Bombay High Court
Sanjay Agarwal vs The Union Of India And Ors on 16 July, 2024
Bench: Nitin Jamdar, Abhay Ahuja
2024:BHC-OS:10938
WP-1202-2022-IAL-9504-23-23072024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1202 OF 2022
WITH
INTERIM APPLICATION (L) NO.9504 OF 2023
IN
WRIT PETITION NO.1202 OF 2022
SANJAY AGARWAL
Age :-52 years, Resident At :
1001, Brindavan Terraces,
Deonar Farm Road, Deonar,
Mumbai-4000 088. )...PETITIONER
V/s.
1. UNION OF INDIA,
Ministry of Finance,
Department of Revenue,
through Commissioner (Legal),
CBIC Offices, Legal Cell/CX. 8A,
5th Floor, Hudco Vishala Bldg,
R.K. Puran, New Delhi -110 066.
Email : [email protected]
2. CENTRAL BOARD OF CUSTOMS
AND INDIRECT TAXES THROUGH
The Chairman Ministry of Finance,
Department of Revenue, North Block,
New Delhi.
Email:- [email protected]
3. DIRECTORATE OF REVENUE INTELLIGENCE
Through the Additional Directorate Mumbai
Zonal Unit 13, Sir Vithaldas Thackersey Marg,
UTI Building, New Marine Lines,
Mumbai-400 020.
Email: [email protected]
4. DIRECTORATE GENERAL OF VALUATION
Through Director General
New Custom House, Annexe (7th Floor),
Ballard Estate, Mumbai-400 001.
Email : directorate. [email protected]
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5. MERCEDES-BENZ INDIA PRIVATE LIMITED
E-3, MIDC Chakan, Phase III,
Chakan Indl. Area, Kuruli & Nighoje, Chakan,
Pune-410 501, Maharashtra
Email : [email protected]
[email protected]
6. SKODA AUTO VOLSWAGEN INDIA PRIVATE LIMITED
Plot No.E-1, MIDC Indl. Area, Phase III,
Nigoje Kharabwadi, Chakan, Taluka-Khed,
Pune-410 501, Maharashtra
And Also at :
4th Floor, Solver Utopia, Cardinal Gracious Road, Chakala,
Andheri, East, Mumbai-400 099.
Email :[email protected]
[email protected]
7. BMW INDIA PRIVATE LIMITED
2nd Floor, Oberoi Corporate Tower,
Building No.11, DLF Cyber City,
Guragon, Haryana.
Email :[email protected]
8. DIRECTORATE OF REVENUE INTELLIGENCE
Through the Additional Director Bengaluru
Zonal Unit, No.8 (P), 1st Stage, 3rd Block,
HBR Layout, Opp BDA Complex,
Bengaluru, Karnataka-560043. )...RESPONDENTS
Mr. Prakash Shah a/w Mr. Mihir Mehta, Mr.Durgaprasad Poojari i/b
PDS Legal, Advocates for the Petitioner.
Mr. Devang Vyas, ASG a/w Mr. Pradeep Jetly, Senior Advocate a/w Mr.
Jitendra B. Mishra, Mr. Sheelang Shah, Mr.Ashutosh Mishra,
Mr.Rupesh Dubey, Advocates for Respondents No.1 to 3/ Union of India
& 8 a/w. Ms. Jaymala J. Ostwal a/w Mr. Siddharth Chandrashekhar,
Advocates for Respondent No.4.
Mr. Rafique Dada, Senior Advocate a/w Mr. Prasad Paranjape,
Ms.Dhruvi Shah i/b. Lumiere Law Partners for Respondent No.5.
Mr. Darius Shroff, Senior Advocate a/w Mr.Anay Banhatti, Ms. Asmita
Gupta, Advocates for Respondent No.6.
Mr. Prasad Paranjape a/w Ms. Dhruvi Shah i/b Lumiere Law Partners
Advocates for Respondent No.7
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CORAM : NITIN JAMDAR &
ABHAY AHUJA, JJ.
RESERVED ON : 10th JULY, 2024
PRONOUNCED ON : 16th JULY, 2024
JUDGMENT (PER COURT). :
1. By this Petition, the Petitioner has sought the following reliefs :-
(a) To issue appropriate writ, order or direction in the nature of mandamus to call for the complete records of File no. DRI/MZU/B/INT- 87/2016 from the Respondent no.3 to ascertain the correctness, legality and propriety of the inaction in bringing a logical end as per law to the detailed and credible information given by the Petitioner vide letters dated 09th January, 2015, 09th September, 2016, 25th November, 2016 and the DRI-1 recorded on 07th December, 2016 in the office of Respondent No.3 pursuant to the Order dated 15 th July, 2016 passed by the Hon'ble Supreme Court in Writ Petition 20 of 2016 preferred by the Petitioner;
(a1) That this Court be pleased to declare that the SVB orders, and orders of assessment and clearance of goods for home consumption obtained by Respondent nos.5 to 7 pursuant thereto or otherwise under Sections 17, 18(2) and 47 of the Customs Act, 1962, having been KSG/AVK 3/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc obtained by the private Respondents 5 to 7 by material suppression, fraud and mis-representation, are nullity, void ab-initio and non-est in the eyes of law as per ratio laid down in AV. Papayya Sastry Vs. Government of A.P. reported in (2007) 4 SCC 22.
(b) To issue appropriate writ, order or direction in the nature of mandamus to direct the Respondents to forthwith investigate the matter of continued massive undervaluation and mis-declaration of material particulars to evade customs duty in import of new 'Luxury Cars' from such related parties who are parent / group companies of the Respondents importers, and to exercise the powers and discharge the duties conferred or imposed under the Customs Act, 1962 so as to expeditiously determine issues of levy, assessment and collection of Customs Duty with applicable interest and issues of fine and penalty under the provisions of the Act and the Rules and Regulations made thereunder and all other issues connected therewith or arising therefrom or incidental thereto;
(c) To issue appropriate writ, order or direction in the nature of mandamus to direct the official Respondents to inquire into the continued inaction by the concerned officer/s causing huge revenue KSG/AVK 4/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc loss and to take such further action as may deem just and expedient in accordance with law;
2. Earlier in SLP bearing no. WP (CRL) No. 20 of 2016 filed before the Hon'ble Supreme Court, the Apex Court on 15 th July, 2016, had passed an order permitting the Petitioner to file all the relevant documents before the authorities viz. Additional Director, Directorate of Revenue Intelligence (the "DRI"), Mumbai, within eight weeks, with a further direction that in case the authority is convinced that information given by the Petitioner is credible, he shall take appropriate action as advised in law.
3. In pursuance of the aforesaid order passed by the Hon'ble Supreme Court, the Petitioner submitted documents before the said authority on 9th September, 2016.
4. It has been the case of the Petitioner that despite the order of the Hon'ble Supreme Court dated 15th July, 2016, and lapse of considerable time, the authorities did not take action and therefore, the Petitioner had to approach this Court by way of this Writ Petition seeking a direction to the authorities to forthwith investigate the matter of the KSG/AVK 5/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc purported massive undervaluation and mis-declaration of material particulars allegedly resulting in evasion of customs duty in import of luxury cars.
5. Since as per order of the Hon'ble Supreme Court dated 29 th March, 2023 the question of locus need not be gone into as the Hon'ble Supreme Court has held that the Petitioner has locus and has directed this Court to proceed to consider and decide the Writ Petition in accordance with the law on its own merits without entering into the question of locus of the Petitioner to maintain the Petition, in accordance with the direction of the Hon'ble Supreme Court, we proceed to hear this Petition.
6. After the order of the Hon'ble Supreme Court, dated 29 th April, 2023, the Petitioner had also filed an Interim Application dated 3 rd July, 2023, seeking following prayers :
a. This Hon'ble Court be pleased to allow the present Application; b. To stay the operation of the SVB Orders and the order of assessment and clearance of goods for home consumption obtained by the Respondent Nos. 5 to 7 pursuant thereto under Sections 17, 18(2) and 47 of the Customs Act, 1962;
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WP-1202-2022-IAL-9504-23-23072024.doc c. To direct the Respondent No.2 to forthwith issue instructions to all Customs Authorities across India to assess all pending and future Bills of Entry of Respondent nos.5 to 7 only on provisional basis under Section 18(1) of the Customs Act, 1962 by obtaining appropriate bond and security in accordance with law, and to ensure that at the time of filing Bill of Entry, the response to Questionnaire at Annexure A to SVB Circular No. 5/2016-Cus dated 09.02.2016 is duly filled particularly to questions 4, 5.2, 5.3, 5.4 and 5.5 and accordingly to inter alia ensure that the particulars of the website of the related foreign seller showing standard fittings and Price generally offered, the Manufacturer's Price List of subject Standard Card and of its accessories and fittings, and price declared by unrelated importer in India, are submitted with every Bill of Entry filed in their imports from related supplier; d. For just and expeditious adjudication of the petition, to direct the private Respondents No.5 to 7 to forthwith file before this Court complete details as per SVB Circular No. 5/2016-Cus dated 09.02.2016, particularly the details required in reply to questions 4, 5.2, 5.3, 5.4 and 5.5 (in Annexure to the Circular) and the "Pricing Pattern" (in Annexure B to the Circular) with their affidavit, including but not limited to the price of the imported goods or identical or similar goods KSG/AVK 7/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc internationally quoted in data base published in automotive industry publications/websites, Global Price List, Supplier Manufacturer's Price List for every Standard Car and its accessories and fittings, details of sale and price settled by Seller with other related Group Companies / unrelated buyers in other Countries such as UK or UAE, and price at which supply made directly to any unrelated person in India.
7. To the said Interim Application, the Respondents have also filed replies dated April-2023 as directed by this Court. Having considered the averments in the Interim Application and the prayers made therein on 25th April, 2023, this Court had observed that in deciding the Application, the merits of the Petition would have to be substantially heard and therefore, the same be listed along with the Petition. Accordingly, this Application has been considered in the context of the Writ Petition.
8. We have heard the learned Counsel and the learned Senior Counsel for the Petitioner as well as the Respondents, and also the learned Additional Solicitor General of India at length over a period of one year and given our thoughtful consideration to the submissions. KSG/AVK 8/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 :::
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9. Mr. Prakash Shah, learned Counsel for the Petitioner would submit that despite there being a published price list containing sale price of the car model, the importer viz. the subsidiary of the exporter manufacturer is selling the models at rates which are grossly undervalued resulting in leakage of revenue to the Indian authorities. He would submit that as per the customs law as well as Rules and circulars issued by the CBEC (now "CBIC"), every exporter is to have a price list according to which the sale transactions are to be valued, subject of course to trade/festival discounts, etc. Learned Counsel would submit that difference in the sale price and the published price list does not suggest that the difference is a discount in the normal course of business but the difference is too large and simply an undervaluation to defraud Indian Revenue, which must stop and therefore, the request to direct an investigation to ascertain the truth and eventually give direction for measures by the Respondent for plugging such revenue leakage.
10. Mr. Shah has taken us through the various documents including price list of the various models of Skoda, Mercedes, Volkswagen, the SVB orders, the Bills of entry as well as the comparable imports of similar models/other luxury cars including Bentley by other entities in KSG/AVK 9/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc India as well as abroad, in support of Petitioner's contentions. The Indian subsidiaries who have imported these models and who are Respondents herein have also filed their affidavits in reply; the DRI and Customs Authorities have also filed their respective affidavits.
PETITIONER'S SUBMISSIONS
11. The Petitioner has submitted that he is a citizen of India and an Advocate by profession. That he had filed the Writ Petition W.P. (Crl.) No.20/2016 before the Hon'ble Supreme Court under Article 32 of the Constitution of India and by order dated 15 th July, 2016, the Hon'ble Supreme Court had permitted the Petitioner to file all the relevant documents before the authority viz. Additional Director, Directorate of Revenue Intelligence (DRI), Mumbai within 8 weeks with a further direction that in case the authority is convinced that information given by the Petitioner is credible, he shall take appropriate action as advised in law.
12. That pursuant to the said order, the Petitioner submitted the documents before the DRI on 9th September, 2016. It is submitted that since the Petitioner was aggrieved that for a substantial period of time no action was taken by the authorities, despite the direction of Hon'ble KSG/AVK 10/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Supreme Court contained in order dated 15 th July, 2016, the Petitioner approached the Bombay High Court by filing the present Writ Petition seeking the above directions to the authorities to forthwith investigate the matter of continued massive under-valuation and mis-declaration of material particulars resulting in evasion of customs duty in the import of new luxury cars.
13. The Respondent No.1 is the Union of India. Respondent No.2 is the Central Board of Customs and Indirect Taxes viz. the CBIC and the Apex Body for administering the levy and collection of Indirect Taxes of the Union of India. Respondent No.3 is the DRI an Intelligence and Enforcement Agency of the Union of India inter alia for collecting information and for investigation concerning matters of evasion of taxes. Respondent No.4 is the Director General of Valuation and functions for Departments like Respondent No.2, concerning matters of customs valuation including monitoring and examining the quality of orders passed by Special Valuation Branches (SVBs) which investigate cases of related party imports and co-ordinate with income tax authorities on "Transfer Pricing" and "Customs Valuation" by sharing of information. Respondent No.5, admittedly is the Indian subsidiary of Daimler AG, Germany. Respondent No.6, admittedly is the Indian KSG/AVK 11/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc subsidiary forming part of Volkswagen Group headquarters in Wolfsburg, Germany and is responsible for the operations of 5 Automobiles in India viz. Skoda, Volkswagen, Audi, Porsche and Lamborghini. Respondent No.7, admittedly is a wholly owned subsidiary of BMW AG-Germany. Respondent No.8 is the Bangalore Unit of the DRI to whom the Respondent No.6 has furnished information and data inter alia with respect to the transactions with related parties pursuant to an investigation initiated in or about October 2017 by the said Respondent No.8 against Respondent No.6 to whom Respondent No.6 has also furnished documents, information and clarifications.
14. Mr. Shah would submit that pursuant to the Order dated 15 th July, 2016 passed by the Hon'ble Supreme Court in petitioner's WP(C) 20 of 2016, the officers of the DRI were obliged to ascertain as to whether the written information given by the Petitioner from time to time since 9th January, 2015 were credible and disclosed that the assessable value declared by the private respondents was influenced by relationship with respective supplier, warranting - (a) rejection of declared transaction value, (b) taking all necessary expedient steps for appropriate levy, assessment and collection of Customs Duty, and (c) KSG/AVK 12/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc taking such penal and confiscatory action, as are prescribed under Customs Act, 1962.
15. That for inexplicable reasons best known to the concerned officers of DRI, there is gross failure in discharge of official duty to protect the revenue's interest, thereby facilitating continuing windfall gains to the three private respondents, contrary to the statutory provisions and prescribed procedures in that regard. There had been absolute lack of transparency from the concerned officers of Respondent no.3, which has resulted in mammoth loss of government revenue. The powerful private respondents have not only escaped from levy, assessment and collection of appropriate duty, but have also escaped from civil and criminal, penal and confiscatory measures as provided in Rule 11(3) of the said Valuation Rules read with the provisions of the Customs Act, 1962.
16. Mr. Prakash Shah learned Counsel for the Petitioner, has while pressing the aforesaid prayers submitted in the written submission that the prayers in the Writ Petition as well as in the interim application, give rise to 17 main issues for adjudication on merits for considering the prima facie case that there is continued massive under-valuation KSG/AVK 13/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc and mis-declaration of material particulars resulting in evasion of customs duty in import of luxury cars in India and that the Respondent No.3 has chosen not to investigate or after investigation decided not to take any action in accordance with law concerning import of luxury cars by Respondents No.5 to 7 from their related parties, which issues are set out hereunder :
(I) Whether the information, data and material produced by the Petitioner, which were not produced by the private respondents and suppressed from assessing officer as well as from SVB, are relevant for ascertaining the circumstance surrounding sale, as per the SVB Circulars dated 23.02.2001 and 09.02.2016 and circular dated 07.05.1990, issued by the Board, the Customs Valuation Rules issued by the Central Government, and Article 17 of the Agreement on implementation Article VII of GATT, inter alia for doubting and rejecting declared transaction value? This, information, data and material, inter alia, includes-
(i) Manufacturer's Price List of each model showing its variant in country of manufacture - showing standard equipment, its price with and without Tax, and with details and prices of the operational fittings;
(ii) GCC Package Price List of cars for Middle East Countries issued by Manufacturer's subsidiary - showing standard equipment, other KSG/AVK 14/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc fittings included in GCC package for Middle East Countries, its price for GCC Package, with details and prices of the operational fitting;
(iii) The "Pricing Pattern" discernible form- (a) The websites of the manufacturer, (b) The websites of its related parties in other Countries, (c) The websites of reputed car dealers abroad, (d) The International Industry Publications of repute, (e) Material showing abnormal discounted rate for import in India
by the private respondents from their related party as compared to that for supply to UAE,
(iv) Comparison of price declared by Respondent No.5 for its import of cars as FBU (at higher rate of Customs Duty) vis a vis price declared by it for its import of cars as CKD (at lower rate of Customs Duty);
(v) Import of 'armoured/Guard' car by mis-declaration and gross suppression of value and description in the Bill of Entry, discernible form the estimated price from Industry Publication and also the domestic sale price post importation. Significantly, in later imports of 'armoured/Guard' cars by unrelated importer (as per media reports for the use by Hon'ble Prime Minister), the correct value and description as mentioned in the Bill of Entry and the price declared is also substantially higher.
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(vi) Details of various imports in India by other unrelated parties, each of them being at substantially higher value than that declared by the private respondents in their related party transactions in the same period, from the same country and from the same related supplier.
(vii) Material showing import of cars in India by Respondent no.6 form related foreign supplier from Middle East, at price declared in India [USD 31,823 for MACAN and USD 38,192.6 for CAYMAN (at Page 45 and 46)] being much lower than the procurement price of the said related supplier for Middle East [USD 50,955 for MACAN AND USD 52898 for CAYMAN], resulting in not only suppressing assessable value of charging Customs Duty, but also seeking assessment at a lower rate of Customs Duty; and
(viii) As against import of luxury cars from related party by the private respondents at ridiculously low declared value, in import of other luxury cars such as Bentley (manufacturer related to Respondent no.6) and Rolls Royce (manufacturer related to Respondent no.7), etc which are imported directly by unrelated dealer / consumer, the declared price are comparable to UK price of dealer available from same websites or Industry Publications.
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WP-1202-2022-IAL-9504-23-23072024.doc (II) Whether the said representative information data and material produced by the Petitioner, suppressed by the private respondents, and ignored by the officers of revenue, prima facie shows ex facie ridiculously low value declared for assessment of Customs Duty by private respondents in their imports from related party to evade Customs Duty ?
(III) Whether the imported cars in CKD or FBU were generally sold and offered for sale, even to unrelated parties, at the same ridiculously low price declared by Respondent nos.5 to 7?
(IV) Whether the abnormal discount in price offered for CKD and FBU cars by the Foreign Supplier is exclusive for their subsidiary in India, as compared to its subsidiaries in other countries, to evade high Customs Duties in India applicable at significantly higher rates of about 145% to 215% as against only 20% VAT payable in UK on imports from Germany, and only 5% Customs Duty payable in UAE for import of Cars?
(V) Whether deliberate suppression by the private respondents from the assessing officer as well as from SVB, of such material information, data and material, having a bearing on the value for the purpose of assessment, would render the favourable orders so obtained fraudulently by private respondents, as non-est, void ab-initio and KSG/AVK 17/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc nullity in the eyes of law as per ratio A.V. Papayya Sastry v. Govt of A.P.- (2007) 4 SCC 221?
(VI) Whether the judgments of the Hon'ble Supreme Court relied upon by the petitioner in his writ petition itself viz. Century Metal Recycling (P) Ltd. v. Union of India, (2019) 6 SCC 655, Padia Sales Corpn. v. Collector of Customs, Bombay, 1993 Supp (4) SCC 57, Sharp Business Machines (P) Ltd., (1991) 1 SCC 154, Habasit Lakoka Pvt Ltd vs. CC (Imports)- 2015 (321) E.L.T. 15 (S.C.), Mytri Enterprises vs. Commissioner - 2015 (323) ELT A71 (SC), and Varsha Plastics (P) Ltd. v. Union of India, (2009) 3 SCC 365, are not at all relevant in the fats and circumstances of the case, as claimed by the private respondents and Shri Sandeep Gunjal, the officer of DRI.
(VII) Whether any Transfer Pricing orders obtained for the purpose of Income Tax would bind Customs Authorities and prohibit them from ascertaining correct value for the purpose of levy, assessment and collection of Customs Duty under Section 14 read with Rules and Instructions issued by the Board ?
(VIII) Whether the rate of Customs duty being in multiples of rate of Income Tax, and the taxable event for imposing Customs Duty occurring under Section 12 when goods are brought into the territorial waters of India, the reliance on Transfer Pricing study for acceptance of KSG/AVK 18/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc ridiculously low declared valuer exclusive for the Indian subsidiary (which is not specific to any transaction of import of car, but aimed for the purpose of discharging Income Tax liability for a particular year and is mainly based on post importation costs), is beyond any lawful justification and would lead to absurdity?[for e.g. Declared Price of FBU being lower than CKD of same or even lower model] ? (IX) Whether despite the gist of statement dated 05.04.2016 by GM of Respondent no.5 showing failure to satisfy the comparison of price of same model in FBU at 49K Euro, CKD 66K Euro and unrelated party import at 111K in 2016 (page 749), and despite email dated 23.06.2020 by an officer of DRI to Respondent no.5 still asking 'why price of CBU is lesser than CKD' (Page 759), and response of Respondent no.5 in para 10 of Reply Affidavit that "....the difference in price is supported with well accepted legal principles of Customs valuation..." (Page 720), accepted without any justification by officer of DRI, would merit acceptance of this Hon'ble Court without looking into investigation report based on such alleged "legal principles of Customs valuation" which do not exist?
(X) Whether issuance of orders of SVB, assessment and clearance, and the alleged investigation by officers of DRI were mechanial with culpable negligence, merely by accepting undertaking / indemnity / KSG/AVK 19/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc statements, without considering / following the requirements stipulated in -
(i) SVB circulars no. 11/2021-Cus dated 23.02.2001 and paragraph 29 of Annexure A and paragraphs 8 to 12 of Annexure B thereof, SVB Circular No.5/2016-Cus dated 09.02.2016 and in particular questions 4, 5, 2, 5.3, 5.4 and 5.5 (Annexure A to the Circular) and the "Pricing Pattern" (in Annexure B to the Circular), which were admittedly not produced by the Respondent Nos.5 to 7,
(ii) Board Circular dated 07.05.1990 instructing to consider published price list of the manufacture as prima facie evidence of under valuation in imports;
(iii) Customs Valuation Rules and particularly Rule 3 and 12;
(iv) Despite settled position of law as per the judgments relied upon by the Petitioner;
(v) Despite being aware that orders of SVB and assessment in import of dealer tools and equipment by the private respondents from related party was on the basis of Price List?
(vi) And despite being aware of the admitted position that price declared in CKD and FBU for imports by its subsidiary was determined by the parent German company, inter alia, based on duties and taxes in the country of importation and post importation costs of the subsidiary, KSG/AVK 20/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc despite there being no separate discount policy for India having been disclosed.
(XI) Whether prima facie case exists for directing the officer of DRI Mumbai and Bangalore to produce before this Court investigation report with complete file to ascertain legality, propriety and validity of the inaction by the officers of DRI, and to pass such further appropriate orders to safeguard and to prevent further evasion of government revenue as may deem just and expedient?
(XII) Whether the petitioner is entitled to have a copy of the investigation report of the cognizable offence alleged by him, to protest and assist the Hon'ble Court, inter alia, in the light of the judgment of Hon'ble Supreme Court Bhagwant Singh v. Commissioner of Police , (1985) 2 SCC 537 read with the Order dated 29.03.2023 passed by the Hon'ble Supreme Court in SLP(C) D12911/2023 filed by the petitioner and in light of the undertaking obtained from him in terms of Board Circular 20/2015-Cus dated 31.07.2015?
(XIII) Whether the concerned officer of DRI have failed to take appropriate and reasonable expedient steps to prevent further revenue loss and had failed to share complete particulars of the allegations along with the said information, data and material produced by the Petitioner, with the concerned departments including SVB, CBIC, DGOV KSG/AVK 21/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc and all concerned Customs Commissionerate?
(XIV) Whether forthwith investigation into the continued evasion of duty as per the information provided by the petitioner and explained further in the instant petition and affidavits filed therein is warranted for which the petitioner can also extend his cooperation? (XV) Whether, ignoring such massive under valuation in imports of Luxury cars and not even investigating and preventing the same in accordance with law, would set at naught the avowed policy of Central Government in larger public interest for compelling the foreign manufacturers of Cars to manufacture them in India, by having higher rate of Customs Duties for FBU imports, lower rate for CKD imports, and further lower rate for Parts imports ?
(XVI) Whether prima facie case is made out for passing any interim direction to the Respondent No.2- 'Central Board of Indirect Taxes' to forthwith take appropriate steps as prayed to safeguard revenue in these related party imports in terms of Circulars issued by it ? (XVII) Whether the writ petition and the prayers in the IA are to be allowed to redress the public injury and to enforce the public duty of the official Respondents ?"
