CESTAT Orders Reassessment of Rs. 95 Lakh Duty on Reimported Ferrari Car after Alleged Carnet Misuse [Read Order]

In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Banglore ordered a reassessment of the Rs. 95 lakh duty imposed on a Ferrari Italia 458 reimported into India after undergoing repairs in Dubai. The tribunal's decision comes after allegations that the appellant misused the Carnet de Passage ( CDP ), a document that allows duty-free temporary export and reimport of vehicles for touring purposes.

The premise of the case stems from the export of the luxury car to the UAE in September 2013. The appellant/assessee, PP Jasique, who had obtained the CDP from the Western India Automobile Association ( WIAA ), declared that the car was being taken to Dubai for touring. However, instead of touring, the Ferrari was sent for repairs at Al Tayer Motors LLC  in Dubai.

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When the vehicle was brought back to India in January 2014, the appellant attempted to clear it duty-free using the same CDP. Upon investigation, customs authorities discovered that the appellant was in India for most of the period during which the car was in Dubai, raising concerns that the vehicle was never used for touring, as originally claimed. Moreover, the appellant did not hold an international driving license, further supporting the allegation that the car’s export was solely for repairs.

The Commissioner of Customs, Cochin, imposed a customs duty of Rs. 95,00,184, based on the cost of the repairs, which were valued at Rs. 44,46,745. The declared value of the Ferrari, originally stated as Rs. 50 lakh, was also rejected, with the customs authorities recalculating it at Rs. 1,21,32,229. The Ferrari was confiscated under Section 111(m) of the Customs Act, 1962, but the appellant was allowed to redeem the car upon payment of a redemption fine of Rs. 20 lakh. Additionally, a penalty of Rs. 10 lakh was imposed.

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Aggrieved, the appellant challenged the decision before CESTAT, arguing that there was no misdeclaration and that the car was in transit under the CDP, thus no Bill of Entry was required. The appellant acknowledged that the vehicle had undergone repairs but maintained that only basic customs duty was applicable under Notification No. 94/1996, which provides exemptions for vehicles reimported after repairs.

After examining the case facts, the bench of Dr DM Misra and Mrs R Bhagya Devi observed that the appellant failed to declare the repairs when seeking reimport clearance, thus confirming the duty liability on the repair costs. However, the tribunal noted that the confiscation of the vehicle and the fines imposed were unjustified, ruling in favor of the appellant. Thus, the  tribunal set aside both the Rs. 20 lakh fine and the Rs. 10 lakh penalty but directed the Commissioner to reconsider the appellant’s liability for only basic customs duty, as per the exemption cited.

In result, the appeal was allowed.

To Read the full text of the Order CLICK HERE

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