High-end car importers under govt scanner

NEW DELHI: Almost two years after it first investigated alleged duty evasion by importers of high-end cars, the government is now scrutinising over 400 such imports and has seized nearly 20 cars belonging to top industrialists and celebrities among others.
    
According to sources, the seized cars include Bentleys, Ferraris and also much fancied Lambrogini among others which were imported through legal channels but by misrepresenting facts.
    
On the radar are also a set of 'Hummers', a favourite of certain filmstars that were also allegedly imported through the same modus operandi.     

Sources in the customs department said that the Customs Preventive and the Directorate of Revenue Intelligence (DRI) are both involved in the present pan-India investigation.
    
Officials said certain importers had allegedly misused the Export Promotion Capital Goods (EPCG) scheme to avail nearly 90 per cent customs duty exemption.
    
The crackdown comes at a time when there has been a rush to avail EPCG scheme keeping the 2010 Commonwealth Games in mind, which is expected to attract lakhs of foreign tourists, the sources said.
    
"As per the scheme, vehicles imported to be used as tourist cars for foreigners could avail duty exemption since they would earn foreign exchequer. But we learnt that many of the vehicles were being diverted for private use," a senior official of Customs Preventive said.
    
The Customs Preventive, Delhi has seized six cars since August including a Bentley Arnage and Mercedes Benz SL 500, which were imported in 2005, belonging to an Ayurvedic pharma major. A delhi-based dealer of foreign cars is also under the scanner.

Sources said all the seized cars in the capital have been returned after both interest and outstanding duties were paid totalling to nearly Rs four crore.
    
Explaining the various grooves used by such car importers, a senior official said: "Cars are brought in saying that they are meant for service industry but after getting the duty exemption, they are diverted into private hands. Many a time, used cars are imported as new cars hence evading duty for old car which is higher."
    
The official said that many cars that are imported are also exclusively left-hand driven and hence they are first imported to some South-east Asian countries where it is converted to right-hand before they are imported to India as in the case of Hummers.
    
"Such converted cars levy a higher customs duty but they import the same by misrepresenting facts," an official said.
    
As per government regulations, imported new cars attract a duty of roughly 102 per cent whereas used cars attract a duty of 152 per cent of the original value.
    
In the case of conversion from left-hand steering to right-hand, the duty is higher.
    
"Some of the cars imported under EPCG scheme were two seaters. I wonder how were they supposed to be used as taxis for foreign tourists," said an official.
    
In 2006, the DRI had first initiated its investigation into imports of such cars which had then led to a seizure of over 100 such cars.