1. The appellant is a registered tour operator. It imported one used Mitsubishi Delica Car at Nhava Sheva Port and filed a Bill of Entry dated 9-5-2004 for its clearance. The declared CIF value was Rs.3,60,000/-.
2. The appellant sought clearance of the car under Policy relating to the import of second-hand capital goods. That Policy read as under: Import of second hand capital goods which are not more than 10 years old shall be allowed on surrender of SIL, equivalent to 5 times the GIF value of imported goods.
The second hand capital goods shall not be transferred, sold or otherwise disposed of within a period of two years from the date of import, except with the prior permission of the Director General of Foreign Trade.
The appellant also sought to surrender Special Import Licence (SIL) equivalent to 5 times the CIF value of imported car in terms of the above provisions.
3. The Customs authorities objected and pointed out that cars are not allowed to be imported as second-hand capital goods and they required specific licence. The appellant contended that this objection was not correct inasmuch as car is a "machinery" and definition of capital goods under the Import Policy covers "any machinery". This contention of the appellant was not accepted in adjudication as well as in first appeal and the car was confiscated under Section 111(d) of the Customs Act and a penalty of Rs. 3.60 lakh imposed on the appellant under Section 112(a) of the Customs Act. The appellant was also allowed to redeem the car on payment of a fine of Rs. 2 lakh.
4. As regards the valuation of the car, the revenue authorities rejected the declared value and determined the value at Rs. 4,37,687/- by working out the value from the List Price of the manufacturer and after giving trade discount and depreciation of 62%.
5. The present appeal is directed against the confiscation of the car and enhanced valuation.
6. We have heard both sides at length and perused record. The contention of the appellant is the same in the present appeal also, that import of second hand cars is permissible under the aforesaid para 5.4 of Import Policy.
7. We find no merit in the contentions of the appellant. The import of motor cars is "Restricted" under Import Policy. Further, while para 5.4 in Chapter 5 ("Imports") permits import of second hand capital goods in general, paras 5.21 and 5.22 are specific to the import of vehicles by travel agents, tour operators etc. Those paras read as under: 5.21 Travel agents, tour operators, restaurants, and tourist transport operators and other units for tourism, like adventure/wildlife and convention units, recognised by the Director General of Tourism, Government of India, shall be entitled to import licences up to a value of 10% of the foreign exchange earned by them during the preceding licensing year. Such licences shall be granted for the import of essential goods related to the travel and tourism industry, including office and other equipment required for their own professional use.
5.22 Import of motor vehicles, including tourist coaches and air-conditioning units for the vehicles, shall be permitted within the entitlement of the licence granted under paragraphs 5.20 and 5.21 above in the case of hotels, travel agents and tour operators only.
These paragraphs make it clear that import of motor vehicles is subject to restrictions and only stipulated categories are eligible for the import and that too within the indicated value limits. When the import of an item is specifically "restricted", that restriction cannot be set at naught by allowing its import under a general provision relating to import of machinery. The valuation undertaken also is not required to be interfered with as the same has been done in conformity with the Customs practice of fixing the value after allowing due depreciation.
8. In view of the above, we are of the opinion that no relief is called for in regard to confiscation or valuation. However, taking into account the facts and circumstances of the case, we reduce the penalty on the appellant to Rs. 2,00,000/-(Rupees two lakh only). Subject to this relief, the impugned order is confirmed.