TaxTMI 
TaxTMI 
2024 (10) TMI 1078
X X X X Extracts X X X X
X X X X Extracts X X X X
....or 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 of the Customs Act, 1962, having been obtained by the private....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egedly 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 issue instructions to all Customs Authorities across India to assess all pending and future Bills of Entry....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tful 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 leakage. 10. Mr. Shah has taken us through the various documents including price list of the various models of Skoda, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Hon'ble Supreme Court in petitioner's WP(C) 20 of 2016, the officers of the DRI were obliged to ascertain as to whether the writte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 showing abnormal discounted rate for import in India by the private respondents from their related party as compared to that for supply to UAE, (iv) Comparison of price declared by Respondent No. 5 for its import of cars a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 upon by the petitioner in his writ petition itself viz. Century Metal Recycling (P) Ltd. v. Union of India, (2019) 6 SCC 655, Padia Sales Corpn. v. Collector of Customs, Bombay, 1993 Supp (4) SCC 57, Sharp Business Machines (P) Ltd., (1991) 1 SCC 154, Habasit Lakoka Pvt Ltd vs. CC (Imports)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 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) And despite being aware of the admitted position that price declared in CKD and FBU for imports by its subsidiary was determined by the parent German company, inter alia, based on duties and taxes in the country of importation and post importation costs of the subsidiary, despite there being no separate discount policy for India having been disclosed. (X....
X X X X Extracts X X X X
X X X X Extracts X X X X
....force 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 the entire system will collapse if this Court gives direction in respect of future imports. 19. Mr. Dada submits that even though having wide powers, the High Court in writ jurisdiction cannot review the decision of the executive but only the decision-making process. 20. Learned Senior Counsel submits that the Petition is hit by delay and laches. The Petitioner did not participate in investigation after 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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, charges, inbound and outbound transportation, extended warranty charges, inventory carrying costs, margins to be paid to dealers and profit of the distributor as well as prevailing local taxes and levies like VAT. These additional costs invariably lead to an increase in the sale price of a car. {Page 718, 719 para 8, 9} {Para 6-Affidavit-in-Reply dated 21st April, 2023 of the Respondent No. 5} 2. Value of FBUs is similar or lesser than the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 Department i.e DRI, SVB, jurisdictional Commissionerate are involved hence it is difficult to sunrise that all have simultaneously connived with Respondent No. 5. Further the actions of the officials of the customs officials of the customs Department also subject to Custom Revenue Audit ("CRA") under the provision of Section 16 of the Comptroller and Auditor's General (Duties, Powers and Conditions of Service) Act, 1971. {Page 733-Para 39} {Para 10-Affidavit-in-Reply dated 21st April, 2023 of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh 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 submitted that the order dated 10th April, 2003 of the Settlement Commission states that the action of the Petitioner was incorrect as per law which underlines the doubtful antecedents and credentials of the Petitioner. 31. Mr. Jetly, learned Senior Counsel has further submitted that the Petitioner has suppressed material facts and made misleading statements, levelled various allegations against officers of DRI without furnishing any prima facie proof in support thereof. 32. It has also been sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Petitioner expressed desire that he would like to place further material on record to assist the investigation. The Petitioner was thereafter requested to visit the DRI office with all additional material. It is submitted that the Petitioner thereafter visited the office on 4th October, 2016 and the information was discussed at length with him and that the Petitioner informed the officers thereafter that he had no additional material and would require some more time to do so. 35. That thereafter, on 16th November, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 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 indicate the actions taken based on the directions given by the Hon'ble Supreme Court in Criminal W.P. No. 20/2016 filed by the Petitioner. It is submitted that accordingly, DRI filed its reply before the Rajasthan High Court on 25th November, 2020 and although the next hearing in the Petition was due on 13th May, 2022, however, as per the court's website, no further update is available. That present Petition has been filed despite having knowledge of the fact that a similar issue is already pending before the Rajasthan High Court fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 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 vice versa. That this supports the fact that the transactions between them are at arm's length. After examining all the above documents and relevant legal provisions, the Investigation against Respondent No. 5, Pune was closed. SUBMISSIONS OF RESPONDENT NO. 4 47. The Respondent No. 4 as mentioned is the Director General of Valuation has also filed an affidavit in the Petition. It has been submitted that the contention of the Petitioner that from 1st January, 2013, all SVBs are under the control of Director General of Valuation is factual....