Imports of Luxury Cars under Diplomatic Privilege to Escape Duty: Madras HC Grants Conditional Interim Custody of Vehicles [Read Order]
While granting interim custody of the vehicles, the Court directed that the car shall not be sold, alienated, or otherwise dealt with until the appeal is finally decided
Luxury Cars
Luxury Cars
The Madras High Court has passed an order granting conditional interim custody of a luxury car that had been seized by the Directorate of Revenue Intelligence (DRI) with regards to a large-scale scam involving misuse of diplomatic privileges to evade customs duty on imported vehicles.
M/s Arun Fabricators, the petitioner, a Chennai-based partnership firm, had purchased a Toyota Vellfire for ₹42 lakh from a local dealer in 2019 and had been using the vehicle until it was seized in 2022 by DRI officials.
According to the seizure memo, the vehicle had originally been imported under diplomatic privilege by a Counsellor of the Embassy of the Democratic People’s Republic of Korea, availing exemption from customs duty under Notification No. 3/1957.
The allegations surfaced that a syndicate was involved in importing multiple high-end cars in the names of foreign diplomats, evading duties, forging bills of entry, and subsequently selling the cars to unsuspecting buyers in India.
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In September 2024, the Additional Commissioner of Customs at Nhava Sheva ordered confiscation of the vehicle but allowed redemption on payment of a fine of ₹19 lakh. The order also demanded re-assessment of duties, confirmed a duty shortfall of over ₹40 lakh against the diplomat, and imposed multiple penalties running into several lakhs on various individuals allegedly involved in the chain of transactions.
The petitioner, challenging the confiscation and seeking release of the vehicle, argued before the High Court that they were bona fide purchasers for value, having relied on documents provided by the dealer.
On the other hand, the DRI strongly opposed release, stating the seriousness of the scam, which it claimed involved large-scale smuggling of luxury cars under cover of diplomatic immunity.
As petitioner’s appeal pending before the Commissioner (Appeals), the bench of Justice Anand Venkatesh refrained from involving into the merits of the Customs adjudication. Instead, it granted an interim arrangement for release of the vehicle, subject to the petitioner paying the redemption fine of ₹19 lakh and an additional penalty of ₹1 lakh.
The Court further directed that the car shall not be sold, alienated, or otherwise dealt with until the appeal is finally decided. Also, the order clarified that interim release did not amount to exoneration of the petitioner from alleged violations.
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