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Illegally imported superbikes in customs auctions are 40-50% cheaper than legal imports
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Mumbai: Sachin Bhatia, 33, a Gurgaon-based software engineer and motorcycle enthusiast, has bought himself a 1999 Honda Magna 750 for ₹ 2.5 lakh, about half of what it may have cost him in India. The seller was the government of India. Bhatia made the best offer for the vehicle in an electronic auction held by the customs department, which has been putting illegally imported superbikes seized by it on sale.
Since the e-auctions for superbikes began in 2011, the directorate of revenue intelligence (DRI)—one of the agencies monitoring economic offences—has auctioned 13 unclaimed imported superbikes, including a Harley Davidson VRSC cruiser, a Suzuki Hayabusa, a Honda CBR 600 F4, a Suzuki VZR 1,800, a Yamaha 1,000 and a 200cc Sanyang quad bike.
Most of these vehicles were abandoned by their owners after being seized by DRI for evasion of customs duty. DRI functions under the Central Board of Excise and Customs (CBEC) in the ministry of finance.
According to a DRI report, a copy of which was reviewed by Mint, the Harley Davidson VRSC fetched ₹ 12.57 lakh while the 1,300cc Suzuki Hayabusa was sold for ₹ 8 lakh. The Suzuki VZR 1,800 was sold at ₹ 8.3 lakh, while a Honda CBR 954 and the Honda CBR 600 F4 were auctioned at ₹ 3.8 lakh and ₹ 3.5 lakh, respectively. This is roughly 40-50% lower than the price of such vehicles imported legally into India.
A DRI official said on condition of anonymity that the agency is planning to circulate the list of illegal superbikes to authorized dealers and service stations to trace their owners.
“We are in the process of writing to the authorized service stations. Hopefully we will be able to gather information on the owners of the bikes," he said.
A Delhi-based participant in a recent customs e-auction said, “The high customs duty on superbikes makes it difficult for bikers to import one. The DRI or customs auction is the best way to legally own an imported bike at a cheap price."
To participate in the customs e-auctions, which take place once a month, a prospective bidder has to pay ₹ 5,000 to register with MSTC Ltd, which conducts them. The buyer is allowed to inspect the goods before bidding. The auction is open for four hours.
The top bid is accepted if it is higher than the reserve price. One-fourth of the money needs to be paid within three days of the auction ending. The rest has to be paid in five days.
CBEC has been conducting e-auctions for unclaimed and confiscated cargo every month since December 2005. The goods on offer are shown on its website as are the auction results.
DRI said in the report cited above that it seized 84 superbikes in 2009 after busting an import racket in which the vehicles were dismantled and listed as spares. A fully built-up superbike attracts a duty of 88%, while this is 30-40% on spare parts. To curb smuggling, a used bike attracts a duty of 142.64%.
Of of the bikes seized by DRI, 64 were returned to the owners after they paid the duty and a penalty for violating norms. The unclaimed bikes were auctioned.
According to the DRI report, certain Mumbai- and Pune-based importers and their associates buy superbikes in Singapore, dismantle them and bring them to India, paying a basic customs duty of 10% ad valorem and other duties on their individual values.
Later, these superbikes are reassembled and sold to unsuspecting customers across the country for ₹ 7-10 lakh, nearly half the price of the legally imported version of the same model.
The DRI report said importers prepare fake bills of entry “showing fully assembled for the purpose of registration of the motorcycles and also to evade local taxes such as road tax, octroi and sales tax".
A Mumbai-based bike enthusiast and a victim of this racket, who spoke to Mint on condition of anonymity, said he bought a Hayabusa for ₹ 13 lakh in 2009 from one such dealer.
Three months later, he realized the risk of owning a bike that was illegally bought into India. He sold it for ₹ 5 lakh.
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