M/s Exclusive Motors Pvt Ltd, a licensed dealer for Bentley Motors Ltd in India, challenged a demand of ₹71.74 crore in differential duty and penalties imposed by the Commissioner of Customs, Inland Container Depot (ICD), Patparganj, New Delhi. The Customs Department claimed that the company had underpaid duty on imported cars between August 2018 and July 2023.
The dispute arose because the declared value of the cars on the bills of entry was the same irrespective of the mode of transport (sea or air). The Customs Department argued that this meant the importer did not pay for the additional freight cost associated with air shipments. However, Exclusive Motors contended that the declared value already included the cost of transportation according to the incoterm (international commercial terms) used in the contract.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) sided with Exclusive Motors. The Tribunal pointed out that the onus of proving that the declared value was incorrect lies with the Customs Department. In this case, the Department failed to establish that the importer had not paid for the freight cost. As a result, the CESTAT set aside the demand for differential duty and penalties imposed by the Customs Department.