AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 1078
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....espondent 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 Law Partners Advocates. JUDGMENT (PER COURT). : 1. By this Petition, the Petitioner has sought the following reliefs :- (a) To issue appropriate writ, order or direction in the nature of mandamus to call for the complete records of File no. DRI/MZU/B/INT-87/2016 from the Respondent No. 3 to ascertain the correctness, legality and propriety of the inaction in bringing a logical end as per law to the detailed and credible information given by the Petitioner vide letters dated 09th January, 2015, 09th September, 2016, 25th November, 2016 and the DRI-1 recorded on 07th December, 2016 in the office of Respondent No. 3 pursuant to the Order dated 15th July, 2016 passed by the Hon'ble Supreme Court in Writ Petition 20 of 2016 preferred by the Petitioner; (a1) That this Court be pleased to declare that the SVB orders, and orders of assessment and clearance of goods for home consumption obtained by Respondent nos.5 to 7 pursuant thereto or otherwise under Sections 17, 18 (2) and 47 ....
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.... 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 locus need not be gone into as the Hon'ble Supreme Court has held that the Petitioner has locus and has directed this Court to proceed to consider and decide the Writ Petition in accordance with the law on its own merits without entering into the question of locus of the Petitioner to maintain the Petition, in accordance with the direction of the Hon'ble Supreme Court, we proceed to hear this Petition. 6. After the order of the Hon'ble Supreme Court, dated 29th April, 2023, the Petitioner had also filed an Interim Application dated 3rd July, 2023, seeking following prayers : a. This Hon'ble Court be pleased to allow the present Application; b. To stay the operation of the SVB Orders and the order of assessment and clearance of goods for home consumption obtained by the Respondent Nos. 5 to 7 pursuant thereto under Sections 17, 18 (2) and 47 of the Customs Act, 1962; c. To direct the Respondent No. 2 to forthwith ....
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...., 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 price of the car model, the importer viz. the subsidiary of the exporter manufacturer is selling the models at rates which are grossly undervalued resulting in leakage of revenue to the Indian authorities. He would submit that as per the customs law as well as Rules and circulars issued by the CBEC (now "CBIC"), every exporter is to have a price list according to which the sale transactions are to be valued, subject of course to trade/festival discounts, etc. Learned Counsel would submit that difference in the sale price and the published price list does not suggest that the difference is a discount in the normal course of business but the difference is too large and simply an undervaluation to defraud Indian Revenue, which must stop and therefore, the request to direct an investigation to ascertain the truth and eventually give direction for measures by the Respondent for plugging such revenue ....
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....ike 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 information. Respondent No. 5, admittedly is the Indian subsidiary of Daimler AG, Germany. Respondent No. 6, admittedly is the Indian subsidiary forming part of Volkswagen Group headquarters in Wolfsburg, Germany and is responsible for the operations of 5 Automobiles in India viz. Skoda, Volkswagen, Audi, Porsche and Lamborghini. Respondent No. 7, admittedly is a wholly owned subsidiary of BMW AG-Germany. Respondent No. 8 is the Bangalore Unit of the DRI to whom the Respondent No. 6 has furnished information and data inter alia with respect to the transactions with related parties pursuant to an investigation initiated in or about October 2017 by the said Respondent No. 8 against Respondent No. 6 to whom Respondent No. 6 has also furnished documents, information and clarifications. 14. Mr. Shah would submit that pursuant to the Order dated 15th July, 2016 passed by the....
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....nding 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 alia, includes- (i) Manufacturer's Price List of each model showing its variant in country of manufacture - showing standard equipment, its price with and without Tax, and with details and prices of the operational fittings; (ii) GCC Package Price List of cars for Middle East Countries issued by Manufacturer's subsidiary - showing standard equipment, other fittings included in GCC package for Middle East Countries, its price for GCC Package, with details and prices of the operational fitting; (iii) The "Pricing Pattern" discernible form- (a) The websites of the manufacturer, (b) The websites of its related parties in other Countries, (c) The websites of reputed car dealers abroad, (d) The International Industry Publications of repute, (e) Material showin....
