The Gautam Singhania-led Raymond Group settled a case of alleged customs duty evasion filed by the Directorate of Revenue Intelligence (DRI) over the import of 142 cars by paying ₹328 crore. The amount paid by Raymond Group unit JK Investors (Bombay) Ltd is inclusive of differential duty along with interest and penalty applicable at 15%, said the DRI closure report, which ET has seen.
The closure, which was granted in January last year, hasn’t been reported earlier.
The federal agency identified Raymond Group chairman and managing director (CMD) Singhania as the “beneficial owner,” on whose alleged instructions 142 cars, including 138 vintage ones and four R&D vehicles, were procured by group companies from renowned auction houses such as Sotheby’s, Barrett-Jackson and Bonhams.
The vintage cars were undervalued and routed through intermediary companies registered in the United Arabs Emirates (UAE), Hong Kong and the US, causing a revenue loss of ₹229.72 crore to the exchequer, according to the DRI.
Purchases made between 2018 and 2021
“This is an old matter and was a case of erroneous calculation which was paid by JK Investors (Bombay) and the matter stands closed,” said a spokesperson of JK Investors (Bombay).
A Raymond Group executive close to the matter said: “The loss to the exchequer is quite less than the mentioned amount as it includes penalty and interest and it was a case of miscalculation and not an attempt to route through a subsidiary to avoid taxes.”
The cars bought from various auction houses between 2018 and 2021 were sent directly to India from the US and the UK, according to the DRI. However, invoices submitted to Indian customs were raised in the names of companies such as Bentimi FZC, Almaskan Trading LLC, Cactus International FZC, Semsa International FZ , Truemax Ltd and Orchid HK Ltd, based in Dubai, the US and Hong Kong. This was to evade customs duty of 251.5% applicable on the import of vintage cars.
Singhania told the agency he was fond of vintage cars and was planning to open a museum in JK House in Mumbai, according to the DRI report.
“Whenever he found or was notified about vintage cars suitable for display in the museum he would ask his team to check the details including the price,” according to the closure report.
‘Actual values known to Singhania’
The DRI said the value of the cars was misdeclared.
“Singhania being the beneficial owner of the vintage cars imported under the IECs of Raymond Group of companies and its business associates declared wrong values in the bills of entry presented by them and also presented incorrect invoices before Indian customs,” according to the DRI order. “Singhania was fully aware of the actual values of the vintage cars and fully suppressed the actual value and mis-declared actual values by causing presentation of invoices with reduced values to the customs with intent to evade payment of proper customs duty.”
An importer-exporter code or IEC is a business identification number that’s mandatory for export and import.
Singhania and his employees “caused presentation of manipulated invoices from the intermediaries before the customs,” the DRI said. “They were fully aware of the actual values of the vintage cars… It appears that they wilfully misdeclared the actual values of the vintage cars so as to evade the payment of appropriate customs duty.”
Searches on premises
During the course of its probe between January 27 and February 1, 2022, the DRI conducted searches on premises linked to the Raymond Group including JK House, Singhania’s Mumbai residence. The agency had retrieved email and chats that revealed the actual prices paid for purchases. Prices pertaining to 78 vintage cars were mentioned in code, according to the DRI.
The probe report said employees engaged in getting vintage cars were reporting directly to Singhania and taking instruction from him. A team in India handled work related to clearance for entry into the country. A second team in the UK and US handled procurement and a third in Dubai created documents in the name of the intermediary companies that showed the reduced value.
Accepting DRI’s case, Singhania in his statement said that he took full responsibility for the shortfall in customs duty payments.
“SL Pokharna (an employee) was authorised by him to give a statement on behalf of all the importers regarding import of vintage cars and whatever other employees of Raymond Ltd stated during the investigation in respect of import of vintage cars, he stands by those statements,” the DRI order added.
Notices to employees
Pokharna told DRI that the Dubai-based firms were independent and not related to the Raymond Group. In some cases, the difference owed to the seller was paid through the accounts of Dubai-based Almaskan Trading. However, he had no idea how the Dubai-based firms received the difference. The DRI had sent notices to another employee Mukesh Mishra to join the probe but was informed that he had quit and the company did not have his contact details.
The DRI cited Pokharna as saying that “the decision of raising invoices from a particular set of intermediary firms from Dubai was (that) of Mukesh Mishra.
