TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1138
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....[the 2007 Valuation Rules] read with section 14 of the Customs Act, 1962 [the Customs Act] and re-determines the assessable value of the said Bentley Flying Spur Automatic Car at Rs. 88,61,962.20/- in terms of rule 3 of the 2007 Valuation Rules read with section 14 of the Customs Act; (ii) Denies the benefit of concessional rate of duty under Serial No. 344 of the Notification No. 21/2002-CUS dated 01.03.2002 [the Notification] in respect of the Automatic Car as the vehicle was not new and was also registered/sold prior to its importation into India and, accordingly, directs for charging duty; (iii) Confirms the demand of customs duty short paid amounting to Rs. 61,93,939/- on the basis of re-determined assessable value under the provisions of section 28(4) of the Customs Act and orders for recovery from the importer Jatin Ahuja, Director of M/s Big Boyz Toyz. The amount deposited by Jatin Ahuja during investigation has been ordered to be appropriated; (iv) Directs for recovery of interest on the delayed payment of differential duty under section 28AA of the Customs Act; (v) Imposes penalty of Rs. 10,00,000/- on Jatin Ahuja, under section 112(a) ....
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....ted 21.10.2014 was issued to the appellant by the Additional Director General for re-determination of the assessable value of the Automatic Car under rule 3 of the 2007 Valuation Rules. The relevant portions of the show cause notice are reproduced below: "13. With regard to the duty liability, the standard Basic Customs Duty rate of 100% was applicable at the relevant time to motor cars falling under tariff heading 8703 of the First Schedule to the Customs Tariff Act, 1975. Vide exemption Notification No. 21/2002-Customs dated 01.03.2002, a lower rate of 60% was prescribed for import of specified categories of cars subject to certain conditions as mentioned in Sl. No. 344 of this notification. The benefit of this exemption has been claimed in the bill of entry filed for clearance of the impugned car at the time of import. xxxxxxxxxxxx It is evident that to avail the above exemption, the car has to satisfy two conditions, namely it has to be new and it should not have been registered anywhere prior to its importation. Thus, any car which was either not new or which was registered anywhere prior to its importation into India would not be eligible for the be....
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....ustoms. Thus, there is clear evidence of mis-declaration of value of the impugned car before the Customs authorities. Xxxxxxxxxxx 20. (i) to (v) xxxxxxxxx (vi) The assessable value of the impugned car i.e. Bentley Flying Spur Automatic bearing Chassis No. SCBBE53W39C060425 imported by Shri Jatin Ahuja under bill of entry no. 838339 dated 12.10.2009 is liable for re-determination on the basis of the actual transaction value which is 88,61,962.20 in terms of Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962." (emphasis supplied) 7. Replies were filed to the show cause notice and the allegations made were denied. 8. However, the Principal Commissioner did not accept the submissions made in the replies and confirmed the demand. The relevant potions of the order dated 12.05.2016 passed by the Principal Commissioner are reproduced below: "29.1 xxxxxxxx I find that in the present case, the transaction value for the purpose of assessment and Customs Duty liability of the importer was required to be the price actually paid or payable for the Bentley Flying Sp....
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....he car was registered in U.K. prior to its importation into India. This establishes that impugned car had been subjected to sale transaction as the car was manufactured in U.K. and sold and registered there and then exported to India by M/s. A.K. International (IE) Ltd. as per documents filed at the time of import and hence the conditions specified at Sl. No. 344, cited supra, are not fulfilled and the said car cannot be termed as a new car in terms of the Import Licensing Note to Chapter 87 of ITC (HS). Accordingly, I hold that the condition mentioned at Sl. No. 344 of Notification No. 21/2002-Cus. is not fulfilled and the importer is not eligible to concessional rate of duty prescribed under the said notification." (emphasis supplied) 9. Shri Pradeep Jain, learned counsel appearing for the appellant assisted by Shri Sambhav Jain and Shri Sumit Sarna, submitted that: (i) Rule 3 of the 2007 Valuation Rules is not applicable as there is no evidence to substantiate that the car was sold to Jatin Ahuja for GBP 1,09,850; and (ii) The benefit of the Notification was available to the appellant as registration of the car was a must in UK before it could be ex....
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....e Condition No. (1) (2) (3) (4) (5) (5) 344 8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02), including station wagons and racing cars, new, which have not registered anywhere prior to importation,- (a) if imported as completely knocked down (CKD) Unit 10% - - (b) if imported in any other form 60% - - 13. The contention for learned counsel for the appellant is that the appellant is entitled to the benefit of the Notification and the applicable customs duty would be only 60%. Learned counsel pointed out that before the Automatic Car could be exported from UK, it had necessarily to be registered and that is why registration was done. The car was a new car and had run only 123 kms. 14. It needs to be noted that the Automatic Car was subjected to inspection at the time of time of import when the Bill of Entry was filed and the Report of the Inspector is reproduced below: "Inspector's Report. .................. ....
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....icles from such countries where temporary registration is mandatory before exportation of the vehicle. Insofar as the facts are concerned, the Settlement Commission has noted that the car was imported by the U.K. dealer of Ferrari, Italy and sold to M/s. Hyperformance Cars Ltd., U.K. on 18 December, 2007. The car was entered for export to India at the relevant port on 20 December, 2007 and the consignment left for India on 30 December 2007 under a bill of lading. There is a finding of fact that the car was not used in the U.K. and was registered in the U.K. on 11 January, 2008 only to meet the transit requirement from Italy to India through the U.K." (emphasis supplied) 18. In Abbas Kuramputhoor, the Tribunal considered the inspection report and also the fact that registration in U.K. was a formality and held that the car should be treated as a new car entitled to the benefit of the Notification. The observations are: "8. On a very careful consideration of the issue, we find that the benefit of Customs Notification for import of new car cannot be denied simply on the basis of its prior registration before shipment to India. The Board's Circular has also clarifi....
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.... * the cars attract VAT and were paid in full. * Mr. Kalra claims VAT on all exported vehicles to India * None of the vehicles have been re-designed, except in some cases where extras such as car mats, televisions, navigation systems, wheels were removed at the purchaser's request. 3. The following documents forwarded by HMRC are enclosed. * copy of the passport of Mr. Sumit Walia, * schedule indicating the price of the vehicle at the time of export and vehicle registration documents, * VAT return of M/s. AK International pertaining to periods 01.01.2010 to 31.03.2010 and 01.04.2010 to 30.06.2010." (emphasis supplied) 22. The relevant portion of the Schedule containing the price of vehicle is reproduced below: (1) Price of vehicle in GBP at the time of export (2) Vehicle classis No. (3) Sr. No. in the list (Annexure-A) 109850 Bentley SCBBE53W39C060425 71 23. Serial No. 71 of list A shows the value of the car GBP 91,500. It is evident that the price of the new vehicle from the showroom has been quoted in the aforesaid letter as GBP - 1,09,850. 24. According to the appellant it had purcha....
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....) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. (b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; (ii) the deductive value for identical goods or similar goods; (iii) the computed value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determi....