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17. Mr. Shah would submit that above 17 issues merit serious consideration and adjudication by this Court and therefore the prayers in the Petition as well as in the Interim Application be granted.
SUBMISSIONS OF RESPONDENT NO.5
18. On the other hand, Mr. Dada, learned Senior Counsel for Respondent No.5 would submit at the outset that the prayer of the Petitioner seeking writ of mandamus alleging continued massive undervaluation and mis-declaration is not maintainable as this would be asking the Court to give direction in respect of future imports. That each assessment is a fresh assessment and that presently, it cannot be said that there would be undervaluation and mis-declaration in future. Mr. Dada has submitted that the entire system will collapse if this Court gives direction in respect of future imports.
19. Mr. Dada submits that even though having wide powers, the High Court in writ jurisdiction cannot review the decision of the executive but only the decision-making process.
20. Learned Senior Counsel submits that the Petition is hit by delay and laches. The Petitioner did not participate in investigation after KSG/AVK 23/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc 2016. That the DRI closed the investigation proceedings in 2020 after finding no evidence of undervaluation. The Petitioner approached this Court in 2022 i.e. 2 years after closure of investigation and after almost 6 years of disposal of its case raising similar grievance before the Hon'ble Supreme Court.
21. And therefore the allegation of inaction by DRI is incorrect. The Respondent No. 5 has made elaborate submissions in this regard in its Affidavit-in-reply dated 21st April, 2023 wherein they have stated that a detailed investigation was conducted.
22. It is submitted that Respondent No. 3 found no undervaluation after examining the documents submitted by the Respondent No. 5. That, before concluding the investigation, the Respondent No. 3 wrote various letters asking the Petitioner if he has any additional information to submit but the Petitioner did not respond to the said letters and it is only thereafter, that the proceedings were concluded.
23. Mr. Dada would submit that the bonafides of the Petitioner is in doubt. That before the Hon'ble Supreme Court, the Petitioner had submitted that his intention behind challenging the valuation was to KSG/AVK 24/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc get reward as per the guidelines laid down under Circular No. 20/2015-Cus dated 31st July, 2015.
24. On merits, Mr. Dada would submit that the transaction value is to be determined in accordance with the Customs Valuation Rules relying upon the decision of the Hon'ble Supreme Court in Eicher Tractors Ltd. v/s. Commissioner of Customs, Mumbai, reported in 2000 (122) E.L.T. 321 (SC). Mr. Dada would submit that a price list is really no more than a general quotation. It does not preclude discounts on the listed price. That in fact, a discount is calculated with reference to the price list. A discount is a commercially acceptable measure, which may be resorted to by a vendor for a variety of reasons including stock clearance and that it is erroneous to reject the transaction value and can not be a reason by itself.
25. As regards the specific allegations made by the Petitioner Mr. Dada has referred to the following table :
Sr. Petitioner's allegation Respondent No.5's response No.
1. Two cars of same model have Independent importers are vast difference in prices. importing the cars from dealers in Germany at showroom KSG/AVK 25/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Import price of armoured car prevailing in Germany.
is three times more than the Respondent No. 5 is importing Base Model of the car. from manufacturer.
Also huge difference in import Two cars of same model can Two cars of same model can also have price differences also price and sale price. because of the additional features embedded in the cars.
(Page 20, 21 - Para 17, Para The buyer opting for a car of a 18 and 19} particular Model No. embedded with additional features would have to pay much higher as compared to buyer opting for the car with lesser additional features of the very same Model No. Comparison of import price and retail sale price is unfair.
Several costs get added to the
price of the car before it is sold
locally. The selling price of any
car would also include
additional expenses like
customs duty, charges, inbound
and outbound transportation,
extended warranty charges,
inventory carrying costs,
margins to be paid to dealers
and profit of the distributor as
well as prevailing local taxes
and levies like VAT. These
additional costs invariably lead
to an increase in the sale price
of a car.
{ Page 718, 719 para 8, 9}
{Para 6-Affidavit-in-Reply dated
21st April, 2023 of the
Respondent No.5}
2. Value of FBUs is similar or For CKD Model, parts are to be lesser than the valuer sourced separately when KSG/AVK 26/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc declared by the Respondent compared to FBUs which are NO.5 for CKD Model. {Page manufactured in a highly 21, 22-Para 20, 21 and 22} advanced facility. Therefore, cost of manufacturing of CKD goes up.
Further, the quantum of FBUs imports is substantially higher when compared to CKD Model's due to which there is a price difference.
{Page 720-Para 10, 11}
3. Assessable value declared by Price List of another country the Respondent No.5 is lesser cannot be taken into when compared with the price consideration as it is the list for Middle Est Country. showroom / retail price in that {Page 24-Para 23} country. Further, various parameters have to be taken into account like estimation of sales volumes, market penetration, product configuration, local taxes, inflation, general and administrative costs etc. {Page 723-Para 16}
4. Special Valuation Branch Circular No.5/2016-Cus. Dated (SVB) orders are not correct 09th February, 2016 -
Investigation procedure by
Special Valuation Branch
explains that detailed
examination takes place before
passing the SVB order.
{Page 418}
5. Relationship between the The issue of influence of
Respondent No.5 and its relationship on the invoice price
parent company Daimler AG has already been decided by
has influenced the prices of SVB order dated 27th January,
the car. 2005 and the same has been
reviewed in the years i.e. 2008,
{Page 34-Ground A} 2011 and 2015. There is
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specific finding by SVB that
there is no flow back. The
transaction has again been
examined wherein the
Respondent No.5 furnished
submissions explaining its
pricing method along with
several documents viz. General
Distributor Agreement between
the parent company and
respondent No.5, Bill of Entry,
Annual Reports for the last
three financial years, Transfer
Pricing report for the
Assessment year 2017-18 and
several other documents. The
Commissioner of Customs
(Import) had taken the same
into consideration while issuing
the Investigation Report dated
09th June, 2020 wherein they
have accepted the transaction
value. The aforesaid documents
are also examined by
Respondent No.3.
{Page 727-728-Para 26}
6. SVB orders have been All checks and balances are
obtained by Respondent No.5 provided in the Act itself. There
through misstatement and is robust assessment process.
suppression of facts. Provisions are there in case
there is duty short-leived or
There is active connivance by collected.
the high ranking officials
There is no misdeclaration and
{Page 67, 68-Ground R and suppression. An exhaustive list S} of documents was submitted before Respondent No.5 in the year 2005 before passing the SVB order, further the SVB order has been reviewed in KSG/AVK 28/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc 2008, 2011 and 2015.
Further the Commissioner of Customs (Imports) has also issued an Investigation report dated 09th June, 2020 accepting the transaction value.
In relation to the allegation of connivance, the assessment of Bill of Entry is subject to review under Section 129D of the Custom's Act, 1962. Further different branches of the Department i.e DRI, SVB, jurisdictional Commissionerate are involved hence it is difficult to sunrise that all have simultaneously connived with Respondent No.5. Further the actions of the officials of the customs officials of the customs Department also subject to Custom Revenue Audit ("CRA") under the provision of Section 16 of the Comptroller and Auditor's General (Duties, Powers and Conditions of Service) Act, 1971.
{Page 733-Para 39}
{Para 10-Affidavit-in-Reply
st
dated 21 April, 2023 of the
Respondent No.5}
SUBMISSIONS OF RESPONDENT NO.1 TO 4
26. Mr. Jetly, learned Senior Counsel has submitted that in the facts of this case, it is necessary that the antecedents of the Petitioner which KSG/AVK 29/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc are a matter of record are considered. Learned Senior Counsel had submitted that the Petitioner, as Director of Sprint Services Private Limited was involved in a case of misuse of customs notification No.49/2000 dated 27th April, 2000, by importing cars under Export Promotion Capital Goods (EPCG), Scheme which was allowed subject to the "Actual User" condition as well as condition of fulfillment of export obligation, by use of the said imported goods. That the Petitioner in breach of the said Notification disposed of the imported cars in the open market and created documents to show apparent compliance with the conditions of the license. After a thorough investigation, the DRI issued two Show Cause cum Demand Notices bearing No.- (I) 27/XI/29/2001-CI dated 31 st May, 2002 [for 20 cars], and (ii) DRI/BZU/C/2001 dated 03 rd June, 2002 [for 5 cars], demanding differential Customs Duty of Rs.2,93,61,300/- and Rs.62,58,173/- respectively.
27. Learned Senior Counsel has submitted that one more Show Cause Notice was issued to the Petitioner by the DRI, Delhi Zone Unit under Section 124 of the Customs Act, regarding confiscation of 6 cars lying uncleared at ICD Ludhiana, wherein the declared assessable value of the cars were found to be grossly understated. It is also submitted KSG/AVK 30/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc that the Petitioner was arrested on 29 th June, 2001 during the course of investigation in the case involving 20 cars as above. It is also submitted that the Petitioner on receipt of Show Cause cum Demand Notice as mentioned Sr No.(ii) above approached the Additional Bench of the Settlement Commission, Mumbai and admitted that he had committed breach of the EPCG License and customs notification No.49 of 2000 dated 27th April, 2000 and, was willing to pay customs duty liability as demanded. Thereafter, the final order dated 10 th April, 2003 was passed by the Settlement Commission, wherein the Settlement Commission granted immunity to the Petitioner from fine, penalty, prosecution. It is submitted that the Petitioner, paid the full amount of differential customs duty along with interest.
28. Mr. Jetly, learned Senior Counsel has submitted that the Petitioner was involved in smuggling of high value cars.
29. Learned Senior Counsel has submitted that the Petitioner is also an offender under the Foreign Trade (Development and Regulation) Act 1992, for which, the above cases were booked against him and a Detention Order although was also issued against him under the COFEPOSA Act, 1974, but was later quashed by this Court. KSG/AVK 31/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 :::
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30. Mr. Jetly, learned Senior Counsel for the Respondents No.1 to 3 has submitted that the cases booked, the arrest made and the Detention Order issued against the Petitioner establishes the antecedents of the Petitioner and which belies his claims that he was neither a convict nor has been penalized in any proceedings under the Customs Act. Mr. Jetly, has submitted that the order dated 10th April, 2003 of the Settlement Commission states that the action of the Petitioner was incorrect as per law which underlines the doubtful antecedents and credentials of the Petitioner.
31. Mr. Jetly, learned Senior Counsel has further submitted that the Petitioner has suppressed material facts and made misleading statements, levelled various allegations against officers of DRI without furnishing any prima facie proof in support thereof.
32. It has also been submitted by Mr. Jetly, with respect to the allegations made by the Petitioner by letter dated 9 th January, 2015, that Respondents No.5, 6 and 7 were resorting to fraud, mis- representation and suppression of facts (under valuation) in import of luxury cars into India from related parties to dupe the Central Government of its legitimate customs duties, that no evidence in KSG/AVK 32/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc support of these allegations has been furnished by the Petitioner nor the same is forthcoming. Mr. Jetly, learned Senior Counsel has submitted that after about three months, the papers submitted by the Petitioner were returned with advice to approach the DRI with credible evidence of the alleged fraud and under-valuation.
33. Mr. Jetly has submitted that in the Criminal Writ Petition No.20 of 2016 filed by the Petitioner on 28th January, 2016, before the Hon'ble Supreme Court of India, a detailed affidavit dated 17 th March, 2016, was filed by the DRI furnishing details, circumstances and reasons for not recording DRI-1 on the information provided by the Petitioner. Mr. Jetly, learned Senior Counsel has submitted that after hearing both the sides the Hon'ble Supreme Court disposed of the said Petition vide order dated 15th July, 2016 by passing the following order. The relevant paragraphs are as under :
"Having heard learned counsel for the parties, we are of the considered opinion that the writ petition can be disposed of at this stage by permitting the petitioner to file documents before Additional Director, Directorate of Revenue Intelligence (DRI), Mumbai within eight weeks hence. Thereafter, the said authority shall intimate the petitioner so that the petitioner can appear and explain and answer the queries of the authorities. As further agreed to by learned Counsel for the parties, the petitioner shall also cooperate as Mr. Nanda would emphatically put forth that the petitioner has filed this writ petition for the national cause. If the Additional Director, DRI, Mumbai Zone is convinced that KSG/AVK 33/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc there is credible information given by the petitioner, he shall take appropriate action, as advised in law. The writ petition is accordingly disposed of. There shall be no order as to costs."
34. Mr. Jetly, learned Senior Counsel has further submitted that by letter dated 9th September, 2016, the Petitioner has submitted certain information along with annexures to the DRI and that the same was examined by the DRI. Mr. Jetly would submit that the Petitioner had made a request for expeditious preliminary enquiry for considering registration of Information Report/DRI-1 and commencing investigation into alleged cognizable offences punishable under the Customs Act for the alleged evasion of customs duties in the import of luxury cars whether as Fully Built Units (FBUs) or in CKD/SKD form when imported from related parties. Mr. Jetly, learned Senior Counsel has submitted that the information furnished in the letters appear to be general in nature and was found to contain sweeping allegations against five corporate houses. Besides, in para 7 of the said letter the Petitioner expressed desire that he would like to place further material on record to assist the investigation. The Petitioner was thereafter requested to visit the DRI office with all additional material. It is submitted that the Petitioner thereafter visited the office on 4 th October, 2016 and the information was discussed at length with him and that KSG/AVK 34/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc the Petitioner informed the officers thereafter that he had no additional material and would require some more time to do so.
35. That thereafter, on 16th November, 2016, the Petitioner once again visited the DRI office and expressed his desire to meet the Additional Director and the other officers of DRI. The Petitioner stated that he had specific details of import of certain consignments of Respondent No.5 viz. Mercedes - Benz India Pvt. Ltd. suspected to be imported fraudulently and that he was in the process of gathering specific details about the consignments of the remaining four importers mentioned in his letter dated 9 th September, 2018. The Petitioner agreed to furnish the details of specific consignments imported by Respondent No.5 for which DRI-1 would be recorded and an enquiry would be initiated by DRI, Mumbai.
36. It is submitted that thereafter, by letter dated 25 th November, 2016, the Petitioner furnished details of a few consignments imported by Respondent No.5 and alleged mis-declaration of description and/or value and also visited DRI office on 29 th November, 2016 and once again requested that the information in respect of the said information furnished by letter dated 25th November, 2016, DRI-1, may be recorded KSG/AVK 35/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc and an enquiry be initiated against the Respondent No.5. Accordingly, DRI-1 was recorded on 7 th December, 2016, regarding the alleged fraudulent imports by Respondent No.5.
37. Mr. Jetly, learned Senior Counsel has submitted that immediately thereafter a thorough investigation was conducted by the DRI under the supervision of Additional Director General, in compliance of the Order of the Hon'ble Supreme Court dated 15th July, 2016.
38. Mr. Jetly learned Senior Counsel has submitted that despite a detailed investigation, no case of evasion on duty of importation of luxury cars on under-stated values by Respondent No.5 could be made out.
39. Mr. Jetly, would submit that thereafter, by three separate letters dated 27th May, 2019, 10th July, 2019 and 19th August, 2019, the Petitioner was requested to furnish additional information / documents (if any) in his possession to substantiate the charges of undervaluation. However, it is submitted that the Petitioner failed to respond to any of the aforesaid letters.
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40. It is submitted that after examining all documents, records and the relevant legal provisions and pronouncements, the Investigation against Defendant No.5 was closed on 16 th September, 2020 after a period of almost four years of investigation. It is submitted that the investigation was supervised at various times by two Deputy Directors, Four Additional/Joint Directors and Two Principal Additional Directors General.
41. Mr. Jetly, would submit that meanwhile, Civil Writ Petition (PIL) No. 9425/2020 was filed by one Arvind Alaru vs Union of India & Ors. before the High Court of Rajasthan, wherein the Petitioner above named was made a favoring Respondent i.e. Respondent No. 5 in the petition. It is submitted that the issues raised in that Petition are similar to the ones raised herein and that hearing in the said case has already taken place and the answering Respondent was directed vide order dated 03rd September, 2020 to indicate the actions taken based on the directions given by the Hon'ble Supreme Court in Criminal W.P. No. 20/2016 filed by the Petitioner. It is submitted that accordingly, DRI filed its reply before the Rajasthan High Court on 25 th November, 2020 and although the next hearing in the Petition was due on 13 th May, 2022, however, as per the court's website, no further update is KSG/AVK 37/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc available. That present Petition has been filed despite having knowledge of the fact that a similar issue is already pending before the Rajasthan High Court for its decision.
42. It has been submitted that the Petitioner is not acting bona fide and has personal gain or private motive or political motivation or other oblique considerations, in mind and therefore this Court may dismiss the petition with costs. Mr. Jetly has relied upon the decisions of the Hon'ble Supreme Court in the case of Holicow Pictures (Private) Ltd. vs. Prem Chandra Mishra and Ors. reported in 2007 (14) SCC 281.
43. Mr. Jetly has submitted that the Hon'ble Supreme Court in Dattaraj Nathuji Thaware V. State of Maharashtra reported in 2005 (1) SCC 590 has taken a view that when frivolous petitions are filed before the Court, such petitions must not only be dismissed but exemplary cost must also be imposed by the Courts so that a larger message is sent that petitions filed with oblique motive do not have the approval of the courts.
44. Mr. Jetly would submit that a bare perusal of the Petition would reveal that the allegations levelled by the Petitioner are totally KSG/AVK 38/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc unfounded and no actionable data or document, whether primary, secondary or otherwise, has been produced by the Petitioner in support of his allegations or claim.
45. Mr. Jetly, would submit that it is a statutory obligation and duty of the Respondents to investigate into offences committed under the said Act, and the Petitioner cannot be allowed to seek any prayer under Article 226 of the Constitution to settle purported personal scores or to achieve any personal gain in the garb of filing this petition.
46. It is submitted that orders passed under Section 92CA(3) of the Income Tax Act, 1961 by the Income Tax (Transfer Pricing) authorities Pune in respect of Respondent No. 5 for AY 2015-16 and AY 2014-15 have been scrutinized. In both the said Orders, the Income Tax authorities have not disturbed the "Arm's Length Price" of transactions as reported by Respondent No.5. Further, scrutiny of the Financial statements of Respondent No.5 for the past years does not indicate any remittance / transfer of funds to Daimler AG (related to import of cars), over and above the Import invoice value. Besides, all the Agreements entered between Daimler AG and Respondent No.5, have been scrutinized thoroughly. However, no provision relating to any flow KSG/AVK 39/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc back of fund from Respondent No.5, Pune to Daimler AG, Germany (other than towards the Invoice Value of the cars) or any other consideration for the foreign supplier relatable to import of cars was noticed. Scrutiny of the Agreements (between Daimler AG and Respondent No.5, Pune) and the Financial Statements of MBIPL, Pune indicate that there are several Agreements viz. Agreement for Assistance, Long Term Consultancy Agreement etc. by which various services like IT, Financing, Planning, Legal, Insurance etc. are provided by Respondent No.5 to Daimler AG, Germany for which amounts are being remitted by Daimler AG, Germany to Respondent No.5. It has been submitted that thus, the flow of money under these Agreements is two ways-from Daimler AG, Germany to Respondent No.5 and vice versa. That this supports the fact that the transactions between them are at arm's length. After examining all the above documents and relevant legal provisions, the Investigation against Respondent No.5, Pune was closed.
SUBMISSIONS OF RESPONDENT NO.4
47. The Respondent No.4 as mentioned is the Director General of Valuation has also filed an affidavit in the Petition. It has been submitted that the contention of the Petitioner that from 1 st January, KSG/AVK 40/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc 2013, all SVBs are under the control of Director General of Valuation is factually incorrect. That although there was a circular in 2012 vesting functional control over the SVBs, the said circular had been withdrawn in the year 2016 and that now the SVBs function under the supervisory control of the jurisdictional Chief Commissioner/ Principal Commissioner/ Commissioner and the Director General of Valuation, continues to support the SVBs issuing advisories on legal issues and guidance notes. That the role of the Director General of Valuation is only limited to facilitate coordination amongst the SVBs. It has also been submitted that the Director General of Valuation is not entrusted with assessment work but only assisting the Board in Policy matters concerning Customs Valuation.
48. Pertinently it has been submitted that the Petitioner has approached this Court without availing of alternate remedy by filing appropriate proceedings before an appropriate forum of the Respondents No. 1 to 3 and that the Director General of Valuation is not a necessary party to the Writ Petition and may be deleted.
49. Mr. Jetly would however submit that files/records pertaining to Respondent No.5 available in the Special Valuation Branch (SVB), New KSG/AVK 41/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Custom House, Mumbai were called for and examined. It was noticed that from the year 2005 till 2020, Special Valuation Branch, New Custom House, Mumbai has passed five Orders for five different periods after detailed scrutiny of the relevant documents of the importer viz. Respondent No.5 pertaining to transaction value. That vide each of the above Orders, the declared invoice value has been accepted as the Transaction value in terms of Section 14 of the said Act, read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. It is submitted that further, from the enquiry conducted by the DRI, it does not appear that Respondent No.5, Pune have made any mis-representations in the proceedings before the SVB, New Custom House, Mumbai.
50. Mr. Jetly would submit that the Petitioner has specifically admitted and recognized that in a PIL being D B Civil WP (PIL) 9425 of 2020 filed by one Mr. Arvind Alaru before the Rajasthan High Court is pending after issuance of notice, wherein the Petitioner herein was made Respondent No. 5 as the first informant of the issue raised in the said PIL. Mr.Jetly would submit that it appears that the PIL was filed at the behest of the Petitioner which is why he was joined as a friendly Respondent. Unless the Petitioner had not disclosed the fact of filing KSG/AVK 42/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc DRI-I to Shri Arvind Alaru, he would have no way of coming to know about that fact.
51. Mr. Jetly, learned Senior Counsel has submitted that the Petitioner has solely placed reliance upon the information given by him to DRI in furtherance of contents of the Writ Petition (Criminal) No. 20 of 2016 filed by the Petitioner before the Hon'ble Supreme Court. That the Hon'ble Supreme Court disposed of the Writ Petition (Criminal) No. 20 of 2016 vide Order dated 15th July, 2016. In Order dated 15th July, 2016, the Hon'ble Supreme Court directed the Petitioner to file relevant documents before Additional Director, DRI in support of his claim. Accordingly, the Additional Director, DRI, Mumbai after taking into consideration and after thorough examination of the evidences placed by the Petitioner and evidences found during the investigation and with the approval of the Additional Director General, DRI, Mumbai, decided to close the investigation for want of any incriminating material indicating evasion of customs duty as alleged by the Petitioner. It is reiterated that before closure of the investigation, three letters were sent to the petitioner dated 27th May, 2019, 10th July, 2019 and 19th August, 2019 seeking the additional information/ documents pertaining to the enquiry being conducted by DRI, MZU into import of KSG/AVK 43/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc SUVs and vehicles caused by Respondent No. 5, however, the Petitioner chose not to reply to any of the said letters. As the department did not find any incriminating evidences even after thorough investigation spanning over a period of almost four years, the investigation in the matter was closed after sharing the Investigation Report with DG, DRI, New Delhi. In the garb of a fresh petition before this Court, the issue already investigated by DRI and closed for want of any evidences should not be allowed to be re-opened merely on the basis of bald, baseless, unfounded and frivolous allegations. It is submitted that in view of the above, the aforesaid petition is not maintainable with totally misconceived, misleading and devoid of substance, and has been filed with an oblique motive, hence, same is liable to be rejected/dismissed with exemplary costs.
52. By order dated 14th February, 2022 and 28th March, 2022, parties were directed to file affidavits, reply and rejoinder. Thereafter, time was granted, replies and rejoinders were filed.
53. The Respondents in their replies had taken a serious objection about the locus and bonafides of the Petitioner.
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54. Accordingly, on 29th November, 2022, the Court had recorded the same. The said order is usefully quoted as under :
" Heard the learned Counsel for the parties.
2. A serious objection is taken by the Respondents about locus and bonafides of the Petitioner. What is placed before us is not a public interest litigation. We had put to the learned Counsel for the Petitioner that the Petitioner shall at least disclose full particulars about himself so as to satisfy conscience of the Court that the Petitioner is indeed prosecuting this petition in larger public interest litigation and is not a mere busy body. Inspite of repeated stating so, the learned Counsel for the Petitioner has refused and therefore, it is not possible for us to pass any order unless the Petitioner discloses all the particulars as above.
3. Remove the petition from board. To come up in regular course.
4. At this stage of dictation; The learned Counsel for the Petitioner tenders apology and states that additional affidavit giving all particulars about the Petitioner and whether the Petitioner had taken social causes, whether any action is taken against him etc., from which the Court can discern that the Petitioner is a bonafide litigant will be filed within one week from today.
5. Earlier order recalled. Stand over to 19th December 2022."
55. This Court had also recorded that what was placed before the Court was not a Public Interest Litigation and, therefore, the bench had put to the learned Counsel for the Petitioner that the Petitioner shall at least disclose full particulars about himself so as to satisfy the conscience of the Court that the Petitioner was indeed prosecuting this Petition in larger public interest and not merely as a busy body. It was KSG/AVK 45/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc recorded that in spite of repeatedly stating so, learned Counsel for the Petitioner had refused and therefore it was not possible for the Court to pass any order unless the Petitioner disclosed all the particulars sought for and the matter was removed from the Board to come up in regular course. However, at the stage of dictation, learned Counsel for the Petitioner tendered apology and stated that an additional affidavit giving all particulars about the Petitioner would be furnished from which the Court could discern that the Petitioner was a bonafide litigant and therefore the earlier order of removal of the matter from the board was recalled and the matter was stood over.
