Case Law Details
P.P. Jasique Vs Commissioner Customs (CESAT Bangalore)
CESTAT Bangalore held that export and re-import of Ferrai Motor Car between India and UAE under Carnet Scheme using a Carnet De Passage (CDP) issued by Western India Automobile Association mis-declaring the purpose as touring instead of actual purpose of repair unjustified. Accordingly, CDP benefit denied.
Facts- The appellant exported a Ferrari Motor Car from India to UAE in September, 2013 under Carnet Scheme using a Carnet De Passage (CDP) issued by Western India Automobile Association (WIAA). He had obtained the said ‘Carnet De Passage’ (CDP) by declaring to WIAA that he was taking the said vehicle to UAE for the purpose of touring. However, the vehicle exported was not used for touring but was instead subjected to repairs at Al Tayer Motors LLC. After the said repairs, appellant imported the vehicle back to India under the cover of the same CDP and sought to clear it free of customs duty.
Investigations conducted revealed that the appellant was present in India during almost the entire period when the vehicle was in Dubai for repairs and he had not used the vehicle for the purpose of touring undertaken by him and he did not possess an international license which would have enabled him to drive the vehicle in UAE. Therefore, the appellant was not eligible for duty-free clearance of the said vehicle on its import.
Accordingly, the Commissioner denied the benefit of duty-free import of the Ferrari Italia 458 car under Carnet De Passage, but extended the benefit of Notification No.94/96 dated 16.12.96. Accordingly, duty of Rs.95,00,184/- was confirmed on the value of Rs.44,46,745/- being the cost of repairs of the car. The Commissioner holding that the appellant had resorted to deliberate misdeclaration and utilised the carnet documents to clear the vehicle without payment of duty, held that the car was liable for confiscation u/s. 111(m) of the Customs Act, 1962. Accordingly, the car was allowed to be redeemed on payment of redemption fine of Rs.20,00,000/- u/s. 125 and penalty of Rs.10,00,000/- was imposed on the appellant u/s. 112(a) of the Customs Act 1962. Being aggrieved, the present appeal is filed.
Conclusion- Held that there is a misdeclaration on the part of the appellant to the effect that the car was exported only for the purpose of repair and reimported thereafter. Since the appellant has accepted his liability on the value of his repairs, the demand of duty on repairs is confirmed. The Commissioner observing that ‘no case of physical concealment within the car having been brough out, the car being available for examination by Customs and duties of Customs having already been paid on the car at the point of first import, denial of benefit of said Notification No.94/1996-Cus. dated 16.12.1996 would be travesty of justice’. Having extended the benefit of the Notification No.94/1996 dated 16.12.1996 which is eligible for goods being exported for repairs, we do not find any reason for confiscating the vehicle nor imposition of penalty u/s. 112(a) of the Customs Act 1962. Hence redemption fine and penalty is set aside.
FULL TEXT OF THE CESTAT BANGALORE ORDER
Briefly stated the facts of the case are that the appellant P.P. Jasique exported a Ferrari Motor Car from India to UAE in September, 2013 under Carnet Scheme using a Carnet De Passage (CDP) issued by Western India Automobile Association (WIAA). He had obtained the said ‘Carnet De Passage’ (CDP) by declaring to WIAA that he was taking the said vehicle to UAE for the purpose of touring. However, the vehicle exported was not used for touring but was instead subjected to repairs at Al Tayer Motors LLC. After the said repairs, Shri P.P. Jasique imported the vehicle back to India under the cover of the same CDP and sought to clear it free of customs duty. Investigations conducted revealed that the appellant was present in India during almost the entire period when the vehicle was in Dubai for repairs and he had not used the vehicle for the purpose of touring undertaken by him and he did not possess an international license which would have enabled him to drive the vehicle in UAE. Therefore, the appellant was not eligible for duty-free clearance of the said vehicle on its import. Accordingly, the Commissioner denied the benefit of duty-free import of the Ferrari Italia 458 car under Carnet De Passage Douane CPD No. Dex.0115496, but extended the benefit of Notification No.94/96 dated 16.12.96. Accordingly, duty of Rs.95,00,184/- was confirmed on the value of Rs.44,46,745/- being the cost of repairs of the car. The declared value of Rs.50,00,000/- was also rejected under Rule 12 of the Customs Valuation Rules, 2007 and the value was redetermined at Rs.1,21,32,229/-. The Commissioner holding that the appellant had resorted to deliberate misdeclaration and utilised the carnet documents to clear the vehicle without payment of duty, held that the car was liable for confiscation under Section 111(m) of the Customs Act, 1962. Accordingly, the car was allowed to be redeemed on payment of redemption fine of Rs.20,00,000/- under Section 125 and penalty of Rs.10,00,000/- was imposed on the appellant under Section 112(a) of the Customs Act 1962. Aggrieved by this order, the appellant is in appeal before us.
