2025 (1) TMI 637 - AT - Customs

Tribunal Confirms Confiscation Under Customs Act, Upholds Reduced Fines Due to Procedural Errors in Declared Value Enhancement.

Commissioner of Customs (Port), Kolkata Versus M/s. Prabh Enterprises

The Tribunal ruled that the enhancement of the declared value of imported clothing was unjustified due to procedural deficiencies. It upheld the appellate ... Valuation of imported goods - import of old and used worn clothing - enhancement of the declared value - confiscation - redemption fine - penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [2018 (11) TMI 625 - CESTAT MUMBAI], wherein this Tribunal has observed 'the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%.' Against the confirmed duties and the Redemption Fine and penalty imposed by the Adjudicating Authority, the Respondent had not filed any appeal, nor have they filed any appeal against the order of the Ld. Appellate authority. Conclusion - The redemption fine and penalty imposed on the respondents by the appellate authority is sufficient to meet the ends of justice. Therefore, the redemption fine and penalty confirmed by the appellate authority are upheld. The appeal filed by the Revenue is dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues addressed in the judgment include:Whether the enhancement of the declared value of imported old and used worn clothing was justified.Whether the imposition of redemption fine and penalty by the adjudicating authority was appropriate.Whether the confiscation of goods under Section 111(d) of the Customs Act, 1962, due to the lack of a valid import license, was lawful.Whether the appellate authority's reduction of the redemption fine and penalty was justified.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Enhancement of Declared ValueRelevant Legal Framework and Precedents: The Customs Act, 1962, particularly Section 111(m), which deals with goods not corresponding in value with the entry made under the Act.Court's Interpretation and Reasoning: The Tribunal referenced the case of Venus Traders vs. Commissioner of Customs, where it was determined that invoking Section 111(m) was inappropriate without a declaration.Key Evidence and Findings: The Tribunal noted that the proceedings were initiated before the filing of bills of entry, thus making Section 111(m) inapplicable.Application of Law to Facts: The Tribunal found that the enhancement of value was not justified under Section 111(m) due to the absence of a declaration.Treatment of Competing Arguments: The Tribunal considered the Revenue's argument for enhancement but found it lacking due to procedural deficiencies.Conclusions: The enhancement of the declared value was not upheld.Issue 2: Imposition of Redemption Fine and PenaltyRelevant Legal Framework and Precedents: Section 125 of the Customs Act, 1962, which allows for the imposition of a redemption fine.Court's Interpretation and Reasoning: The Tribunal noted that the redemption fine should not exceed the market price of the goods and highlighted the importance of disclosing the margin of profit.Key Evidence and Findings: A market survey was conducted to ascertain the margin of profit, but the original authority failed to disclose this to the appellants.Application of Law to Facts: The Tribunal found that the original authority's failure to disclose the margin of profit warranted a reduction in the redemption fine and penalty.Treatment of Competing Arguments: The appellants questioned the margin of profit and the validity of the market survey, but the Tribunal focused on procedural compliance.Conclusions: The Tribunal upheld the appellate authority's decision to reduce the redemption fine to 10% and the penalty to 5%.Issue 3: Confiscation under Section 111(d)Relevant Legal Framework and Precedents: Section 111(d) of the Customs Act, 1962, which pertains to the confiscation of goods imported without a valid license.Court's Interpretation and Reasoning: The Tribunal upheld the confiscation, noting the admitted failure to comply with licensing requirements.Key Evidence and Findings: The lack of a valid import license was undisputed, justifying confiscation under Section 111(d).Application of Law to Facts: The Tribunal applied Section 111(d) to uphold the confiscation due to the absence of a license.Treatment of Competing Arguments: The appellants did not dispute the lack of a license, focusing instead on the fine and penalty.Conclusions: The confiscation under Section 111(d) was upheld.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The redemption fine is not, in terms of the statute, permitted to exceed the market price of the goods...'Core Principles Established: The necessity of procedural compliance in determining fines and penalties, and the requirement for valid import licenses under Section 111(d).Final Determinations on Each Issue: The Tribunal dismissed the Revenue's appeal, upholding the appellate authority's reduction of the redemption fine and penalty, and confirmed the confiscation under Section 111(d).