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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 directed the Petitioner to file relevant documents before Additional Director, DRI in support of his claim. Accordingly, the Additional Director, DRI, Mumbai after taking into consideration and after thorough examination of the evidences placed by the Petitioner and evidences found during the investigation and with the approval of the Additional Director General, DRI, Mumbai, decided to close the investigation for want of any incriminating material indicating evasion of customs duty as alleged by the Petitioner. It is reiterated that before closure of the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional 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 himself so as to satisfy the conscience of the Court that the Petitioner was indeed prosecuting this Petition in larger public interest and not merely as a busy body. It was recorded that in spite of repeatedly stating so, learned Counsel for the Petitioner had refused and therefore it was not possible for the Court to pass any order unless the Petitioner disclosed all the particulars sought for and the matter was removed from the Board to come up in regular course. However, at the stage of dictation, learned Counsel for the Petitioner tendered apology and stated that an additional affidavit giving a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 per the order of the Hon'ble Supreme Court dated 29th March, 2023 : "The writ petition was on board last week at Serial No.9 of the Weekly Supplementary Board for final disposal of the matters which is taken every day after daily matters are over. Today, the petition is placed on board under the caption "For Directions" in view of the order passed by the Hon'ble Supreme Court dated 29th March 2023 in SLP (Civil) No. 12911/2023. 2. Stand over to 17th April 2023 to enable the Registry to take necessary steps as per the order passed by the Hon'ble Supreme Court dated 29th March 2023." 60. Thereafter, pursuant to an adminis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erification 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. 7. As far as Interim Application (L) No.9504/2023 is concerned, at the request of the learned Counsel for the Petitioner, list this interim application on 2nd May 2023." 63. On 2nd May, 2023, the following order was passed. "This interim application is taken out on 3rd April 2023. As regards the main writ petition is concerned, by order dated 25th April 2023 we have listed the petition for further hearing on 9th June 2023 in view of the ensuing Summer Vacation. 2. Having considered the averments made in the application and the prayers made therein, we are of the opinion that for deciding the application, the merits of the petition will have to be substantially heard. The petition is fix....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 investigation. 68. During the said hearing, this Bench had put a query to the learned Senior Counsel for the DRI as to the stand of the DRI in respect of the other private respondents viz. Respondents No. 6 and 7. The Learned Senior Counsel for the DRI had submitted that the Petitioner had not submitted any material in respect of the said Respondents inspite of having been given an opportunity. Learned Senior Counsel for the DRI had submitted that the material now placed on record by the Petitioner would be examined. This Court had accordingly recorded that if the Petitioner intends to file any additional material he can give the same within a particular time period and that after examining the material thoroughly the Court would be informed of the course of action the DRI intended ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve 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, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Similarly, the Petitioner has alleged that Respondent No. 7 is importing Luxury Cars from related parties, mainly BMW AG, Germany, whether as Fully Built Units (FBUs) or in Completely Knocked Down (CKD) condition by mis-declaration and suppression of material particulars from the Customs Authorities and that the said Respondents are importing these luxury cars at ridiculously low and unrealistic prices. 77. In response to the same, the learned ASG submits that the information provided by the petitioner vide his email 16.08.2023 is very generic and is an analysis made by him mostly based on information available in open source which is otherwise also available to the assessing officers and the investi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988. 81. It is submitted that in 2007, Section 14 of the Customs Act was amended vide the Finance Act, 2007. The Statement of Objects and Reasons and the Notes on Clauses - Customs, Customs tariff, Excise explained the reason for the introduction of the amendment in Section 14 of the Customs Act, 1962 as below. "Clause 86 seeks to amend section 14 of the Customs Act, 1962 which relates to valuation of goods for the purposes of assessment. The existing sub-section (1) of section 14 is based on concept of the deemed value of goods, but sub-section (1A) of section 14 mandates 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] where 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 reasons' and not Ideas fanciful and absurd. 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 should be based and predicated on grounds and material in the form of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itioner 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 one or two cars by unrelated parties. It is 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 va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed 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 Petitioner is levelling sweeping allegations without any concrete evidence sufficient to cause investigation into the matter. Further, it informed that the Bills of Entry filed by Respondent No. 7 for the import of cars are being assessed provisionally at present. 