56. On 27th January, 2023, when the matter was listed, the Petitioner had filed an additional affidavit and the revenue had also filed reply to the same also taking up the issue of locus and bonafides of the Petitioner. The Respondent No.6 sought further time to file reply to the additional affidavit and the matter was directed to be listed on 06 th February, 2023. The Court had clearly recorded in the said order that on 06th February, 2023, first the Petition would be heard on the question of locus of the Petitioner raised by the Respondents. The said order is usefully quoted as under :-
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WP-1202-2022-IAL-9504-23-23072024.doc "1. Pursuant to the order dated 29th November 2022 petitioner had filed additional affidavit, which reply filed on behalf of the revenue. Respondent No.6 states that reply to the additional affidavit is ready and be filed within two working days with copy to the other side.
2. List the petition at the bottom of board on 6 th February 2023.
On 6th February 2023 the parties are put to notice that first petition would be heard on the question of locus of the Petitioner raised by the Respondents.
3. Learned counsel for the Respondents state that a note giving a background of the litigation would be circulated before the next date."
57. Thereafter, on 10th February, 2023, the matter was stood over to 13th February, 2023 and thereafter due to paucity of time the matter could not be taken up.
58. It appears that in the meanwhile, the Petitioner approached the Hon'ble Supreme Court of India against the order dated 29 th November, 2022 as well as order dated 27th January, 2023 and after hearing the Counsel for the Petitioners, the Hon'ble Supreme Court, by order dated 29th March, 2023, in view of the record that the Supreme Court had entertained the writ petition filed by the Petitioner under Article 32 of the Constitution of India and passed order dated 15 th July, 2016 thereon being satisfied that the Petitioner had locus to approach the KSG/AVK 47/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc High Court for the reliefs claimed in the Writ Petition filed by him and being of the considered opinion that the interest of justice would stand served if, a bench would be nominated to hear the writ petition expeditiously within a period of three months, since the issue involved had lot of cascading effect on the revenue, directed the High Court to proceed to consider and decide the writ petition in accordance with law on its own merits without entering into the question of locus of the Petitioner to maintain the writ petition.
59. Accordingly, on 3rd April, 2023 the Court passed the following order in view of the order passed by the Hon'ble Supreme Court and listed the matter on 17th April, 2023, to enable the Registry to take necessary steps as per the order of the Hon'ble Supreme Court dated 29 th March, 2023 :
" The writ petition was on board last week at Serial No.9 of the Weekly Supplementary Board for final disposal of the matters which is taken every day after daily matters are over. Today, the petition is placed on board under the caption "For Directions" in view of the order passed by the Hon'ble Supreme Court dated 29 th March 2023 in SLP (Civil) No.12911/2023.
2. Stand over to 17th April 2023 to enable the Registry to take necessary steps as per the order passed by the Hon'ble Supreme Court dated 29th March 2023."
60. Thereafter, pursuant to an administrative order of the Acting Chief Justice, this bench had been constituted as a Special Bench to hear and decide the Petition.
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61. When the matter was listed on 17th April, 2023, time was sought to file reply to the Interim Application. The said order is usefully quoted as under.
"1. Perused the order passed by the Hon'ble Supreme Court. The petition is assigned to this Bench as per the administrative order. Place the petition on board on 25th April 2023 for hearing."
62. On 25th April, 2023, when the matter was listed, the following order was passed.
" This petition has been listed before this bench as Special Bench as per the administrative order of the Acting Chief Justice for disposal in the light of the order passed by the Supreme Court dated 29th March 2023 in S.L.P. (Civil) No.12911/2023. By this order, the Hon'ble Supreme Court has observed that the petition requires to be disposed of within a period stipulated in the order. However, when the petition is taken up for disposal, the learned Counsel for the Petitioner drawn our attention to the pending interim applications.
2. Interim Application No.1553/2022, the Petitioner seeks to join Directorate of Revenue Intelligence, Bangalore as party- respondent and corresponding prayer. Interim Application (L) No.9540/2023 is filed on 3rd April 2023 to incorporate additional final prayers in terms of the schedule. Interim Application (L) No.9504/2023 is filed on 3rd April 2023 seeking certain interim reliefs. Both, Interim Application (L) Nos.9540/2023 and 9504/2023 have been filed after the order is passed by the Supreme Court on 29th March 2023.
3. As regards the amendments, the learned Counsel for the Respondents state that amendment can be granted but adequate time be given to the Respondents to deal with the amended prayers and pleadings which have been sought by way of amendment.
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4. Accordingly, we allow Interim Application No.1553/2022 and Interim Application (L) No.9540/2023. As regards the adding of Directorate of Revenue Intelligence, Bangalore as party Respondent is concerned, the amendment to be carried out forthwith. The learned Counsel appearing for Respondent No.3- Directorate of Revenue Intelligence waives notice on behalf of the added Respondent. As regards other amendments are concerned, the same be carried out within one week. Since the amendments are moved on application, re-verification is dispensed with.
5. In view of nature of prayers sought by way of amendment, learned counsel for the Respondents seek time to file additional reply, to which the Petitioner has no objection for granting time to the Respondents to file additional reply. Additional reply to the added portion of the petition to be filed before the next date.
6. In view of the ensuing Summer Vacation from 5th May 2023 to 4th June 2023, list the writ petition for further hearing on 9th June 2023.
7. As far as Interim Application (L) No.9504/2023 is concerned, at the request of the learned Counsel for the Petitioner, list this interim application on 2nd May 2023."
63. On 2nd May, 2023, the following order was passed.
" This interim application is taken out on 3 rd April 2023. As regards the main writ petition is concerned, by order dated 25 th April 2023 we have listed the petition for further hearing on 9 th June 2023 in view of the ensuing Summer Vacation.
2. Having considered the averments made in the application and the prayers made therein, we are of the opinion that for deciding the application, the merits of the petition will have to be substantially heard. The petition is fixed for hearing on 9 June 2023. Therefore, we deem it appropriate that hearing of the present application is deferred to 9th June 2023. Order accordingly.
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3. Replies to the application and rejoinder, if any, to be filed before the next date."
64. On 9th June, 2023, the matter was listed for directions before the Special Bench and by consent of parties, the matter was placed on 16 th June, 2023 at 03:30 p.m. and the following order was passed :
" The matter is placed under the caption "For Directions"
before the special Bench. By consent of parties we place the Petition for further hearing on 16th June 2023 at 3.30 p.m.
2. The learned Counsel for the Petitioner states that Interim Application (Lodg.) No.13047 of 2023 is filed in respect of two reliefs: on for removal of three affidavits filed by one Dr. Sandeep Gunjal and secondly, to direct the Central Board of Customs and Indirect Taxes to file an affidavit in response.
3. As regards the first point is concerned, learned Counsel for Respondent Nos.1 to 3 accepts that the affidavits of Dr. Sandeep Gunjal ought not to have been filed and states that an affidavit sworn by the Sunil Kumar Mall, Principal Additional Director General, Directorate of Revenue Intelligence, Mumbai is now filed. The learned Counsel for the Petitioner states that he will examine the issue.
4. As regards the second relief that is sought, we are of the opinion that the hearing of the matter has to first commence in the light of the time bound directions and thereafter, once the hearing commences, we will be able to appreciate the prayers made by the Petitioner in better light so that appropriate orders can be passed."
65. On 23rd June, 2023, the following order was passed where it was recorded that the learned Counsel for the Petitioner had completed his arguments :
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WP-1202-2022-IAL-9504-23-23072024.doc "Matter is heard by this specially constitued Bench. The learned Counsel for the Petitioner has completed his arguments. He states that compilation of judgments with emphasis on passages relied upon would be filed by the next week. Stand over to 7 th July 2023 for arguments of the Respondnets."
66. On 7th July, 2023, the following order was passed as the arguments of learned Senior Counsel for the Respondents No.5 and 7 were yet to be concluded.
"The arguments of the learned Senior Advocte for the Respondent Nos.5 and 7 to be continued on the next date.
2. Stand over to 21st July 2023 at 2.30 p.m."
67. On 28th July, 2023, the Special Bench had recorded that arguments had been concluded on behalf of the Petitioner and thereafter the arguments on behalf of the Respondent No.5 as above were also over. The contention of the Respondent No.5 was that the investigation had already been conducted and concluded by the DRI and that there is no need for further investigation.
68. During the said hearing, this Bench had put a query to the learned Senior Counsel for the DRI as to the stand of the DRI in respect of the other private respondents viz. Respondents No.6 and 7. The Learned Senior Counsel for the DRI had submitted that the Petitioner had not submitted any material in respect of the said Respondents KSG/AVK 52/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc inspite of having been given an opportunity. Learned Senior Counsel for the DRI had submitted that the material now placed on record by the Petitioner would be examined. This Court had accordingly recorded that if the Petitioner intends to file any additional material he can give the same within a particular time period and that after examining the material thoroughly the Court would be informed of the course of action the DRI intended to take.
69. Accordingly, the learned Senior Counsel for the Petitioner submitted that if there was any additional material the same would be given to the DRI within a period of three weeks with a copy to the concerned private Respondents and the learned Senior Counsel for the DRI had stated that the DRI would take 6 weeks after the Petitioner submitted the additional information.
70. Accordingly, at the request of the learned Senior Counsel for the DRI, the matter was stood over to 05 th October, 2023. By the said order, the learned Senior Counsel for the Petitioner agreed that in view of the aforesaid course of action, the Petition could not be decided within the time limit of 3 months stipulated by the Hon'ble Supreme Court and if necessary, the Petitioner would request for an extension. KSG/AVK 53/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 :::
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71. Thereafter on 05th April, 2024, Mr. Devang Vyas, learned Additional Solicitor General of India has addressed this Court on behalf of the Respondent Statutory Authorities based on the Affidavit dated 28th September, 2023 filed under directions of this Court by order dated 28th July, 2023 on behalf of the Respondents No.1 to 4.
72. Learned ASG would submit that the said affidavit has been filed as the Hon'ble Court had queried the learned Senior Counsel of Respondents No.1 to 3 regarding the stand of D.R.I. in respect of other Private Respondents i.e., M/s. Skoda Auto Volkswagen India Private Limited (SAVIPL)- Respondent No.6 and M/s. BMW India Private Limited (BIPL) - Respondent No.7.
73. Learned ASG would submit that the learned Senior Counsel for Respondents No.1 to 3 had submitted that the Petitioner had not submitted any material in respect of these Respondents and the material placed now on record by the Petitioner would be examined and further that if the Petitioner intended to file any additional material, he could give the same within a particular time, and after KSG/AVK 54/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc examining the said material thoroughly, the Hon'ble Court would be informed of the course of action the D.R.I would propose to take.
74. Learned ASG would submit that the Petitioner submitted certain information in respect of Respondent No.6 and Respondent No.7 through an email dated 16th August, 2023.
75. That thereafter, after thoroughly examining all the information submitted by the Petitioner in respect of Respondents No.6 and 7, preliminary objections have been raised as to the maintainability of the issues raised in respect of Respondents No.6 and 7.
76. Learned ASG would submit that the Petitioner has submitted that Respondent No.6 is importing Luxury Cars viz. 'Porsche', 'Audi', 'Lamborghini' etc. from related parties viz. M/s. Automobili Lamborghini, Italy, M/s. Audi, Germany and PORSCHE Middle East & Africa FZE, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Similarly, the Petitioner has alleged that Respondent No.7 is importing Luxury Cars from related parties, mainly BMW AG, Germany, whether as Fully Built Units (FBUs) or in Completely Knocked Down (CKD) condition by mis-declaration KSG/AVK 55/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc and suppression of material particulars from the Customs Authorities and that the said Respondents are importing these luxury cars at ridiculously low and unrealistic prices.
77. In response to the same, the learned ASG submits that the information provided by the petitioner vide his email 16.08.2023 is very generic and is an analysis made by him mostly based on information available in open source which is otherwise also available to the assessing officers and the investigating agencies. That in fact, in the details submitted by the Petitioner in respect of Respondent No.6 and Respondent No.7 only the names of the car manufacturers have been changed and the content is by and large the same. In other words, the Petitioner's claim is sweepingly general to all luxury car imports by various multinational brands and is not specific.
78. It is further submitted that while levelling allegations against Respondent No.6 and Respondent No.7, the Petitioner has heavily relied upon the following factors :
(i) Purchase prices in other countries/regions such as the Middle East KSG/AVK 56/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc
(ii) Retail prices/Website prices in the UK and Germany which were mentioned on www.audi.co.uk, www.hrowen.co.uk, www.bmw.co.uk etc.
(iii) Comparison of import prices of cars that have been imported into India as a one-off case by unrelated parties in India with prices declared by related parties.
(iv) Prices available in published magazines such as Auto Expres Cars, Top Gear etc.
(v) The alleged misrepresentation and suppression of facts by Respondents No. 6 & 7 before the Special Valuation Branch (S.V.B) authorities.
79. That the petitioner has sought to make comparisons of purchase prices in other countries/regions, retail prices/website prices in other countries, prices available in published magazines, and import prices by unrelated parties with the import prices declared by Respondents No.6 and 7. However, it is submitted that such comparison is neither logical nor legal and is not allowed as per the Customs Valuation Rules, 2007.
80. Learned ASG would submit that Section 14 of the Customs Act, which lays down the provisions for valuation of goods for the purpose KSG/AVK 57/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc of assessment of customs duty, has undergone a lot of changes since its inception. Prior to 2007, the concept of "deemed value" was very significant as the then Section 14(1) of the Customs Act, 1962 stated that the value of the imported goods shall be the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade. That therefore, prior to 2007, the assessing officer ought not to see the actual value of the goods, but the value at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time and place of import. Similarly, the words "in the course of international trade" it is submitted are also of great importance. The assessing officer ought to see the value of the goods not for each specific transaction, but the ordinary value which the goods would have in the course of international trade at the time and place of their import. That India continued to have the deeming provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988.
81. It is submitted that in 2007, Section 14 of the Customs Act was amended vide the Finance Act, 2007. The Statement of Objects and Reasons and the Notes on Clauses - Customs, Customs tariff, Excise KSG/AVK 58/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc explained the reason for the introduction of the amendment in Section 14 of the Customs Act, 1962 as below.
"Clause 86 seeks to amend section 14 of the Customs Act, 1962 which relates to valuation of goods for the purposes of assessment. The existing sub-section (1) of section 14 is based on concept of the deemed value of goods, but sub-section (1A) of section 14 mandates that the price in respect of imported goods shall be determined in terms of the rules made in this behalf and the rules framed thereunder are based on the concept of "transaction value" as enshrined in the World Trade Organisation Valuation Agreement. Because of the inherent contradiction in the two concepts of "deemed value" and "transaction value", practical difficulties are being faced in implementation of the valuation provisions of the Customs Act. There has been felt a need to substitute the concept of "deemed value with the concept of "transaction value","
Accordingly, it is proposed to substitute section 14 of the said Act wit goods shall be the transaction value of such goods, as determined accordance with the rules made in this behalf. It is further proposed to provide that the transaction value in the case of imported good specified in sub-section (1) shall include any amount that the buyer is liable to pay for costs and services, including commissions and KSG/AVK 59/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc brokerage, assists, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, and handling charges. It is also proposed to provide that where there is no sale or the transaction value of the imported goods or export goods is not determinable, the value of such goods shall be determined in accordance with the rules made in this behalf. The said clause shall come into force from such date as the Central Government may, by notification in the Official Gazette, appoint." Learned ASG would submit that therefore with the amendment of Section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation Rules, 2007, there is no place for relying on the concept of deemed value, and the "transaction value"
took the primary position.
82. That as per the new Section 14 of the Customs Act, 1962 that was introduced vide the Finance Act, 2007, the value of the imported goods is the transaction value of such goods, that is, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, where the buyer and seller of the goods are not related and the price is the sole consideration for the sale KSG/AVK 60/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc subject to such other conditions as may be specified in the rules made in this behalf.
83. Learned ASG has submitted that Rule 12 of CVR, 2007 empowers the assessing officer to reject the transaction value declared by the importer. However, this power is to be exercised sparingly and only in cases where there lie genuine doubts related to the authenticity of the declared value. That this principle was followed in a catena of judgments of the Apex Court which held that the transaction value cannot be rejected except for the grounds laid down under the Valuation Rules. Learned ASG has relied upon the decision of the Hon'ble Supreme Court in the case of Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] where the Hon'ble Supreme Court, in Para 18 of its decision, has held that, "It is only in case where the doubt of the proper officer persists after conducting examination of information including documents or on account of non-furnishing of information that the procedure for further investigation and determination of value in terms of Rules 4 to 9 would come into operation and would be applicable. Reasonable doubt will exist if the doubt is reasonable and for 'certain reasons' and not Ideas fanciful and absurd. A doubt to justify detailed enquiry under the proviso to Section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of 'certain reasons' and not me reasons would be contrary to the scheme KSG/AVK 61/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc and because one is distrustful and unsure without reasonable and certa purpose behind the provisions which ensure quick and expeditious clearance of import goods."
84. Learned ASG submits that the decision of the Hon'ble Supreme Court in Para 11 of its judgment in CC Vishakhapatnam v. Aggarwal Industries Ltd. [2011 (272) EL 641 (SC)] has held that, "reason to doubt' does not mean reason to suspect'. A mere suspicion upon the correctness of the invoice produced by an importer is not sufficient to reject it as evidence of the value of imported goods. The doubt held by the officer concerned has to be based on some material evidence and is not to be formed on a mere suspicion or speculation."
85. It has been submitted by the learned ASG that contrary to what the Hon'ble Supreme Court has laid down in the aforesaid judgments, the Petitioner has been speculating on undervaluation by Respondents 6 and 7 without any hard evidence and is demanding an investigation into the matter based on mere suspicion.
86. Learned ASG would submit that the following facts further counter the speculative reasoning put forward by the Petitioner in his submissions :
a) The retail sale price of same or similar cars in a country other than India cannot be a basis for the valuation of cars at the time of import of KSG/AVK 62/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc the same into India. It is submitted that the same is specifically barred by Rule 9(2) of the Customs Valuation Rules, 2007 which states that "No value shall be determined under the provisions of this rule on the basis of -(v) - the price of the goods for the export to a country other than India".
b) Further, Customs Valuation Rules, 2007 also prescribe that no value shall be determined under the provisions of Rule 9(2) based on the price of goods in the domestic market of the country of exportation.
c) Also, the GATT valuation agreement states that valuation based on the price of goods in the domestic market of the country of exportation would go against the principle that valuation procedures should not be used to combat dumping.
d) The cars available in other countries may not be similar in specifications/technology and, hence, it is otherwise also not reasonable to compare the prices of cars merely based on similarity of description.
87. It is also submitted that the Petitioner has erred in making a comparison of the price of one-off cars imported by unrelated parties in India with the cars imported by Respondents 6 and 7 in India. That hundreds of cars are imported into India by the related parties i.e., KSG/AVK 63/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Respondents 6 and 7 as compared to one or two cars by unrelated parties. It is submitted that the value of goods can only be compared if they are contemporaneous and of similar commercial quantity. Transaction value declared by the importers cannot be rejected merely based on import by an unrelated party without considering other commercial factors. Further, that the two sample Bills of Entry submitted by Petitioner have been examined and it has been observed that in both the case of imports by unrelated parties, the import is on a High Seas Sale basis and, hence, the sale is at a premium to adjust for dealer's margins and for various costs such as marketing, distribution, logistics, etc. That this ensures that the retail price at which the cars are sold by the retailers to end customers is nearly the same as the prices of cars when imported on a High Seas Sale basis. It is also submitted that just by subtracting the High Seas Sale loading value from the overall assessable value as declared by the unrelated parties, the import prices closely approximate to the prices declared by the related parties. It is submitted by an example, that the Bill of Entry No. 8863665 dated 26 th December, 2012 and Bill of Entry No. 8750215 dated 13 th December, 2012 that were submitted by the Petitioner as part of the documents sent by him vide email dated 16th August, 2023 were examined. In the Bill of Entry No. 8863665 dated 26th December, 2012, it was observed KSG/AVK 64/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc that the assessable value was Rs. 2699668.90 which included the High Seas Sale Loading Amount of Rs. 441138. That therefore after subtracting this amount, the value arrived at Rs. 2258530.90 which is comparable to the assessable value of Rs. 1993820 in Bill of Entry No. 8750215 dated 13th December, 2012 filed by Respondent No.7 given that imports by unrelated parties may include other fittings and accessories in addition to the standard components.
88. It has been further submitted that the department as always been at the forefront in taking appropriate action whenever actionable intelligence in the form of credible documentary evidence is available with the department. That a Show Cause Notice vide F.No. DGCEI/MZU/I & IS'C'/30-81/06 dated 31st March, 2008 was issued to Respondent No.6 by the DGCEI, Mumbai in respect of valuation.
89. Learned ASG would submit that unlike in the present writ petition where the Petitioner is demanding a roving inquiry based on mere hunches and accusations without any credible documentary evidence that is actionable, the aforesaid Show Cause Notice was based on very specific intelligence with the department that USD 45 million, which was paid by Respondent No.6 to M/s. Skoda Auto AS, Czech KSG/AVK 65/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc towards "Technical know-how/Technological Transfer Fees", has not been included in the value of the imported cars. It is also submitted that, presently, the issue is pending before the Hon'ble Supreme Court of India.
90. That all the Bills of Entry filed by Respondent No.6 for the import of cars, parts, and accessories, have been assessed provisionally since then.
91. It is further submitted that Respondent No.7 also has been issued with a Show Cause Notice vide F.No. DRI/DZU/JRU/19/ENQ-1(INT-
1)/2014/ 679-690 dated 29th May, 2015 by the D.R.I., Delhi Zonal Unit. In this case, too, the Show Cause Notice has been issued based on very specific intelligence with the department that the Brand Promotion Expense incurred by Respondent No.7 on behalf of their related foreign supplier has not been included in the value of the cars imported by them unlike in the present case where the Petitioner is levelling sweeping allegations without any concrete evidence sufficient to cause investigation into the matter. Further, it informed that the Bills of Entry filed by Respondent No.7 for the import of cars are being assessed provisionally at present.
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92. Learned ASG submit that the Petitioner has alleged that Respondent No.6 and 7 have suppressed the Price Pattern from SVB Authorities which is required to be provided, as per the Board's Circulars, to arrive at a decision to accept or reject the declared value. That the Petitioner has also alleged that the prices declared by Respondent No.7 to the Special Valuation Branch (SVB) are not in the ordinary course of business under fully competitive conditions and the Orders obtained from the SVB are based on false undertaking/affidavits/assurance that their admitted relationship with the foreign supplier has not influenced the import price declared by them. That the petitioner has alleged that the Respondents have not submitted the price lists for the goods being imported by them. That, the petitioner has also alleged that pricing details of goods supplied to buyers/branches/collaborators in other countries as required to be provided by the Respondents in accordance with the question at S.No. 29 of Annex-A of Circular 11/2001 dated 23 rd February, 2001 have not been provided.
93. Learned ASG would submit that Circular 11/2001 dated 23 rd February, 2001, which was issued in accordance with the earlier Customs Valuation Rules, 1997, was superseded by Circular No. KSG/AVK 67/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc 05/2016 dated 09th February, 2016 which was issued in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Therefore, it is no longer required to submit pricing details of goods supplied to buyers/branches/collaborators in other countries as per the new circular. That, as per question 5.5 of Annex-A of Circular No. 05/2016 dated 09 th February, 2016, the importers are required to provide copies of price list and the basis of arriving at the invoice value only if the price of imported goods was determined based on a price list. In the instant case, learned ASG submits that the Respondents No. 6 and 7 have declared that their price is based on a Transfer Price and not based on a price list and therefore the allegation of non-submission of price list is not correct. That therefore, prima facie, there doesn't appear to be any misrepresentation or suppression as alleged by the Petitioner.
94. Learned ASG would submit that even if it is assumed that a price list exists and is not submitted, it does not lay ground for the rejection of the transaction value declared by Respondents No. 6 and 7. Learned ASG relies upon the decision of the Hon'ble Supreme Court in the case of Mirah Exports Pvt. Ltd. v. Collector of Customs 1998 (98) E.L.T. the Supreme Court has held that:
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WP-1202-2022-IAL-9504-23-23072024.doc "The legal position is well settled that the burden of proving a charge of undervaluation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge.
"Ordinarily, the Court should proceed on the basis that the apparent tenor of the agreement reflect the real state of affairs"
and what is to be examined is "whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price." [See: Union of India Vs. Mahindra & Mahindra (supra), at p. 487 In the present case, the only evidence that was adduced by Revenue in support of the charge of under-valuation is the price list No. 8102 dated February 15, 1981 which was found during the course of search in the premises of Skefko, etc. that was conducted by the officers of the enforcement Directorate on or about June 22, 1983."
95. It is submitted that therefore, the price list of the foreign supplier/ manufacturer is not a proof of transaction value invariably, and existence of the price list cannot be the sole reason to reject the transaction value. A price list is no more than a general quotation. It does not preclude discounts, which may be granted for a variety of reasons including stock clearance. Mere production of price list cannot discharge the onus on the customs authorities to prove the existence of special circumstances indicated under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007.
