Customs dept alleges ADAG company 'smuggled' in yacht

The customs department has alleged that Anil Dhirubhai Ambani Group company Ammolite Holdings has violated the Customs Act by "smuggling in" a luxurious yacht, which is believed to be a gift by Anil to his wife.

"The imported luxury yacht 'Tian' was imported in contravention of Section 111(m) of the Customs Act, hence is liable for confiscation. The petitioner has indulged in smuggling by violating the provisions of the Act and in league with others to evade duties," assistant commissioner of Customs SR Vichare stated in reply to a petition filed by Ammolite Holdings challenging seizure of the yacht.

Ammolite Holdings has filed the petition in Bombay High Court challenging seizure of the yacht. The yacht was seized by the customs department in February for alleged duty evasion. It was bought by Ammolite Holdings last October and it has been chartered by Reliance Transport and Travels Ltd, another ADAG company.

The court has given time to ADAG until Friday to reply to the allegation that yacht was imported in violation of statutory provisions of the Customs Act.

ADAG has claimed that the yacht was not imported to India, but it is a ship with foreign flag which can sail in international as well as Indian waters, so there was no question of paying any import duty.

The customs department told the court that finance for purchase of the yacht appeared to be a "sham" transaction. During the probe, documents revealed that the yacht was purchased by ADAG in the name of its holding company Ammolite Holdings from Ferretti Custom line, Italy.

This payment was made by another associate company of ADAG Reliance Communication Ltd. The yacht was brought to India and its possession was given to ADAG by way of charter from a foreign company and was declared as TP cargo, the customs department alleged.

"All this was done to avoid customs duty which was otherwise leviable on the yacht...." it further alleged.

The customs said it initiated the probe in the light of media reports that Anil Ambani gifted the yacht valued at Rs 400 crore to his wife Tina Ambani.

However, investigations revealed that the yacht was brought into India and used by family members of the chairman of ADAG Group in contravention of Customs Act, it added.

It said the yacht was procured from the Italian company for USD 11.64 million by Ammolite Holdings but the payment was made by Gateway Net Trading, an associate company of Reliance Communication Ltd.

The customs department has questioned as to why the company in whose name the yacht was registered did not pay the price to the manufacturer.

It said investigations are on to find out whether its value was more than USD 11.64 million after taking into account that it was registered in the name of a foreign holding company and brought to India by mis-declaring as a used one.

ADAG companies, Ammolite Holdings and Reliance Transport and Travel Pvt Ltd, who filed petition, contended that action of Customs was arbitrary, unreasonable and invalid.

The petitioners contended that though the levy of customs duty was questionable, they had deposited Rs 25 crores which secure more than 95 per cent of the duty, if any, payable.

Besides, imposition of further conditions is arbitrary and has no nexus with release of yachy, the petitioners said.

The yacht is not liable to pay any duty whatsoever, they said, adding it was a foreign flag vessel and was brought in as cargo purely as a matter of convenience.

The unavoidable circumstances in which the yacht remained within the Mumbai harbour were in the nature of force majeure and except for a test voyage to Goa, it has not undertaken any other voyage after coming to Mumbai, the petitioners said.

The amount of Rs 25 crores was paid under pressure due to threat of possible seizure and detention of the yacht. But this is not an admission on the part of the petitioners that they were liable to pay duty for the yacht, they added.