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....ndents 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 significantly higher rates of about 145% to 215% as against only 20% VAT payable in UK on imports from Germany, and only 5% Customs Duty payable in UAE for import of Cars? (V) Whether deliberate suppression by the private respondents from the assessing officer as well as from SVB, of such material information, data and material, having a bearing on the value for the purpose of assessment, would render the favourable orders so obtained fraudulently by private respondents, as non-est, void ab-initio and nullity in the eyes of law as per ratio A.V. Papayya Sastry v. Govt of A.P.-(2007) 4 SCC 221? (VI) Whether the judgments of the Hon'ble Supreme Court relied upo....
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....(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 Circular), which were admittedly not produced by the Respondent Nos.5 to 7, (ii) Board Circular dated 07.05.1990 instructing to consider published price list of the manufacture as prima facie evidence of under valuation in imports; (iii) Customs Valuation Rules and particularly Rule 3 and 12; (iv) Despite settled position of law as per the judgments relied upon by the Petitioner; (v) Despite being aware that orders of SVB and assessment in import of dealer tools and equipment by the private respondents from related party was on the basis of Price List? (vi) ....
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.... ? (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 other hand, Mr. Dada, learned Senior Counsel for Respondent No. 5 would submit at the outset that the prayer of the Petitioner seeking writ of mandamus alleging continued massive undervaluation and mis-declaration is not maintainable as this would be asking the Court to give direction in respect of future imports. That each assessment is a fresh assessment and that presently, it cannot be said that there would be undervaluation and mis-declaration in future. Mr. Dada has submitted that....
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....n 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 buyer opting for a car of a particular Model No. embedded with additional features would have to pay much higher as compared to buyer opting for the car with lesser additional features of the very same Model No. Comparison of import price and retail sale price is unfair. Several costs get added to the price of the car before it is sold locally. The selling price of any car would also include additional expenses like customs duty,....
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....ents. 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 been reviewed in 2008, 2011 and 2015. Further the Commissioner of Customs (Imports) has also issued an Investigation report dated 09th June, 2020 accepting the transaction value. In relation to the allegation of connivance, the assessment of Bill of Entry is subject to review under Section 129D of the Custom's Act, 1962. Further different branches of the Departmen....
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....f 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, learned Senior Counsel for the Respondents No. 1 to 3 has submitted that the cases booked, the arrest made and the Detention Order issued against the Petitioner establishes the antecedents of the Petitioner and which belies his claims that he was neither a convict nor has been penalized in any proceedings under the Customs Act. Mr. Jetly, has ....
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....as 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 Built Units (FBUs) or in CKD/SKD form when imported from related parties. Mr. Jetly, learned Senior Counsel has submitted that the information furnished in the letters appear to be general in nature and was found to contain sweeping allegations against five corporate houses. Besides, in para 7 of the said letter the....
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....19, 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 Respondent i.e. Respondent No. 5 in the petition. It is submitted that the issues raised in that Petition are similar to the ones raised herein and that hearing in the said case has already taken place and the answering Respondent was directed vide order dated 03rd September, 2020 to indic....
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....s 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. are provided by Respondent No. 5 to Daimler AG, Germany for which amounts are being remitted by Daimler AG, Germany to Respondent No. 5. It has been submitted that thus, the flow of money under these Agreements is two ways-from Daimler AG, Germany to Respondent No. 5 and v....
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.... 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. 20 of 2016 filed by the Petitioner before the Hon'ble Supreme Court. That the Hon'ble Supreme Court disposed of the Writ Petition (Criminal) No. 20 of 2016 vide Order dated 15th July, 2016. In Order dated 15th July, 2016, the Hon'ble Supreme Court dir....
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....close 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 the Court was not a Public Interest Litigation and, therefore, the bench had put to the learned Counsel for the Petitioner that the Petitioner shall at least disclose full particulars about hims....
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.... 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 order in view of the order passed by the Hon'ble Supreme Court and listed the matter on 17th April, 2023, to enable the Registry to take necessary steps as ....
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....ment 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 the writ petition for further hearing on 9th June 2023. ....
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....hat appropriate orders can 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 invest....
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....for Respondents No. 1 to 3 had submitted that the Petitioner had not submitted any material 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, Du....
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....s Valuation Rules, 2007. 80. Learned ASG would submit that Section 14 of the Customs Act, which lays down the provisions for valuation of goods for the purpose 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 provisio....
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....pt of deemed value, and the "transaction value" took the primary position. 82. That as per the new Section 14 of the Customs Act, 1962 that was introduced vide the Finance Act, 2007, the value of the imported 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....
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....toms 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. 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 on....
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....oving 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 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 Petition....
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....n't appear to be any misrepresentation or suppression as alleged by the Petitioner. 94. Learned ASG would submit 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. Learned 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 Februa....
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....the declared value, it has been submitted that 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. 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 Inc....
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....l assessment by the jurisdictional Customs Authorities. Hence, any action or investigation by the DRI is not warranted on this ground also. 102. That all the issues pointed out by the petitioner viz. comparison of the prices of the Luxury Cars as shown on the web in other countries, 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. 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 Valua....
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....ed vide the Finance Act, 2007. The Statement of Objects and Reasons and the Notes on Clauses, Customs, Customs Tariff, Excise explained the reasons for the introduction of the amendment in Section 14 of the Customs Act, 1962, where it is explained that the existing section 14 was based on the concept of deemed value of goods. However sub-section (1A) of section 14 mandated that the price in respect of imported goods shall be determined 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 ....
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...., it is impermissible to compare prices of goods for export to UAE. In the present case, the Petitioner has purported to compare the price in the domestic market of other, countries such as UK and not just the whole sale price but retail price which is manifestly impermisible. Further Rule 9 (2) expressly prohibits determination of value on the basis of price of the goods for the export to a country other than India. That therefore it is impermisible to compare prices of goods 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 shou....
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.... UAE from Germany. (v) Cars imported into the UAE are not further sold to/in India. (vi) Mr. Shroff would submit that that the Petitioner has wrongly and deliberately attempted to mislead this Court, by stating that, Porsche Middle East has sold the Porsche cars imported into the UAE by it to Respondent No. 6 in India at prices lower than the purchase/procurement price of said cars by Porsche Middle East from Porsche AG, Germany; [a. Pg. 44 of Petition; b. Pg. 885 - 886 (paras 87 and 89), Pg. 893 (para 106) of Petitioner's Rejoinder; 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 P....
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.... 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 may be sold in India (second generation Porsche MACAN). c) Different configurations, customization options/ on-top features, extras, etc. would be available in different countries. Porsche India offers limited customization options 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 P....
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....are as per price list; (v) Mr. Shroff draws the attention of this Court 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: * 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. The consequences for the importer not furnishing complete reply to the SVB 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 h....
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....6] 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. 114. With respect to comparison by the Petitioner with retail prices in the UK, Mr. Shroff would submit 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 [ pg. 529 to 532 (paras 36, 37 and 39 ) of Respondent No. 6's Reply] (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) 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 mar....
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....ct of a stray import of Lamborghini car referred at pg. 51 of Petition. c) Bills of entry of unrelated importers cannot be available with Respondent No. 6. [Pg: 529 - 532 (Paras 36,37 and 40), Pg. 539-540 (paras 56-57), Pg. 542 (Para 57 (iv))]. 117. Imports at different commercial levels and at different quantity levels cannot be compared [judgments in the cases of and Hewlett Packard Ltd. - Respondent No. 6's compilation page nos. 32, 16, 36, 38, 40 and 42, respectively.] 118. It is submitted that reference by the Petitioner to import of 'Bentley' cars [Pg. 44 of Petition], cannot be the basis to allege undervaluation of imports by Respondent No. 6 of Audi, Porsche and Lamborghini cars. 119. That the submissions made by the Petitioner in relation to - (i) comparison of price of FBU with price of CKD imports, (ii) import of armoured/bullet-proof vehicles by allegedly mis-declaring the description of imports, (iii) imports by unrelated entities at prices higher than price list, etc., and any data provided by the Petitioner in this regard related to Respondent No. 5 and admittedly do not concern imports made by Respondent No. 6....
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....009 [Pgs. 196 to 227 of the Petition]. 124. That before passing the order, Respondent No. 6 has furnished its reply to questionnaire, extensive documents and details, SVB submissions, inter alia vide- a) Letter dated 4.10.2008 [Pg. 197-198]; b) Two letters dated 30.10.2008 furnished during personal hearing on 31.10.2008 [Pgs. 200, 206]; c) Note dated 19.11.2008 [Pg. 206]; d) Letter dated 4.12.2008 [Pg. 209]; 125. That it was not the case of Customs / SVB authorities that there was any suppression/ mis-declaration by Respondent No. 6. It is submitted that: (i) Suppression / mis-declaration, if any, can only be dealt with by relevant authorities under the Customs Act by initiating proceedings as per procedure recognized under the Customs Act and there can be no proceedings de hors Customs Act. [Respondent No. 6's pleadings at Para 11 of Reply of Respondent No. 6 to Interim Application}. (ii) This would entail issuance of Show Cause Notice under section 28 of Customs Act by the "proper officer" designated under the Customs Act and conducting hearing, prior to any decision/ adjudication as to suppression / mis-declaration b....
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....spondent No. 6 are assessed provisionally on Respondent No. 6 having furnished appropriate provisional duty. 135. That if deemed necessary, the SVB authorities can ask for further information or details from Respondent No. 6 (including on examining the present proceedings) and Respondent No. 6 would be required to provide the same. 136. Mr. Shroff would submit that the DRI has concluded that there is no evasion of customs duty and the premise of the present Petition as to the inaction on the part of Respondent No. 3 is belied. Mr. Shroff would submit that: a) As per Hon'ble Supreme Court's Order dated 15.07.2016 Respondent No. 3 was to take appropriate action as advised in law only if the Respondent No. 3 was convinced that the information given by the Petitioner was credible information. [Exh F at Pg. 413 of Petition]. b) The Petitioner filed the present Petition premised on purported inaction on the part of Respondent No. 3 - [prayer(a), (b) and (c) at pgs. 79 and 80 of Petition.] c) Respondent No. 3 has concluded that there is no case of evasion of Customs duties based on information provided by the Petitioner: i. Respondent No. ....
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.... fundamentally change the nature and character of the proceedings by way of expanding the reliefs sought by challenging the SVB Orders. 137. Mr. Shroff would submit that after several hearings, this Court directed the DRI to reconsider the evidence produced by the Petitioner not only prior to the filing of the petition but even during the pendency of the petition and permitted the Petitioner to even file further documents for consideration by the DRI. After considering all the documents, the DRI has filed its latest affidavit in which they have stated that there is no material or evidence produced by the Petitioner which even remotely suggests that there was any under valuation with regard to the imports made by the various Respondent importers. 138. Mr. Shroff therefore submits that this Court cannot be called upon to enter into disputed question of facts in the writ jurisdiction. 139. Learned Senior Counsel submits that the Petition requires this Court to enter into a detailed enquiry and investigation into the disputed questions of facts in its writ jurisdiction, at the behest of the Petitioner who has raised reckless and baseless allegations, to decide on- (i)....
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....roprietary confidential information: (i) Pg. 1221 (para 12) of Additional Reply of Respondent No. 6 146. 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. 147. Petitioner has been approaching different forums (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 he....
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....to Respondent No. 6 in Mumbai, India. ii. Porsche cars relevant for Indian market which are sold by Porsche Middle Bast to Respondent No. 6 for sale in India are shipped directly by Porsche AG Germany from Bremerhaven in Germany to Respondent No. 6 in India. The import of cars in India from Germany is a distinct transaction stream from import of Porsche cars into UAE. iii. The documents furnished by the Petitioner in the Petition [at Pgs. 499 to 506 of the Petition] do not in any manner indicate that Porsche cars imported into UAE are sold to Respondent No. 6 in India. Further, the Petitioner itself has stated that the said imports in UAE are "for UAE delivery" [at para (i) at Pg. 44 of the Petition, para 89 at Pg. 886 Petitioner's rejoinder] iv. For various reasons the import prices of cars imported in UAE are not comparable to cars imported in India. [para C (x) to (xii) of Respondent No. 6's Written Submissions]. c. 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 submi....
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....e 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 price list available for export to India during the relevant period. iv. Further, relevance of price-lists is limited to the period prior to the amendment in section 14 of the Customs Act in 2007 as the said section (prior to the amendment) provided that the value of goods shall be "deemed to be the price at which such or like goods are ordinarily sold, or offered for sale,. in the course of international trade." Whereas, post-amendment, as per section 14 the value is to be the transaction ....