96. With respect to the the Petitioner's reliance upon the judgments of the tribunal in SA Putehally v. Comm. Of Customs (2004) 178 ELT KSG/AVK 69/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc 861 (Tri.) where the contention of the D.R.I. to value the cars based on the "Tourist Price List" issued by the German manufacturer was upheld and which has been confirmed in the judgment of the Hon'ble Supreme Court in Gerson Da Cunha v. Commissioner of Customs (2015) 16 SCC 682, it is submitted by the learned ASG that the said case relied upon by the Petitioner is distinguishable from the issue at hand as, in that case, concrete evidence regarding the misdeclaration of the capacity of the engine declared to be less than 1500 cc as against the actual capacity which is greater than 1500 cc was found based on testing of the cars, warranting the rejection of the declared transaction value.
97. Further with respect to the Petitioner's reliance upon the ratio in A.V. Papayya Sastry v. Govt. of A.P. (2007) 4 SCC 221 to emphasize that favorable orders fraudulently obtained by the Respondents are non-est, void ab-initio and nullity in the eyes of the law, and the judgments in the cases of Century Metal Recycling (P) Ltd. v. Union of India, (2019) 6 SCC 655, Padia Sales Corpn. V. Collector of Customs, Bombay, 1993 Supp (4) SCC 57, Sharp Business Machines (P) Ltd., (1991) 1 SCC 154, Habasit Lakoka Pvt. Ltd. vs. CC (Imports) - 2015 (321) E.L.T. 15 (S.C.), Mytri Enterprises vs. Commissioner -2015 (323) ELT A71 (SC), and Varsha Plastics (P) Ltd. v. Union of India, (2009) 3 KSG/AVK 70/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc SCC 365 to highlight the fact that valuation can be redetermined by rejecting the declared value, it has been submitted that the petitioner is unmindful of the fact that the question in the present petition is not so much as to whether the declared value can be rejected or not, but whether there are reasonable grounds to reject the transaction value declared by Respondents No. 6 and 7 in accordance with the statutory provisions. Learned ASG emphasizes that the Petitioner has not provided an iota of credible and specific information to suggest that the S.V.B orders were fraudulently obtained by Respondents No. 6 and 7.
98. It has been submitted that the Petitioner has also submitted that the valuation of the Luxury Cars imported by Respondent No.6 and Respondent No.7 is done based on a Transfer Pricing Order can bind the Customs Authorities to ascertain Pricing Order obtained for the purpose of Income Tax and no such Transfer Pricing Order can bind the Customs Authorities to ascertain the correct value for the purpose of levy, assessment, and collection of Customs Duty.
99. Learned ASG would submit that since the prime reason for seeking prayers for carrying out of an investigation in the matter was undervaluation, the study of Transfer Pricing by Income Tax confirming KSG/AVK 71/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc the "Arm's Length Price" can be very much relied upon. It is emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents No. 6 and 7 to the Income Tax Authorities and the SVB are contradictory, there is no reason to reject the transfer pricing study of the Income Tax Authorities. It is further submitted that the Transfer Pricing study by Income Tax Authorities, if it confirms the Arm's length pricing, can be accepted for deciding the value of imported goods in the absence of any information to the contrary. That, no other law for the time being in force, restricts the Customs Authorities from doing so.
100. Learned ASG reiterates that the Petitioner has not provided any specific information that points out the flow back of funds related to the import of cars (in addition to the invoice value). That the petitioner has also not provided any information regarding services that are to be offered or payments that are to be made a pre-condition for the sale of goods and that in the absence of such Information, it is difficult to challenge the Transaction Value declared by Respondents No. 6 and 7. And unless the information provided pertains to the time and place of KSG/AVK 72/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc importation, the information cannot be taken cognizance of as held by the Hon'ble Supreme Court in Commissioner of Customs, Ahmedabad v/s Essar Steel Limited- 2015 (319) ELT. 202 (SC).
101. Learned ASG has concluded by submitting that therefore there is no prima facie case to cause any investigation by the D.R.I. against Respondent No.6 and Respondent No.7 based on the extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules. That as there is no credible documentary evidence and given the fact that the imports are only provisionally assessed, it does not warrant conducting such a roving inquiry as demanded by the Petitioner. Such an approach would erode the confidence of the trade and would hamper the ease of doing business in India. Further, as the imports by both Respondent No.6 and Respondent No.7 are assessed provisionally, differential duties, if any and on any ground, can be recovered from them at the time of final assessment by the jurisdictional Customs Authorities. Hence, any action or investigation by the DRI is not warranted on this ground also.
102. That all the issues pointed out by the petitioner viz. comparison of the prices of the Luxury Cars as shown on the web in other KSG/AVK 73/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc countries, price of the cars sold and purchased by the related parties from other Countries, comparison of the prices of luxury cars when supplied by the concerned related party to the unrelated parties in India with the prices of cars supplied to the Respondents No. 6 and 7 and Transfer Pricing having been examined, it has been found that the information is not actionable in terms of the prevailing legal position.
103. Learned ASG submits that the Petitioner has invoked the extraordinary jurisdiction of this Court without a clear understanding of the Customs Valuation Rules and has also leveled various sweeping allegations against the Respondents without furnishing any credible documentary evidence to initiate an investigation.
104. Learned ASG submits that therefore, it is evident that the writ petition filed by the Petitioner is totally misconceived, lacking in proper understanding of the Customs Valuation Rules, misleading, and devoid of any substance which appears to have been filed with an oblique motive and that the same is liable to be dismissed with exemplary costs.
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WP-1202-2022-IAL-9504-23-23072024.doc SUBMISSIONS OF RESPONDENTS NO.6
105. Learned Senior Counsel for Respondent No.6 submits that the Respondent No.6 is an entity which is resultant of amalgamation of three entities viz., (i) Volkswagen Group Sales India Pvt. Ltd. (ii) Volkswagen India Pvt. Ltd. and (iii) Skoda Auto India Pvt. Ltd.
106. Mr. Shroff, learned Senior counsel would submit that Volkswagen Group Sales India Pvt. Ltd has never imported Skoda cars in CKD/SKD form.
107. That in the year 2015, when the Petitioner wrote his first letter to the DRI and also filed Petition in the Hon'ble Supreme Court complaint was filed only against Volkswagen Group Sales India Pvt. Ltd. and that the 2009 SVB order is also against the said entity.
108. That, the Respondent No.6 was inter-alia engaged in the import of cars as FBUs and sale of the cars to dealers on wholesale basis for further sale to end customers. That the allegations of the Petitioner relate only to imports of FBUs and not SKD/CKD as the Petitioner is now seeking to do by his affidavit dated 19 th August, 2023 by attempting to explain the scope of the Petition.
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109. Mr. Shroff would submit that Respondent No.6 purchases the cars from the following Volkswagen Group entities who are related as per Custom's Valuation Rules:
(i) Porsche cars are ordered from Porsche Middle East and Africa FZE, Dubai since 2012. This entity deals and looks after the sales function relating to the Middle East, Africa and India. Though the orders are placed by Respondent No. 6 on Porsche Middle East and Africa FZE, Dubai, the cars are shipped directly by Porsche AG, Germany to Respondent No.6 in India. That this is clear from the invoices and other documents; ii) Lamborghini cars ordered and shipped from Automobili Lamborghini SpA, Italy since December 2011; and (iii) Audi cars from Audi AG, Germany since July 2007.
110. Mr. Shroff would submit that the material relied upon by the Petitioner is extraneous and irrelevant for the purposes of custom's valuation and there is no suppression before the customs/SVB authorities.
111. Mr. Shroff also submits that in 2007, section 14 of the Customs Act was amended vide the Finance Act, 2007. The Statement of Objects and Reasons and the Notes on Clauses, Customs, Customs Tariff, Excise KSG/AVK 76/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc explained the reasons for the introduction of the amendment in Section 14 of the Customs Act, 1962, where it is explained that the existing section 14 was based on the concept of deemed value of goods. However sub- section (1A) of section 14 mandated that the price in respect of imported goods shall be determined in terms of the rules made in this behalf and the rules framed thereunder are based on the concept of 'transaction value as enshrined in the WTO Valuation Agreement. Because of this inherent contradiction in the two concepts, namely, 'deemed value' and 'transaction value', practical difficulties were being faced in implementation of the valuation under the provisions of the Act and therefore it was felt that the concept of "deemed value" had to be substituted with the concept of "transaction value". Accordingly section 14 was substituted with a view to provide that the value of the imported goods and export goods shall be the transaction value of such as determined in accordance with the rules made in this behalf. That therefore with the amendment to section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ("Customs Valuation Rules"), the concept of "deemed value"
no longer exists and has been replaced with the concept of "transaction value". Thus the value of imported goods has to be the transaction KSG/AVK 77/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc value that is the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, with the buyer and seller of the goods are not related and the price is the sole consideration for the same subject to other conditions. That thus there was a sea-change from the earlier section 14 and the earlier 1988 valuation rules. Prior to 2007 the assessing officer was not required to see the actual value or the amount actually paid or payable. He was required to see the value not for each specific transaction but the ordinary value in the course of international trade at the time and place of importation.
2. The new Customs Valuation Rules inter alia, provided as under:
(i) Rule 3(3)(a) and Rule 3(3)(b) provide when transaction value is to be accepted where the buyer and seller are related.
(ii) If the transaction value cannot be accepted, then value is to be determined by proceeding sequentially through rules 4 to 9.
(iii) Rule 9, which is the residual method for valuation, provides for the value to be determined using "reasonable means consistent with the principles and general provisions"
of the Customs Valuation Rules, and expressly excludes certain basis for determining the value. In fact Rule 9 (2) KSG/AVK 78/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc expressly prohibits determination of value on the basis of "the price of the goods in the domestic market of the country of exportation". Thus, when it is not permissible to compare the price of goods in the domestic market of country of exportation, it is manifestly impermissible to compare the prices in the domestic market of other countries. In the present case, the Petitioner has purported to compare the price in the domestic market of other countries such as UK and not just the wholesale price but the retail price which is manifestly impermissible. Further, Rule 9 (2) expressly prohibits determination of value on the basis of "the price of the goods for the export to a country other than India". Therefore, it is impermissible to compare prices of goods for export to UAE. In the present case, the Petitioner has purported to compare the price in the domestic market of other, countries such as UK and not just the whole sale price but retail price which is manifestly impermisible. Further Rule 9(2) expressly prohibits determination of value on the basis of price of the goods for the export to a country other than India. That therefore it is impermisible to compare prices of goods for export to UAE. The Petition has purported to KSG/AVK 79/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc compare the price of car purchased by Porsche Middle East & Africa FZE, Dubai for import into Dubai.
(iv) Mr. Shroff would submit that Rule 12 provides when "proper officer" under Customs has reason to doubt the declared import value and that as settled in Century Metal Recycling Private Limited v Union of India 2009 (367) ELT 3 (SC)], that rejection of the transaction value has to be done sparingly and only with evidence and a doubt to justify detailed enquiry under the proviso to section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of certain reasons and not mere ipse dixit. It is not permissible to subject imports on mere suspicion because one is distrustful and unsure without reasonable and certain reasons as that would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods.
112. Mr. Shroff would submit that comparison with the purchase price of car purchased by Porsche Middle East and Africa FZE, Dubai, from KSG/AVK 80/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Porsche AG Germany which cars are for delivery in UAE by the Petitioner is improper. Mr. Shroff would submit that :
(i) The Petitioner has at pages 44 to 47, at paras (i), (ii), (iii) & (iv) of Petition has referred to various Invoices and sea-way bills in respect of import by Porsche Middle East in UAE for delivery in Dubai (the invoices of cars imported by Porsche Middle East being at Pgs. 499 to 506 of Petition and at Pgs. 512 to 514 of Additional Affidavit of Petitioner). These are cars admittedly "for UAE delivery" ( page 44 of the petition).
(ii) These cars are imported by Porsche Middle East for use in the domestic market in Dubai. These cars are not exported to India.This is clear from the invoices and sea-way bills which have been annexed by the Petitioner and which show supply by Porsche Germany to Porsche Middle East, where port of departure is in Germany and port of destination is UAE.
(iii) As the Petitioner did not provide the bills of entry along with the corresponding invoices and certificate of origin in respect of imports made by Respondent No. 6, Respondent No. 6 filed an Additional affidavit dated 30 June 2023 [Pgs. 1264 to 1291] in which R.6 has provided (i) bills of entry, (ii) corresponding invoices and (iii) certificate of origin in respect of the imports of Porsche cars imported KSG/AVK 81/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc by R.6 in India as referred by the Petitioner at paras (i) to (iv) at Pgs. 45 to 47 of Petition.
(iv) The aforesaid documents produced in the Additional Affidavit clearly show that the cars imported by Respondent No.6 in India, though sold by Porsche Middle East to Respondent No.6 for sale in the Indian market, are shipped by Porsche AG, Germany directly from Bremerhaven in Germany to Respondent No.6 in India. The import of cars in India from Germany is a distinct transaction stream from import of cars into the UAE from Germany.
(v) Cars imported into the UAE are not further sold to/in India.
(vi) Mr. Shroff would submit that that the Petitioner has wrongly and deliberately attempted to mislead this Court, by stating that, Porsche Middle East has sold the Porsche cars imported into the UAE by it to Respondent No.6 in India at prices lower than the purchase/procurement price of said cars by Porsche Middle East from Porsche AG, Germany; [a. Pg. 44 of Petition; b. Pg. 885 - 886 (paras 87 and 89), Pg. 893 (para 106) of Petitioner's Rejoinder; c. Pg. 94 [Para 34 (1) (vii)] of Petitioner's Rejoinder in I.A.]
(vii). Further, he has wrongly stated during oral arguments that the said "facts are not in dispute". This is an untenable submission considering the fact that that the issue is very much disputed by KSG/AVK 82/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc Respondent No. 6 in the below mentioned affidavits filed by Respondent No.6: a.Pg. 529 - 532 (paras 36, 37 and 39), and Pg. 541 [para 57(iii)] of R.6's Reply; b. Pg. 1267 - 1269 (paras 2 to 5) R.6's Additional Affidavit; c. Pg. 1224 (para 16) of R.6's Affidavit; d. Pg. 17 (Para 27) of R.6's Affidavit in reply to Interim Application of the Petitioner.
(viii). The Petitioner had neither provided the said data to DRI, including vide his letter dated 9.01.2015 at Exh A, Pg. 89 of Petition, nor provided before the Hon'ble Supreme Court; and the said data is being provided for the first time in the present petition before this Hon'ble Court. As the present petition was filed premised on purported inaction on part of DRI, the said data besides being wholly irrelevant cannot be now relied upon as stated in Respondent No.6's Submissions at Pg. 17 (para 27) of Respondent No.6's Affidavit in reply to Interim Application.
(ix). Further, as the Petitioner has not disclosed the source of the data or any particulars pertaining to purchases by Porsche Middle East, therefore the said data cannot be relied upon, as stated by R 6 in the following: a. Pg. 1221 (Para 12) of R.6's Affidavit filed in the context of locus of the Petitioner; b. Pg. 1267 (Para 3) of R.6's Additional Affidavit.
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(x). There is no Rule, or method of valuation, under the Customs Valuation Rules which requires comparison with imports in another country.
(xi). Rule 9 of the Customs Valuation Rules [at Pg.438 of Petition] expressly prohibits determination of value on the basis of "the price of the goods for the export to a country other than India".
(xii). Additionally, the import prices of cars for different countries are not comparable for the following reasons -
a) Import prices of cars for different countries have correlation to several country specific factors - The economic factors, such as the demand pattern of the customers within the market, the competitive factors and its impact on retail prices; The nature of operations of the importer within the country; along with the functions and risks assumed by the importing entity, along with associated costs. Whether the importer deploying assets, and bearing risks in relation to stock risk, working capital risk, etc. and incurring costs in relation to promotion and marketing costs, nature of overhead costs, etc. The supply chain for import, distribution and retail sale adopted within the country; and the margins and costs associated at each leg of such supply chain, including rates of taxes and duties in KSG/AVK 84/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc the market.
Any specific regulatory requirements in the country requiring the cars to be built with certain country-specific features / configurations.
b) Even for cars of the same model, there could be various options available. Also, basic features of the cars keep on updating at regular intervals- therefore, there are different generations of the same model of the car. A different generation of car may be sold in UAE (for example, third generation Porsche MACAN) when different generation of car may be sold in India (second generation Porsche MACAN).
c) Different configurations, customization options/ on-top features, extras, etc. would be available in different countries. Porsche India offers limited customization options to Indian customers as compared to customization options offered in Dubai.
113. Mr. Shroff further submits that with respect to the grievance made by the Petitioner to the purported non production of suppliers/manufacturers price list, it is submitted that the same is KSG/AVK 85/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc without any basis. Learned Senior counsel submits that:
(i) In the letter dated 09 th January, 2015 issued by Petitioner to Respondent No. 3 [at Exh A, Pg. 89 of Petition], the petition filed before the Hon'ble Supreme Court, and in the present Petition - no reference has been made by the Petitioner to any foreign supplier's / manufacturer's price list in the context of imports by Respondent No.6.
Accordingly, no allegations can be made against Respondent No.6 by reference to any purported price lists [see Pg. 535 (Paras 44 and 45) and Pg- 540 [Para 57(v)] of Respondent No.6's Reply].
(ii) That for the first time, the Petitioner has in his Rejoinder in I.A. (L) No. 9504 of 2023 filed before this Court on 29 th April 2023, at Pg. 81 (para 11) made reference to a document in German language (without English translation) stated to be "Price List of June 2016 for variants of A8 model of Audi AG, Germany from www.audi.de" [document is at Pgs. 367 to 426 of Compilation annexed to said Rejoinder]. This it is submitted is a sales brochure available for end-customers in Germany to have a look at the car, its configurations and features, extras, and the correlated price range. The sales brochure contains prices offered /recommended at the retail sales level in Germany. In support of this, it is submitted that as annexed to the written submission at Exhibit A, is a KSG/AVK 86/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 ::: WP-1202-2022-IAL-9504-23-23072024.doc query raised on Audi Germany website which makes it abundantly clear that this brochure is a sales brochure and the prices are retail sales. This document has no correlation/relevance whatsoever to the import prices of cars sold to other countries (including India) and has been produced by the Petitioner only to mislead this Court. It is submitted that the Petitioner has not made any attempts to make inquiries in respect of the nature of the document, or even translated the document, before furnishing the said document before this Court for compelling the Court to exercise of its writ jurisdiction. That German language document is a 2016 document and has no relevance to the SVB Order was passed on 15 th January, 2009 against Respondent No. 6, and therefore this document cannot be the basis for alleging any suppression before the SVB authorities.
(iii) The import prices of Respondent No.6 are not on the basis of any price list and therefore there was no requirement to furnish any purported price list before SVB authorities as stated by Respondent No.6 [ Pg. 539 (Para 56) of Respondent No.6's Reply].
(iv) As per the SVB Circulars, the importer is required to provide price list only where the import prices are as per price list;
(v) Mr. Shroff draws the attention of this Court to - KSG/AVK 87/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:30 :::
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a) Circular 11/2001 dated 23rd February, 2001 - Pgs. 308 to 313 of Petitioner's Rejoinder in I.A. (L) No. 9504 of 2023:
As per Q22 of Questionnaire [Pg. 311], from the wording of the said question itself, it is clear that there could be several different basis for arriving at the invoice price.
The documents listed at Pgs. 312-313 are to be given to the SVB authorities only if those documents are relevant in the facts of the importer's case.
It is not the case of the SVB authorities that there was suppression on the part of Respondent No.6. The consequences for the importer not furnishing complete reply to the SVB questionnaire set out at Pg. 310 (para 9).
b) Circular 5/2016 dated 09th February, 2016 - Pgs. 297 to 307 of Petitioner's Rejoinder:
As per Q 5.5, 5.6 and Q5.7 of the Questionnaire [Pg. 301] it is apparent that there could be several different basis for arriving at the invoice price, and where import price is not as per price list, then question of furnishing any price list does not arise.
c) Petitioner has incorrectly submitted that as per Circular 11/2001 it was mandatory to provide price list, the said Circular being applicable KSG/AVK 88/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc in respect of the SVB Order dated 15th January, 2009 of Respondent No.6.
(vi) Mr. Shroff submits that it is settled law as per the Compilation of Judgments submitted by Respondent No.6, as regards reference to suppliers/manufacturer's price list for the purpose of Customs valuation, following position emerges -
a) For making reference to price-list, there has to exist a supplier's/ manufacturer's price list providing for import prices and/ or the recommended selling prices of the importer;
b) The price lists provide general quotations which are subject to negotiations, and which do not preclude discounts, and cannot be the sole reason for rejecting transaction value [para 22 of the judgement in the case of Eicher Motors - Respondent No.6's compilation page 1].
c) Discounts on price list prices is a recognized feature of international trade practice, which can be for variety of reasons.
In cases, discounts ranging from 40% to 76% on price list prices has been allowed [judgements of Eicher Motors (supra), Mirah Exports (supra), Komet Precision Tools India Pvt. Ltd.(supra)]
d) Further, to rely upon any price list, there has to be evidence KSG/AVK 89/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc of import at the said price list [para 8 of Mirah Exports (supra)]
e) Price lists have been referred by the Courts in the context of section 14 of the Customs Act, prior to its amendment in 2007, according to which -
"the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, Section 14 (prior to, and post, amendment in 2007) is available in the Compilation of Judgments submitted by Respondent No.6
(vii) The Petitioner's statements that each foreign supplier has price list on the website, and that it was mandatory to submit the price list to SVB authorities is false to his knowledge and are made to deliberately mislead this Court.
(viii) There being a price list for dealer tools and dealer equipment imported by Respondent No.6 from Volkswagen AG [Pg. 201 of Petition
- SVB Order of Respondent No.6] cannot be the basis to infer that there exists price list of Audi AG for supply of cars to Respondent No.6. The prices for dealer tools and dealer equipment are applicable to all dealers and such tools/ equipment are not on country specific KSG/AVK 90/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc requirements/configurations as in the case of cars. It is submitted that the said document is therefore wholly irrelevant.
114. With respect to comparison by the Petitioner with retail prices in the UK, Mr. Shroff would submit that
(i) Respondent No.6 has in its pleadings pointed out that such comparison is not legal and hence such documents and pleadings made by the Petitioner are irrelevant [ pg. 529 to 532 (paras 36, 37 and 39 ) of Respondent No.6's Reply]
(ii) There is no Rule, or method of valuation, under the Customs Valuation Rules which allow comparison with retail price of goods in the domestic-market of another country.
(iii) As stated above, Rule 9 of the Customs Valuation Rules [at Pg-438 of Petition] expressly prohibits determination of value on the basis of "the price of the goods on the domestic market of the country of exportation".
(iv) Where the price of goods in the domestic market of the country of exportation itself cannot be considered, then question of considering price of goods in the domestic market of a third country (other than the manufacturer's country and importer's country) does not arise. KSG/AVK 91/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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(v) That additionally, the retail price in the domestic market of another country is not comparable for several reasons, inter alia -
a. Firstly, import prices of cars for different countries can be different (for reasons discussed earlier);
b. Secondly, the purchase price offered to actual consumers are significantly more than the import price paid by the importer. Imported cars reaches the ultimate customer through supply chain comprising of importer, dealer, etc. Each entity in the supply chain carries out certain functions, deploys assets and bears certain risks and there are associated costs incurred. Further, there are local taxes on sale of goods.
115. As regards, the comparison with imports of unrelated entities, Mr. Shroff submits that in terms of Rule 12(2)(iii)(a) and Rule 4 and Rule 5 of the Customs Valuation Rules for comparison with imports by unrelated entities, the following examination would be required -
a) Whether the cars being imported are comparable being "identical goods" [Rule 2(1)(d)] or "similar goods" [Rule 2(1)
(f)].
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b) Whether the imports are at the same commercial level [Rule 4(i)(b)]
c) Whether the imports are at same quantity levels [Rule 4(i)
(b)];
d) Whether there are more than one comparable transaction, and amongst such transactions which is the transaction at the lowest value [Rule 4(3)].
116. The Petitioner has not produced the following import documents of the so-called comparable imports, so that it is impossible for anyone including Respondent No.6 to give any cogent reply as to whether they are identical, similar, whether they are imports at the same commercial level and the same quantity levels:
a) For the import of one Audi car referred at Pg. 50 of Petition, import documents i.e., the bill of entry) not provided, along with not stating the name of the unrelated importer. Examination of bills of entry necessary to examine the import price assessed by the Customs authorities, and for the Respondent No.6 to make any specific submissions in this regard.
b) No Bill of entry is provided in respect of a stray import of Lamborghini car referred at pg. 51 of Petition. KSG/AVK 93/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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c) Bills of entry of unrelated importers cannot be available with Respondent No.6. [Pg: 529 - 532 (Paras 36,37 and 40), Pg. 539- 540 (paras 56-57), Pg. 542 (Para 57 (iv))].
117. Imports at different commercial levels and at different quantity levels cannot be compared [judgments in the cases of and Hewlett Packard Ltd. - Respondent No.6's compilation page nos. 32, 16, 36, 38, 40 and 42, respectively.]
118. It is submitted that reference by the Petitioner to import of 'Bentley' cars [Pg. 44 of Petition], cannot be the basis to allege undervaluation of imports by Respondent No.6 of Audi, Porsche and Lamborghini cars.
