as well as its registration papers to make to appear that the vehicle as a 1998 model. It was suspected that the misdeclaration was done with the object of evading customs duty. Therefore, show cause notice was issued to the appellant asking him to show cause why the car imported by him should not be treated as a 2002 model and valued at Rs.23,95,536/-. The appellant replied to the same on 4.4.2006 questioning the value adopted by the authorities and submitted that he would have to pay more than Rs.35 lakhs as customs duty in addition to the demurrage and other expense if the proposed action was initiated. He admitted that the car was not in his possession for one year CUA 17/2009 7 prior to its import. He denied that he had wilfully misdeclared the model of the car and requested that he may be allowed to clear the car at the invoice value of USD 26,500/- or in the alternative he may be allowed to re-export the car to Dubai. After hearing the appellant's counsel, an order was passed by the Commissioner of Customs confiscating the vehicle under Section 111(d) and (m) of the Customs Act 1962 read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1992. However, the appellant was given an option to redeem the vehicle on payment of a fine of Rs.8,50,000/-. A penalty of Rs.2,50,000/- was also imposed. 7. The appellant challenged the said order evidenced herein by Annexure E in Customs Appeal No: 279/2006 before the CESTAT. Before the Tribunal the appellant contended that various documents relied on by the authorities while passing Annexure E order had not been given to him and that he had obtained data/information from the manufacturer of the vehicle which showed that the same was manufactured in 1998. Since the said documents were received by him only after Annexure E order, he requested for an opportunity to place them before the authority CUA 17/2009 8 and sought for a reconsideration of the entire issue on the basis of the said additional documents also. The request was allowed by the Tribunal as per Annexure J, the order of confiscation was set aside and the matter was remanded for fresh consideration of all the issues, within a period of four months of the said order. 8. After remand the customs authorities had taken up the matter with High Commissioner of India, U.K and had conducted enquiries to ascertain the genuineness of the V5 registration documents submitted in respect of the imported vehicle. However, the enquiry did not yield any results for the reason that they insisted on a vehicle verification. Certain other details were also requested for by the High Commissioner. Meanwhile the appellant approached the Settlement Commission at Chennai and tried to settle the matter by admitting a duty liability of Rs.27,91,925/-, at the same time questioning the valuation done by the department. The request of the appellant was rejected since the appellant had not come forward to pay the full duty liability. Thereafter the appellant and his counsel were heard, their contentions were considered in detail and the vehicle imported by the appellant was CUA 17/2009 9 confiscated by the Commissioner as per order dated 17.12.2007, evidenced herein by Annexure M. However he has allowed redemption of the car on payment of the applicable duty of Rs.35,92,375/-, a fine of Rs.6 lakhs and also a penalty of Rs.2,50,000/-. 9. The said order was challenged by the appellant in appeal No: C/303/2008 before the CESTAT. The Tribunal heard the matter, considered the various contentions advanced on behalf of the appellant and by Annexure N order dated 12.1.2009 has disposed of the appeal filed by the appellant reducing the redemption fine to Rs.4 lakhs and the penalty to Rs.1 lakh. The request of the appellant to re-export the vehicle has been rejected. The above appeal is against the said order of the CESTAT. 10. We have heard learned counsel appearing for the petitioner and the standing counsel for the respondent. 11. Counsel for the appellant pointed out that there was a complete absence of any deliberate act on the part of the appellant to either misdeclare the vehicle or to evade customs duty as alleged. According to him the appellant had come to India after CUA 17/2009 10 placing an order with Messrs. Al Wafrah, Sharjah, for the import of the vehicle. Thereafter, all the other formalities for the import were done by the said concern and his cousin Rafique. He had not even seen the vehicle and it was only in Cochin that he saw the vehicle for the first time. Therefore, the mistake is contended to be unintentional and not capable of attracting the penal action initiated against him. According to him, the valuation adopted by the authorities is wrong and excessive since according to him a 2002 model Range Rover VOGUE car costs much less. According to him even a brand new Range Rover has been allowed to be imported at a lesser value. Since there was no deliberate attempt at evasion of customs duty, and since there was no deliberate misdeclaration of the vehicle, the car was not liable to be confiscated under Section 111(d) and (m) of the Customs Act. Therefore he prays for setting aside the order appealed against. At any rate, according to him, there is no justification for not permitting him to re-export the car to Dubai. 12. On a careful perusal of the orders of the Commissioner of Customs evidenced herein by Annexure (L) and that of the CESTAT CUA 17/2009 11 evidenced herein by Annexure (N), it is evident that the said authorities have elaborately considered the contentions of the appellant. They have also considered each and every item of evidence and each of the incriminating circumstances available against the appellant. All the relevant documents have been adverted to in detail and considered in extenso. We do not find any infirmity in the manner of consideration of the authorities below. It is to be noted that, in the present case there was a deliberate attempt to evade customs duty by misdeclaring a 2002 model vehicle as a 1998 model one. Though there is no evidence to show that the misdeclaration was done by the appellant deliberately, his complicity cannot be brushed aside inasmuch as he is the ultimate beneficiary of the fraud. It is difficult to accept that his cousin would have paid the additional amount of USD 9,000/- as alleged without his knowledge or consent. The various explanations put forward by the appellant have surfaced only after the misdeclaration was detected by the authorities. As the authorities below have noticed, evasion of customs duty would have taken place if the misdescription had not been detected. The fact that CUA 17/2009 12 the description of the vehicle and its registration papers do not conform to the vehicle actually imported, gives rise to grave suspicion with regard to the bonafides of the importer. The act of the appellant has violated not only the Customs Act but also the provisions of the Foreign Trade (Development and Regulation) Act, 1992. Therefore the authorities have decided to confiscate the vehicle. They are perfectly justified in their action. 13. The authorities have found that since the registration papers of the vehicle do not match the vehicle imported the provisions of the Customs Valuation Rules could not be applied and the normal value of the vehicle in accordance with Rules 5, 6 and 7 cannot be applied. Therefore, the vehicle has been valued in terms of Rule 8 thereof. The authorities cannot be found fault with for the above action also. However, in spite of the above, the appellant has been given an option to redeem the vehicle by paying redemption fine. The Tribunal has reduced the redemption fine and the penalty imposed, by way of indulgence. The request for re- export of the vehicle has also been considered by the authorities below and rejected. The order under appeal does not call for any CUA 17/2009 13 interference. The appeal is therefore dismissed. No costs. C.N. RAMACHANDRAN NAIR Judge K. SURENDRA MOHAN Judge jj K.K.DENESAN & V. RAMKUMAR, JJ. ---------------------------------------------------- M.F.A.NO: ----------------------------------------------------- JUDGMENT Dated: