Mumbai: DRI busts luxury car smuggling racket, 3 held

Photo used for representational purpose

The Directorate of Revenue Intelligence busted a luxury car smuggling racket in Gurugram that had caused a duty evasion of more than Rs 25 crore by smuggling 20 vehicles into India in the name of diplomats and diverting the same to private persons.

Three people, including the CEO of the luxury car dealership, were arrested by the Directorate of Revenue Intelligence, said the press release.

"Operation Monte Carlo" was launched after DRI received a tip-off that a group of individuals was involved in smuggling high-end luxury cars into India in the name of diplomats and diverting the same to private persons, thereby evading a huge amount of Customs duty, according to the press release.

It is pertinent to note that the Government grants exemption from Customs duty to certain classes of members of Diplomatic Missions in India and their families members on all imported goods (vide Notification No. 03/57 dated 08.01.1957). The net Customs duty on import of cars works out to 204% according to (Regulation of Customs Privileges) Rules, 1957.

Upon receiving specific details of one such luxury car imported in the name of a Delhi-based diplomat of an African nation, DRI officers kept discreet watch over the vehicle after its arrival at the port.

Thereafter, this vehicle was loaded onto a transport vehicle and taken to a showroom in Andheri, and placed for display. DRI officers followed the vehicle and kept a discreet watch over the car all along. Simultaneously, in a carefully planned all-India operation across seven cities, searches were carried out at the premises of the key individuals involved in this racket.

A total of six cars have been detained under the provisions of the Customs Act, 1962. More cars have been identified and are in the process of being located.

A Dubai-based individual, who has been involved in past Customs offenses and has been investigated by DRI, was the mastermind behind the racket. He would arrange for the import of luxury cars into India from countries like the UK, Japan, and UAE, in the names of diplomats.

The actual buyers for the vehicles would be identified by the CEO of a popular chain dealing in the sale of pre-owned luxury cars. Upon arrival in India, these vehicles would be directly ferried to the city of the buyer or a dealer of luxury cars.

The domestic registration for these vehicles would be done in certain specific Regional Transport Offices (RTOs) in Maharashtra, Himachal Pradesh, and Punjab. After the registration formalities were completed, these cars on which full Customs duty @ 204% was evaded, would be sold to the Indian buyers, thereby making a huge profit at the cost of Government revenue.

Imports made by foreign diplomats and Missions in India are governed by the Foreign Privileged Persons (Regulation of Customs Privileges) Rules, 1957. Motor cars are classifiable under chapter heading 8703 having a duty structure of Basic Customs Duty - 125%, Integrated Goods and Services Tax- 28%, and 12.50% Social Welfare Surcharge. The net Customs duty on import of cars works out to 204%. The Notification dated 08.01.1957.

The detection of this racket has thus helped unearth a serious fraud, reinforcing DRI's ability to detect and combat unique and sophisticated methods of smuggling.

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