119. That the submissions made by the Petitioner in relation to - (i) comparison of price of FBU with price of CKD imports, (ii) import of armoured/bullet-proof vehicles by allegedly mis-declaring the description of imports, iii) imports by unrelated entities at prices higher than price list, etc., and any data provided by the Petitioner in this regard related to Respondent No.5 and admittedly do not concern KSG/AVK 94/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc imports made by Respondent No.6 as they pertain only to import of Mercedes cars.
120. The Petitioner vide its letter dated 09 th January, 2015 issued to Respondent No.3 [at Exh A, Pg. 89 of Petition] given information in relation to imports by Tata Motors Pvt. Ltd. [at Pgs. 101-102] which information is similar in nature to the information provided in respect of imports by Respondent No.6. However, the Petitioner has selectively targeted Respondent No.6 and certain other importers, by making baseless and reckless allegations.
121. Mr. Shroff would submit that relevance of transfer pricing reports for the purpose of Customs Valuation (the Petitioner is alleged that Transfer Pricing is irrelevant and that accepting the transfer price is not correct). It is submitted that this is a totally erroneous submission for the following reasons:
(i) As per Rule 3(3)(a) of Customs Valuation Rules, there is requirement to examine circumstances surrounding the sale. [Pg.
436 of Petition]
(ii) Circular 5/2016 [at Pg. 302 of Petitioners Rejoinder Affidavit] requires importer to submit Transfer Pricing Report KSG/AVK 95/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc filed before Income-tax Department, and also the Advance Pricing Agreement.
(iii) Circular of 2001 (Common Affidavit In Rejoinder page 308 at 311, 022, where it is specifically asked as to whether the prices are fixed on the basis of transfer price.
(iv) The import prices of R6 are transfer prices arrived on arm's length basis - [ paragraph 88, Pg. 531, Para 38 of Respondent No.6's Reply]. V. See paragraph 6.20 at pg. 1282 of the DRI's latest affidavit on the relevance of transfer pricing.
122. Mr. Shroff, learned senior counsel submits that SVB is a specialised institution dealing with imports by Respondent No.6 and there is no suppression/fraud by Respondent No.6 before SVB authorities. The SVB Circulars also provide for consequences if the importer does not furnish complete reply to the SVB questionnaire or provide the documents/ details. Mr. Shroff refers to -
(i) Circular 11/2001 - [Pg. 308 to 313 of Petitioner's Rejoinder in I.A.].
(ii) Circular 5/2016 - [Pg. 297 to 307 of Petitioner's Rejoinder in I.A.]. KSG/AVK 96/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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123. Further in respect of imports by Respondent No. 6, the case was registered with SVB authorities in 2007, and the SVB authorities after carrying out detailed examination passed the SVB Order on 15.01.2009 [Pgs. 196 to 227 of the Petition].
124. That before passing the order, Respondent No.6 has furnished its reply to questionnaire, extensive documents and details, SVB submissions, inter alia vide-
a) Letter dated 4.10.2008 [Pg. 197-198];
b) Two letters dated 30.10.2008 furnished during personal hearing on 31.10.2008 [Pgs. 200, 206];
c) Note dated 19.11.2008 [Pg. 206];
d) Letter dated 4.12.2008 [Pg. 209];
125. That it was not the case of Customs / SVB authorities that there was any suppression/ mis-declaration by Respondent No.6. It is submitted that:
(i) Suppression / mis-declaration, if any, can only be dealt with by relevant authorities under the Customs Act by initiating proceedings as per procedure recognized under the Customs Act and there can be no proceedings de hors Customs Act. [Respondent No.6's pleadings at Para KSG/AVK 97/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc 11 of Reply of Respondent No.6 to Interim Application}.
(ii) This would entail issuance of Show Cause Notice under section 28 of Customs Act by the "proper officer" designated under the Customs Act and conducting hearing, prior to any decision/ adjudication as to suppression / mis-declaration before the SVB authorities,
(iii) Any order passed in such adjudication proceedings would then be subject to appeal proceedings by "aggrieved person" or relevant Customs authorities under section 128 or section 129A of the Customs Act.
126. It is submitted that the Petitioner is seeking to circumvent the proceedings and procedures under the Customs Act, which should not be permitted by the this Court in its writ jurisdiction.
127. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No.6 is erroneous.
128. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining KSG/AVK 98/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities.
129. It is submitted by Mr. Shroff that in appeal proceedings from the SVB Order, Respondent No.6 has succeeded before the Tribunal, and the Customs authorities have filed an appeal from the Tribunal's Order before the Hon'ble Supreme Court which is pending before the Hon'ble Supreme Court. [i. Pgs. 519 to 521 (para 15 and 16), Pg- 538 (para 53) of Respondent No.6's Reply to Petition; ii. Para 9 of Reply of Respondent No.6 to Interim Application.]
130. It is submitted that the SVB Order has attained finality in law, subject to issues in appeal proceedings.
131. That when the appeal proceedings from the SVB Order are pending before the Hon'ble Supreme Court, this Court should not be called upon to set aside the SVB Order. This Court cannot be called upon to act contrary to the statutory appellate provisions. SVB proceedings for subsequent period are pending.
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132. The SVB Order was filed for a period of 3 years. Proceedings for the subsequent period are pending before the SVB authorities. [i. Pg. 521 (para 16) of Respondent No.6's Reply to Petition; 11. Para 9 of Reply of Respondent No.6 to Interim Application.]
133. Respondent No.6 has provided the relevant information to SVB authorities and followed the procedure as laid down in Circular No. 4/2016 and Circular No. 5/2016.
134. That as required under the said circulars, the imports by Respondent No.6 are assessed provisionally on Respondent No.6 having furnished appropriate provisional duty.
135. That if deemed necessary, the SVB authorities can ask for further information or details from Respondent No.6 (including on examining the present proceedings) and Respondent No.6 would be required to provide the same.
136. Mr. Shroff would submit that the DRI has concluded that there is no evasion of customs duty and the premise of the present Petition as to the inaction on the part of Respondent No.3 is belied. Mr. Shroff would submit that:
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a) As per Hon'ble Supreme Court's Order dated 15.07.2016 Respondent No.3 was to take appropriate action as advised in law only if the Respondent No.3 was convinced that the information given by the Petitioner was credible information.
[Exh F at Pg. 413 of Petition].
b) The Petitioner filed the present Petition premised on purported inaction on the part of Respondent No.3 - [prayer(a), (b) and (c) at pgs. 79 and 80 of Petition.]
c) Respondent No.3 has concluded that there is no case of evasion of Customs duties based on information provided by the Petitioner:
i. Respondent No.3 has as regards Petitioner's letter dated 9.1.2015 [Exh A at Pg. 89 of the Petition] stated that the Petitioner had not provided any concrete or prima facie evidence in support of his allegations, and that there was no credible evidence [ Pg. 1236 (paras 4 and 5) of Reply of Respondent No.3].
ii. Vide letters dated 9.9.2016 [Exh B at Pg. 105 of Petition] and 25.11.2016 [Exh C at Pg. 114 of Petition] filed subsequent to the Hon'ble Supreme Court's Order dated 15.07.2016, no information and material furnished by Petitioner pertaining to KSG/AVK 101/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc Respondent No.6 but only as regards Respondent No.5. iii. As admitted by the Petitioner [at Pg. 17 (para 13) of the Petition] - If information regarding Respondent No.5 (Mercedes) would have been found credible and investigation would show that information recorded would result in detention and recovery of duty; then recording separate DRI-1 statement for investigation into other importers was to be considered. iv. Detailed investigation conducted against Respondent No. 5 [Pgs. 691 to 696 (para 8) of Reply of Respondent No. 5] v. Thorough investigation conducted and concluded by Respondent No.3 [at Pgs. 1240 and 1241 (paras 10 and 12) of Reply of Respondent No.3].
d) The Petitioner's statement that Respondent No.3 has not investigated imports of Respondent No.6, is belied, when on Respondent No.3 carrying out thorough investigation it was found that the information being furnished by the Petitioner is not credible.
e) Mr. Shroff would submit that further, in view of investigation by the DRI of Respondent No.6's imports [refer, Pg. 516 (para 9) of Respondent No.6's Reply] the Petitioner's statement is incorrect and misleading.
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f) Mr. Shroff would submit that statedly the premise of the Petition as to alleged inaction on part of Respondent No. 3 based on data provided by Petitioner, stands belied. That the stated premise of the Petition being the alleged inaction on the part of the Respondent No. 3 is also noted by the Hon'ble Supreme Court in its Order dated 29th March 2023 in disposing of the Special Leave Petitions No. 6609-6610 / 2023.
g) It is submitted that subsequent to Hon'ble Supreme Court's Order dated 29th March 2023, the Petitioner has by seeking additional prayer [prayer (a1) at Pg. 79] sought to fundamentally change the nature and character of the proceedings by way of expanding the reliefs sought by challenging the SVB Orders.
137. Mr. Shroff would submit that after several hearings, this Court directed the DRI to reconsider the evidence produced by the Petitioner not only prior to the filing of the petition but even during the pendency of the petition and permitted the Petitioner to even file further documents for consideration by the DRI. After considering all the documents, the DRI has filed its latest affidavit in which they have stated that there is no material or evidence produced by the Petitioner KSG/AVK 103/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc which even remotely suggests that there was any under valuation with regard to the imports made by the various Respondent importers.
138. Mr. Shroff therefore submits that this Court cannot be called upon to enter into disputed question of facts in the writ jurisdiction.
139. Learned Senior Counsel submits that the Petition requires this Court to enter into a detailed enquiry and investigation into the disputed questions of facts in its writ jurisdiction, at the behest of the Petitioner who has raised reckless and baseless allegations, to decide on-
(i) whether the data provided by the Petitioner is relevant under Customs law for determining the assessable value of imports by Respondent No.6,
(ii) whether there was any suppression or fraud by the Respondent No.6 before the SVB authorities which should not be permitted.
140. Mr. Shroff, learned senior counsel for the Respondent No.6 urges this Court that the conduct of the Petitioner should dis-entitle him from any reliefs from this Court.
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141. Petitioner's role, if at all, can be that of an informant, and should have been confined to furnishing of the information to Respondent No.3.
(i) This is also as per Hon'ble Supreme Court's Order dated 15 th July, 2016 [Exh F@ Pg. 413].
142. The Petitioner has been unduly seeking to compel the conduct and conclusion of investigation by statutory authorities (Respondent No.3) as per Petitioner's agenda - (i) by making reckless and baseless allegations based on irrelevant material and truthful statements, (ii) by bringing frivolous proceedings before different Courts, and (iii) for improper motives.
143. These proceedings have been initiated for personal gains - by way of monetary reward. This is clear from the following :
(i) Exh A at page 89
(ii) Pgs. 136, 170, 189 and 193 of the Petition - proceedings before
Hon'ble Supreme Court.
(iii) Circular 20/ 2015 - Guidelines for grant of reward at Pgs.348 to
362.
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(iv) Pg. 1173 [Para 5(ff)] of Additional Affidavit of Petitioner.
(v) Pg.1230 (Para 24) of Additional Reply of Respondent No.6.
144. Past proceedings against Petitioner :
(i) Pg 15 (para 10) of the Petition.
(ii) Pg 370 of Petition - Counter Affidavit before the Hon'ble
Supreme Court.
(iii) Pg. 1252 (para 29) of Reply of Respondent No.3 - arrested for
smuggling activities and detailed under COFEPOSA Act
(iv) Pg. 1180 (para 5) of Additional Reply of Respondent No.3 - This information was not provided by the Petitioner at the time of filing the Petition and in its Affidavit to establish bona fides.
145. The Petitioner has not disclosed source of information/ details which are proprietary in nature (clause (m) of the Petitioner's affidavit on locus dated 1st December 2022, page 1165). It is beyond comprehension as to how in his role as an advocate he obtained this proprietary confidential information:
(i) Pg. 1221 (para 12) of Additional Reply of Respondent No. 6 KSG/AVK 106/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
146. Petitioner had concealed material facts:
(i) Petitioner did not disclose three letters (dated 27 th May, 2019, 10th July, 2019 & 19th August, 2019) issued by Respondent No.3 requesting for information and that Petitioner has not responded to these letters
a) Pg.1221(para 12) of Additional Reply of Respondent No.6
b) Pg. 696 (paras 11 and 12) of Reply of Respondent No.5
c) Pg. 848 (para 15) of Petitioner's Rejoinder.
(ii) Petitioner had not made efforts / attempts to find out relevant facts
- re status of investigation by Respondent No.3 after providing information in 2016, before filing the present Petition in February 2022.
147. Petitioner has been approaching different forums (Forum Shopping) by bringing frivolous proceedings before different Courts. Pursuant to Hon'ble Supreme Court's Order of 15.07.2016, by relying upon the material submitted by Petitioner with Respondent No.3, on 24 August 2020 Civil Writ Petition (PIL) No. 9425 of 2020 was filed before the Rajasthan High Court;
(i) Petitioner herein was made Respondent no. 5 in the petition before Rajasthan High Court; [at Pg. 589 of Reply of Respondent No.3] KSG/AVK 107/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
(ii) Affidavit in Reply filed by Respondent No.3 before Rajasthan High Court on 25th November 2020. [at Pg. 642 of Reply of Respondent No.3]
148. Lastly Mr. Shroff submits that the Petition suffers from inordinate delay and laches and deserves to be dismissed. Learned senior counsel submits that subsequent to the Petitioner furnishing of information and Petitioner's visits to Respondent No.3, all in 2015 and 2016, there has been inordinate delay of more than 5 (five) years with the present Petition having been filed in January 2022, and no explanation whatsoever provided by the Petitioner in the Petition for the interregnum period. That the Petitioner had furnished information to Respondent No.3 stated to be relevant as to Respondent No.6's imports only in January 2015 (i.e., letter dated 09 th January, 2015 [Exh. A at Pg.89] and the present Petition filed in January 2022 has been filed after an unexplained delay of 7 (seven) years.
149. In reply to the Petitioner's oral arguments Mr. Shroff has also made additional submissions on behalf of the Respondent No.6 as under :
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a) The Respondent no. 6 (Skoda Auto Volkswagen India Pvt. Ltd.) is filing these Additional Submissions with the permission of this Court, specifically in reply to the oral arguments made by the Petitioner on 5 th July 2024. The Additional Submissions are in addition to the synopsis of submissions ("Written Submissions") submitted on behalf of Respondent No.6 on 8th April 2024.
b) The Petitioner has wrongly stated that the same Porsche cars imported into UAE by Porsche Middle East & Africa FZE, Dubai ("Porsche Middle East") are sold by Porsche Middle East to Respondent No.6 in India. In this regard, it is submitted as follows -
i. Respondent No.6 has furnished the bills of entry, corresponding invoices and certificate of origin in respect of Porsche cars imported by Respondent No.6 in India, as were referred in the Petition in paras (i) to (iv) at pgs. 45 to 47. [Pgs. 1271 to 1289 of the Additional affidavit of Respondent No.6]. From the said documents on record, it s evident that the Porsche cars imported by Respondent No.6 in India are shipped/ exported by Porsche AG Germany directly from Bremerhaven in Germany to Respondent No.6 in Mumbai, India.
ii. Porsche cars relevant for Indian market which are sold by Porsche Middle Bast to Respondent No.6 for sale in India are shipped directly by Porsche AG Germany from Bremerhaven in Germany to Respondent KSG/AVK 109/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc No.6 in India. The import of cars in India from Germany is a distinct transaction stream from import of Porsche cars into UAE. iii. The documents furnished by the Petitioner in the Petition [at Pgs. 499 to 506 of the Petition] do not in any manner indicate that Porsche cars imported into UAE are sold to Respondent No.6 in India. Further, the Petitioner itself has stated that the said imports in UAE are "for UAE delivery" [at para (i) at Pg. 44 of the Petition, para 89 at Pg. 886 Petitioner's rejoinder] iv. For various reasons the import prices of cars imported in UAE are not comparable to cars imported in India. [para C (x) to (xii) of Respondent No.6's Written Submissions].
c. The Petitioner's submission that DRI, Bangalore Zonal Unit, has not filed its submissions and its affidavit in the present proceedings, is of no relevance for the following reasons -
i. The Petitioner had submitted its letter dated 09 th January, 2015 [Exh A at Pg. 89 of Petition] to the Additional Director, DRI, Mumbai. In the Writ Petition (Cri.) No. 20 of 2016 filed before the Hon'ble Supreme Court, the Additional Director, DRI, Mumbai was Respondent no. 3 [at Pg. 145 of the Petition], and the Hon'ble Supreme Court had vide its Order dated 15th July 2016 [Exh F at Pg. 413-414 of the Petition] stated
- "If the Additional Director, DRI, Mumbai Zone is convinced that there KSG/AVK 110/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc is credible information given by the Petitioner, he shall take appropriate action, as advised in law."
ii. Further, the Petitioner had submitted its letters dated 9.9.2016 [Exh B at Pg. 105 of the Petition] and 25.11.2016 [Exh C at Pg. 114 of the Petition] to the Additional Director, DRI, Mumbai Zonal Unit. iii. The Petitioner has, on the basis of the Hon'ble Supreme Court's said order, and the above-referred communication with the DRI, Mumbai Zonal Unit, premised the present Petition on the alleged inaction on the part of the Respondent no. 3, i.e., the DRI.
iv. Where the Respondent no. 3 has, on examination of the material furnished by the Petitioner, in its Reply [at para 5, Pg. 1236. Reply of Respondent No.3] stated that the Petitioner "did not provide any concrete or prima facie evidence in support of his allegations of undervaluation", and in its Additional Affidavit in Reply [at Pgs. 1283 and 1284 of Respondent No.3's Additional Affidavit in Reply] stated the material to be "extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules", and as the Bangalore Zonal Unit is only a sub-ordinate unit of Respondent no. 3 (i.e., the DRI), the Petitioner's submissions that the DRI, Bangalore Zonal Unit has not filed any separate affidavit, is of no relevance.
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WP-1202-2022-IAL-9504-23-23072024.doc d. The Tribunal's decision in S.A. Futehally v. Commissioner of Customs [at Pg. 104 to 115 of Petitioner's compilation of cases] is distinguishable, and not relevant, inter alia for the following reasons - i. In that case, it would appear that imports were made by end- customers, and the appellant (S. U. Futehally) facilitated the imports by the said customers [refer paras 2, 3 and 4 of the decision]. The price- lists referred to in that case would relate to imports/ purchase by end customers. Whereas, in the present facts, Respondent No.6 imports the cars which are subsequently sold to dealers on wholesale basis for further sale to end customers.
ii. In that case the imports were made during 1987-89 from Volkswagen Germany. It is submitted that the availability of price lists referred in respect of imports in 1987-89, cannot be the basis to assume existence of price-lists for exports to India after a period of more than 20 years (SVB Order was passed on 15th January, 2009) when exports to India were under a distinct transaction structure.
iii. From the record of the present case including material furnished by the Petitioner), there is no reference to manufacturer's price list available for export to India during the relevant period. iv. Further, relevance of price-lists is limited to the period prior to the amendment in section 14 of the Customs Act in 2007 as the said KSG/AVK 112/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc section (prior to the amendment) provided that the value of goods shall be "deemed to be the price at which such or like goods are ordinarily sold, or offered for sale,. in the course of international trade." Whereas, post-amendment, as per section 14 the value is to be the transaction value i.e., the price actually paid or payable for goods exported to India.
v. The facts of that case are also distinguishable as in that case there was evidence regarding misdeclaration of engine capacity of imported cars, and in relation to part payments of imports made by an entity in Japan [refer para 2 at Pg. 106 of Petitioner's compilation of cases] vi. Submissions as regards relevance of price-lists in the present context are at para 4 of Respondent No.6's Written Submission. e. The Petitioner's submissions that the SVB authorities have not examined the pricing pattern of the imports by Respondent No.6 stands belied on perusal of para 5.1 and 5.2 of the SVB Order whereas the sales pattern and price pattern are examined. [Pgs. 206 to 208 of the Petition] f. The Hon'ble Supreme Court's decision in Varsha Plastics Pvt. Ltd. v. Union of India [Pgs. 81 to 91 of the Petitioner's compilation of cases] which was referred by the Petitioner to support reference to foreign journals, is clearly distinguishable as in the said case the imports were KSG/AVK 113/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc made in July 2000, and the scope of section 14 of the Customs Act prior to its amendment in 2007 was examined [Refer paras 2, 15, 19, 20, 35 and 37 of said decision]. In 2007, section 14 of the Customs Act was amended and there was a sea-change from the earlier section 14 with the concept of "deemed value" replaced by the concept of "transaction value". Prior to the amendment the ordinary value in the course of international trade was to be seen, whereas, post-amendment the transaction value i.e., price actually paid or payable for the specific transaction) was to be considered. [Refer submissions at para B (1) of Respondent No.6's Written Submissions; Section 14 of the Customs Act is at Pgs. 56 to 58 of Respondent No.6's Compilation of judgments].
SUBMISSIONS OF RESPONDENTS NO.7
150. Adopting Mr. Shroff's argument, Mr.Prasad Paranjape, learned Counsel for the Respondent No. 7 reiterates all that has been stated in the Affidavit in reply dated 08th April 2022 (page nos. 763-803) and Additional Affidavits both dated 25th April 2023.
151. Mr. Paranjape, learned Counsel for the Respondent No.7 has further submitted that Respondent No. 7 has correctly followed the customs laws with respect to valuation of goods imported by it. KSG/AVK 114/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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152. With respect to para 29 (page no. 33) of the Petition where the Petitioner has enclosed Exhibit G to the Petition (page no. 415 to the Petition) seeking to compare prices declared by Respondent No. 7 before the Indian Customs Authorities vis-à-vis, list price in Germany and UK, it is submitted by Mr.Paranjape that this is dealt in Respondent No. 7's Affidavit in reply dated 08 th April 2022 at para 57 (page no.
791) where Respondent No. 7 has submitted that such a comparison is meaningless because what is being compared in column 9 and 10 and column 12 and 13 of the table at page 415, is declared assessable value and purported list price in Germany and UK. It is submitted that the list price which is meant for ultimate customers and that to in different geographies such as Germany and UK, cannot be compared with the Customs Assessable Value in India as the assessable value will get added with customs duties, various taxes, expenses, over-heads, margins in India, which may become the basis to arrive at the list price in a country of ultimate sale. Therefore, comparing list price and assessable value that too in two different countries is like comparing chalk to cheese.
153. Further it is submitted by Mr. Paranjape that at para 32 at page 33 of the Petition, where the Petitioner has enclosed a few invoices KSG/AVK 115/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc issued by the overseas BMW entity for delivery in UAE. That these supplies are made by the overseas entity to certain customer in UAE. It is submitted that the Petitioner does not draw any analysis as to what exactly his case or contention is, by enclosing such invoices. In any case, it is submitted that the sale by overseas BMW entity to a customer in UAE which is a different geography cannot be compared. Entity in every country will have its laws to be followed and other commercial parameters to be applied such as quantity of offtake, model number, year of sale or features of the car.
154. With respect to para (p)(i) at page no. 52 of the Petition, where the table seeks to compare assessable values in India with the FOB price of Right-Hand Drive (RHD) vehicle published on the website, purportedly applicable in the UK, it is submitted that the same is dealt with by the Respondent No. 7 in para 65 at page no. 794 in the Affidavit in reply dated 08th April 2022. That the assessable value cannot be compared with the FOB price or list price, which is meant for the ultimate customer, that too in a different geography and further evidently of a model with a different configuration i.e. RHD. It is further submitted that the difference between the assessable value and the final list price published on the website meant for the ultimate KSG/AVK 116/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc buyer will comprise of various elements such as duties, taxes, expenses, margins, overheads, and therefore again such a comparison is as good as comparing apples with oranges.
155. With respect to para (ii) at page 54 of the Petition, which seeks to compare the values declared in the two Bills of Entry, it is submitted that the same is dealt with by the Respondent No. 7 in para 66 at page no. 795 in the Affidavit in reply dated 08 th April 2022. The value declared in the Bill of Entry No. 8750215 is where Respondent No. 7 has imported themselves for subsequent sale through dealer network. Whereas the Bill of Entry No. 8863665, the goods were sold on high seas basis and the Bill of Entry was filed by the importer in India. It is submitted that in the high sea sale transaction, the Bill of Entry is filed by the Purchaser in India which would include margin of Respondent No.7 justifying the difference in price between the two transactions. This again demonstrates how the Petitioner has been comparing with incomparable.
156. Mr. Paranjape seeks to draw attention of this Court to para EE at page no. 73 of the Petition where certain aspersions have been cast upon, inter alia, upon Respondent No.7 with respect to the alleged KSG/AVK 117/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc proceedings under the Acts other than the Customs Act. Mr. Paranjape submits that this appears to tarnish the image of Respondent No.7 and is highly deprecated. That this appears to be a feeble attempt to create a prejudice against Respondent No.7. It is submitted that at para 5 at page no. 1179 of the Affidavit in Reply of the DRI dated 21 st December 2022, the DRI has stated instances in which the Petitioner was proceeded against and that too, inter alia, under the Customs Act. With regard to such antecedents of the Petitioner, it is submitted that it is incorrect on the part of the Petitioner to cast aspersions on Respondent No.7 presumably to misdirect this Court into an area that is not relevant for the purpose of this Petition and this itself creates doubts about the bona fide of the present Petition.