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....spect to para 29 (page no. 33) of the Petition where the Petitioner has enclosed Exhibit G to the Petition (page no. 415 to the Petition) seeking to compare prices declared by Respondent No. 7 before the Indian Customs Authorities vis-à-vis, list price in Germany and UK, it is submitted by Mr. Paranjape that this is dealt in Respondent No. 7's Affidavit in reply dated 08th April 2022 at para 57 (page no. 791) where Respondent No. 7 has submitted that such a comparison is meaningless because what is being compared in column 9 and 10 and column 12 and 13 of the table at page 415, is declared assessable value and purported list price in Germany and UK. It is submitted that the list price which is meant for ultimate customers and that to in different geographies such as Germany and UK, cannot be compared with the Customs Assessable 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. 153. F....
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....e in price between the two transactions. This again demonstrates how the Petitioner has been comparing with incomparable. 156. Mr. Paranjape seeks to draw attention of this Court to para EE at page no. 73 of the Petition where certain aspersions have been cast upon, inter alia, upon Respondent No. 7 with respect to the alleged proceedings under the Acts other than the Customs Act. Mr. Paranjape submits that this appears to tarnish the image of Respondent No. 7 and is highly deprecated. That this appears to be a feeble attempt to create a prejudice against Respondent No. 7. It is submitted that at para 5 at page no. 1179 of the Affidavit in Reply of the DRI dated 21st December 2022, the DRI has stated instances in which the Petitioner was proceeded against and that too, inter alia, under the Customs Act. With regard to such antecedents of the Petitioner, it is submitted that it is incorrect on the part of the Petitioner to cast aspersions on Respondent No. 7 presumably to misdirect this Court into an area that is not relevant for the purpose of this Petition and this itself creates doubts about the bona fide of the present Petition. 157. Without prejudice to above Mr. Paranjap....
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....he flow back of funds related to the import of cars (in addition to the invoice value). That the Petitioner has also not provided any information regarding services that are to be offered or payments that are to be made a pre-condition for the sale of goods and that in the absence of such Information, it is difficult to challenge the Transaction Value declared by Respondents No. 6 and 7. And unless the information provided pertains to the time and place of importation, the information cannot be taken cognizance of as held by the Hon'ble Supreme Court in Commissioner of Customs, Ahmedabad v/s Essar Steel Limited- 2015 (319) ELT. 202 (SC). 162. Learned ASG has concluded by submitting that therefore there is no prima facie case to cause any investigation by the DRI against Respondents No. 6 and Respondent No. 7 based on the extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules. That as there is no credible documentary evidence and given the fact that the imports are only provisionally assessed, it does not warrant conducting such a roving inquiry as demanded by the Petitioner. Such an approach would erode the conf....
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....ach of Customs Notification No. 49 of 2000 dated 27th April, 2000, by importing cars under Export Promotion Capital Goods (EPCG), Scheme which was allowed subject to the "Actual User" condition as well as condition of fulfillment of export obligation by use of the said imported goods, having disposed of the imported cars in the open market and created documents to show apparent compliance with the conditions of the license. That the Petitioner was arrested on 29th June, 2001 during the course of investigation in the case involving 20 cars. After a thorough investigation, the DRI issued two Show Cause cum Demand Notices bearing No.- (i) 27/XI/29/2001-CI dated 31st May, 2002 for 20 cars, and (ii) DRI/BZU/C/2001 dated 03rd June, 2002 for 5 cars, demanding differential Customs Duty of Rs. 2,93,61,300/- and Rs. 62,58,173/- respectively and a Show Cause Notice was issued to the Petitioner by the DRI, Delhi Zone Unit under Section 124 of the Customs Act, regarding confiscation of 6 cars lying uncleared at ICD Ludhiana, wherein the declared assessable value of the cars were found to be grossly understated. On receipt of Show Cause cum Demand Notice as mentioned Sr.No. (ii....
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....226 of the Constitution to settle purported personal scores or to achieve any personal gain in the garb of filing this Petition. (vii) 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. 20 of 2016 filed by the Petitioner before the Hon'ble Supreme Court. That the Hon'ble Supreme Court disposed of the Writ Petition (Criminal) No. 20 of 2016 vide Order dated 15th July, 2016. In Order dated 15th July, 2016, the Hon'ble Supreme Court directed the Petitioner to file relevant documents before Additional Director, DRI in support of his claim. (viii) After about three months, the papers submitted by the Petitioner were returned with advice to approach the DRI with credible evidence of the alleged fraud and under-valuation. (ix) In the Criminal Writ Petition No. 20 of 2016 filed by the Petitioner on 28th January, 2016, before the Hon'ble Supreme Court of India, a detailed affidavit dated 17th March, 2016, was filed by the DRI furnishing details, circumstances and reasons for not recording DRI-1 on the information provided by the Petitioner and after hearing both the sides the Hon'ble....
