Case Law Details
Commissioner of Customs Vs Meethel Puthiya Purayil Kassim (CESTAT Chennai)
In the case of Commissioner of Customs vs. Meethel Puthiya Purayil Kassim, the respondent imported a 2013 Nissan Petrol Car Upper Grade ASR SPEC (13-999) from the UAE, valued at AED 2,15,000 (CIF), claiming the benefit of Notification No. 21/2002 dated 01.03.2002. This notification grants exemption for certain motor vehicles, including cars, under specified conditions.
The adjudicating authority initially rejected the importer’s claim for exemption, citing several reasons. Firstly, it was stated that the importer failed to submit Type Approval/COP (Conformity of Production) certificates from the country of manufacture, as required by Rule 126 of the Motor Vehicle Rules, 1989. Additionally, it was argued that the vehicle couldn’t be considered new as it had been sold once before importation, contravening import licensing notes.
Further, the assessable value was re-determined by the adjudicating authority under Customs Valuation Rules, 2007, due to doubts about the declared value. The adjudicating authority used the value of similar vehicles imported into Australia as a basis for revaluation, which the appellant contested.
The Commissioner (Appeals), however, overturned the adjudicating authority’s decision. Firstly, it was concluded that the vehicle should be considered new, as there was no evidence to suggest it had been used prior to importation, despite being registered in the UAE. Additionally, the Commissioner accepted the value declared by the importer, stating that the adjudicating authority had not provided sufficient reasons to doubt it. The Commissioner also noted that the importer had produced a GSO (Gulf Standardization Organization) Conformity Certificate, which was deemed acceptable despite mentioning right-hand drive, as this was the standard model used in India.
Regarding valuation, the Commissioner emphasized that the Customs Act mandates accepting the transaction value unless there are valid reasons to reject it. Since the adjudicating authority hadn’t provided such reasons and had instead based the revaluation on the value of similar vehicles in Australia, the Commissioner deemed this approach unjustified.
The Tribunal upheld the Commissioner’s decision, ruling that the car should be considered new and the importer eligible for the exemption. It criticized the adjudicating authority for not providing adequate reasons to reject the declared value and for using the value of Australian imports as a basis for revaluation.
In conclusion, the Tribunal dismissed the Department’s appeal, affirming the Commissioner’s decision to grant the exemption and set aside the order of confiscation of the goods. The Tribunal also found the enhancement of value unjustified, based on the lack of valid reasons to reject the declared value and the inappropriate use of foreign import values for revaluation.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The facts in brief are that the respondent imported „2013 Nissan Petrol Car Upper Grade ASR SPEC (13-999)” Vehicle as per Bill of Entry dated 08.04.2013 valued at AED 2,15,000 (CIF). The appellant claimed the benefit of Notification No. 21/2002 dated 01.03.2002.
As per this Notification exemption is granted in at sl. No. 344 reads as under:-
Here’s a 6-column table based on the provided information:
| Sl. No. | Chapter or Heading No. or Sub heading No. | Description of Goods | Standard Rate | Additional Duty Rate | Condition No. |
| 344 | 87.03 | Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons, etc. | 60% | – | – |
| New vehicles not registered anywhere prior to importation. | |||||
| (a) Imported as Completely Built-up Units (CBU) | |||||
| Explanation I: “Completely Built-up Unit” means completely assembled vehicle, whether or not fitted with tyres or batteries. | |||||
| Explanation II: If the engine and gearbox assemblies are installed in the body assembly, it’s considered CBU. | |||||
| (b) Imported in any other form | 30% | – | – |
1.1 The vehicle was imported from UAE. The first check examination report of vehicle stated as follows:-
“New, Make Nissan year of manufacture 2012, Model, Petrol (TPKNRGLY62EM7), Engine No. VK56081574A, Chassis No. JNITANY 62000609, 4 doors, Right Hand Drive, Colour Black, Reading 121 km, Fuel, Petrol, Number of seats 8, since catalogue not submitted, other details Could not be verified”
1.2 The adjudicating authority observed that, (i) the importer has not submitted Type Approval/COP by the listed agency country of manufacture hence has not complied as Rule 126 of Motor vehicle Rule 1989; (ii) Proof of compliance to conformity of Production (COP) as under rule 126A of the Central Motor Vehicles Rules, 1989. (iii) the vehicle is not new as it has been sold once before importation and cannot be considered as new vehicle as per import licensing note (2) (1) of Chapter 87 of ITC-HS. (Indian Trade Classification Harmonized System). That these amounted to violation of the policy conditions no. (2)(II)(a),(2)(II)(b) and (2)(II)(c) of Chapter 87 of ITC-HS
1.3 It was also held that the transaction value declared by the importer AED 2,15,22 (CIP) (Rs. 33,11,537.50/-) appeared to be low. The assessable value was re-determined by the adjudicating authority as per Rule 9 of Customs valuation Rules, 2007, to Rs. 53,50,433/-. The benefit of exemption is not available cars with CIF value over USD 40,000. The benefit of exemption was denied. The adjudicating authority passed the following order:-
(i) The said vehicle cannot be considered as a new vehicle.