2. At the outset, the Learned Counsel submitted that appellant is a partner of M/s. Koyenco Mobikes (a partnership firm) owned a Ferrari car which was purchased as a second-hand car in May 2013 from M/s. Al Nafeez Frozen Foods Exports Pvt. Ltd; the partnership firm obtained E Carnet De Message Endouance (CDP) on 11.9.2013 from Western India Automobile Association (WIAA) Mumbai, with P.P. Jasique, the appellant as its authorised person, for export of the car for touring purpose. On 19.09.2013, shipping bill was filed for export of the car and separate letter was issued to the Commissioner of Customs informing that the car is being taken for touring purpose to Dubai under carnet issued by Western India Automobile Association. Let export order was issued on 26.09.2013 and the car was exported. At Dubai, the car was imported by use of the carnet which was endorsed by the UAE customs and while the car was at Dubai, was subject to certain repairs. On 10.12.2013, the car was shipped from UAE and reimported at Cochin Port and on arrival of the car on 07.01.2014, the appellant informed the Deputy Commissioner of Customs seeking endorsement on the carnet for the reimportation of the car. On the same day, the Customs House Agent filed a letter along with the original carnet and copy of passport of the appellant for customs clearance. However, since the car was subjected to repairs abroad, the customs authorities being of the view that carnet was misused issued a show-cause notice to the appellant denying the benefit of duty-free import and treating the car as smuggled by redetermining the value and invoking the provisions of Section 111(d) and 111(m) for confiscating the vehicle and imposing penalty on the appellant under section 112(a) of the Customs Act, 1962.
3. The learned counsel further submits that the entire show-cause notice is the result of the letter dated 07.01.2014 filed by the appellant requesting clearance of the car on the production of the original carnet. No Bill of Entry was filed for home consumption by the appellant except for filing the above letter only for the purpose of endorsement for having reimported the car, so that the guarantee furnished by the Automobile Association could be discharged. It is submitted that for merchandise goods which are in transit for transhipment and covered by a carnet, there is no necessity to file a Bill of Entry. Since no Bill of Entry was submitted and merely a letter was filed only for the sake of endorsement, therefore, the question of misdeclaration cannot be alleged and confiscation of the vehicle is bad in law.
3.1 It is further submitted that under the Carnet Scheme, a person seeking to import a car for touring purpose can do so by producing the carnet issued by the Automobile Association which guarantees that if the car is not exported after touring, then the duty of customs will be paid by the Association. In the instant case, the Carnet has been utilised by the appellant for importing the car into UAE and thereafter, exporting the car from UAE and the Carnet itself shows endorsements by the UAE customs authorities. The import and export under Carnet are covered by the ATA Carnet Regulations, 1990 and in terms of these Regulations, the Carnet for merchandise goods is prescribed as the Bill of Entry and the Shipping Bill. But in the present case, since the Carnet is issued for a vehicle, the said Regulations do not apply, therefore it is submitted that there was no misdeclaration as such and hence, the goods were not liable for confiscation or imposition of penalty. However, since the repairs were undertaken at Dubai, the appellant is liable to pay duty on the value of the repairs that was undertaken. Further, though the learned counsel accepts that they are liable to pay duty on the value of the repairs, it is claimed that under Notification No.94/1996 dated 16.12.1996, the appellant is liable to pay only the basic customs duty and not the Countervailing Duty (CVD), Special Additional Duty (SAD) and therefore, demand of duty in excess of Rs.55,58,431/- is illegal and untenable in law. In this regard, reliance is placed on the decision of the Hon’ble High Court of Bombay in the case of Ceat Tyres of India Ltd. Versus Union of India: 1992 (57) ELT 221 and also the decision of this Tribunal in the case of Interg lobe Aviation Ltd. Versus Commissioner of Customs, New Delhi: 2020 (43) GSTL-410 and Jet Airways India Ltd. Versus Commissioner of Customs (Import), Mumbai: 2023 (2) CENTAX 132 (TriMumbai).
4. The Authorised Representative on behalf of the Revenue submitted that the appellant had breached the conditions of Carnet by not filing normal Bill of Entry for clearance of the same. The additional grounds raised by the appellant are also objected by the Revenue as these were not placed before the authorities concerned, the appellant having failed to file a Bill of Entry and assess the goods on payment of duty for the repairs undertaken by them cannot claim that there was no misdeclaration on their part. The Revenue relies on the following decisions:
i) Control Touch Electronics (Poona) Pvt. Ltd. Versus C.C.E., PuneIII: 2016 (335) E.L.T. 529 (Tri. – Mumbai) dated 05.01.2016.
