Mumbai: An Anil Ambani-owned firm that was fighting a court case against the Indian customs authorities for the release of a luxury yacht, seized by customs, has settled the case out of court, paying Rs28 crore and offering a bank guarantee worth Rs15 crore.

Ammolite Holdings Ltd, an unlisted Channel Islands-based associate firm of Reliance Capital Ltd, has withdrawn the case it had filed in the Bombay high court to get back the yacht, after the settlement, confirmed officials from both the sides.

The Channel Islands are located off the French coast of Normandy.

The luxury yacht Tian, purportedly a gift for Tina Ambani from her husband and Reliance-Anil Dhirubhai Ambani Group (R-Adag) promoter Anil Ambani, was seized in February by the central intelligence unit of the customs department in Mumbai in the wake of a probe that had began in January “due to non-payment of duty".

The government agency had claimed that the yacht was illegally brought to India, flouting norms, and was used without paying the duty.

A senior customs official, who has been part of the probe but did not want to be identified as he is not authorized to speak to the media, told Mint that Ammolite has “agreed to pay customs duty. We will release the yacht as soon as we receive the money".

An update on the Bombay high court website listing this case has marked it with a “For Withdrawal", but doesn’t give details of the settlement.

An email questionnaire sent to an R-Adag spokesman on Wednesday remained unanswered.

A person close to the development confirmed that the business conglomerate with interests in telecommunication, power, infrastructure, financial services and entertainment sectors has agreed to pay an additional Rs3 crore to the customs department along with a Rs15 crore bank guarantee to get the yacht back.

The company has conceded all conditions set out by the government agency, added this person, who did not want to be identified. “The provisional order came Thursday evening."

In a 21 April story, Mint had reported that the agency had received a draft of Rs25 crore from R-Adag.

The bank guarantee is to cover any additional duty that the customs authorities may decide to levy in the future, in excess of Rs28 crore.

Tian was, according to the customs department’s investigation, purchased in mid-2008 from Italian luxury yacht builder Ferretti SA by Ammolite Holdings.

The yacht—a Custom Line 112 Next, 34m flying-bridge fibre glass vessel—has been valued at about Rs100 crore by customs authorities. It was brought to India on 31 October 2008 under a charter agreement with Reliance Transport and Travels Pvt. Ltd, another group company.

The customs department had alleged that the yacht’s final destination, according to its shipment papers, was Colombo. It was to be unloaded at Mumbai before sailing off to the Sri Lankan capital.

While Reliance Transport and Travels took permission from port authorities to park the yacht in Mumbai for a few days, the customs department found that the yacht did not leave for Colombo for over three months. Instead, it was being used in India without paying duty.

Duty is usually paid at the destination—in this case, Colombo—but the Indian customs department took the view that the yacht was meant for use in India, and hence the duty was payable here.

The funds for the charter came from Singapore-based Gateway Net Trading Pte Ltd, an associate firm of Reliance Communications Ltd.

Ammolite Holdings, according to the customs department, is a small firm with a share capital of $100,000 (Rs46.9 lakh).

Ammolite Holdings had contested the customs department’s claims back then, but seems to have changed its stance since.

In a letter to the department dated 18 February and reviewed by Mint, Ammolite Holdings and Reliance Transport and Travels had denied evading customs duty.

Ammolite Holdings had said that “the yacht was duly and validly brought into Indian waters in compliance with all laws and regulations with the permission of the customs department".

Ammolite Holdings and Reliance Transport and Travels had also said the Rs25 crore paid was a voluntary deposit “to demonstrate bona fides and to avoid any unwarranted or unpleasant consequences".