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....n consignments of Respondent No. 5 viz. Mercedes - Benz India Pvt. Ltd. suspected to be imported fraudulently and that he was in the process of gathering specific details about the consignments of the remaining four importers mentioned in his letter dated 9th September, 2018. The Petitioner agreed to furnish the details of specific consignments imported by Respondent No. 5 for which DRI-1 would be recorded and an enquiry would be initiated by DRI, Mumbai. (xiv) By letter dated 25th November, 2016, the Petitioner furnished details of a few consignments imported by Respondent No. 5 and alleged mis-declaration of description and/or value and also visited DRI office on 29th November, 2016 and once again requested that the information in respect of the said information furnished by letter dated 25th November, 2016, DRI-1, may be recorded and an enquiry be initiated against the Respondent No. 5. (xv) DRI-1 was recorded on 7th December, 2016, regarding the alleged fraudulent imports by Respondent No. 5. (xvi) Statedly a thorough investigation was conducted by the DRI under the supervision of Additional Director General, in compliance of the Order of the Hon'ble Supreme Court date....
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.... 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. That the scrutiny of the Agreements (between Daimler AG and Respondent No. 5, Pune) and the Financial Statements of Respondent no. 5, Pune by the authorities 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. are provided by Respondent No. 5 to Daimler AG, Germany for which amounts are being remitted by Daimler AG, Germany to Respondent No. 5 and that thus, the flow of money under these Agreements is two ways-from Daimler AG, Germany to Respondent No. 5 and vice versa supporting the fact that the transactions between them are at arm's length. It has been submitted that after examining all the above documents and relevant legal provisions, the Investigation against Respondent No. 5, Pune was closed. (xxiii) Statedly, files/records pertaining to Respondent No. 5 available in the Special Valuation Branch (SVB), New Custom House, Mumbai were called fo....
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....estigation, the Respondent No. 3 wrote various letters asking the Petitioner if he has any additional information to submit but the Petitioner did not respond to the said letters and it is only thereafter, that the proceedings were concluded. Transaction value and price list 168. The transaction value is to be determined in accordance with the Customs Valuation Rules relying upon the decision of the Hon'ble Supreme Court in Eicher Tractors Ltd. v/s. Commissioner of Customs, Mumbai, reported in 2000 (122) E.L.T. 321 (SC). A price list is no more than a general quotation. It does not preclude discounts on the listed price. 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 cannot be a reason by itself. A discount is calculated with reference to the price list. 169. Accordingly on 28th July, 2023, this 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 and that the contention of the Respondent No. 5 was t....
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....at the Petitioner had not submitted any material in respect of these Respondents inspite of giving an opportunity. The learned Senior Advocate for the DRI submitted that the material now placed on record by the Petitioner would be examined. If the Petitioner intends to file any additional material, he can give the same within a particular time. After examining the material thoroughly, the Court will be informed of the course of action the DRI intends to take. 4. The learned Counsel for the Petitioner submits that if there is any additional material, the same will be given to the DRI within a period of three weeks with copy to the concerned private Respondents. The learned Senior Advocate for the DRI states that it would take six weeks after the Petitioner submits the additional information as above. 5. Therefore, at the request of the learned Senior Advocate for the DRI, stand over to 5 October 2023 at 4.35 p.m. under the caption "For Directions". 6. The learned Counsel for the Petitioner is agreeable to this course of action and states that the Petitioner is mindful of the fact that in view of this order, the Petition may not be decided within the time l....
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....gating agencies. 176. The Respondents have submitted 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. 177. The Respondents have submitted 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. Prima facie no violation of Pricing Rules 178. That the Petitioner has relied upon the following factors : (a) Purchase prices in other countries/regions such as the Middle East (b) Retail prices/Website prices in the UK and Germany which were mentioned on www.audi.co.uk, www.hrowen.co.uk, www.bmw.co.uk etc. (c) Comparison of import prices of cars that have been imported into India as a one-off case by unrelated parties in India with prices declared by related parties. ....