ii) Commissioner of Cus. & C. Ex., Goa Versus Dempo Engineering Works Ltd.: 2015 (319) E.L.T. 359 (S.C.) dated 15.04.2015.
iii) Standard Pencils Pvt. Ltd. Versus Commissioner of C. Ex., Chennai: 2006 (197) E.L.T. 346 (Tri. – Del.) dated 05.08.2005.
iv) Saci Allied Products Ltd. Versus Commissioner of C. Ex., Meerut: 2005 (183) E.L.T. 225 (S.C) dated 26.04.2005.
v) Commissioner of Customs, Chennai Versus K. Boopalrajah:
2005 (184) E.L.T 295 (Tri.- Chennai) dated 0 1.02.2005.
vi) Dailmer Chrysler India Pvt. Ltd. Versus Commissioner of Customs, New Delhi: 2016 (331) E.L.T 126 (Tri. – Mumbai) dated 11.09.2015.
4.1 With regard to the appellant’s claim that only basic customs duty is liable to be paid under the Notification No.94/1996 dated 16.12.1996, it is submitted that the appellant is liable to pay all the duties and is not eligible for any exemption on CVD, SAD etc. Reliance is placed on the following decisions:
i) Hindustan National Glass and Industries Versus Commissioner of Ex., Calcutta – IV: 1999 (113)E.L.T 321 (Tri. – Cal.) dated 04.01.1999.
ii) Indian Airlines New Delhi Versus Collector of Customs, New Delhi: 1983 (13) E.L.T 993 (CEGAT) dated 19.02.1993.
iii) Super Cassettes Industries Ltd. Versus Commissioner of Customs, New Delhi: 2008 (225) E.L.T 401 (S.C.) dated 04.01.1999.
4.2 The Revenue also submitted that at the time of export on 23.09.2013, explicit declaration was made before the Commissioner of Customs that the vehicle was being taken to Dubai for touring purpose and it is a fact that the tour did not happen but repairs were conducted at Dubai and therefore, it was a clear case of misdeclaration. Moreover, at the time of reimport, the appellant was aware of payment of duty on the repairs but did not file the Bill of Entry for clearance on payment of duty instead submitted a letter for endorsement on the Carnet without any disclosure of repairs. Hence, the Commissioner was right in confiscating the vehicle and releasing the same on
payment of fine and penalty.
5. Heard both sides and perused the records. The fact that the appellant had exported the Ferrari Motor Car from India to UAE in September 2013 under Carnat Scheme a ‘Carnat De Passage’ (CDP) issued by Western India Automobile Association (WIAA) is not disputed. It is also a fact that at the time of export, the appellant had made an explicit declaration to the effect that the vehicle was being taken for Dubai for touring purpose. The appellant has also clearly admitted that though the permission was taken for tour purpose, appellant did not travel to Dubai and therefore, the purpose for which the vehicle was taken to Dubai was only meant for repairs and return. On reimport of the vehicle, the appellant though filed a letter for endorsement on the Carnat documents failed to disclose that the car was taken for repairs to Dubai. In view of the above, there is a misdeclaration on the part of the appellant to the effect that the car was exported only for the purpose of repair and reimported thereafter. Since the appellant has accepted his liability on the value of his repairs, the demand of duty on repairs is confirmed. The Commissioner observing that ‘no case of physical concealment within the car having been brough out, the car being available for examination by Customs and duties of Customs having already been paid on the car at the point of first import, denial of benefit of said Notification No.94/1996-Cus. dated 16.12.1996 would be travesty of justice’. Having extended the benefit of the Notification No.94/1996 dated 16.12.1996 which is eligible for goods being exported for repairs, we do not find any reason for confiscating the vehicle nor imposition of penalty under Section 112(a) of the Customs Act 1962. Hence redemption fine and penalty is set aside.
6. The Learned counsel also disputed the amount of duty to be paid claiming that as per the Notification No.94/1996 dated 16.12.1996, appellant is only liable to pay basic customs duty and all other duties are exempted and it is not disputed that this issue has been raised for the first time before the Tribunal. The Revenue challenging the additional grounds filed by the appellant for the first time regarding determination of duty submitted that the appellant had paid the entire amount of duty and thus, now cannot challenge the same having not taken up this issue before the adjudicating authorities. With regard to determination of duty since the issue has been raised for the first time and being a pure question of law; we are therefore inclined to allow the said ground but remand the matter to the Commissioner for consideration of the above issue raised as an additional ground before the Tribunal, on merits, after giving a reasonable opportunity of hearing to the appellants to present their case.
7. In view of the above, the impugned order is modified to the extent of allowing the redemption fine and penalty and appeal is remanded to the Commissioner to decide only on the additional ground raised before this Tribunal with regard to their liability to pay only basic customs duty. Appeal is disposed accordingly.
(Order pronounced in Open Court on 23.09.2024.)
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