(ii) I confiscate the said vehicle valued at Rs.53,50,433/- (Rupees Fifty Three Lakhs Fifty Thousand For Hundred and Thirty Three only) imported vide Bill of Entry No. 9797125 dated 08.04.2013, under section 111(m) and 111(o) of the Customs Act, 1962.
(iii) However, I allow the importer to redeem the said vehicle on payment of redemption fine of Rs.5,00,000/- (Rupees Five Lakhs only) under section 125 of Customs Act, 1962 subject to payment of applicable duties.
(iv) I impose a penalty of Rs.2,00,000/- (Rupees Two Lakhs only) under section 112)a) of Customs Act, 1962 on the importer.
1.4 The importer preferred an appeal against the above order before the Commissioner (Appeals). On the issue as to whether the vehicle is new or old, the Commissioner (Appeals) observed that merely because the vehicle was sold by the manufacturer in Japan (Nissan Japan) to dealer in Dubai, for the purpose of sale and export to the importer in India it cannot be considered as sale Prior to importation so as to make the car an old car. The Commissioner (Appeals) thus held that the vehicle is new. On the second issue of valuation it was observed that when the adjudicating authority doubted the declared price, then the re-determination of value should be based on some comparable evidence, and that the model of car adopted for comparison of value is the value of car from the Australian website which is not the same. The value re-determined on the basis of value of car of Australia was held to be not sustainable. The order passed by adjudicating authority was set aside by the Commissioner (Appeals) and the appeal filed by importer was allowed.
1.5 Aggrieved by such order, the department is now before the Tribunal.
2. The Ld. Authorized Representative Shri R. Rajaraman appeared and argued for the department. It is submitted that the importer had not submitted valid Type approval/COP from the manufacturer country as per Import Licensing for chapter 87and this issue has not been discussed by the Commissioner (Appeals)
2.1 While filing B/E, the goods were declared by importer to be new. On perusal of the Vehicle Export Certificate dated 19.03.2013 it was seen that the vehicle was registered in UAE in 2013. As per condition at Sl. No. (2)(I)(c) Of the Policy notes to chapter 87 states that ‘vehicle has not been registered for use in any country according to the laws of the country prior to importation into India’. The vehicle imported having been registered in UAE cannot be considered as a new vehicle. The relevant policy notes referred by Ld. AR are as under:
As per para 2 of the Import Licence notes to chapter 87 reads as follows:
“(I) A new imported vehicle (including all the vehicles other than Railway or Tramway) for the purposes of this Chapter shall mean a vehicle that:-
(i) has not been manufactured/assembled in India; and
(ii) has not been sold, leased or loaned prior to importation into India; or
(iii) has not been registered for use in any country according to the laws of that country, prior to importation into India.
