Arun Fabricators Vs Additional Director General (Madras High Court)
Conclusion: Writ petition challenging the seizure and confiscation of the vehicle involving misuse of diplomatic privileges to evade customs duty on imported vehicles was disposed of by High Court by granting interim release of the vehicle to assessee subject to condition that assessee will pay a fine of ₹19 lakhs and a penalty of ₹1 lakh and should not sell, alienate, or encumber the vehicle pending the outcome of the appeal before Commissioner (Appeals).
Held: Assessee was a Chennai-based partnership firm, had purchased a Toyota Vellfire for ₹42 lakh from a local dealer in 2019 and had been using the vehicle until it was seized in 2022 by DRI officials. According to the seizure memo, the vehicle had originally been imported under diplomatic privilege by a Counsellor of the Embassy of the Democratic People’s Republic of Korea, availing exemption from customs duty under Notification No. 3/1957. The allegations surfaced that a syndicate was involved in importing multiple high-end cars in the names of foreign diplomats, evading duties, forging bills of entry, and subsequently selling the cars to unsuspecting buyers in India. n September 2024, the Additional Commissioner of Customs at Nhava Sheva ordered confiscation of the vehicle but allowed redemption on payment of a fine of ₹19 lakh. The order also demanded re-assessment of duties, confirmed a duty shortfall of over ₹40 lakh against the diplomat, and imposed multiple penalties running into several lakhs on various individuals allegedly involved in the chain of transactions. Assessee challenged the confiscation and seeking release of the vehicle, argued before the High Court that they were bona fide purchasers for value, having relied on documents provided by the dealer. However, DRI strongly opposed release, stating the seriousness of the scam, which it claimed involved large-scale smuggling of luxury cars under cover of diplomatic immunity. It was held that Court had released the car only as an interim custody and release of the car should not be construed as if assessee had been exonerated from the alleged violation committed. It was also made clear that Commissioner (Appeals) should deal with the appeal on its own merits and in accordance with law and order passed in the present writ petition would not have any bearing.