157. Without prejudice to above Mr. Paranjape submits that in any event, presently the assessment of the Bills of Entry filed by the Respondent No. 7 are provisional and therefore, the allegation made by the Petitioner that there is undervaluation is anyway premature as the proper officer has not even applied his mind.
158. Learned Counsel for Respondent No.7 accordingly submits that this Court dismiss the Petition with exemplary costs. KSG/AVK 118/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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159. The Respondents including Learned ASG have submitted that the Petitioner has not provided any credible and specific information to suggest that the S.V.B orders were fraudulently obtained by Respondents No. 6 and 7. In any event it is stated that the Department is in appeal against the said orders which appeal is pending and that for some of the subsequent years, the S.V.B. orders are pending.
160. In response to the Petitioner's submission that the valuation of the Luxury Cars imported by Respondent No.6 and Respondent No.7 is done based on a Transfer Pricing Order can bind the Customs Authorities to ascertain Pricing Order obtained for the purpose of Income Tax and no such Transfer Pricing Order can bind the Customs Authorities to ascertain the correct value for the purpose of levy, assessment, and collection of Customs Duty, it has been submitted that since the prime reason for seeking prayers for carrying out of an investigation in the matter was undervaluation, the study of Transfer Pricing by Income Tax confirming the "Arm's Length Price" can be very much relied upon. It has been emphasized that the Petitioner has not provided any specific information as to why the transfer pricing study of the income tax authorities cannot be relied upon. That unless there is any concrete evidence that the submissions made by Respondents KSG/AVK 119/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc No. 6 and 7 to the Income Tax Authorities and the SVB are contradictory, there is no reason to reject the transfer pricing study of the Income Tax Authorities. It is further submitted that the Transfer Pricing study by Income Tax Authorities, if it confirms the Arm's length pricing, can be accepted for deciding the value of imported goods in the absence of any information to the contrary. That, no other law for the time being in force, restricts the Customs Authorities from doing so.
161. It has been reiterated on behalf of the Respondents that the Petitioner has not provided any specific information that points out the flow back of funds related to the import of cars (in addition to the invoice value). That the Petitioner has also not provided any information regarding services that are to be offered or payments that are to be made a pre-condition for the sale of goods and that in the absence of such Information, it is difficult to challenge the Transaction Value declared by Respondents No. 6 and 7. And unless the information provided pertains to the time and place of importation, the information cannot be taken cognizance of as held by the Hon'ble Supreme Court in Commissioner of Customs, Ahmedabad v/s Essar Steel Limited- 2015 (319) ELT. 202 (SC).
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162. Learned ASG has concluded by submitting that therefore there is no prima facie case to cause any investigation by the DRI against Respondents No.6 and Respondent No.7 based on the extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules. That as there is no credible documentary evidence and given the fact that the imports are only provisionally assessed, it does not warrant conducting such a roving inquiry as demanded by the Petitioner. Such an approach would erode the confidence of the trade and would hamper the ease of doing business in India. Further, as the imports by both Respondents No.6 and Respondent No.7 are assessed provisionally, differential duties, if any and on any ground, can be recovered from them at the time of final assessment by the jurisdictional Customs Authorities. Hence, any action or investigation by the DRI is not warranted on this ground also.
163. Further, it has been submitted by the Learned ASG on behalf of the Respondent authorities that all the issues pointed out by the Petitioner viz. comparison of the prices of the Luxury Cars as shown on the web in other countries, price of the cars sold and purchased by the related parties from other Countries, comparison of the prices of luxury cars when supplied by the concerned related party to the unrelated KSG/AVK 121/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc parties in India with the prices of cars supplied to the Respondents No. 6 and 7 and Transfer Pricing having been examined, it has been found that the information is not actionable in terms of the prevailing legal position.
164. We do not find any material which prima facie suggests that the said Respondent has not cooperated with the investigation and/or interfered with the same or the decision making process or that there has been any suppression or a mis-declaration or undervaluation or any collusion or connivance. The allegations levelled by the Petitioner against the Respondent authorities appear to be unfounded.
165. The Petitioner has also approached this Court without availing of alternate remedy by filing appropriate proceedings before an appropriate forum of the Respondents No. 1 to 3.
166. It has also been submitted that therefore the aforesaid Petition is not maintainable, is totally misconceived, misleading and devoid of substance, and has been filed with an oblique motive, hence, same is liable to be rejected/dismissed with exemplary costs. KSG/AVK 122/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
WP-1202-2022-IAL-9504-23-23072024.doc SUMMARY OF SUBMISSIONS Antecedents and Bonafides
167. The above submissions can be summarized as under:
(i) The Respondents have raised a grievance that the Petitioner is not acting in a bona fide manner and has personal gain or private motive or political motivation or other oblique considerations in mind and therefore this Court may dismiss the petition with exemplary costs.
(ii) The Petitioner, as Director of Sprint Services Private Limited was involved in a case of breach of Customs Notification No.49 of 2000 dated 27th April, 2000, by importing cars under Export Promotion Capital Goods (EPCG), Scheme which was allowed subject to the "Actual User" condition as well as condition of fulfillment of export obligation by use of the said imported goods, having disposed of the imported cars in the open market and created documents to show apparent compliance with the conditions of the license. That the Petitioner was arrested on 29 th June, 2001 during the course of investigation in the case involving 20 cars. After a thorough investigation, the DRI issued two Show Cause cum Demand Notices bearing No.- (i) 27/XI/29/2001-CI dated 31 st May, 2002 for 20 cars, KSG/AVK 123/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc and (ii) DRI/BZU/C/2001 dated 03rd June, 2002 for 5 cars, demanding differential Customs Duty of Rs.2,93,61,300/- and Rs.62,58,173/-
respectively and a Show Cause Notice was issued to the Petitioner by the DRI, Delhi Zone Unit under Section 124 of the Customs Act, regarding confiscation of 6 cars lying uncleared at ICD Ludhiana, wherein the declared assessable value of the cars were found to be grossly understated. On receipt of Show Cause cum Demand Notice as mentioned Sr.No.(ii) above, Petitioner approached the Additional Bench of the Settlement Commission, Mumbai and admitted that he had committed breach of the EPCG License and Customs Notification No.49 of 2000 dated 27th April, 2000 and, was willing to pay customs duty liability as demanded after which the final order dated 10 th April, 2003 was passed by the Settlement Commission, holding that the action of the Petitioner was incorrect as per law and the Petitioner, paid the full amount of differential customs duty along with interest whereby immunity was granted to the Petitioner from fine, penalty, prosecution.
(iii) The present Petition has been filed despite having knowledge of the fact that a similar issue is already pending before the Rajasthan High Court for its decision in Civil Writ Petition (PIL) No. 9425 of 2020 KSG/AVK 124/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc raising similar issues which was filed by one Arvind Alaru vs Union of India & Ors. before the High Court of Rajasthan, wherein the Petitioner being the informant was made a favouring/friendly Respondent i.e. Respondent No. 5 in the Petition. Hearing in the said case has already taken place and the answering Respondent was directed vide order dated 03rd September, 2020 to indicate the actions taken based on the directions given by the Hon'ble Supreme Court in Criminal Writ Petition No.20 of 2016 filed by the Petitioner. DRI filed its reply before the Rajasthan High Court on 25 th November, 2020 and although statedly the next hearing in the Petition was due on 13 th May, 2022, no further update is available.
(iv) That before the Hon'ble Supreme Court, the Petitioner had submitted that his intention behind challenging the valuation was to get reward as per the guidelines laid down under Circular No. 20/2015-Cus dated 31st July, 2015.
Allegations against Respondent authorities and their response
(v) The Petitioner has levelled various allegations against officers of DRI without furnishing any prima facie material/proof/evidence in KSG/AVK 125/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc support thereof including by letter dated 9 th January, 2015, that Respondents No.5, 6 and 7 were resorting to fraud, mis-representation and suppression of facts (under valuation) in import of luxury cars into India from related parties to dupe the Central Government of its legitimate customs duties.
(vi)The Respondent Authorities have submitted that the Petitioner cannot be allowed to seek any prayer under Article 226 of the Constitution to settle purported personal scores or to achieve any personal gain in the garb of filing this Petition.
(vii) That the Petitioner has solely placed reliance upon the information given by him to DRI in furtherance of contents of the Writ Petition (Criminal) No. 20 of 2016 filed by the Petitioner before the Hon'ble Supreme Court. That the Hon'ble Supreme Court disposed of the Writ Petition (Criminal) No. 20 of 2016 vide Order dated 15 th July, 2016. In Order dated 15th July, 2016, the Hon'ble Supreme Court directed the Petitioner to file relevant documents before Additional Director, DRI in support of his claim.
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(viii) After about three months, the papers submitted by the Petitioner were returned with advice to approach the DRI with credible evidence of the alleged fraud and under-valuation.
(ix) In the Criminal Writ Petition No.20 of 2016 filed by the Petitioner on 28th January, 2016, before the Hon'ble Supreme Court of India, a detailed affidavit dated 17th March, 2016, was filed by the DRI furnishing details, circumstances and reasons for not recording DRI-1 on the information provided by the Petitioner and after hearing both the sides the Hon'ble Supreme Court disposed of the said Petition vide order dated 15th July, 2016 by passing the following order. The relevant paragraphs are as under :
"Having heard learned counsel for the parties, we are of the considered opinion that the writ petition can be disposed of at this stage by permitting the petitioner to file documents before Additional Director, Directorate of Revenue Intelligence (DRI), Mumbai within eight weeks hence. Thereafter, the said authority shall intimate the petitioner so that the petitioner can appear and explain and answer the queries of the authorities. As further agreed to by learned Counsel for the parties, the petitioner shall also cooperate as Mr. Nanda would emphatically put forth that the petitioner has filed this writ petition for the national cause. If the Additional Director, DRI, Mumbai Zone is convinced that there is credible information given by the petitioner, he shall take appropriate action, as advised in law. The writ petition is accordingly disposed of. There shall be no order as to costs." KSG/AVK 127/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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(x) By letter dated 9th September, 2016, the Petitioner submitted certain information along with annexures to the DRI requesting for expeditious preliminary enquiry for considering registration of Information Report/DRI-1 and commencing investigation into alleged cognizable offences punishable under the Customs Act for the alleged evasion of customs duties in the import of luxury cars whether as FBUs or in CKD/SKD form when imported from related parties.
(xi) The information furnished in the letters was general in nature containing sweeping allegations against five corporate houses, which was examined by the DRI.
(xii) Since the Petitioner had expressed desire that he would like to place further material on record to assist the investigation, Petitioner was invited to attend the office of the DRI and the Petitioner thereafter visited the office on 4th October, 2016. The information was discussed at length with him and that the Petitioner informed the officers thereafter that he had no additional material and would require some more time to do so.
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WP-1202-2022-IAL-9504-23-23072024.doc Respondent No. 5
(xiii) Thereafter, on 16th November, 2016, the Petitioner once again visited the DRI office and expressed his desire to meet the Additional Director and the other officers of DRI and stated that he had specific details of import of certain consignments of Respondent No.5 viz. Mercedes - Benz India Pvt. Ltd. suspected to be imported fraudulently and that he was in the process of gathering specific details about the consignments of the remaining four importers mentioned in his letter dated 9th September, 2018. The Petitioner agreed to furnish the details of specific consignments imported by Respondent No.5 for which DRI- 1 would be recorded and an enquiry would be initiated by DRI, Mumbai.
(xiv) By letter dated 25th November, 2016, the Petitioner furnished details of a few consignments imported by Respondent No.5 and alleged mis-declaration of description and/or value and also visited DRI office on 29th November, 2016 and once again requested that the information in respect of the said information furnished by letter dated 25th November, 2016, DRI-1, may be recorded and an enquiry be initiated against the Respondent No.5.
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(xv) DRI-1 was recorded on 7 th December, 2016, regarding the alleged fraudulent imports by Respondent No.5.
(xvi) Statedly a thorough investigation was conducted by the DRI under the supervision of Additional Director General, in compliance of the Order of the Hon'ble Supreme Court dated 15 th July, 2016 and that despite a detailed investigation, no case of evasion on duty of importation of luxury cars on under-stated values by Respondent No.5 could be made out.
(xvii) Thereafter, by three separate letters dated 27 th May, 2019, 10th July, 2019 and 19th August, 2019, the Petitioner was requested to furnish additional information / documents (if any) in his possession to substantiate the charges of undervaluation, however statedly the Petitioner failed to respond to any of the aforesaid letters. (xviii) After examining all documents, records and the relevant legal provisions and pronouncements, the investigation against Respondent No.5 was closed on 16th September, 2020 after a period of almost four years of investigation. The investigation was supervised at various times by two Deputy Directors, Four Additional/Joint Directors and Two Principal Additional Directors General.
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WP-1202-2022-IAL-9504-23-23072024.doc (xix) On behalf of Respondent No.5 it has been submitted that the Petition is hit by delay and laches. The Petitioner did not participate in investigation after 2016. That the DRI closed the investigation proceedings in 2020 after finding no evidence of undervaluation. The Petitioner approached this Court in 2022 i.e. 2 years after closure of investigation and after almost 6 years of disposal of its case raising similar grievance before the Hon'ble Supreme Court. (xx) And therefore the allegation of inaction by DRI is incorrect. The Respondent No. 5 has made elaborate submissions in this regard in its Affidavit-in-reply dated 21st April, 2023 wherein they have stated that a detailed investigation was conducted.
(xxi) Orders passed under Section 92CA(3) of the Income Tax Act, 1961 by the Income Tax (Transfer Pricing) authorities Pune in respect of Respondent No. 5 for AY 2015-16 and AY 2014-15 have been scrutinized and the Income Tax authorities have not disturbed the "Arm's Length Price" of transactions as reported by Respondent No.5. (xxii) As per the Respondent authorities, scrutiny of the Financial statements of Respondent No.5 for the past years does not indicate any KSG/AVK 131/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc remittance / transfer of funds to Daimler AG (related to import of cars), over and above the Import invoice value and that all the Agreements entered between Daimler AG and Respondent No.5, have been scrutinized thoroughly and no provision relating to any flow back of fund from Respondent No.5, Pune to Daimler AG, Germany (other than towards the Invoice Value of the cars) or any other consideration for the foreign supplier relatable to import of cars was noticed. That the scrutiny of the Agreements (between Daimler AG and Respondent No.5, Pune) and the Financial Statements of Respondent no. 5, Pune by the authorities indicate that there are several Agreements viz. Agreement for Assistance, Long Term Consultancy Agreement etc. by which various services like IT, Financing, Planning, Legal, Insurance etc. are provided by Respondent No.5 to Daimler AG, Germany for which amounts are being remitted by Daimler AG, Germany to Respondent No.5 and that thus, the flow of money under these Agreements is two ways-from Daimler AG, Germany to Respondent No.5 and vice versa supporting the fact that the transactions between them are at arm's length. It has been submitted that after examining all the above documents and relevant legal provisions, the Investigation against Respondent No.5, Pune was closed.
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WP-1202-2022-IAL-9504-23-23072024.doc (xxiii) Statedly, files/records pertaining to Respondent No.5 available in the Special Valuation Branch (SVB), New Custom House, Mumbai were called for and examined and it was noticed that from the year 2005 till 2020, Special Valuation Branch, New Custom House, Mumbai has passed five Orders for five different periods after detailed scrutiny of the relevant documents of the importer viz. Respondent No.5 pertaining to transaction value and that vide each of the above Orders, the declared invoice value has been accepted as the Transaction value in terms of Section 14 of the said Act, read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. (xxiv) From the enquiry conducted by the DRI, it does not appear that Respondent No.5, Pune has made any mis-representations in the proceedings before the SVB, New Custom House, Mumbai. (xxv) Accordingly, the Additional Director, DRI, Mumbai after taking into consideration and after thorough examination of the evidences placed by the Petitioner and evidences found during the investigation and with the approval of the Additional Director General, DRI, Mumbai, decided to close the investigation for want of any incriminating material indicating evasion of customs duty as alleged by KSG/AVK 133/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc the Petitioner. Before closure of the investigation, three letters were sent to the Petitioner dated 27th May, 2019, 10th July, 2019 and 19th August, 2019 seeking the additional information / documents pertaining to the enquiry being conducted by DRI, MZU into import of SUVs and vehicles caused by Respondent No. 5, however, statedly the Petitioner chose not to reply to any of the said letters and as the department did not find any incriminating evidences even after thorough investigation spanning over a period of almost four years, the investigation in the matter was closed after sharing the Investigation Report with DG, DRI, New Delhi.
(xxvi) As regards the specific allegations made by the Petitioner against Respondent no.5, Mr. Dada, Learned Senior Counsel has referred to the table in paragraph 25 above.
(xxvii) It has been submitted by the Respondent authorities that in the garb of a fresh Petition before this Court, the issue already investigated by DRI and closed for want of any evidences should not be allowed to be re-opened merely on the basis of bald, baseless, unfounded and frivolous allegations.
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WP-1202-2022-IAL-9504-23-23072024.doc (xxviii) Respondent No. 3 found no undervaluation after examining the documents submitted by the Respondent No. 5. That, before concluding the investigation, the Respondent No. 3 wrote various letters asking the Petitioner if he has any additional information to submit but the Petitioner did not respond to the said letters and it is only thereafter, that the proceedings were concluded. Transaction value and price list
168. The transaction value is to be determined in accordance with the Customs Valuation Rules relying upon the decision of the Hon'ble Supreme Court in Eicher Tractors Ltd. v/s. Commissioner of Customs, Mumbai, reported in 2000 (122) E.L.T. 321 (SC). A price list is no more than a general quotation. It does not preclude discounts on the listed price. A discount is a commercially acceptable measure, which may be resorted to by a vendor for a variety of reasons including stock clearance and that it is erroneous to reject the transaction value and cannot be a reason by itself. A discount is calculated with reference to the price list.
169. Accordingly on 28th July, 2023, this Special Bench had recorded that arguments had been concluded on behalf of the Petitioner and KSG/AVK 135/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc thereafter the arguments on behalf of the Respondent No.5 as above were also over and that the contention of the Respondent No.5 was that the investigation had already been conducted and concluded by the DRI and that there is no need for further investigation. During the said hearing, this Bench had put a query to the learned Senior Advocate for the DRI as to the stand of the DRI in respect of the other private Respondents viz. Respondents No.6 and 7. The Learned Senior Counsel for the DRI had submitted that the Petitioner had not submitted any material in respect of the said Respondents inspite of having been given an opportunity. Learned Senior Counsel for the DRI had submitted that the material now placed on record by the Petitioner would be examined. This Court had accordingly recorded that if the Petitioner intends to file any additional material he can give the same within a particular time period and that after examining the material thoroughly the Court would be informed of the course of action the DRI intended to take. Accordingly, the learned Senior Counsel for the Petitioner submitted that if there was any additional material the same would be given to the DRI within a period of three weeks with a copy to the concerned private Respondents and the learned Senior Counsel for the DRI had stated that the DRI would take 6 weeks after the Petitioner submitted the additional information. Accordingly, at the request of the KSG/AVK 136/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc learned Senior Counsel for the DRI, the matter was stood over to 05 th October, 2023. By the said order, the learned Senior Counsel for the Petitioner agreed that in view of the aforesaid course of action, the Petition could not be decided within the time limit of 3 months stipulated by the Hon'ble Supreme Court and if necessary, the Petitioner would request for an extension. The said order dated 28 th July, 2023 is usefully quoted as under:
"This Petition is specially assigned to this bench.
2. On the last occasion the learned Counsel for the Petitioner had concluded his arguments. Thereafter, the arguments on behalf of Respondent No.5 were over. The contentions of Respondent No.5 was that the investigation has already been conducted and concluded by the Directorate of Revenue Intelligence (DRI) and there is no need for further investigation.
3. During the hearing we put a query to the learned Senior Advocate for the DRI as to the stand of the DRI in respect of other Private Respondents. The learned Senior Advocate for the DRI submitted that the Petitioner had not submitted any material in respect of these Respondents inspite of giving an opportunity. The learned Senior Advocate for the DRI submitted that the material now placed on record by the Petitioner would be examined. If the Petitioner intends to file any additional material, he can give the same within a particular time. After examining the material thoroughly, the Court will be informed of the course of action the DRI intends to take.
4. The learned Counsel for the Petitioner submits that if there is any additional material, the same will be given to the DRI within a period of three weeks with copy to the concerned KSG/AVK 137/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc private Respondents. The learned Senior Advocate for the DRI states that it would take six weeks after the Petitioner submits the additional information as above.
5. Therefore, at the request of the learned Senior Advocate for the DRI, stand over to 5 October 2023 at 4.35 p.m. under the caption "For Directions".
6. The learned Counsel for the Petitioner is agreeable to this course of action and states that the Petitioner is mindful of the fact that in view of this order, the Petition may not be decided within the time limit stipulated by the Hon'ble Supreme Court and if necessary, would request for an extension.
7. In the meanwhile, leave to amend is granted to the Respondent No.4 to annex the documents not annexed to the reply.
8. Amendment to be carried out within a period of one week."
Respondents No.6 and 7
170. Pursuant to the aforesaid order, Petitioner submitted certain information with respect to Respondents No.6 and 7 through email of 16th August, 2023.
171. In respect of Respondents no. 6 and 7, the Learned Counsel for the Petitioner, Learned ASG as well as the Learned Senior Counsel and Counsel have made submissions.
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172. According to the Learned ASG, the Petitioner had not submitted any material in respect of these Respondents earlier and the material placed now on record by the Petitioner would be examined and further that if the Petitioner intended to file any additional material, he could give the same within a particular time, and after examining the said material thoroughly, the Hon'ble Court would be informed of the course of action the DRI would propose to take.
173. The Petitioner submitted certain information in respect of Respondents No.6 and 7 through an email dated 16th August, 2023.
174. The Petitioner's claim has been observed to be general like all luxury car imports by various multinational brands and is not specific. The Petitioner had submitted that Respondent No.6 is importing Luxury Cars viz. 'Porsche', 'Audi', 'Lamborghini' etc. from related parties viz. M/s. Automobili Lamborghini, Italy, M/s. Audi, Germany and PORSCHE Middle East & Africa FZE, Dubai, UAE by mis-declaration and suppression of material particulars from the Customs Authorities. Similarly, the Petitioner had also alleged that Respondent No.7 was importing Luxury Cars from related parties, mainly BMW AG, Germany, whether as Fully Built Units (FBUs) or in Completely Knocked Down KSG/AVK 139/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc (CKD) condition by mis-declaration and suppression of material particulars from the Customs Authorities and that the said Respondents are importing these luxury cars at ridiculously low and unrealistic prices.
175. It has been observed that the information is very generic and is an analysis made by the Petitioner mostly based on information available in open source which is otherwise also available to the assessing officers and the investigating agencies.
176. The Respondents have submitted that the Petitioner has invoked the extraordinary jurisdiction of this Court without a clear understanding of the Customs Valuation Rules and has also leveled various sweeping allegations against the Respondents without furnishing any credible documentary evidence to initiate an investigation.
177. The Respondents have submitted that the writ petition filed by the Petitioner is totally misconceived, lacking in proper understanding of the Customs Valuation Rules, misleading, and devoid of any KSG/AVK 140/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc substance which appears to have been filed with an oblique motive and that the same is liable to be dismissed with exemplary costs. Prima facie no violation of Pricing Rules
178. That the Petitioner has relied upon the following factors :
(a) Purchase prices in other countries/regions such as the Middle East
(b) Retail prices/Website prices in the UK and Germany which were mentioned on www.audi.co.uk, www.hrowen.co.uk, www.bmw.co.uk etc.
(c) Comparison of import prices of cars that have been imported into India as a one-off case by unrelated parties in India with prices declared by related parties.
(d) Prices available in published magazines such as Auto Express Cars, Top Gear etc.
(e) Misrepresentation and suppression of facts by Respondents No. 6 and 7 before the Special Valuation Branch (S.V.B) authorities.
179. The Respondent Authorities have submitted that the Petitioner's comparison of purchase prices in other countries/regions, retail prices/website prices in other countries, prices available in published magazines, and import prices by unrelated parties with the import KSG/AVK 141/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc prices declared by Respondents No.6 and 7 as above is neither logical nor legal and is not allowed as per the Customs Valuation Rules, 2007.
180. That Section 14 of the Customs Act, which lays down the provisions for valuation of goods for the purpose of assessment of customs duty is relevant. That prior to 2007, the concept of "deemed value" was relevant as the then Section 14(1) of the Customs Act, 1962 stated that the value of the imported goods shall be the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade and that therefore, prior to 2007, the assessing officer was not to see the actual value of the goods, but the value at which such goods or like goods were ordinarily sold or offered for sale for delivery at the time and place of import. Similarly, the words "in the course of international trade" were relevant. The Assessing Officer was to see the value of the goods not for each specific transaction, but the ordinary value which the goods would have in the course of international trade at the time and place of their import. That India continued to have the deeming provision in the Customs Act, 1962 as well as in the Valuation Rules, 1988 till 2007. Section 14 of the Customs Act was amended vide the Finance Act, 2007 to value goods KSG/AVK 142/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc on the basis of transaction value as against deemed value. With the amendment of Section 14 of the Customs Act, 1962 in 2007 as well as with the introduction of the Customs Valuation Rules, 2007 ("CVR"), the concept of "transaction value" became relevant and not deemed value. As per the new Section 14 of the Customs Act, 1962 that was introduced vide the Finance Act, 2007, the value of the imported goods is the transaction value of such goods, that is, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, where the buyer and seller of the goods are not related and the price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf.