(II) The import of new vehicles shall be subject to the following conditions:
a. The new vehicle shall
(i) have a speedometer indicating the speed in Kilometers per hour;
(ii) have right hand steering, and controls (applicable on vehicles other than two and three wheelers)
(iii) have photometry of the headlamps to suit “keep-left” traffic; and
(iv) be imported from the country of manufacture. The country of manufacture will also mean a Single Market like the European Union (EU).
b. In addition to the conditions specified in (a) above, the new vehicle shall conform to the provisions of the Motor Vehicles Act, 1988 and the rules made there under, as applicable, on the date of import.
c. Whoever being an importer or dealer in motor vehicles who imports or offers to import a new vehicle Into India shall,
(i) at the time of importation, have valid certificate of compliance as per the provisions of rule 126 of Central Motor Vehicle Rules (CMVR), 1989, for the vehicle model being imported, issued by any of the testing agencies, specified in the said rule;
(ii) be responsible for all the provisions assigned to the manufacturer as per Rules 122 & 138 of CMVR, 1989 and for issuing Form 22, as per provisions of CMVR, 1989; and
(iii) Give an undertaking in writing that the proof of compliance to conformity of production as per rule 126A of CMVR shall be submitted within six months of the imports. In case of failure to do so, no further import of new vehicle of that model shall be allowed thereafter.
d. The import of new vehicles shall be permitted through the Customs Port at Nhava Sheva, Kolkata, Chennai and Chennal Airport, Cochin, ICD- Tughlakabad and Delhi Air Cargo, Mumbal Port and Mumbal Air Cargo Complex, ICD Talegaon Pune.
e. The above mentioned provisions will not apply to the imports of new vehicles:-
(i) For the purpose of certification as per para (c) (1) above;
(ii) For the purpose of defence requirement.
f. The above mentioned provisions will also not apply to the import of new vehicles for R & D purpose by vehicle manufacturers and auto component manufacturers. However, the vehicles imported by both these categories for R & D will not be registered under the CMVR Rules in the country and will not ply on Indian roads. The customs will make necessary endorsement at the time of clearance of these vehicles.
g. In case the country of manufacture is a land locked country and the shipment takes place from another country, the vehicles would deemed to have been exported from the country of manufacture provided there are supporting documents to track the vehicles from the country of manufacture to the Port of Landing and from there, to the Port of Destination.”
“With regard to the valuation of the car, on verification it is seen from the website (www.nissan-me.com”) of M/s. Nissan Middle East FZE, Dubai, the regional headquarters of M/s. Nissan Motor Corporation, Japan, that the supplier M/s. Al Masaood Automobiles, UAE is a distributor for M/s. Nissan Middle East FZE, Dubai. The importer had submitted a copy of sale invoice dated 20.12.2012 between M/s. Nissan Middle East FZE, Dubai and M/s. Al Masaood Automobiles, UAE claimed to be pertaining to the imported vehicle wherein value of the vehicle is Japanese Yen 55,44,000 CIF. However, there were no details about Model or Chassis Number in the said sale invoice. To ascertain the value based on model variant “TI-L” of the vehicle mentioned in the certificate like GSO Conformity Certificate i.e., GCC Standardization Organization. Based on the model name “TI-L” and name of the vehicle “Nissan Petrol”, it was seen from the Australian website of M/s. Nissan Motor Corporation (www.nissan.com.au), the value of the vehicle in Australia (right hand traffic country), recommended drive away price was AUD 1,22,688 which included Nissan’s recommended dealer delivery fee, GST and Luxury car tax, 12 months‟ registration and compulsory third party insurance. The FOB value of the vehicle was arrived at AUD 91,456 by subtracting all the above mentioned charges including customs duty. The CIF value of the imported vehicle was arrived at AUD 93,430 by adding the actual freight and insurance incurred by the importer i.e. USD 2,054 (equivalent to AUD 1,974 at the current exchange rate) to the FOB value of AUD 91,456. Accordingly, the assessable value arrived at Rs. 53,50,433/- was fair”.
