COMMISSIONER OF CUSTOMS Vs. NOSHIRE MOODY

JUDGEMENT

(1.) THESE proceedings arise from a decision of the Settlement Commission under the provisions of Section of the Customs Act 1962. The Respondent imported a Ferrari under a bill of entry dated 14 February 2008 at Nhava Sheva. He claimed the benefit of an exemption notification 21/2002 -CUS dated 1 March 2002 on the basis that it was a brand new vehicle. The DRI commenced an investigation on intelligence information which it received that the vehicle was second hand and was registered with the Driver and Vehicle Licensing Agency (DVLA) in the United Kingdom prior to its importation. The benefit of the exemption notification was alleged to be wrongly claimed on that basis. A notice to show cause was issued to the Respondent on 21 December 2009 by the Additional Director General in the DRI. The Respondent made an application before the Settlement Commission on 18 August 2010, by which he accepted a further duty liability of Rs.61.32 lacs over and above the duty paid in the amount of Rs.72.61 lacs at the time of import. Interest thereon was also paid. Before the Settlement Commission, the contention of the jurisdictional commissioner was that the vehicle was registered in the United Kingdom and that in order to suppress the fact that the vehicle was already registered and was being shipped from United Kingdom, instead of Italy which was the country of manufacture, the Respondent had produced a fake invoice dated 24 December 2007 to hide the identity of the U.K. Ferrari dealer.

(2.) THE Settlement Commission has in its order noted that notification 21/2002 -CUS dated 1 March 2002 uses the words "new, which have not been registered anywhere prior to importation". In the U.K. registration of motor vehicles bought for export is a requirement mandated under law. The Central Board of Excise and Customs issued a circular on 11 January 2005, circular 1/2005 to deal with this situation by which field formations were directed

(3.) ON these facts as found by the Settlement Commission, the finding that the benefit of the exemption under notification 21 -CUS/02 dated 1 March 2002 was admissible cannot be faulted. On the issue of undervaluation the Settlement Commission has noted that the redetermined assessable value of the car is Rs.1.18 Crores. The Respondent admitted the allegation of undervaluation by accepting the redetermined value of Rs.1.18 Crores. The differential duty liability after extending the benefit of the notification was also admitted and the differential duty was paid in full together with interest of Rs.13.63 lacs. The duty, as observed by the Settlement Commission, was deposited even prior to the issuance of a notice to show cause. On these facts, the Settlement Commission determined the differential customs duty liability at Rs.61.32 lacs in accordance with law and also recorded that the entire interest had been paid. A penalty of Rs.3 lacs and Rs. 2 lacs was imposed respectively, in lieu of confiscation and upon the Respondent, invoking the show cause notice, while granting immunity from penalty in excess of the aforesaid amount.