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.... 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. 181. Rule 12 of CVR, 2007 empowers the Assessing Officer to reject the transaction value declared by the importer, which power is to be exercised sparingly and only in cases where there are genuine doubts relating to the authenticity of the declared value. The transaction value cannot be rejected except for the grounds laid down under the Valuation Rules. In Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] 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 examination of information including documents or on account of non-furnishing of information that the procedure for further investigation and determination of value in terms of Rules 4 to 9 would come into operation and would be applicable. Reasonable doubt will exist if the doubt is reasonable and for 'certain reason....
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....d 7 as compared to one or two cars by unrelated parties. It has been 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 considering other commercial factors. Further, that the two sample Bills of Entry submitted by Petitioner have been examined and it has been observed that in both the case of imports by unrelated parties, the import is on a High Seas Sale basis and, hence, the sale is at a premium to adjust for dealer's margins and for various costs such as marketing, distribution, logistics, etc. That this ensures that the retail price at which the cars are sold by the retailers to end customers is nearly the same as the prices of cars when imported on a High Seas Sale basis. It is also submitted that just by subtracting the High Seas Sale loading value from the overall assessable value as declared by the unrelated parties, the import prices closely approximate to the prices declared by the related parties. It has been submitted by an example, that the Bill of Entry No. 8863665 dated 26th Decemb....
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....ars imported by them unlike in the present case where the Petitioner is leveling sweeping allegations without any concrete evidence sufficient to cause investigation into the matter and that the Bills of Entry filed by Respondent No. 7 for the import of cars are being assessed provisionally at present. 188. The Petitioner had alleged that Respondents No. 6 and 7 have suppressed the Price Pattern from Special Valuation Branch (SVB) Authorities which was required to be provided, as per the Board's Circulars, to arrive at a decision to accept or reject the declared value. That the Petitioner had also alleged that the prices declared by Respondent No. 7 to the SVB are not in the ordinary course of business under fully competitive conditions and the Orders obtained from the SVB are based on false undertaking/affidavits/assurance that their admitted relationship with the foreign supplier has not influenced the import price declared by them. It was also alleged that the Respondents have not submitted the price lists for the goods being imported by them and that pricing details of goods supplied to buyers/branches/collaborators in other countries as required to be provided by the Re....
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....c. that was conducted by the officers of the enforcement Directorate on or about June 22, 1983." 193. Therefore, the price list of the foreign supplier/ manufacturer is not a proof of transaction value invariably, and existence of the price list cannot be the sole reason to reject the transaction value. As noted above, price list is no more than a general quotation. It does not preclude discounts, which may be granted for a variety of reasons including stock clearance. Further, mere production of price list cannot discharge the onus on the customs authorities to prove the existence of special circumstances indicated under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007. 194. The Petitioner's reliance upon the judgments of the tribunal in SA Putehally v. Comm. Of Customs (2004) 178 ELT 861 (Tri.) where the contention of the DRI to value the cars based on the "Tourist Price List" issued by the German manufacturer it has been submitted was upheld and which has been confirmed in the judgment of the Hon'ble Supreme Court in Gerson Da Cunha v. Commissioner of Customs (2015) 16 SCC 682, has been distinguished by the learned ASG on the basis that in th....
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.... of the goods in the domestic market of the country of exportation". Thus, when it is not permissible to compare the price of goods in the domestic market of country of exportation, it is manifestly impermissible to compare the prices in the domestic market of other countries. In the present case, the Petitioner has purported to compare the price in the domestic market of other countries such as UK and not just the wholesale price but the retail price which is manifestly impermissible. Further, Rule 9 (2) expressly prohibits determination of value on the basis of "the price of the goods for the export to a country other than India". 198. The Petitioner is seeking to compare the price in the domestic market of other, countries such as UK and not just the whole sale price but retail price which is manifestly impermissible. 199. That therefore it is impermissible to compare prices of goods for export to UAE. The Petitioner has purported to compare the price of car purchased by Porsche Middle East & Africa FZE, Dubai for import into Dubai. 200. Rule 12 provides when "proper officer" under Customs has reason to doubt the declared import value and that as settled in Century Meta....