92. Learned ASG submit that the Petitioner has alleged that Respondent No. 6 and 7 have suppressed the Price Pattern from SVB Authorities which is 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 has also alleged that the prices declared by Respondent No. 7 to the Special Valuation Branch (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. Tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es 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 February 15, 1981 which was found during the course of search in the premises of Skefko, etc. that was conducted by the officers of the enforcement Directorate on or about June 22, 1983." 95. It is submitted that 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. A 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. 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. 96. With respect to the the Petitioner's reliance upon the judgments of the tribunal in SA Putehally v. Comm. Of Customs (2004) 178 ELT 861 (Tri.) wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Income Tax confirming the "Arm's Length Price" can be very much relied upon. It is emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents No. 6 and 7 to the Income Tax Authorities and the SVB are contradictory, there is no reason to reject the transfer pricing study of the Income Tax Authorities. It is further submitted that the Transfer Pricing study by Income Tax Authorities, if it confirms the Arm's length pricing, can be accepted for deciding the value of imported goods in the absence of any information to the contrary. That, no other law for the time being in force, restricts the Customs Authorities from doing so. 100. Learned ASG reiterates that the Petitioner has not provided any specific information that points out the flow back of funds ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible 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 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. SUBMISSIONS OF RESPONDENTS NO. 6 105. Learned Senior Counsel for Respondent No. 6 submits that the Respondent No. 6 is an entity which is resultant of amalgamation of three entities viz., (i) Volkswagen Group Sales India Pvt. Ltd. (ii) Volkswagen India Pvt. Ltd. And (iii) Skoda Auto India Pvt. Ltd. 106. Mr. Shroff, learned Senior counsel would submit that Volkswagen Group Sales India Pvt. Ltd has never imported Skoda cars in CKD/SKD form. 107. That in the year 2015, when the Petitioner wrote his first letter to the DRI and also filed Petition in the Hon'ble Supreme Court complaint was filed only against Volkswagen Group Sales India Pvt. Ltd. and that the 2009 SVB order is also against the said entity. 108. That, the Respondent No. 6 was inter-alia engaged in the impor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de 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 the amendment to section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ("Customs Valuation Rules"), the concept of "deemed value" no longer exists and has been replaced with the concept of "transaction value". Thus the value of imported goods has to be the transaction value 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, with the buyer and seller of the goods are not related and the price is the sole consideration for the same subject to other conditions. That thus there was a sea-change from the earlier section 14 and the earlier 1988 valuation rules. Prior to 2007 the assessing officer was not required to see the actual value or the amount actually paid or payable. He was required to see the value not for each specific transaction but the ordinary value in the course of international trade at the time and place of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of certain reasons and not mere ipse dixit. It is not permissible to subject imports on mere suspicion because one is distrustful and unsure without reasonable and certain reasons as that would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods. 112. Mr. Shroff would submit that comparison with the purchase price of car purchased by Porsche Middle East and Africa FZE, Dubai, from Porsche AG Germany which cars are for delivery in UAE by the Petitioner is improper. Mr. Shroff would submit that : (i) The Petitioner has at pages 44 to 47, at paras (i), (ii), (iii) & (iv) of Petition has referred to various Invoices and sea-way bills in respect of import by Porsche Middle East in UAE for delivery in Dubai (the invoices of cars imported by Porsche Middle East being at Pgs. 499 to 506 of Petition and at Pgs. 512 to 514 of Additional Affidavit of Petitioner). These are cars admittedly "for UAE delivery" (page 44....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Affidavit; d. Pg. 17 (Para 27) of R.6's Affidavit in reply to Interim Application of the Petitioner. (viii). The Petitioner had neither provided the said data to DRI, including vide his letter dated 9.01.2015 at Exh A, Pg. 89 of Petition, nor provided before the Hon'ble Supreme Court; and the said data is being provided for the first time in the present petition before this Hon'ble Court. As the present petition was filed premised on purported inaction on part of DRI, the said data besides being wholly irrelevant cannot be now relied upon as stated in Respondent No. 6's Submissions at Pg. 17 (para 27) of Respondent No. 6's Affidavit in reply to Interim Application. (ix). Further, as the Petitioner has not disclosed the source of the data or any particulars pertaining to purchases by Porsche Middle East, therefore the said data cannot be relied upon, as stated by R 6 in the following: a. Pg. 1221 (Para 12) of R.6's Affidavit filed in the context of locus of the Petitioner; b. Pg. 1267 (Para 3) of R.6's Additional Affidavit. (x). There is no Rule, or method of valuation, under the Customs Valuation Rules which requires comparison with imports in anot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....resent 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 [see Pg. 535 (Paras 44 and 45) and Pg- 540 [Para 57(v)] of Respondent No. 6's Reply]. (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 in German language (without English translation) stated to be "Price List of June 2016 for variants of A8 model of Audi AG, Germany from www.audi.de" [document is at Pgs. 367 to 426 of Compilation annexed to said Rejoinder]. This it is submitted is a sales brochure available for end-customers in Germany to have a look at the car, its configurations and features, extras, and the correlated price range. The sales brochure contains prices offered /recommended at the retail sales level in Germany. In support of this, it is submitted that as annexed to the written submission at Exhibit A, is a query raised on Audi Germany website which ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y to provide price list, the said Circular being applicable in respect of the SVB Order dated 15th January, 2009 of Respondent No. 6. (vi) Mr. Shroff submits that it is settled law as per the Compilation of Judgments submitted by Respondent No. 6, as regards reference to suppliers/manufacturer's price list for the purpose of Customs valuation, following position emerges - 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 general quotations which are subject to negotiations, and which do not preclude discounts, and cannot be the sole reason for rejecting transaction value [para 22 of the judgement in the case of Eicher Motors - Respondent No. 6's compilation page 1]. c) Discounts on price list prices is a recognized feature of international trade practice, which can be for variety of reasons. In cases, discounts ranging from 40% to 76% on price list prices has been allowed [judgements of Eicher Motors (supra), Mirah Exports (supra), Komet Precision Tools India Pvt. Ltd.(supra)] d) Further, to rely upo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facturer'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, there are local taxes on sale of goods. 115. As regards, the comparison with imports of unrelated entities, Mr. Shroff submits that in terms of Rule 12 (2) (iii) (a) and Rule 4 and Rule 5 of the Customs Valuation Rules for comparison with imports by unrelated entities, the following examination would be required - a) Whether the cars being imported are comparable being "identical goods" [Rule 2(1)(d)] or "similar goods" [Rule 2(1) (f)]. b) Whether the imports are at the same commercial level [R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion is similar in nature to the information provided in respect of imports by Respondent No. 6. However, the Petitioner has selectively targeted Respondent No. 6 and certain other importers, by making baseless and reckless allegations. 121. Mr. Shroff would submit that relevance of transfer pricing reports for the purpose of Customs Valuation (the Petitioner is alleged that Transfer Pricing is irrelevant and that accepting the transfer price is not correct). It is 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. [Pg. 436 of Petition] (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 (Common Affidavit In Rejoinder page 308 at 311, 022, where it is specifically asked as to whether the prices are fixed on the basis of transfer price. (iv) The import prices of R6 are transfer prices arrived on arm's length basis - [paragraph 88, Pg. 531, Para 38 of Responde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould not be permitted by the this Court in its writ jurisdiction. 127. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No. 6 is erroneous. 128. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities. 129. It is submitted by Mr. Shroff that in appeal proceedings from the SVB Order, Respondent No. 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. [i. Pgs. 519 to 521 (para 15 and 16), Pg-538 (para 53) of Respondent No. 6's Reply to Petition; ii. Para 9 of Reply of Respondent No. 6 to Interim Application.] 130. It is submitted that the SVB Order has attained finality in law, subject to issues in appeal proceedings. 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent to the Hon'ble Supreme Court's Order dated 15.07.2016, no information and material furnished by Petitioner pertaining to Respondent No. 6 but only as regards Respondent No. 5. iii. As admitted by the Petitioner [at Pg. 17 (para 13) of the Petition] - If information regarding Respondent No. 5 (Mercedes) would have been found credible and investigation would show that information recorded would result in detention and recovery of duty; then recording separate DRI-1 statement for investigation into other importers was to be considered. iv. Detailed investigation conducted against Respondent No. 5 [Pgs. 691 to 696 (para 8) of Reply of Respondent No. 5] v. Thorough investigation conducted and concluded by Respondent No. 3 [at Pgs. 1240 and 1241 (paras 10 and 12) of Reply of Respondent No. 3]. d) The Petitioner's statement that Respondent No. 3 has not investigated imports of Respondent No. 6, is belied, when on Respondent No. 3 carrying out thorough investigation it was found that the information being furnished by the Petitioner is not credible. e) Mr. Shroff would submit that further, in view of investigation by the DRI of Respondent No. 6's imports [refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e that of an informant, and should have been confined to furnishing of the information to Respondent No. 3. (i) This is also as per Hon'ble Supreme Court's Order dated 15th July, 2016 [Exh F@ Pg. 413]. 142. The Petitioner has been unduly seeking to compel the conduct and conclusion of investigation by statutory authorities (Respondent No. 3) as per Petitioner's agenda - (i) by making reckless and baseless allegations based on irrelevant material and truthful statements, (ii) by bringing frivolous proceedings before different Courts, and (iii) for improper motives. 143. These proceedings have been initiated for personal gains - by way of monetary reward. This is clear from the following : (i) Exh A at page 89 (ii) Pgs. 136, 170, 189 and 193 of the Petition - proceedings before Hon'ble Supreme Court. (iii) Circular 20/ 2015 - Guidelines for grant of reward at Pgs.348 to 362. (iv) Pg. 1173 [Para 5(ff)] of Additional Affidavit of Petitioner. (v) Pg.1230 (Para 24) of Additional Reply of Respondent No. 6. 144. Past proceedings against Petitioner : (i) Pg 15 (para 10) of the Petition. (ii) Pg 370 of Petition - Counter Affidavit before the Hon'ble Supreme Court. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in January 2022, and no explanation whatsoever provided by the Petitioner in the Petition for the interregnum period. That the Petitioner had furnished information to Respondent No. 3 stated to be relevant as to Respondent No. 6's imports only in January 2015 (i.e., letter dated 09th January, 2015 [Exh. A at Pg.89] and the present Petition filed in January 2022 has been filed after an unexplained delay of 7 (seven) years. 149. In reply to the Petitioner's oral arguments Mr. Shroff has also made additional submissions on behalf of the Respondent No. 6 as under : a) The Respondent no. 6 (Skoda Auto Volkswagen India Pvt. Ltd.) is filing these Additional Submissions with the permission of this Court, specifically in reply to the oral arguments made by the Petitioner on 5th July 2024. The Additional Submissions are in addition to the synopsis of submissions ("Written Submissions") submitted on behalf of Respondent No. 6 on 8th April 2024. b) The Petitioner has wrongly stated that the same Porsche cars imported into UAE by Porsche Middle East & Africa FZE, Dubai ("Porsche Middle East") are sold by Porsche Middle East to Respondent No. 6 in India. In this regard, it is subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 114 of the Petition] to the Additional Director, DRI, Mumbai Zonal Unit. iii. The Petitioner has, on the basis of the Hon'ble Supreme Court's said order, and the above-referred communication with the DRI, Mumbai Zonal Unit, premised the present Petition on the alleged inaction on the part of the Respondent no. 3, i.e., the DRI. iv. Where the Respondent no. 3 has, on examination of the material furnished by the Petitioner, in its Reply [at para 5, Pg. 1236. Reply of Respondent No. 3] stated that the Petitioner "did not provide any concrete or prima facie evidence in support of his allegations of undervaluation", and in its Additional Affidavit in Reply [at Pgs. 1283 and 1284 of Respondent No. 3's Additional Affidavit in Reply] stated the material to be "extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules", and as the Bangalore Zonal Unit is only a sub-ordinate unit of Respondent no. 3 (i.e., the DRI), the Petitioner's submissions that the DRI, Bangalore Zonal Unit has not filed any separate affidavit, is of no relevance. d. The Tribunal's decision in S.A. Futehally v. Commissioner of Custo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....08 of the Petition] f. The Hon'ble Supreme Court's decision in Varsha Plastics Pvt. Ltd. v. Union of India [Pgs. 81 to 91 of the Petitioner's compilation of cases] which was referred by the Petitioner to support reference to foreign journals, is clearly distinguishable as in the said case the imports were made in July 2000, and the scope of section 14 of the Customs Act prior to its amendment in 2007 was examined [Refer paras 2, 15, 19, 20, 35 and 37 of said decision]. In 2007, section 14 of the Customs Act was amended and there was a sea-change from the earlier section 14 with the concept of "deemed value" replaced by the concept of "transaction value". Prior to the amendment the ordinary value in the course of international trade was to be seen, whereas, post-amendment the transaction value i.e., price actually paid or payable for the specific transaction) was to be considered. [Refer submissions at para B (1) of Respondent No. 6's Written Submissions; Section 14 of the Customs Act is at Pgs. 56 to 58 of Respondent No. 6's Compilation of judgments]. SUBMISSIONS OF RESPONDENTS NO. 7 150. Adopting Mr. Shroff's argument, Mr. Prasad Paranjape, learned Counsel ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 same is dealt with by the Respondent No. 7 in para 65 at page no. 794 in the Affidavit in reply dated 08th April 2022. 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. It is further submitted that the difference between the assessable value and the final list price published on the website meant for the ultimate buyer will comprise of various elements such as duties, taxes, expenses, margins, overheads, and therefore again such a comparison is as good as comparing apples with oranges. 155. With respect to para (ii) at page 54 of the Petition, which seeks to compare the values declared in the two Bills of Entry, it is submitted that the same is dealt with by the Respondent No. 7 in para 66 at page no. 795 in the Affidavit in reply dated 08th April 2022. The value declared in the Bill of Entry No. 8750215 is where Respondent No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se to the Petitioner's submission 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, it has been submitted 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 Income Tax confirming the "Arm's Length Price" can be very much relied upon. It has been emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents No. 6 and 7 to the Income Tax Authorities and the SVB are contradictory, there is no reason to reject the transfer pricing study of the Income Tax Authorities. It is further submitted that the Transfer Pricing study by Income Tax Authorities, if it confir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rties 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. 164. We do not find any material which prima facie suggests that the said Respondent has not cooperated with the investigation and/or interfered with the same or the decision making process or that there has been any suppression or a mis-declaration or undervaluation or any collusion or connivance. The allegations levelled by the Petitioner against the Respondent authorities appear to be unfounded. 165. The Petitioner has also approached this Court without availing of alternate remedy by filing appropriate proceedings before an appropriate forum of the Respondents No. 1 to 3. 166. It has also been submitted that therefore the aforesaid Petition is not maintainable, is totally misconceived, misleading and devoid of substance, and has been filed with an oblique motive, hence, same is liable to be rejected/dismissed with exemplary costs. SUMMARY OF SUBMISSIONS Antecedents and Bona fides 167. The above submissions can be summarized as under: (i) The Respondents....