NRI vehicle import rules: genuine overseas ownership is permissible, but a name-lender arrangement makes the import unlawful.

Under the relevant import policy, a returnee NRI could import a vehicle bought from overseas earnings if the importer owned it at the time of import and until clearance. An arrangement to resell later was treated as an agreement to sell, not a completed sale, so no unlawful transfer of the import facility was established where the documents and payment supported genuine ownership. By contrast, where the named importer had no proof of payment, signed blank papers, and merely lent his name while the appellant controlled the import, the NRI facility was misused and the import was unlawful. The penalty in that instance was found excessive and reduced.

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Issues: (i) Whether the import of the car in the name of Quazi S. Ahmed was unlawful and liable to confiscation and penalty. (ii) Whether the import of the car in the name of K.D. Sunny was a genuine NRI import or a benami import by the appellant and, if unlawful, whether the penalty was excessive.

Issue (i): Whether the import of the car in the name of Quazi S. Ahmed was unlawful and liable to confiscation and penalty.

Analysis: The relevant import scheme permitted returnee NRIs to import a vehicle purchased out of earnings abroad, provided the importer owned the vehicle at the time of import and until clearance. The material showed that Quazi S. Ahmed had paid for the car from his own earnings abroad, the documents stood in his name, and the import was made in his name. His intention to resell the car for profit did not, by itself, breach the policy or the licence conditions. The arrangement with the appellant amounted only to an agreement to sell and not a completed sale before importation or clearance. On the record, no unlawful transfer of the import facility was established.

Conclusion: The finding of illegality was unsustainable. The confiscation, redemption fine and penalty relating to Quazi S. Ahmed's car were set aside in favour of the appellant.

Issue (ii): Whether the import of the car in the name of K.D. Sunny was a genuine NRI import or a benami import by the appellant and, if unlawful, whether the penalty was excessive.

Analysis: The statements relating to K.D. Sunny showed that he had no proof of payment for the car, had signed blank papers, had not ordered the optional accessories, had allowed his name and documents to be used for consideration, and had effectively permitted the appellant to conduct the import in his name. These facts established that the appellant was the real operator and Sunny was only a name lender, amounting to misuse of the NRI import facility. However, while the import was unlawful, the penalty imposed was considered excessive on the facts.

Conclusion: The import was held unlawful and the penalty was reduced from Rs. 5 lakhs to Rs. 1 lakh, partly in favour of the appellant.

Final Conclusion: Relief was granted in relation to the Quazi S. Ahmed car and the penalty for the K.D. Sunny car was substantially reduced, leaving the finding of misuse intact but moderating the fiscal burden on the appellant.

Ratio Decidendi: Under the relevant import policy and control order, an NRI importer remains entitled to import a vehicle if the vehicle is purchased out of overseas earnings and owned at the time of import and clearance; an agreement to sell before import is not equivalent to a completed sale, but where the so-called importer is only a name lender and the appellant is the real operator, the import is unlawful and liable to be dealt with accordingly.

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