Case Note & Summary
The case involves a challenge by the Commissioner of Customs (Import) against an order of the Settlement Commission under Section 127C(5) of the Customs Act, 1962. The respondent imported a Ferrari car under a bill of entry dated 14 February 2008 at Nhava Sheva and claimed the benefit of exemption Notification 21/2002-CUS dated 1 March 2002, which exempts 'new, which have not been registered anywhere prior to importation'. The DRI investigated on intelligence that the vehicle was second hand and had been registered with the DVLA in the UK prior to import. A show cause notice was issued on 21 December 2009. The respondent applied to the Settlement Commission on 18 August 2010, accepting a further duty liability of Rs.61.32 lacs over the duty already paid of Rs.72.61 lacs, plus interest. The jurisdictional commissioner contended that the vehicle was registered in the UK and that a fake invoice was produced to hide the identity of the UK Ferrari dealer. The Settlement Commission noted that in the UK, registration of motor vehicles bought for export is mandatory under law. The CBEC issued circular 1/2005 on 11 January 2005 directing field formations to verify whether registration is a formality and to compare dates. The Commission observed that the purpose of the exemption is to discourage import of second hand cars, and the circular clarifies that mere documentary registration for transit does not disqualify. The Commission held that unless the notification is given a workable meaning to exclude registration for transit, it would become unworkable for imports from countries where temporary registration is mandatory. The High Court upheld the Settlement Commission's order, dismissing the writ petition.
Headnote
A) Customs Law - Exemption Notification - Interpretation - Notification 21/2002-CUS dated 1 March 2002 - The court considered whether temporary registration of a vehicle in the UK for transit purposes disqualifies it from exemption as a 'new' vehicle. The Settlement Commission held that such registration does not disqualify, and the High Court upheld this view, noting that the CBEC circular 1/2005 clarifies that mere documentary registration for enabling transit will not disqualify. Held that the notification must be given a workable meaning to exclude registration for transit, otherwise it would become unworkable for imports from countries where temporary registration is mandatory (Paras 1-4).
Issue of Consideration
Whether a motor vehicle that was temporarily registered in the United Kingdom for transit purposes prior to export to India can be considered 'new, which have not been registered anywhere prior to importation' under exemption Notification 21/2002-CUS dated 1 March 2002.
Final Decision
The High Court dismissed the writ petition, upholding the order of the Settlement Commission.
Law Points
- Exemption notification must be given workable meaning
- temporary registration for transit not disqualifying
- CBEC circular 1/2005 clarifies
- purpose of notification is to discourage import of second hand cars