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one Arvind Alaru vs Union of India & Ors. before the High Court of Rajasthan, wherein the Petitioner being the informant was made a favouring/friendly Respondent i.e. Respondent No. 5 in the Petition. Hearing in the said case has already taken place and the answering Respondent was directed vide order dated 03rd September, 2020 to indicate the actions taken based on the directions given by the Hon'ble Supreme Court in Criminal Writ Petition No. 20 of 2016 filed by the Petitioner. DRI filed its reply before the Rajasthan High Court on 25th November, 2020 and although statedly the next hearing in the Petition was due on 13th May, 2022, no further update is available. (iv) That before the Hon'ble Supreme Court, the Petitioner had submitted that his intention behind challenging the valuation was to get reward as per the guidelines laid down under Circular No. 20/2015-Cus dated 31st July, 2015. Allegations against Respondent authorities and their response (v) The Petitioner has levelled various allegations against officers of DRI without furnishing any prima facie material/proof/evidence in support thereof including by letter dated 9th January, 2015, that Respondents No. 5, 6 and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble 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." (x) By letter dated 9th September, 2016, the Petitioner submitted certain information along with annexures to the DRI requesting 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 FBUs or in CKD/SKD form when imported from related parties. (xi) The information furnished in the letters was general in nature containing sweeping allegations against five corporate houses, which was examined by the DRI. (xii) Since the Petitioner had expressed desire that he would like to place further material on record to assist the investigation, Petitioner was invited to attend the office of the DRI and the Petitioner thereafter visited the office on 4th October, 2016. The information was discussed at length with him and that the Petitioner informed the officers thereafter that he had no additional material....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l. (xix) On behalf of Respondent No. 5 it has been submitted that the Petition is hit by delay and laches. The Petitioner did not participate in investigation after 2016. That the DRI closed the investigation proceedings in 2020 after finding no evidence of undervaluation. The Petitioner approached this Court in 2022 i.e. 2 years after closure of investigation and after almost 6 years of disposal of its case raising similar grievance before the Hon'ble Supreme Court. (xx) And therefore the allegation of inaction by DRI is incorrect. The Respondent No. 5 has made elaborate submissions in this regard in its Affidavit-in-reply dated 21st April, 2023 wherein they have stated that a detailed investigation was conducted. (xxi) Orders passed under Section 92CA (3) of the Income Tax Act, 1961 by the Income Tax (Transfer Pricing) authorities Pune in respect of Respondent No. 5 for AY 2015-16 and AY 2014-15 have been scrutinized and the Income Tax authorities have not disturbed the "Arm's Length Price" of transactions as reported by Respondent No. 5. (xxii) As per the Respondent authorities, scrutiny of the Financial statements of Respondent No. 5 for the past years does not indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion and with the approval of the Additional Director General, DRI, Mumbai, decided to close the investigation for want of any incriminating material indicating evasion of customs duty as alleged by the Petitioner. Before closure of the investigation, three letters were sent to the Petitioner dated 27th May, 2019, 10th July, 2019 and 19th August, 2019 seeking the additional information / documents pertaining to the enquiry being conducted by DRI, MZU into import of SUVs and vehicles caused by Respondent No. 5, however, statedly the Petitioner chose not to reply to any of the said letters and as the department did not find any incriminating evidences even after thorough investigation spanning over a period of almost four years, the investigation in the matter was closed after sharing the Investigation Report with DG, DRI, New Delhi. (xxvi) As regards the specific allegations made by the Petitioner against Respondent No. 5, Mr. Dada, Learned Senior Counsel has referred to the table in paragraph 25 above. (xxvii) It has been submitted by the Respondent authorities that in the garb of a fresh Petition before this Court, the issue already investigated by DRI and closed for want of any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Senior Counsel for the Petitioner submitted that if there was any additional material the same would be given to the DRI within a period of three weeks with a copy to the concerned private Respondents and the learned Senior Counsel for the DRI had stated that the DRI would take 6 weeks after the Petitioner submitted the additional information. Accordingly, at the request of the learned Senior Counsel for the DRI, the matter was stood over to 05th October, 2023. By the said order, the learned Senior Counsel for the Petitioner agreed that in view of the aforesaid course of action, the Petition could not be decided within the time limit of 3 months stipulated by the Hon'ble Supreme Court and if necessary, the Petitioner would request for an extension. The said order dated 28th July, 2023 is usefully quoted as under: "This Petition is specially assigned to this bench. 2. On the last occasion the learned Counsel for the Petitioner had concluded his arguments. Thereafter, the arguments on behalf of Respondent No. 5 were over. The contentions of Respondent No. 5 was that the investigation has already been conducted and concluded by the Directorate of Revenue Intelligence (DRI) and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said material thoroughly, the Hon'ble Court would be informed of the course of action the DRI would propose to take. 173. The Petitioner submitted certain information in respect of Respondents No. 6 and 7 through an email dated 16th August, 2023. 