181. Rule 12 of CVR, 2007 empowers the Assessing Officer to reject the transaction value declared by the importer, which power is to be exercised sparingly and only in cases where there are genuine doubts relating to the authenticity of the declared value. The transaction value cannot be rejected except for the grounds laid down under the Valuation Rules. In Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] the Hon'ble Supreme Court, in Para 18 of its decision, has held that:
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WP-1202-2022-IAL-9504-23-23072024.doc "It is only in case where the doubt of the proper officer persists after conducting examination of information including documents or on account of non-furnishing of information that the procedure for further investigation and determination of value in terms of Rules 4 to 9 would come into operation and would be applicable. Reasonable doubt will exist if the doubt is reasonable and for 'certain reasons' and not Ideas fanciful and absurd. A doubt to justify detailed enquiry under the proviso to Section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of 'certain reasons' and not me reasons would be contrary to the scheme and because one is distrustful and unsure without reasonable and certain purpose behind the provisions which ensure quick and expeditious clearance of import goods."
182. It has been submitted that the Petitioner has been speculating on undervaluation by Respondents 6 and 7 without any hard evidence and is demanding an investigation into the matter based on mere suspicion. According to the Respondents, the following facts further counter the speculative reasoning put forward by the Petitioner:
a) The retail sale price of same or similar cars in a country other than India cannot be a basis for the valuation of cars at the time of import of the same into India. It is submitted that the same is specifically barred by Rule 9(2) of the Customs Valuation Rules, 2007 which states that "No value KSG/AVK 144/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc shall be determined under the provisions of this rule on the basis of -(v) - the price of the goods for the export to a country other than India.
b) Further, Customs Valuation Rules, 2007 also prescribe that no value shall be determined under the provisions of Rule 9(2) based on the price of goods in the domestic market of the country of exportation.
c) Also, the GATT valuation agreement states that valuation based on the price of goods in the domestic market of the country of exportation would go against the principle that valuation procedures should not be used to combat dumping.
d) The cars available in other countries may not be similar in specifications/technology and, hence, it is otherwise also not reasonable to compare the prices of cars merely based on similarity of description.
Provisional and not final assessment of Bills of Entry
183. According to the Respondent Authorities, comparison of the price of one-off cars imported by unrelated parties in India with the cars imported by Respondents 6 and 7 in India is erroneous. That hundreds KSG/AVK 145/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc of cars are imported into India by the related parties i.e., Respondents 6 and 7 as compared to one or two cars by unrelated parties. It has been submitted that the value of goods can only be compared if they are contemporaneous and of similar commercial quantity. Transaction value declared by the importers cannot be rejected merely based on import by an unrelated party without considering other commercial factors. Further, that the two sample Bills of Entry submitted by Petitioner have been examined and it has been observed that in both the case of imports by unrelated parties, the import is on a High Seas Sale basis and, hence, the sale is at a premium to adjust for dealer's margins and for various costs such as marketing, distribution, logistics, etc. That this ensures that the retail price at which the cars are sold by the retailers to end customers is nearly the same as the prices of cars when imported on a High Seas Sale basis. It is also submitted that just by subtracting the High Seas Sale loading value from the overall assessable value as declared by the unrelated parties, the import prices closely approximate to the prices declared by the related parties. It has been submitted by an example, that the Bill of Entry No. 8863665 dated 26th December, 2012 and Bill of Entry No. 8750215 dated 13 th December, 2012 that were submitted by the Petitioner as part of the documents sent by him vide email dated 16 th August, 2023 were KSG/AVK 146/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc examined. In the Bill of Entry No. 8863665 dated 26 th December, 2012, it was observed that the assessable value was Rs. 2699668.90 which included the High Seas Sale Loading Amount of Rs. 441138. It has been submitted that therefore after subtracting this amount, the value arrived at Rs. 2258530.90 which is comparable to the assessable value of Rs. 1993820 in Bill of Entry No. 8750215 dated 13 th December, 2012 filed by Respondent No.7 given that imports by unrelated parties may include other fittings and accessories in addition to the standard components.
184. It has also been submitted that it is a statutory obligation and duty of the Respondents to investigate into offences committed under the Customs Act and that the department has always been at the forefront in taking appropriate action whenever actionable intelligence in the form of credible documentary evidence is available with the department and that a Show Cause Notice vide F.No. DGCEI/MZU/I & IS'C'/30-81/06 dated 31st March, 2008 was issued to Respondent No.6 by the DGCEI, Mumbai in respect of valuation.
185. That unlike in the present writ petition where the Petitioner is demanding a roving inquiry based on mere hunches and accusations KSG/AVK 147/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc without any credible documentary evidence that is actionable, the aforesaid Show Cause Notice was based on very specific intelligence with the department that USD 45 million, which was paid by Respondent No.6 to M/s. Skoda Auto AS, Czech towards "Technical know-how/Technological Transfer Fees", has not been included in the value of the imported cars. It has been submitted that, presently, the issue is pending before the Hon'ble Supreme Court of India.
186. That all the Bills of Entry filed by Respondent No.6 for the import of cars, parts, and accessories, have been assessed provisionally since then.
187. Respondent No.7 was also issued a Show Cause Notice vide F.No. DRI/DZU/JRU/19/ENQ-1(INT-1)/2014/ 679-690 dated 29th May, 2015 by the D.R.I., Delhi Zonal Unit based on very specific intelligence with the department that the Brand Promotion Expense incurred by Respondent No.7 on behalf of their related foreign supplier has not been included in the value of the cars imported by them unlike in the present case where the Petitioner is leveling sweeping allegations without any concrete evidence sufficient to cause investigation into the KSG/AVK 148/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc matter and that the Bills of Entry filed by Respondent No.7 for the import of cars are being assessed provisionally at present.
188. The Petitioner had alleged that Respondents No.6 and 7 have suppressed the Price Pattern from Special Valuation Branch (SVB) Authorities which was required to be provided, as per the Board's Circulars, to arrive at a decision to accept or reject the declared value. That the Petitioner had also alleged that the prices declared by Respondent No.7 to the SVB are not in the ordinary course of business under fully competitive conditions and the Orders obtained from the SVB are based on false undertaking/affidavits/assurance that their admitted relationship with the foreign supplier has not influenced the import price declared by them. It was also alleged that the Respondents have not submitted the price lists for the goods being imported by them and that pricing details of goods supplied to buyers/branches /collaborators in other countries as required to be provided by the Respondents in accordance with the question at S.No.29 of Annex-A of Circular 11/2001 dated 23rd February, 2001 which have not been provided.
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189. On behalf of the Respondent Authorities, Learned ASG has submitted that Circular 11/2001 dated 23rd February, 2001, issued in accordance with the earlier Customs Valuation Rules, 1997, was superseded by Circular No. 05/2016 dated 09th February, 2016 which was issued in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and therefore, it is no longer required to submit pricing details of goods supplied to buyers/branches/ collaborators in other countries as per the new circular. That, as per question 5.5 of Annex-A of Circular No. 05/2016 dated 09th February, 2016, the importers are required to provide copies of price list and the basis of arriving at the invoice value only if the price of imported goods was determined based on a price list.
190. In the case of the Respondents No. 6 and 7 they have declared that their price based on a Transfer Price and not based on a price list and therefore the allegation of non-submission of price list would not be relevant.
191. That, therefore, prima facie, there doesn't appear to be any misrepresentation or suppression as alleged by the Petitioner. KSG/AVK 150/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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192. That even if it is assumed that a price list exists and is not submitted, it does not lay ground for the rejection of the transaction value declared by Respondents No. 6 and 7. In Mirah Exports Pvt. Ltd. v. Collector of Customs 1998 (98) E.L.T. the Supreme Court has held that, "The legal position is well settled that the burden of proving a charge of undervaluation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge.
"Ordinarily, the Court should proceed on the basis that the apparent tenor of the agreement reflect the real state of affairs"
and what is to be examined is "whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price." [See: Union of India Vs. Mahindra & Mahindra (supra), at p. 487 In the present case, the only evidence that was adduced by Revenue in support of the charge of under-valuation is the price list No. 8102 dated February 15, 1981 which was found during the course of search in the premises of Skefko, etc. that was conducted by the officers of the enforcement Directorate on or about June 22, 1983."
193. Therefore, the price list of the foreign supplier/ manufacturer is not a proof of transaction value invariably, and existence of the price list cannot be the sole reason to reject the transaction value. As noted above, price list is no more than a general quotation. It does not preclude discounts, which may be granted for a variety of reasons including stock clearance. Further, mere production of price list cannot KSG/AVK 151/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc discharge the onus on the customs authorities to prove the existence of special circumstances indicated under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007.
194. The Petitioner's reliance upon the judgments of the tribunal in SA Putehally v. Comm. Of Customs (2004) 178 ELT 861 (Tri.) where the contention of the DRI to value the cars based on the "Tourist Price List" issued by the German manufacturer it has been submitted was upheld and which has been confirmed in the judgment of the Hon'ble Supreme Court in Gerson Da Cunha v. Commissioner of Customs (2015) 16 SCC 682, has been distinguished by the learned ASG on the basis that in that case, concrete evidence regarding the mis-declaration of the capacity of the engine declared to be less than 1500 cc as against the actual capacity which is greater than 1500 cc was found based on testing of the cars, warranting the rejection of the declared transaction value.
195. Further with respect to the Petitioner's reliance upon the ratio in A.V. Papayya Sastry v. Govt. of A.P. (2007) 4 SCC 221 to emphasize that favorable orders fraudulently obtained by the Respondents are non-est, void ab-initio and nullity in the eyes of the law, and the KSG/AVK 152/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc judgments in the cases of Century Metal Recycling (P) Ltd. v. Union of India, (2019) 6 SCC 655, Padia Sales Corpn. V. Collector of Customs, Bombay, 1993 Supp (4) SCC 57, Sharp Business Machines (P) Ltd., (1991) 1 SCC 154, Habasit Lakoka Pvt. Ltd. vs. CC (Imports) - 2015 (321) E.L.T. 15 (S.C.), Mytri Enterprises vs. Commissioner -2015 (323) ELT A71 (SC), and Varsha Plastics (P) Ltd. v. Union of India, (2009) 3 SCC 365 to highlight the fact that valuation can be redetermined by rejecting the declared value, it has been submitted that the petitioner is unmindful of the fact that the question in the present petition is not so much as to whether the declared value can be rejected or not, but whether there are reasonable grounds to reject the transaction value declared by Respondents No. 6 and 7 in accordance with the statutory provisions.
Respondent No.6
196. The material relied upon by the Petitioner is extraneous and irrelevant for the purposes of custom's valuation and there is no suppression before the customs/SVB authorities. Impermissible to compare the prices in the domestic market of other countries
197. The new Customs Valuation Rules inter alia, provide that: KSG/AVK 153/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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(i) Rule 3(3)(a) and Rule 3(3)(b) provide when transaction value is to be accepted where the buyer and seller are related.
(ii) If the transaction value cannot be accepted, then value is to be determined by proceeding sequentially through rules 4 to 9.
(iii) Rule 9, which is the residual method for valuation, provides for the value to be determined using "reasonable means consistent with the principles and general provisions"
of the Customs Valuation Rules, and expressly excludes certain basis for determining the value. In fact Rule 9 (2) expressly prohibits determination of value on the basis of "the price of the goods in the domestic market of the country of exportation". Thus, when it is not permissible to compare the price of goods in the domestic market of country of exportation, it is manifestly impermissible to compare the prices in the domestic market of other countries. In the present case, the Petitioner has purported to compare the price in the domestic market of other countries such as UK and not just the wholesale price but the retail price which is manifestly impermissible. Further, Rule 9 (2) expressly prohibits determination of value on the basis of "the price of KSG/AVK 154/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc the goods for the export to a country other than India".
198. The Petitioner is seeking to compare the price in the domestic market of other, countries such as UK and not just the whole sale price but retail price which is manifestly impermissible.
199. That therefore it is impermissible to compare prices of goods for export to UAE. The Petitioner has purported to compare the price of car purchased by Porsche Middle East & Africa FZE, Dubai for import into Dubai.
200. Rule 12 provides when "proper officer" under Customs has reason to doubt the declared import value and that as settled in Century Metal Recycling Private Limited v Union of India 2009 (367) ELT 3 (SC)], that rejection of the transaction value has to be done sparingly and only with evidence and a doubt to justify detailed enquiry under the proviso to section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and 'certain' material. It should be based and predicated on grounds and material in the form of certain reasons and not mere ipse dixit. It is not permissible to subject imports on mere suspicion because one is distrustful and unsure without reasonable and certain reasons as KSG/AVK 155/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc that would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods.
201. Comparison with the purchase price of car purchased by Porsche Middle East and Africa FZE, Dubai, from Porsche AG Germany which cars are for delivery in UAE by the Petitioner is improper.
202. It has been submitted that :
(i) The Petitioner has referred to various Invoices and sea-way bills in respect of import by Porsche Middle East in UAE for delivery in Dubai. The invoices of cars imported by Porsche Middle East are cars admittedly "for UAE delivery".
(ii) These cars are imported by Porsche Middle East for use in the domestic market in Dubai. These cars are not exported to India. This is clear from the invoices and sea-way bills which have been annexed by the Petitioner and which show supply by Porsche Germany to Porsche Middle East, where port of departure is in Germany and port of destination is UAE.
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(iii) As the Petitioner did not provide the bills of entry along with the corresponding invoices and certificate of origin in respect of imports made by Respondent No. 6, Respondent No. 6 filed an Additional affidavit dated 30 June 2023 in which Respondent No. 6 has provided
(a) bills of entry, (b) corresponding invoices and (c) certificate of origin in respect of the imports of Porsche cars imported by Respondent No.6 in India as referred by the Petitioner at paras (i) to (iv) at Pgs. 45 to 47 of Petition. Documents produced in the Additional Affidavit clearly show that the cars imported by Respondent No.6 in India, though sold by Porsche Middle East to Respondent No.6 for sale in the Indian market, are shipped by Porsche AG, Germany directly from Bremerhaven in Germany to Respondent No.6 in India. The import of cars in India from Germany is a distinct transaction stream from import of cars into the UAE from Germany.
(iv) Cars imported into the UAE are not further sold to/in India.
(v) Petitioner has wrongly and deliberately attempted to mislead this Court by stating that Porsche Middle East has sold the Porsche cars imported into the UAE by it to Respondent No.6 in India at prices lower than the purchase/procurement price of said cars by Porsche Middle East from Porsche AG, Germany.
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(vi) Further, Petitioner has wrongly stated during oral arguments that the said "facts are not in dispute". This is an untenable submission considering the fact that that the issue is very much disputed by Respondent No. 6 in the affidavits filed by Respondent No.6: a.Pg. 529
- 532 (paras 36, 37 and 39), and Pg. 541 [para 57(iii)] of R.6's Reply; b. Pg. 1267 - 1269 (paras 2 to 5) R.6's Additional Affidavit; c. Pg. 1224 (para 16) of R.6's Affidavit; d. Pg. 17 (Para 27) of R.6's Affidavit in reply to Interim Application of the Petitioner.
(vii) The Petitioner had neither provided the said data to DRI, including vide his letter dated 9.01.2015 at Exh A, Pg. 89 of Petition, nor provided before the Hon'ble Supreme Court; and the said data is being provided for the first time in the present petition before this Hon'ble Court. As the present petition was filed premised on purported inaction on part of DRI, the said data besides being wholly irrelevant cannot be now relied upon as stated in Respondent No.6's Submissions at paragrapg 27 of Respondent No.6's Affidavit in reply to Interim Application.
(viii) Further, as the Petitioner has not disclosed the source of the data or any particulars pertaining to purchases by Porsche Middle East, therefore the said data cannot be relied upon.
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(ix) There is no Rule, or method of valuation, under the Customs Valuation Rules which requires comparison with imports in another country.
(x) Rule 9 of the Customs Valuation Rules expressly prohibits determination of value on the basis of "the price of the goods for the export to a country other than India".
(xi) Additionally, the import prices of cars for different countries are not comparable as -
a) Import prices of cars for different countries have correlation to several country specific factors - The economic factors, such as the demand pattern of the customers within the market, the competitive factors and its impact on retail prices;
The nature of operations of the importer within the country; along with the functions and risks assumed by the importing entity, along with associated costs. Whether the importer deploying assets, and bearing risks in relation to stock risk, working capital risk, etc. and incurring costs in relation to promotion and marketing costs, nature of overhead costs, etc. The supply chain for import, distribution and retail sale adopted within the country; and the margins and costs associated at each leg of KSG/AVK 159/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc such supply chain, including rates of taxes and duties in the market.
Any specific regulatory requirements in the country requiring the cars to be built with certain country-specific features / configurations.
b) Even for cars of the same model, there could be various options available. Also, basic features of the cars keep on updating at regular intervals- therefore, there are different generations of the same model of the car. A different generation of car may be sold in UAE (for example, third generation Porsche MACAN) when different generation of car may be sold in India (second generation Porsche MACAN).
c) Different configurations, customization options/ on-top features, extras, etc. would be available in different countries. Porsche India offers limited customization options to Indian customers as compared to customization options offered in Dubai.
203. With respect to the grievance made by the Petitioner to the purported non production of suppliers/manufacturers price list, it has been submitted that the same is without any basis as:
(i) In the letter dated 09 th January, 2015 issued by Petitioner to Respondent No. 3, the petition filed before the Hon'ble Supreme Court, and in the present Petition - no reference has been made by the Petitioner to any foreign supplier's / manufacturer's price list in the KSG/AVK 160/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc context of imports by Respondent No.6. Accordingly, no allegations can be made against Respondent No.6 by reference to any purported price lists.
(ii) That for the first time, the Petitioner has in his Rejoinder in I.A. (L) No. 9504 of 2023 filed before this Court on 29 th April 2023, at Pg. 81 (para 11) made reference to a document in German language (without English translation) stated to be "Price List of June 2016 for variants of A8 model of Audi AG, Germany from www.audi.de" [at Pgs. 367 to 426 of Compilation annexed to said Rejoinder]. It has been submitted that this is a sales brochure available for end-customers in Germany to have a look at the car, its configurations and features, extras, and the correlated price range. The sales brochure contains prices offered /recommended at the retail sales level in Germany. In support, it has been submitted that as annexed to the written submission at Exhibit A, is a query raised on Audi Germany website which makes it abundantly clear that this brochure is a sales brochure and the prices are retail sales. This document has no correlation/relevance whatsoever to the import prices of cars sold to other countries (including India) and has been produced by the Petitioner only to mislead this Court. It is submitted that the Petitioner KSG/AVK 161/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc has not made any attempts to make inquiries in respect of the nature of the document, or even translated the document, before furnishing the said document before this Court for compelling the Court to exercise of its writ jurisdiction. That German language document is a 2016 document and has no relevance to the SVB Order that was passed on 15th January, 2009 against Respondent No. 6, and therefore this document cannot be the basis for alleging any suppression before the SVB authorities.
(iii) The import prices of Respondent No.6 are not on the basis of any price list and therefore there was no requirement to furnish any purported price list before SVB authorities.
(iv) As per the SVB Circulars, the importer is required to provide price list only where the import prices are as per price list;
(v) This Court's attention has been drawn to -
a) Circular 11/2001 dated 23rd February, 2001 - Pgs. 308 to 313 of Petitioner's Rejoinder in I.A. (L) No. 9504 of 2023 to submit that:
As per Q22 of Questionnaire [Pg. 311], from the wording of the said question itself, it is clear that there could be several different KSG/AVK 162/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc basis for arriving at the invoice price.
The documents listed at Pgs. 312-313 are to be given to the SVB authorities only if those documents are relevant in the facts of the importer's case.
It is not the case of the SVB authorities that there was suppression on the part of Respondent No.6 or 7. The consequences for the importer not furnishing complete reply to the SVB questionnaire set out at Pg. 310 (para 9).
b) Circular 5/2016 dated 09th February, 2016 - Pgs. 297 to 307 of Petitioner's Rejoinder to submit that:
As per Q 5.5, 5.6 and Q5.7 of the Questionnaire [Pg. 301] it is apparent that there could be several different basis for arriving at the invoice price, and where import price is not as per price list, then question of furnishing any price list does not arise.
c) Petitioner has incorrectly submitted that as per Circular 11/2001 it was mandatory to provide price list, the said Circular being applicable in respect of the SVB Order dated 15th January, 2009 of Respondent No.6.
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(vi) It has been submitted that following position emerges as per settled law as regards reference to suppliers/manufacturer's price list for the purpose of Customs valuation, -
a) For making reference to price-list, there has to exist a supplier's/ manufacturer's price list providing for import prices and/ or the recommended selling prices of the importer;
b) The price lists provide general quotations which are subject to negotiations, and which do not preclude discounts, and cannot be the sole reason for rejecting transaction value [para 22 of the judgement in the case of Eicher Motors - Respondent No.6's compilation page 1].
c) Discounts on price list prices is a recognized feature of international trade practice, which can be for variety of reasons. In cases, discounts ranging from 40% to 76% on price list prices has been allowed [judgements of Eicher Motors (supra), Mirah Exports (supra), Komet Precision Tools India Pvt. Ltd.(supra)]
d) Further, to rely upon any price list, there has to be evidence of import at the said price list [para 8 of Mirah Exports (supra)]
e) Price lists have been referred by the Courts in the context of section 14 of the Customs Act, prior to its amendment in 2007, according to which -
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WP-1202-2022-IAL-9504-23-23072024.doc "the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, Section 14 (prior to, and post, amendment in 2007) is available in the Compilation of Judgments submitted by Respondent No.6
(vii) The Petitioner's statements that each foreign supplier has price list on the website, and that it was mandatory to submit the price list to SVB authorities is false to his knowledge and are made to deliberately mislead this Court.
(viii) There being a price list for dealer tools and dealer equipment imported by Respondent No.6 from Volkswagen AG cannot be the basis to infer that there exists price list of Audi AG for supply of cars to Respondent No.6. The prices for dealer tools and dealer equipment are applicable to all dealers and such tools/ equipment are not on country specific requirements/configurations as in the case of cars. It is submitted that the said document is therefore wholly irrelevant.
204. With respect to comparison by the Petitioner with retail prices in the UK, it has been submitted that:
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(i) Respondent No.6 has in its pleadings pointed out that such comparison is not legal and hence such documents and pleadings made by the Petitioner are irrelevant
(ii) There is no Rule, or method of valuation, under the Customs Valuation Rules which allow comparison with retail price of goods in the domestic-market of another country.
(iii) It is reiterated that Rule 9 of the Customs Valuation Rules expressly prohibits determination of value on the basis of "the price of the goods on the domestic market of the country of exportation".
(iv) Where the price of goods in the domestic market of the country of exportation itself cannot be considered, then question of considering price of goods in the domestic market of a third country (other than the manufacturer's country and importer's country) does not arise.
(v) That additionally, the retail price in the domestic market of another country is not comparable for several reasons, inter alia -
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WP-1202-2022-IAL-9504-23-23072024.doc a. Firstly, import prices of cars for different countries can be different (for reasons discussed earlier);
b. Secondly, the purchase price offered to actual consumers are significantly more than the import price paid by the importer. Imported cars reaches the ultimate customer through supply chain comprising of importer, dealer, etc. Each entity in the supply chain carries out certain functions, deploys assets and bears certain risks and there are associated costs incurred. Further, there are local taxes on sale of goods.
205. As regards, the comparison with imports of unrelated entities, it is submitted that in terms of Rule 12(2)(iii)(a) and Rule 4 and Rule 5 of the Customs Valuation Rules for comparison with imports by unrelated entities, the following examination would be required -
a) Whether the cars being imported are comparable being "identical goods" [Rule 2(1)(d)] or "similar goods" [Rule 2(1)
(f)].
b) Whether the imports are at the same commercial level [Rule 4(i)(b)] KSG/AVK 167/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
c) Whether the imports are at same quantity levels [Rule 4(i)
(b)];
d) Whether there are more than one comparable transaction, and amongst such transactions which is the transaction at the lowest value [Rule 4(3)].
206. The Petitioner has not produced the following import documents of the so-called comparable imports, so that it is impossible for anyone including Respondent No.6 to give any cogent reply as to whether they are identical, similar, whether they are imports at the same commercial level and the same quantity levels:
a) For the import of one Audi car referred at Pg. 50 of Petition, import documents (i.e., the bill of entry) not provided, along with not stating the name of the unrelated importer. Examination of bills of entry necessary to examine the import price assessed by the Customs authorities, and for the Respondent No.6 to make any specific submissions in this regard.
b) No Bill of entry is provided in respect of a stray import of Lamborghini car referred at pg. 51 of Petition.
c) Bills of entry of unrelated importers cannot be available with Respondent No.6.
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207. Imports at different commercial levels and at different quantity levels cannot be compared.
208. It is submitted that reference by the Petitioner to import of 'Bentley' cars cannot be the basis to allege undervaluation of imports by Respondent No.6 of Audi, Porsche and Lamborghini cars.
209. The Petitioner vide its letter dated 09 th January, 2015 issued to Respondent No.3 has given information in relation to imports by Tata Motors Pvt. Ltd. which information is similar in nature to the information provided in respect of imports by Respondent No.6 but Petitioner has selectively targeted Respondent No.6 and certain other importers, by making baseless and reckless allegations.
