TaxTMI 
TaxTMI 
2026 (8) TMI 608
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....114A of the Customs Act, 1962, and a penalty of Rs. 10,00,000/-was imposed on the second appellant under Section 112(a) of the Act. Aggrieved by the said Order-in-Original, the present appeals have been filed. 2. The first appellant purchased a brand-new Maserati GranTurismo from M/s. Hyperformance Cars, U.K., for GBP 53,000, imported it through Chennai Port under Bill of Entry dated 08.12.2008 and claimed the concessional rate of duty under Notification No. 21/2002-Cus. The vehicle was examined, assessed on the declared transaction value and cleared for home consumption. Subsequently, pursuant to an investigation by the Directorate of Revenue Intelligence, Ahmedabad, into imports of luxury cars allegedly facilitated through Shri Alberto Bestonso and Shri Lorenzo Bestonso, the Department, relying upon the statements of Shri Alberto Bestonso, foreign invoices, e-mails, electronic records and documents obtained from overseas authorities, alleged undervaluation and proposed rejection of the declared transaction value under Section 14 of the Customs Act read with the Customs Valuation Rules, recovery of differential duty, confiscation of the vehicle and imposition of penalties. The ....
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.... decisions. 4. The Ld. Authorized Representative Ms. Rajini Menon reiterated the findings of the adjudicating authority and submitted that the investigation conducted by the Directorate of Revenue Intelligence, Ahmedabad, revealed a systematic modus operandi adopted by Shri Alberto Bestonso and Shri Lorenzo Bestonso for importing luxury cars into India at suppressed values. It was contended that the Department had rightly rejected the declared transaction value on the basis of the cumulative evidence comprising the statements recorded under Section 108 of the Customs Act, foreign invoices, e-mail correspondence, electronic records and documents received from overseas authorities, which established that the invoice produced before the Customs did not reflect the actual consideration paid for the vehicle. According to the Revenue, the appellant, having purchased the vehicle through Shri Alberto Bestonso, could not disown the transactions undertaken by the intermediary when foreign invoices reflected the actual purchase price of the vehicle, thereby establishing deliberate undervaluation. It was further submitted that adjudication proceedings under the Customs Act are not governed ....
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....14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and whether the assessable value determined by the adjudicating authority is sustainable. It is well settled that transaction value constitutes the primary basis of assessment under Section 14. However, where the proper officer entertains reasonable doubt regarding the truth or accuracy of the declared value and such doubt is supported by cogent and reliable evidence, the declared value may be rejected under Rule 12 and the assessable value determined in accordance with the Valuation Rules. 9. In the present case, the Revenue has not proceeded merely on suspicion or on the basis of a solitary document. The investigation conducted by the Directorate of Revenue Intelligence formed part of a nation-wide investigation into systematic undervaluation of imported luxury motor cars through overseas intermediaries. During the investigation, contemporaneous invoices, commercial records, electronic correspondence, statements and other documentary evidence were recovered and relied upon collectively to establish undervaluation. The evidence, therefore, has to be appreciated as....
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.... declared transaction value is, therefore, according to us founded upon cogent, contemporaneous and independently corroborated documentary evidence and not upon mere suspicion. The ratio of the aforesaid decisions is, therefore, clearly distinguishable on the above facts duly supported by documentary evidence. 12. The appellant also relied upon Vinod Solanki v. Union of India, 2009 (233) E.L.T. 157 (S.C.), and Mohtesham Mohd. Ismail v. Special Director, Enforcement Directorate, 2007 (220) E.L.T. 3 (S.C.), to contend that a retracted statement, in the absence of independent corroboration, cannot form the sole basis of an adverse finding. The principle laid down in the above decisions is equally well settled. However, the present case does not rest solely upon the statement of Shri Alberto Bestonso. His statement constitutes only one link in a larger chain of evidence and stands independently corroborated by the contemporaneous invoices, the annexure furnished by him, electronic correspondence, import documents and the report of the First Secretary (Commercial), High Commission of India, London. The impugned findings are thus supported by substantial independent documentary eviden....