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....emerhaven in Germany to Respondent No. 6 in India. The import of cars in India from Germany is a distinct transaction stream from import of cars into the UAE from Germany. (iv) Cars imported into the UAE are not further sold to/in India. (v) Petitioner has wrongly and deliberately attempted to mislead this Court by stating that Porsche Middle East has sold the Porsche cars imported into the UAE by it to Respondent No. 6 in India at prices lower than the purchase/procurement price of said cars by Porsche Middle East from Porsche AG, Germany. (vi) Further, Petitioner 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 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. (vii) The Petitioner had neither provided the said data to DRI, including vide hi....
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....hird generation Porsche MACAN) when different generation of car may be sold in India (second generation Porsche MACAN). c) Different configurations, customization options/ on-top features, extras, etc. would be available in different countries. Porsche India offers limited customization options to Indian customers as compared to customization options offered in Dubai. 203. With respect to the grievance made by the Petitioner to the purported non production of suppliers/manufacturers price list, it has been submitted that the same is without any basis as: (i) In the letter dated 09th January, 2015 issued by Petitioner to Respondent No. 3, 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. (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....
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....ion on the part of Respondent No. 6 or 7. The consequences for the importer not furnishing complete reply to the SVB questionnaire set out at Pg. 310 (para 9). b) Circular 5/2016 dated 09th February, 2016 - Pgs. 297 to 307 of Petitioner's Rejoinder to submit that: * 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) It has been submitted that following position emerges as per settled law as regards reference to suppliers/manufacturer's price list for the purpose of Customs valuation, - 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 gene....
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....ail 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 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,....
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....ance 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 circumstances surrounding the sale. (ii) Circular 5/2016 [at Pg. 302 of Petitioners Rejoinder Affidavit] requires importer to submit Transfer Pricing Report filed before Income-tax Department, and also the Advance Pricing Agreement. (iii) Circular of 2001 where it is specifically asked as to whether the prices are fixed on the basis of transfer price. (iv) The import prices of Respondent No. 6 are transfer prices arrived on arm's length basis 211. SVB is a specialised institution dealing with imports by Respondent No. 6 and there is no suppression/fraud by the said Respondents before SVB authorities. The SVB Circulars also provide for consequences if the importer does not furnish complete reply to the SVB questionnaire or provide the documents/ details. 212. In respect of impor....
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....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 Court cannot be called upon to act contrary to the statutory appellate provisions. SVB proceedings for subsequent period are pending. 219. The SVB Order was filed for a period of 3 years. Proceedings for the subsequent period are pending before the SVB authorities. 220. It has been submitted that Respondent No. 6 has provided the relevant information to SVB authorities and followed the procedure as laid down in Circular No. 4/2016 and Circular No. 5/2016. 221. That as required under the said circulars, the imports by Respondent No. 6 are assessed provisionally on which on having furnished appropriate provisional duty. 222. If deemed necessary, the SVB authorities can ask for further i....
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.... 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 after several hearings, this Court directed the DRI to reconsider the evidence produced by the Petitioner not only prior to the filing of the petition but even during the pendency of the petition and permitted the Petitioner to even file further documents for consideration by the DRI. After considering all the documents, the DRI has filed its latest affidavit in which they have stated that there is no material or evidence produced by the Petitioner which even remotely suggests that there was any under valuation with regard to the imports made by the various Respondent imp....
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.... (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 No. 3 before Rajasthan High Court on 25th November 2020. Delay and Laches 233. That the Petition suffers from inordinate delay and laches and deserves to be dismissed. 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 fil....
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....as 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 price list available for export to India during the relevant period. iv. Further, relevance of price-lists is limited to the period prior to the amendment in section 14 of the Customs Act in 2007 as the said section (prior to the amendment) provided that the value of goods shall be "deemed to be the price at which such or like goods are ordinarily sold,....
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....es 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 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. That the difference between the assessable value and the final list price published on th....
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...., 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 of the Petition], and the Hon'ble Supreme Court had vide its Order dated 15th July 2016 [Exh F at Pg. 413-414 of the Petition] stated: - "If the Additional Director, DRI, Mumbai Zone is convinced that there is credible information given by the Petitioner, he shall ....
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....ut 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 Respondents. The Petitioner, who claims to be an informer, has filed these proceedings himself against the private Respondents and the statutory authorities. The dispute between the private Respondent and the statutory authorities, ....