Background
Gautam Singhania, the Chairman and Managing Director of Raymond Group, a leading textile and apparel company in India, has settled a case of alleged customs duty evasion filed by the Directorate of Revenue Intelligence (DRI) over the import of 142 cars by paying penalties amounting to Rs 328 crore. The case was initiated amid Singhania’s ongoing divorce dispute with his wife Nawaz Modi Singhania.
Details
Car Procurement
According to the DRI, Singhania was the “beneficial owner” of 142 cars, including 138 vintage ones and four research and development vehicles, that were procured by Raymond Group from renowned auction houses such as Sotheby’s, Barrett-Jackson and Bonhams. The cars were bought from various auction houses between 2018 and 2021 and were sent directly to India from the US and the UK.
Invoice Manipulation
However, the invoices submitted to Indian customs were raised in the names of intermediary companies registered in the UAE, Hong Kong and the US, such as Bentimi FZC, Almaskan Trading LLC, Truemax Ltd and Orchid HK Ltd. This was allegedly done to an evasion of customs duties amounting to Rs 229.72 crore.
Singhania’s Statement
Singhania, who is a passionate car collector and was planning to open a car museum at JK House in Mumbai, took full responsibility for the customs duty shortfall in his statement to DRI. He said that he would ask his team to check the details and price of any vintage car that he found suitable for display in the museum. The DRI investigation report claimed that Raymond Group intentionally presented manipulated invoices from intermediaries to customs, fully aware of the actual values of vintage cars. The investigation suggested that the group suppressed and misdeclared the true values in invoices to evade customs duties.
Settlement
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. The payment was made in January last year and the matter stands closed now. A Raymond Group spokesperson said that this was an old matter and was a case of erroneous calculation. A Raymond Group executive close to the matter said that it was not an attempt to route through a subsidiary to avoid taxes but a case of miscalculation.