2.2 With regard to the valuation of the car, on verification it is seen from the website (www.nissan-me.com”) of M/s. Nissan Middle East FZE, Dubai, the regional headquarters of M/s. Nissan Motor Corporation, Japan, that the supplier M/s. Al Masaood Automobiles, UAE is a distributor for M/s. Nissan Middle East FZE, Dubai. The importer had submitted a copy of sale invoice dated 20.12.2012 between M/s. Nissan Middle East FZE, Dubai and M/s. Al Masaood Automobiles, UAE claimed to be pertaining to the imported vehicle wherein value of the vehicle is Japanese Yen 55,44,000 CIF. However, there were no details about Model or Chassis Number in the said sale invoice. To ascertain the value based on model variant “TI_L” of the vehicle mentioned in the certificate like GSO Conformity Certificate i.e., GCC Standardization Organization. Based on the model name “TI_L” and name of the vehicle “Nissan Petrol”, it was seen from the Australian website of M/s. Nissan Motor Corporation (www.nissan.com.au), the value of the vehicle in Australia (right hand traffic country), recommended drive away price was AUD 1,22,688 which included Nissan’s recommended dealer delivery fee, GST and Luxury car tax, 12 months‟ registration and compulsory third party insurance. The FOB value of the vehicle was arrived at AUD 91,456 by adjudicating authority by subtracting all the above mentioned charges including customs duty. The CIF value of the imported vehicle was arrived at AUD 93,430 by adding the actual freight and insurance incurred by the importer i.e. USD 2,054 (equivalent to AUD 1,974 at the current exchange rate) to the FOB value of AUD 91,456. Accordingly, the assessable value arrived at Rs. 53,50,433/- was fair.
2.3 The Commissioner (Appeals) in impugned Order dated 09.04.2014 in 1 para at page No.6 has observed that “It is not known why the value of model mentioned in the import invoice was not confirmed from the original manufacturer itself. In that case, the Commissioner (Appeal) could have remanded back the case to Original Adjudicating Authority instead of allowing the appeal. Further, in this case, the importer had requested for waiver of Show Cause Notice and Personal Hearing and agreed to the enhancement of value vide letter dated 18.04.2013.
2.4 The Commissioner (Appeals) in his conclusion has discussed about conformity certificate. The conformity certificate no.54994 submitted by the importer at the time of filing the Bill of Entry, provided certain details of the vehicle however it was silent on whether it was RHD/LHD. Therefore, it appears that the subject vehicle was imported from Dubai to India only after changing the transmission into RHD.
2.5 Since the importer has violated the policy condition of the Chapter 87 Notes and the Commissioner (Appeals) had accepted the value declared by the importer, the Order of the Commissioner (Appeals) is not legal and proper.
3. The Ld. Counsel Shri S. Sankaranarayanan appeared and argued for the importer/ respondent. It is submitted that the first check examination has noted the vehicle is new one. The reading shows 121 kms. which would prove that the vehicle is not used. The vehicle was registered in Dubai only because it was purchased by importer through the distributor at Dubai. The examination report had correctly reported that the vehicle is brand new and not registered. The vehicle was not registered for the purpose of use of the vehicle. The respondent had claimed the benefit of exemption from duty of customs under Sl. No.344 of Notification No. 21/2002(Cus.) dated 01.03.2002 as the vehicle imported is new.
3.1 The respondent has also produced the GSO Conformity Certificate issued by the manufacturer, Nissan, Japan. The said certificate and other documents were not accepted by the original authority. It was wrongly assumed by adjudicating authority that a Right Hand Drive car (RHD) could not be registered in UAE being a country which uses left hand drive (LHD). The registration of any caring is only for the purpose of export and not for use in UAE. The department has not been able to adduce any evidence in this regard. To support the above submission, the Ld. Counsel relied on the decision in the case of Lorenzo Bestonso Vs CC, (I) Nhava Seva 2013(294) ELT 39(Tri-Mumbai). In the said case, the benefit of Notification No. 21/2002 was denied by department for the sole reason that the Ferrari Car imported was alleged to be a used car as it was initially booked by M/s Going Rich Ltd, Singapore with the car dealer and thereafter purchased by the importer. The Tribunal observed that there is no allegation that it is used by anyone before export into India or that it was registered for use. As per Import Licensing Note I(I)(b) to determine a vehicle as used car, it should be registered for use abroad. In the case of CC Vs Noshire Moody reported in 2012-TIOL-391 HC- Mum-Cus, the Hon‟ble High Court considered similar issue when the importer purchased the car from the dealer in U.K, and settlement Commission had noted that the registration is only for the purpose of complying with the requirement of the licensing authority in U.K, the finding of the Tribunal that the car is not old and is a new one was upheld by the Hon‟ble High Court.