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.... the annexure furnished by him showing the transaction value, the electronic correspondence, the commercial records recovered during investigation and the verification carried out by the First Secretary (Commercial), High Commission of India, London. These materials constitute a consistent and mutually corroborative body of evidence and cannot be discredited or viewed in isolation. 16. The contemporaneous documentary evidence, in our considered view, conclusively establishes that the declared transaction value did not represent the true transaction value. The invoice produced by the appellant, namely Invoice No. 1029 dated 28.10.2008 issued by M/s. Hyperformance Cars Ltd., U.K., declared the sale price of the imported Maserati GranTurismo at GBP 53,000. However, during investigation, Shri Alberto Bestonso produced the contemporaneous Invoice No. 37103676 dated 28.10.2008 issued by M/s. H.R. Owen Sports Cars, U.K., relating to the very same vehicle, reflecting a price of GBP 80,516 (inclusive of VAT). The authenticity of the said invoice stood independently corroborated by the First Secretary (Commercial), High Commission of India, London, in his report dated 14.05.2009, which co....
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....onsequences. Applying the above principles, we uphold the rejection of the declared transaction value under Rule 12 and the enhancement of the assessable value under Section 14 read with Rule 3 of the Customs Valuation Rules, subject only to exclusion of the VAT refund as discussed above. Whether the appellant is eligible for the benefit of the Notification No. 21/2002-Cus.? 19. We now proceed to examine whether the appellant is entitled to the benefit of Serial No. 344(2) of Notification No. 21/2002-Cus., dated 01.03.2002. The Revenue denied the exemption principally on the ground that the Maserati GranTurismo was registered with the Driver and Vehicle Licensing Agency (DVLA), United Kingdom, before its export to India and, therefore, ceased to be a new motor vehicle. The question, therefore, is whether such registration, by itself, is sufficient to deny the benefit of the notification. 20. We are unable to agree with the above contention. Mere registration of a motor vehicle in the exporting country does not, by itself, establish that the vehicle had been put to use. The decisive test is whether the vehicle had actually been used prior to export. This position stands cla....
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....se, cannot by itself disentitle the appellant from claiming the benefit of the notification. 23. The Revenue contended that once undervaluation is established, the appellant is not entitled to the benefit of the exemption notification. We are unable to accept the said contention. The issue of valuation and the issue of eligibility to an exemption notification rest on different statutory foundations. Rejection of the declared transaction value under Section 14 of the Customs Act does not, by itself, result in denial of an exemption notification. The entitlement to an exemption has to be examined independently on the basis of the conditions prescribed therein. In the present case, although the declared value has rightly been rejected, the Revenue has failed to establish that the imported vehicle was a used motor vehicle so as to deny the benefit of Serial No. 344(2) of Notification No. 21/2002-Cus. 24. The above conclusion is also consistent with the principles laid down by the Constitution Bench of the Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co., 2018 (361) E.L.T. 577 (S.C.). The Constitution Bench held that exemption notification....
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....l No. 344(2) of Notification No. 21/2002-Cus. does not efface or condone the fraudulent act of undervaluation. The liability to confiscation arises from the misdeclaration of value and operates independently of the appellant's entitlement to the exemption notification. We accordingly hold that the order confiscating the imported vehicle under Section 111(m) of the Customs Act warrants no interference. 27. Having held that the imported vehicle is liable to confiscation under Section 111(m), we now examine the redemption fine imposed under Section 125 of the Customs Act. It is not in dispute that the imported vehicle had already been cleared and was no longer available for confiscation or redemption. Further, there was no evidence that it was provisionally assessed or cleared. The Hon'ble Supreme Court in Commissioner of Customs v. Finesse Creation Inc., 2023 (385) E.L.T. 513 (S.C.) has authoritatively held that redemption fine under Section 125 cannot be imposed where the goods are no longer available for confiscation. Respectfully following the said decision, we hold that although the confiscation of the vehicle is sustainable, the redemption fine imposed under Section 1....