174. The Petitioner's claim has been observed to be general like all luxury car imports by various multinational brands and is not specific. The Petitioner had 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, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Similarly, the Petitioner had also alleged that Respondent No. 7 was importing Luxury Cars from related parties, mainly BMW AG, Germany, whether as Fully Built Units (FBUs) or in Completely Knocked Down (CKD) condition by mis-declaration and suppression of material particulars from the Customs Authorities and that the said Respondents are importing these luxury cars at ridiculously low and unrealistic prices. 175. It has been observed that the inf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale, for delivery at the time and place of importation in the course of international trade and that therefore, prior to 2007, the assessing officer was not to see the actual value of the goods, but the value at which such goods or like goods were ordinarily sold or offered for sale for delivery at the time and place of import. Similarly, the words "in the course of international trade" were relevant. The Assessing Officer was 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 provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988 till 2007. Section 14 of the Customs Act was amended vide the Finance Act, 2007 to value goods on the basis of transaction value as against deemed value. With the amendment of Section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation Rules, 2007 ("CVR"), the concept of "transaction value" became relevant and not deemed value. As per the new Section 14 of the Customs Act, 1962 that was introduced vide the Finance Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the same into India. It is submitted that the same is specifically barred by Rule 9 (2) of the Customs 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. Provisional and not final assessment of Bills of Entry 183. According to the Respondent Authorities, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and that a Show Cause Notice vide F.No. DGCEI/MZU/I & IS'C'/30-81/06 dated 31st March, 2008 was issued to Respondent No. 6 by the DGCEI, Mumbai in respect of valuation. 185. That unlike in the present writ petition where the Petitioner is demanding a roving 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 has been submitted that, presently, the issue is pending before the Hon'ble Supreme Court of India. 186. 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. 187. Respondent No. 7 was also issued 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 based on very specific intelligence with the department that the Brand Promotion Expense incurred by Respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of non-submission of price list would not be relevant. 191. That, therefore, prima facie, there doesn't appear to be any misrepresentation or suppression as alleged by the Petitioner. 192. 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. In 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 February 15....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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. Respondent No. 6 196. The material relied upon by the Petitioner is extraneous and irrelevant for the purposes of custom's valuation and there is no suppression before the customs/SVB authorities. Impermissible to compare the prices in the domestic market of other countries 197. The new Customs Valuation Rules inter alia, provide that: (i) Rule 3(3)(a) and Rule 3(3)(b) provide when transaction value is to be accepted where the buyer and seller are related. (ii) If the transaction value cannot be accepted, then value is to be determined by proceeding sequentially through rules 4 to 9. (iii) Rule 9, which is the residual method for valuation, provides for the value to be determined using "reasonable means consistent with the principles and general provisions" of the Customs Valuation Rules, and expressly excludes certain basis for determining the value. In fact Rule 9 (2) expressly prohibits dete....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cars imported by Porsche Middle East are cars admittedly "for UAE delivery". (ii) These cars are imported by Porsche Middle East for use in the domestic market in Dubai. These cars are not exported to India. This is clear from the invoices and sea-way bills which have been annexed by the Petitioner and which show supply by Porsche Germany to Porsche Middle East, where port of departure is in Germany and port of destination is UAE. (iii) As the Petitioner did not provide the bills of entry along with the corresponding invoices and certificate of origin in respect of imports made by Respondent No. 6, Respondent No. 6 filed an Additional affidavit dated 30 June 2023 in which Respondent No. 6 has provided (a) bills of entry, (b) corresponding invoices and (c) certificate of origin in respect of the imports of Porsche cars imported by Respondent No. 6 in India as referred by the Petitioner at paras (i) to (iv) at Pgs. 45 to 47 of Petition. Documents produced in the Additional Affidavit clearly show that the cars imported by Respondent No. 6 in India, though sold by Porsche Middle East to Respondent No. 6 for sale in the Indian market, are shipped by Porsche AG, Germany direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctors - The economic factors, such as the demand pattern of the customers within the market, the competitive factors and its impact on retail prices; The nature of operations of the importer within the country; along with the functions and risks assumed by the importing entity, along with associated costs. Whether the importer deploying assets, and bearing risks in relation to stock risk, working capital risk, etc. and incurring costs in relation to promotion and marketing costs, nature of overhead costs, etc. The supply chain for import, distribution and retail sale adopted within the country; and the margins and costs associated at each leg of such supply chain, including rates of taxes and duties in the market. Any specific regulatory requirements in the country requiring the cars 