3.2 The decision in the case of Abbas Kurma Puthoor Vs. CC, Cochin 2008 (240) ELT 98 (Tri-Chennai) was relied. It is submitted that in this case, the Tribunal referred to Circular 01/2005-Cus dated 11.01.2005 issued by Ministry where in it is clarified that when the registration is only technical formality, and the registration is not for use of car abroad, the benefit or Notification should not be denied.
3.3 The Ld. Counsel submitted that the GSO Conformity Certificate was also produced by the appellant. The same has been discussed by the Commissioner (Appeals). The original authority had observed that the model variant noted in the certificate is “Ti_L”. In Gulf Cooperation Council country the vehicles of right hand driving are used. Nothing is stated as to why the said certificate cannot be accepted.
3.4 In regard to issue on valuation, the Ld. Counsel argued that the original authority has not given any reasons for rejecting the transaction value. Further, the value of car imported in to Australia cannot be adopted to enhance the value as such value differs based on the destination of shipment. The Commissioner (Appeals) have correctly concluded that the rejection of transaction value and the redetermination of value on the basis value of the car imported in Australia cannot be adopted. The Ld. Counsel prayed that the appeal may be dismissed.
4. Heard both sides.
5. The foremost issue to be considered is whether the appellant is eligible for the benefit of Notification No.21/2002 dt. 1.3.2002. The allegation of the department is that the car imported is not new and is an old one. The Ld.AR submitted that the said car has been registered in UAE and therefore is an used car. On perusal of records, it is seen that the report given on first check of the imported car, is that the car is new. The reading is only 121 Kms. The department though alleges that the car has been used has not produced any evidence to show that the car has been registered for the purpose of use. The registration, if in UAE is only to comply with technical formalities of the said country and not for using the vehicle on road. The Tribunal in the case of ABBAS KURAMPUTHOOR VS COMMISSIONER OF COCHIN (supra) had referred to the circular 1/2005-Cus. dated 11.1.2005 issued by the Ministry wherein it has been clarified that when registration is only technical formality, the benefit of notification should not be denied. So also in the case of Lorenzo Bestonro (supra) and Noshire Moody (supra) it was held that when registration is for the purpose of complying formalities it cannot be said that the car is used one. After going through the records, and following the decisions we are of the considered opinion that the allegation that the car is not new cannot be accepted.
6. The second allegation put forward by the department is that the appellant has not produced type approval / COP certificate by the listed agency country of manufacture. The appellant has produced copy of the GSO conformity certificate. The original authority has held that in the said certificate there is mention of left hand drive. The vehicles used in UAE are of right hand drive and that therefore the said certificate cannot been accepted as compliance of Rule 126A of Central Motor Vehicle Rules, 1989. The copy of the said certificate has been produced by the learned counsel before us. It is a certificate issued by manufacturer in Japan wherein it is stated that, “we hereby certify that the vehicles manufactured by Nissan Motor Co; Ltd. Type Y 62 (4 Door, Wagon, 4WD VK56, 5AT), Petrol Model year 2013 Category Multi Purpose Vehicle Produced in and after Month September Year 2012 will satisfy the GSTO Technical Registration” The importer has opted to purchase the vehicle through the dealer in UAE. The vehicle also is said to have been registered in UAE. In such circumstances, merely because the said certificate shows the vehicle as right hand drive, which is the model used in India, it cannot be said that the appellant has not complied with policy conditions.
