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Relief for Bentley Motors: CESTAT Quashes ₹20 Lakh Penalty, Rules Exporter Not Liable for Importer’s Undervaluation [Read Order]

CESTAT set aside a Rs. 20 lakh penalty on Bentley Motors, holding that as an exporter it had no role in the importer’s undervaluation before Indian Customs.

Kavi Priya
Relief for Bentley Motors: CESTAT Quashes ₹20 Lakh Penalty, Rules Exporter Not Liable for Importer’s Undervaluation [Read Order]
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The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that an overseas exporter cannot be penalized under Section 112(a)(ii) of the Customs Act when the alleged undervaluation arises from the acts of the Indian importer.

Bentley Motors Ltd., the appellant, is a UK-based exporter that supplied 170 cars to its Indian dealer, Exclusive Motors Pvt. Ltd. The Directorate of Revenue Intelligence investigated the imports and alleged undervaluation, claiming that Exclusive Motors received supplementary invoices from Bentley which were not disclosed in the Bills of Entry.

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A show cause notice was issued proposing recovery of differential duty, confiscation of cars, and penalties on the dealer, its officers, and Bentley. By an order passed in July 2024, the Commissioner imposed a penalty of Rs. 20 lakh on Bentley under Section 112(a)(ii), holding that the company abetted undervaluation.

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The appellant’s counsel argued that Bentley’s role ended with supplying the cars and issuing invoices, including supplementary invoices whenever cars were shipped by air at higher cost. The counsel submitted that these invoices were genuine, shared with Exclusive Motors, and disclosed to investigators.

They argued that Bentley had no role in the customs declarations filed in India and could not be blamed for the importer’s omissions. The counsel argued that CESTAT had already set aside penalties on Exclusive Motors and its officers in an earlier order, and the same principle should apply to Bentley.

The revenue counsel argued that Bentley had enabled undervaluation by issuing supplementary invoices outside the main Bills of Entry, and this facilitated the importer’s under-declaration of value. They submitted that the Commissioner was correct in treating Bentley’s conduct as abetment of undervaluation.

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The two-member bench comprising Ashok Jindal(Judicial Member) and K. Anpazhakan (Technical Member) observed that penalties on Exclusive Motors and its officers had already been set aside in November 2024, which meant the foundation of the penalty on Bentley did not survive.

The tribunal also observed that Bentley had produced supplementary invoices, airway bills, and account adjustment records, showing that the transactions were disclosed and not concealed. The tribunal pointed out that Bentley, as an exporter, had no responsibility for declarations made before Indian Customs, and no evidence showed that the company abetted misdeclaration.

The tribunal explained that Section 112 requires proof of abetment or omission rendering goods liable to confiscation. In this case, no such conduct was attributable to Bentley. The penalty of Rs. 20 lakh was set aside and Bentley’s appeal was allowed.

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M/s Bentley Motors Ltd vs Commissioner of Customs
CITATION :  2025 TAXSCAN (CESTAT) 919Case Number :  CUSTOMS APPEAL NO. 52346 OF 2024Date of Judgement :  20.08.2025.Coram :  HON’BLE DR. MS. RACHNA GUPTA, MEMBER (JUDICIAL) HON’BLE SHRI P.V. SUBBA RAOCounsel of Appellant :  Shri Sujit Ghosh, Shri Nikhil Varshney, Ms. Rashi Jeph and Ms. Tanya ShuklaCounsel Of Respondent :  Shri Rakesh Kumar and Shri Girijesh Kumar

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