210. Relevance of transfer pricing reports for the purpose of Customs Valuation (the Petitioner has alleged that Transfer Pricing is irrelevant and that accepting the transfer price is not correct). It has been submitted that this is a totally erroneous submission for the following reasons:
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(i) As per Rule 3(3)(a) of Customs Valuation Rules, there is requirement to examine circumstances surrounding the sale.
(ii) Circular 5/2016 [at Pg. 302 of Petitioners Rejoinder Affidavit] requires importer to submit Transfer Pricing Report filed before Income-tax Department, and also the Advance Pricing Agreement.
(iii) Circular of 2001 where it is specifically asked as to whether the prices are fixed on the basis of transfer price.
(iv) The import prices of Respondent no.6 are transfer prices arrived on arm's length basis
211. SVB is a specialised institution dealing with imports by Respondent No.6 and there is no suppression/fraud by the said Respondents before SVB authorities. The SVB Circulars also provide for consequences if the importer does not furnish complete reply to the SVB questionnaire or provide the documents/ details.
212. In respect of imports by Respondent No. 6, the case was registered with SVB authorities in 2007, and the SVB authorities after carrying out detailed examination passed the SVB Order on 15.01.2009 and that before passing the order, Respondent No.6 has furnished its KSG/AVK 170/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc reply to questionnaire, extensive documents and details, SVB submissions, inter alia vide-
a) Letter dated 4.10.2008;
b) Two letters dated 30.10.2008 furnished during personal hearing on 31.10.2008;
c) Note dated 19.11.2008;
d) Letter dated 4.12.2008.
So far no credible material for punitive action by the authorities
213. That it was not the case of Customs / SVB authorities that there was any suppression/ mis-declaration by Respondent No.6. It is submitted that:
(i) Suppression / mis-declaration, if any, can only be dealt with by relevant authorities under the Customs Act by initiating proceedings as per procedure recognized under the Customs Act and there can be no proceedings de hors Customs Act.
(ii) This would entail issuance of Show Cause Notice under section 28 of Customs Act by the "proper officer"
designated under the Customs Act and conducting hearing, KSG/AVK 171/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc prior to any decision/ adjudication as to suppression / mis- declaration before the SVB authorities,
(iii) Any order passed in such adjudication proceedings would then be subject to appeal proceedings by "aggrieved person" or relevant Customs authorities under section 128 or section 129A of the Customs Act.
214. It has been submitted that the Petitioner is seeking to circumvent the proceedings and procedures under the Customs Act, which should not be permitted by this Court in its writ jurisdiction.
215. That the material relied upon by the Petitioner is extraneous and entirely irrelevant for the purposes of customs valuation. Therefore, reliance placed on the said material to allege suppression / mis- declaration / fraud by Respondent No.6 is erroneous. SVB Orders pending in appeal and SVB Orders for subsequent period pending
216. As the SVB Order was passed on 15th January, 2009, the material and data furnished by the Petitioner in the present Petition pertaining to the period subsequent to such date, cannot be the basis to state that there was suppression / mis-declaration / fraud before SVB authorities. KSG/AVK 172/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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217. That in appeal proceedings from the SVB Order, Respondent No.6 has succeeded before the Tribunal, and the Customs authorities have filed an appeal from the Tribunal's Order before the Hon'ble Supreme Court which is pending before the Hon'ble Supreme Court. The SVB Order has attained finality in law, subject to issues in appeal proceedings.
218. It has been submitted that when the appeal proceedings from the SVB Order are pending before the Hon'ble Supreme Court, this Court should not be called upon to set aside the SVB Order. This Court cannot be called upon to act contrary to the statutory appellate provisions. SVB proceedings for subsequent period are pending.
219. The SVB Order was filed for a period of 3 years. Proceedings for the subsequent period are pending before the SVB authorities.
220. It has been submitted that Respondent No.6 has provided the relevant information to SVB authorities and followed the procedure as laid down in Circular No. 4/2016 and Circular No. 5/2016. KSG/AVK 173/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::
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221. That as required under the said circulars, the imports by Respondent No.6 are assessed provisionally on which on having furnished appropriate provisional duty.
222. If deemed necessary, the SVB authorities can ask for further information or details from Respondent No.6 (including on examining the present proceedings) and the said Respondents would be required to provide the same.
223. On behalf of Respondent No.6 it has been submitted that the DRI has concluded that there is no evasion of customs duty and the premise of the present Petition as to the inaction on the part of Respondent No.3 is belied that:
a) As per Hon'ble Supreme Court's Order dated 15.07.2016 Respondent No.3 was to take appropriate action as advised in law only if the Respondent No.3 was convinced that the information given by the Petitioner was credible information.
b) The Petitioner filed the present Petition premised on purported inaction on the part of Respondent No.3 KSG/AVK 174/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
c) Respondent No.3 has concluded that there is no case of evasion of Customs duties based on information provided by the Petitioner:
i. Respondent No.3 has as regards Petitioner's letter dated 9.1.2015 stated that the Petitioner had not provided any concrete or prima facie evidence in support of his allegations, and that there was no credible evidence ii. Vide letters dated 9.9.2016 and 25.11.2016 filed subsequent to the Hon'ble Supreme Court's Order dated 15.07.2016, no information and material has been furnished by Petitioner pertaining to Respondent No.6 but only as regards Respondent No.5.
iii. As admitted by the Petitioner if information regarding Respondent No.5 (Mercedes) would have been found credible and investigation would show that information recorded would result in detention and recovery of duty; then recording separate DRI-1 statement for investigation into other importers was to be considered.
iv. Detailed investigation conducted against Respondent No. 5 v. Thorough investigation conducted and concluded by Respondent No.3.
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d) The Petitioner's statement that Respondent No.3 has not investigated imports of Respondent No.6 is belied, when on Respondent No.3 carrying out thorough investigation it was found that the information being furnished by the Petitioner is not credible.
e) In view of investigation by the DRI of Respondent No.6's imports the Petitioner's statement is incorrect and misleading.
f) Statedly the premise of the Petition as to alleged inaction on part of Respondent No. 3 based on data provided by Petitioner, stands belied. That the stated premise of the Petition being the alleged inaction on the part of the Respondent No. 3 is also noted by the Hon'ble Supreme Court in its Order dated 29 th March 2023 in disposing of the Special Leave Petitions No. 6609- 6610 / 2023.
g) It is submitted that subsequent to Hon'ble Supreme Court's Order dated 29th March 2023, the Petitioner has by seeking additional prayer sought to fundamentally change the nature and character of the proceedings by way of expanding the reliefs sought by challenging the SVB Orders.
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224. That after several hearings, this Court directed the DRI to reconsider the evidence produced by the Petitioner not only prior to the filing of the petition but even during the pendency of the petition and permitted the Petitioner to even file further documents for consideration by the DRI. After considering all the documents, the DRI has filed its latest affidavit in which they have stated that there is no material or evidence produced by the Petitioner which even remotely suggests that there was any under valuation with regard to the imports made by the various Respondent importers.
225. That therefore this Court cannot be called upon to enter into disputed question of facts in the writ jurisdiction.
226. The Petition requires this Court to enter into a detailed enquiry and investigation into the disputed questions of facts in its writ jurisdiction, at the behest of the Petitioner who has raised reckless and baseless allegations, to decide on-
(i) whether the data provided by the Petitioner is relevant under Customs law for determining the assessable value of imports by Respondent No.6, KSG/AVK 177/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
(ii) whether there was any suppression or fraud by the Respondent No.6 before the SVB authorities which should not be permitted.
227. It is urged that the conduct of the Petitioner should dis-entitle him from any reliefs from this Court. Petitioner's role, if at all, can be that of an informant, and should have been confined to furnishing of the information to Respondent No.3. This is also as per Hon'ble Supreme Court's Order dated 15th July, 2016.
228. It is submitted that the Petitioner has been unduly seeking to compel the conduct and conclusion of investigation by statutory authorities (Respondent No.3) as per Petitioner's agenda - (i) by making reckless and baseless allegations based on irrelevant material and truthful statements, (ii) by bringing frivolous proceedings before different Courts, and (iii) for improper motives.
229. It has been submitted that these proceedings have been initiated for personal gains - by way of monetary reward.
230. It has further been submitted that the Petitioner has not disclosed source of information/ details which are proprietary in nature (clause KSG/AVK 178/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc
(m) of the Petitioner's affidavit on locus dated 1 st December 2022, page 1165). It is beyond comprehension as to how in his role as an advocate he obtained this proprietary confidential information.
231. It was submitted that the Petitioner had concealed material facts:
(i) Petitioner did not disclose three letters (dated 27 th May, 2019, 10th July, 2019 & 19th August, 2019) issued by Respondent No.3 requesting for information and that Petitioner has not responded to these letters
a) Pg.1221(para 12) of Additional Reply of Respondent No.6
b) Pg. 696 (paras 11 and 12) of Reply of Respondent No.5
c) Pg. 848 (para 15) of Petitioner's Rejoinder.
(ii) Petitioner had not made efforts / attempts to find out relevant facts
- re status of investigation by Respondent No.3 after providing information in 2016, before filing the present Petition in February 2022.
232. Petitioner has been approaching different forums and resorting to Forum Shopping by bringing frivolous proceedings before different Courts. Pursuant to Hon'ble Supreme Court's Order of 15.07.2016, by relying upon the material submitted by Petitioner with Respondent No.3, on 24 August 2020 Civil Writ Petition (PIL) No. 9425 of 2020 was KSG/AVK 179/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc filed before the Rajasthan High Court;
(i) Petitioner herein was made Respondent no. 5 in the petition before Rajasthan High Court;
(ii) Affidavit in Reply filed by Respondent No.3 before Rajasthan High Court on 25th November 2020.
Delay and Laches
233. That the Petition suffers from inordinate delay and laches and deserves to be dismissed. Learned senior counsel submits that subsequent to the Petitioner furnishing of information and Petitioner's visits to Respondent No.3, all in 2015 and 2016, there has been inordinate delay of more than 5 (five) years with the present Petition having been filed in January 2022, and no explanation whatsoever provided by the Petitioner in the Petition for the interregnum period. That the Petitioner had furnished information to Respondent No.3 stated to be relevant as to Respondent No.6's imports only in January 2015 (i.e., letter dated 09th January, 2015 and the present Petition filed in January 2022 has been filed after an unexplained delay of 7 (seven) years.
234. That the Petitioner has wrongly stated that the same Porsche cars imported into UAE by Porsche Middle East & Africa FZE, Dubai KSG/AVK 180/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc ("Porsche Middle East") are sold by Porsche Middle East to Respondent No.6 in India. In this regard, it has been submitted as follows - i. Respondent No.6 has furnished the bills of entry, corresponding invoices and certificate of origin in respect of Porsche cars imported by Respondent No.6 in India, as were referred in the Petition in paras (i) to (iv) at pgs. 45 to 47. [Pgs. 1271 to 1289 of the Additional affidavit of Respondent No.6]. From the said documents on record, it s evident that the Porsche cars imported by Respondent No.6 in India are shipped/ exported by Porsche AG Germany directly from Bremerhaven in Germany to Respondent No.6 in Mumbai, India.
ii. Porsche cars relevant for Indian market which are sold by Porsche Middle Bast to Respondent No.6 for sale in India are shipped directly by Porsche AG Germany from Bremerhaven in Germany to Respondent No.6 in India. The import of cars in India from Germany is a distinct transaction stream from import of Porsche cars into UAE. iii. The documents furnished by the Petitioner in the Petition [at Pgs. 499 to 506 of the Petition] do not in any manner indicate that Porsche cars imported into UAE are sold to Respondent No.6 in India. Further, the Petitioner itself has stated that the said imports in UAE are "for UAE delivery".
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WP-1202-2022-IAL-9504-23-23072024.doc iv. For various reasons the import prices of cars imported in UAE are not comparable to cars imported in India.
235. The Tribunal's decision in S.A. Futehally v. Commissioner of Customs [at Pg. 104 to 115 of Petitioner's compilation of cases] is distinguishable, and not relevant, inter alia for the following reasons - i. In that case, it would appear that imports were made by end- customers, and the appellant (S. U. Futehally) facilitated the imports by the said customers [refer paras 2, 3 and 4 of the decision]. The price- lists referred to in that case would relate to imports/ purchase by end customers. Whereas, in the present facts, Respondent No.6 imports the cars which are subsequently sold to dealers on wholesale basis for further sale to end customers.
ii. In that case the imports were made during 1987-89 from Volkswagen Germany. It is submitted that the availability of price lists referred in respect of imports in 1987-89, cannot be the basis to assume existence of price-lists for exports to India after a period of more than 20 years (SVB Order was passed on 15th January, 2009) when exports to India were under a distinct transaction structure.
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WP-1202-2022-IAL-9504-23-23072024.doc iii. From the record of the present case including material furnished by the Petitioner), there is no reference to manufacturer's price list available for export to India during the relevant period. iv. Further, relevance of price-lists is limited to the period prior to the amendment in section 14 of the Customs Act in 2007 as the said section (prior to the amendment) provided that the value of goods shall be "deemed to be the price at which such or like goods are ordinarily sold, or offered for sale,. in the course of international trade." Whereas, post-amendment, as per section 14 the value is to be the transaction value i.e., the price actually paid or payable for goods exported to India.
v. The facts of that case are also distinguishable as in that case there was evidence regarding misdeclaration of engine capacity of imported cars, and in relation to part payments of imports made by an entity in Japan.
vi. Submissions as regards relevance of price-lists in the present context are at para 4 of Respondent No.6's Written Submission.
236. The Petitioner's submissions that the SVB authorities have not examined the pricing pattern of the imports by Respondent No.6 stands KSG/AVK 183/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc belied on perusal of para 5.1 and 5.2 of the SVB Order whereas the sales pattern and price pattern are examined.
237. The Hon'ble Supreme Court's decision in Varsha Plastics Pvt. Ltd. v. Union of India (supra) which was referred by the Petitioner to support reference to foreign journals, is distinguishable as in the said case the imports were made in July 2000, and the scope of section 14 of the Customs Act prior to its amendment in 2007 was examined. Respondent No.7
238. The Respondent no. 7 has adopted the arguments made on behalf of the Respondent no.6 and submitted that Respondent No.7 has correctly followed the customs laws with respect to valuation of goods imported by it.
239. With respect to para 29 of the Petition where the Petitioner has enclosed Exhibit G to the Petition seeking to compare prices declared by Respondent No. 7 before the Indian Customs Authorities vis-à-vis, list price in Germany and UK, it is submitted that such a comparison is meaningless because what is being compared in column 9 and 10 and column 12 and 13 of the table at page 415, is declared assessable value KSG/AVK 184/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc and purported list price in Germany and UK. It is submitted that the list price which is meant for ultimate customers and that to in different geographies such as Germany and UK, cannot be compared with the Customs Assessable Value in India as the assessable value will get added with customs duties, various taxes, expenses, over-heads, margins in India, which may become the basis to arrive at the list price in a country of ultimate sale. Therefore, comparing list price and assessable value that too in two different countries is like comparing chalk to cheese.
240. Where the Petitioner has enclosed a few invoices issued by the overseas BMW entity for delivery in UAE, it has been submitted that these supplies are made by the overseas entity to certain customer in UAE and that the Petitioner does not draw any analysis as to what exactly his case or contention is, by enclosing such invoices. That the sale by overseas BMW entity to a customer in UAE which is a different geography cannot be compared. Entity in every country will have its laws to be followed and other commercial parameters to be applied such as quantity of offtake, model number, year of sale or features of the car.
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241. With respect to the table which seeks to compare assessable values in India with the FOB price of Right-Hand Drive (RHD) vehicle published on the website, purportedly applicable in the UK, it is submitted that the assessable value cannot be compared with the FOB price or list price, which is meant for the ultimate customer, that too in a different geography and further evidently of a model with a different configuration i.e. RHD. That the difference between the assessable value and the final list price published on the website meant for the ultimate buyer comprises of various elements such as duties, taxes, expenses, margins, overheads, and therefore again such a comparison is as good as comparing apples with oranges.
242. With respect to comparison of the values declared in the two Bills of Entry, it has been submitted on behalf of Respondent No.7 that the value declared in the Bill of Entry No. 8750215 is where Respondent No. 7 has imported themselves for subsequent sale through dealer network, whereas the Bill of Entry No. 8863665, the goods were sold on high seas basis and the Bill of Entry was filed by the importer in India. That in the high sea sale transaction, the Bill of Entry is filed by KSG/AVK 186/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc the Purchaser in India which would include margin of Respondent No.7 justifying the difference in price between the two transactions. The Petitioner has been comparing with incomparable.
243. The aspersions cast inter alia, upon Respondent No.7 with respect to the alleged proceedings under the Acts other than the Customs Act, it has been submitted that this appears to tarnish the image of Respondent No.7 and is highly deprecated. That this appears to be a feeble attempt to create a prejudice against Respondent No.7. It is submitted that at para 5 at page no. 1179 of the Affidavit in Reply of the DRI dated 21st December 2022, the DRI has stated instances in which the Petitioner was proceeded against and that too, inter alia, under the Customs Act. With regard to such antecedents of the Petitioner, it is submitted that it is incorrect on the part of the Petitioner to cast aspersions on Respondent No.7 presumably to misdirect this Court into an area that is not relevant for the purpose of this Petition and this itself creates doubts about the bona fide of the present Petition.
244. The assessment of the Bills of Entry filed by the Respondent No. 7 are provisional and therefore, the allegation made by the Petitioner KSG/AVK 187/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc that there is undervaluation is anyway premature as the proper officer has not even applied his mind.
245. Prima facie, there neither appears to be any misrepresentation or suppression by the private parties nor any of the above submissions by the Respondents appear to be controverted with any credible evidence by or on behalf of the Petitioner.
246. On behalf of the Petitioner it has also been argued at the time of the closing of the arguments that, no separate affidavit was filed on behalf of the added Respondent No.8. However, the learned ASG has submitted that he has made submissions on behalf of the Respondent Statutory Authorities and therefore, we do not think that it would be necessary for the Respondent No.8 to file a separate affidavit. Moreover, it has been submitted on behalf of Respondent No.6, which submissions have been adopted by Respondent No.7 that the Petitioner's submission that DRI, Bangalore Zonal Unit, has not filed its submissions and its affidavit in the present proceedings, is of no relevance for the following reasons -
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WP-1202-2022-IAL-9504-23-23072024.doc i. The Petitioner had submitted its letter dated 09 th January, 2015 [Exh A at Pg. 89 of Petition] to the Additional Director, DRI, Mumbai. In the Writ Petition (Cri.) No. 20 of 2016 filed before the Hon'ble Supreme Court, the Additional Director, DRI, Mumbai was Respondent no. 3 [at Pg. 145 of the Petition], and the Hon'ble Supreme Court had vide its Order dated 15th July 2016 [Exh F at Pg. 413-414 of the Petition] stated:
- "If the Additional Director, DRI, Mumbai Zone is convinced that there is credible information given by the Petitioner, he shall take appropriate action, as advised in law."
ii. Further, the Petitioner had submitted its letters dated 9.9.2016 [Exh B at Pg. 105 of the Petition] and 25.11.2016 [Exh C at Pg. 114 of the Petition] to the Additional Director, DRI, Mumbai Zonal Unit. iii. The Petitioner has, on the basis of the Hon'ble Supreme Court's said order, and the above-referred communication with the DRI, Mumbai Zonal Unit, premised the present Petition on the alleged inaction on the part of the Respondent no. 3, i.e., the DRI.
iv. Where the Respondent no. 3 has, on examination of the material furnished by the Petitioner, in its Reply [at para 5, Pg. 1236. Reply of Respondent No.3] stated that the Petitioner "did not provide any KSG/AVK 189/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc concrete or prima facie evidence in support of his allegations of undervaluation", and in its Additional Affidavit in Reply [at Pgs. 1283 and 1284 of Respondent No.3's Additional Affidavit in Reply] stated the material to be "extremely generic information provided by the Petitioner without a proper understanding of the Customs Valuation Rules", and as the Bangalore Zonal Unit is only a sub-ordinate unit of Respondent no. 3 (i.e., the DRI), the Petitioner's submissions that the DRI, Bangalore Zonal Unit has not filed any separate affidavit, is of no relevance.
247. Having heard the learned Counsel for the parties in detail and having gone through the record, the matter needs to be looked into in proper perspective.
248. The Petitioner, who claims to be an informer, is seeking to bring before the Court information, which according to him, will be useful for the Customs Authorities and the Director of Revenue Intelligence in respect of import of cars in India. Once such a matter which involves technical expertise, the matters of import duties, the pricing across countries and various factors that go before international pricing, it is KSG/AVK 190/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc not possible for this Court in writ jurisdiction to arrive at determinative findings. Rights of the Respondents to pursue their statutory remedies also cannot be prejudiced.
249. We, therefore, called upon the statutory authorities to look into the information. Such course of action was adopted by the Hon'ble Supreme Court when the Petitioner brought before them certain information. The Hon'ble Supreme Court did not directly issue any specific direction to the private parties, but only called upon the statutory authorities to look into the information brought forth by the Petitioner. Under the exercise of writ jurisdiction, therefore, we have chosen to adopt the same approach. Pursuant to information supplied by the Petitioner in respect of the Respondent No. 5- Mercedes, the Director of Revenue Intelligence and the Customs Authorities have looked into the matter and have not found any violation. Even if they do, the methodology and procedure under the governing statute will have to be followed.
250. As regards Respondents No. 6 and 7, information was not included in the Petition, but it was placed by way of additional KSG/AVK 191/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc affidavits. Since the information was placed before us for the first time, we had directed the Customs Authorities and the Director of Revenue Intelligence to examine the same. Both these departments, upon examination, have reported that they have not found anything objectionable in the conduct of the private Respondents. The Petitioner, who claims to be an informer, has filed these proceedings himself against the private Respondents and the statutory authorities. The dispute between the private Respondent and the statutory authorities, if any, will be resolved through the mechanism provided under the governing statute. We are not inclined to grant any special status higher than that of an informer like any other citizen to the Petitioner. No case is made out of any collusion or malafides on the part of the statutory authorities. Such collusion and malafides cannot be casually intended and must be substantiated. Merely by raising suspicion about the merits of the stand taken by the Director of Revenue Intelligence and the Customs Authorities, directions cannot be issued against the private Respondents and the Director of Revenue Intelligence. If such casual assertions are accepted and the directions are given on the basis that the Director of Revenue Intelligence and the Customs Authorities, who are represented through the learned Additional Solicitor General, have colluded with the private KSG/AVK 192/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc Respondents, then it would be a serious matter on the part of these Respondents and their officers. Without any material, therefore, such observations and directions cannot be issued.
251. From the arguments advanced before us and the pleadings filed, and the chart shown that it is clear that valuation and pricing of these cars is a complex matter and is governed by various factors. Therefore, the Special Valuation Cell is also set up which consists of experts. As regards the Petitioner's expertise in the subject, we have not been shown anything to demonstrate the same. Having called upon the Customs Authorities and the Director of Revenue Intelligence to look into the information supplied by the Petitioner, the matter cannot be taken forward in writ jurisdiction. Therefore, we have no material before us to reach a conclusion that the Director of Revenue Intelligence and the Customs Authorities have deliberately not looked into the information supplied by the Petitioner. This Court cannot in a writ jurisdiction give any direction in respect of future imports. The Petitioner himself as an informer cannot abuse the status granted by this Court to convert this litigation into a witch hunt against the private Respondents. The Petitioner as a citizen has done his duty by bringing KSG/AVK 193/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc certain information to the notice of this Court and the authorities. Thereafter, it is for the statutory authorities to take the matter forward. In a writ jurisdiction, this Court cannot review the decision of the executive but only the decision making process. The issues raised by Mr.Shah would, therefore, be appropriately redressed before the authorities and forum under the relevant statutes and not before a Writ Court.
252. The matter also needs to be looked in another perspective. As regards the valuation of these imported vehicles is concerned, there is dispute. We are informed that some proceedings are pending before the Special Valuation Branch. Therefore, issuance of writ as sought for by the Petitioner would directly impact the pending proceedings and there is no reason as to why such course of action be adopted. Even otherwise, it is always open to any citizen including the Petitioner, if any credible material is found in future, to approach these authorities. This position is also made clear by the learned Additional Solicitor General. According to us, on the basis of material supplied by the Petitioner, substantial investigation has taken place, substantial judicial time has been spent upon the same and the proceedings cannot go on KSG/AVK 194/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 ::: WP-1202-2022-IAL-9504-23-23072024.doc merely because the Petitioner insists that they should go on. Therefore, we have reached the stage where the proceedings need to be terminated.
253. Writ Petition is accordingly dismissed. The connected Interim Application also to accordingly to stand dismissed. No order as to costs.
254. We make it clear that we have not expressed any opinion on the merits of the claims and counter arguments made on behalf of the parties and keep all the contentions open to be considered in accordance with law by the Adjudicating Authorities before whom the challenges / appeals may be pending or proposed to be filed.
[ABHAY AHUJA J.] [NITIN JAMDAR J.] ARTI VILAS KHATATE Digitally signed by ARTI VILAS KHATATE Date: 2024.07.25 17:30:17 +0530 KSG/AVK 195/195 ::: Uploaded on - 25/07/2024 ::: Downloaded on - 27/07/2024 03:15:31 :::