7. The second issue is with regard to valuation. In para-6 of the order passed by the original authority, it is merely stated that the declared value of Rs.33,11,537/- appears to be low. There are no reasons given by the adjudicating authority to doubt and reject the transaction value. There is no evidence put forward by the department to allege that the value is not at arm‟s length. As per Section 14 of the Customs Act, 1962, the value of imported goods shall be the transaction value of such goods. Without giving sufficient reasons as to why the transaction value cannot be accepted, the department cannot reject the same. In the present case, the commodity imported is a vehicle and the value of the same can be verified easily from website. The department could have easily checked if there is any undervaluation. No such findings have been rendered by the adjudicating authority as to why he concluded that the value is low. In para-6 after merely stating that the value appears to be low, the original authority proceeds to determine the value on the basis of Customs Valuation Rules, 2007. The value has been determined under Rule 9 of Customs Valuation Rules, 2007. Interestingly, the value of the car that is imported into Australia has been taken as the comparable price for enhancement of value. It is noted by the adjudicating authority that there are no contemporaneous imports of identical or similar goods. In the absence of contemporaneous import of like kind of goods at higher price, the invoice price submitted by the importer should be taken as the basis for assessable value if there are no grounds to reject transaction value. In COLLECTOR OF CUSTOMS Vs NIPPON BEARING PVT LTD – 1996 (82) ELT 3 (SC) and in the case of BASAND INDUSTRIES Vs COLLECTOR 1996 (81) ELT 195 (SC) it was observed by Apex Court that a mere comparison of invoices of import of same goods by another importer is not conclusive to hold that the appellant is guilty of undervaluation. In the present case, there is no evidence suggesting undervaluation especially when the value of the goods could be easily verified from website. The adjudicating authority has taken the view that since the vehicle imported is of right hand drive and the vehicles used in UAE are of left hand drive, the value value cannot be accepted. We cannot endorse the said view. Further, the value of the goods imported into Australia cannot be taken as a comparable value for redetermining the assessable value of the goods since the value differs on the basis of destination of shipment also.
8. In the case of AHAMMED KUNHI MOHIDEEN KUTTY Vs CC CHENNAI 2007-TIOL-1691-CESTAT-MAD it was held that it is settled law that before proceeding to determine the assessable value of imported goods, the assessing authority should state reasons for rejecting the value declared by the importer. The relevant paragraphs read as under:
“4. With regard to valuation, we note that learned Commissioner rejected the declared value and chose to determine a value for the car under Rule 8 of the Customs Valuation Rules on the basis of listed price. We note that this is a case in which show-cause notice was waived by the importer. However, it appears from the records that the party was given an opportunity to furnish evidence in support of the declared value under Rule 10A of the Valuation Rules and accordingly they produced an invoice dated 5-12-2005 issued by one M/s. Choice Motors, who were claimed to be dealers, in UAE, of BMW car manufactured in Germany. This invoice contains identity particulars such as vehicle model no., chassis no. etc. The claim of the appellant is that the vehicle had been shipped from Germany and subsequently transhipped from UAE and, therefore, the value mentioned in the dealer’s invoice should be accepted in view of the international practice relating to trade in motor vehicles. We find that the impugned order does not contain any finding or observation against the genuineness of this document. The Commissioner has chosen to go by the listed price of the vehicle for the year 2005. It is settled law that, before proceeding to determine the assessable value of imported goods, the assessing authority should state reasons for rejecting the evidence adduced by the importer in respect of the value declared by him. The invoice produced by the appellant was not rejected in this manner. Therefore, we are of the view that the declared value of the vehicle should be accepted in this case. It is made clear that the payment of duty on the vehicle shall be based on its declared value.
5. The order of confiscation (with redemption fine) and the penalty are associated with the matter which we have already remanded and, therefore, learned Commissioner shall consider those aspects afresh after hearing the party.
6. In the result, the impugned order is set aside and this appeal is allowed by way of remand.”
9. From the above, we find that the order passed by Commissioner (Appeals) allowing the benefit of exemption Notification No.21/2002-Cus. as well as setting aside the order of confiscation of the goods is legal and proper. The enhancement of value was also found to be not justified. The impugned order does not call for any interference. The Department appeal is dismissed.
(Order pronounced in the open court on 26.02.2024)
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