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 diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as no relevance to the SVB Order that was passed on 15th January, 2009 against Respondent No. 6, and therefore this document cannot be the basis for alleging any suppression before the SVB authorities. (iii) The import prices of Respondent No. 6 are not on the basis of any price list and therefore there was no requirement to furnish any purported price list before SVB authorities. (iv) As per the SVB Circulars, the importer is required to provide price list only where the import prices are as per price list; (v) This Court's attention has been drawn 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 to submit that: * 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 or 7. The consequences for the importer not furnishi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the website, and that it was mandatory to submit the price list to SVB authorities is false to his knowledge and are made to deliberately mislead this Court. (viii) There being a price list for dealer tools and dealer equipment imported by Respondent No. 6 from Volkswagen AG 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. 204. With respect to comparison by the Petitioner with retail prices in the UK, it has been submitted 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 (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) It is reiterated that Rule 9 of the Customs Valuation Rules expressly prohibits determination of valu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecific submissions in this regard. b) No Bill of entry is provided in respect 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. 207. Imports at different commercial levels and at different quantity levels cannot be compared. 208. It is submitted that reference by the Petitioner to import of 'Bentley' cars cannot be the basis to allege undervaluation of imports by Respondent No. 6 of Audi, Porsche and Lamborghini cars. 209. The Petitioner vide its letter dated 09th January, 2015 issued to Respondent No. 3 has given information in relation to imports by Tata Motors Pvt. Ltd. which information is similar in nature to the information provided in respect of imports by Respondent No. 6 but Petitioner has selectively targeted Respondent No. 6 and certain other importers, by making baseless and reckless allegations. 210. Relevance 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 submiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Petitioner is seeking to circumvent the proceedings and procedures under the Customs Act, which should not be permitted by this Court in its writ jurisdiction. 215. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No. 6 is erroneous. SVB Orders pending in appeal and SVB Orders for subsequent period pending 216. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities. 217. That in appeal proceedings from the SVB Order, Respondent No. 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 proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lt in detention and recovery of duty; then recording separate DRI-1 statement for investigation into other importers was to be considered. iv. Detailed investigation conducted against Respondent No. 5 v. Thorough investigation conducted and concluded by Respondent No. 3. d) The Petitioner's statement that Respondent No. 3 has not investigated imports of Respondent No. 6 is belied, when on Respondent No. 3 carrying out thorough investigation it was found that the information being furnished by the Petitioner is not credible. e) In view of investigation by the DRI of Respondent No. 6's imports the Petitioner's statement is incorrect and misleading. f) Statedly the premise of the Petition as to alleged inaction on part of Respondent No. 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 seek....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use (m) of the Petitioner's affidavit on locus dated 1st December 2022, page 1165). It is beyond comprehension as to how in his role as an advocate he obtained this proprietary confidential information. 231. It was submitted that the 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. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent No. 6 in India. Further, the Petitioner itself has stated that the said imports in UAE are "for UAE delivery". iv. For various reasons the import prices of cars imported in UAE are not comparable to cars imported in India. 235. The Tribunal's decision in S.A. Futehally v. Commissioner of Customs [at Pg. 104 to 115 of Petitioner's compilation of cases] is distinguishable, and not relevant, inter alia for the following reasons - i. In that case, it would appear that imports were made by end- customers, and the appellant (S. U. Futehally) facilitated the imports by the said customers [refer paras 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y filed by the Respondent No. 7 are provisional and therefore, the allegation made by the Petitioner that there is undervaluation is anyway premature as the proper officer has not even applied his mind. 245. Prima facie, there neither appears to be any misrepresentation or suppression by the private parties nor any of the above submissions by the Respondents appear to be controverted with any credible evidence by or on behalf of the Petitioner. 246. On behalf of the Petitioner it has also been argued at the time of the closing of the arguments that, 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 sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e international pricing, it is not possible for this Court in writ jurisdiction to arrive at determinative findings. Rights of the Respondents to pursue their statutory remedies also cannot be prejudiced. 249. We, therefore, called upon the statutory authorities to look into the information. Such course of action was adopted by the Hon'ble Supreme Court when the Petitioner brought before them certain information. The Hon'ble Supreme Court did not directly issue any specific direction to the private parties, but 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 informat....