2026 (1) TMI 729 - AT - Customs

Classification of imported car shades as vehicle accessories, not curtains; valuation penalties partly overturned and remanded

Dominant issue - classification: The Tribunal held the imported items were car shades (car accessories), not curtains; applying tariff interpretation the ... Transaction value - Classification of the goods - imported goods are correctly classifiable under CTI 6303 99 90 (textile curtains) or under CTI 8708 99 00 (parts and accessories of motor vehicles) - intent to evade of duty - waived the show cause notice - requirement of personal hearing - penalties imposed u/s 114A - reasonable doubt about the truth and accuracy of the imported goods - liability for confiscation u/s 111 (m) - HELD THAT:- Admittedly, what were imported by the appellant were not curtains or drapes but were shades meant and for use in cars. We do not find CTI 6303 99 90 is the correct classification for such car accessories even though the purpose of this particular accessories is to provide protection from the sun. They are clearly not curtains. Such shades are sold as car accessories in shops. They have also been described as car accessories in the appellant’s own documents. Therefore, on question of classification of the goods, we find in favour of the department and against the appellant. Since the appellant’s overseas supplier was a trader, the Joint Commissioner asked the appellant to submit the manufacturer’s invoice, which the appellant failed to submit. The Joint Commissioner concluded that the appellant had willfully mis-declared the value of the goods with an intent to evade of duty. As per Rule 3 of the Customs Valuation (Determination of Value of Imported Goods), Rules 2007 [Valuation Rules] subject to Rule 12, the value of the imported goods shall be the transaction value adjusted in accordance with Rule 10 of the Valuation Rules. Rule 10 of the Valuation rules provides for addition of certain costs and services to the transaction value which are not relevant for this purpose. Rule 12 provides for the proper officer to ask the importer to furnish further information or documents who has reason to doubt the truth and accuracy of the imported goods and after receiving such information or in the absence of such information from the importer by the proper officer still has reasonable doubt about the truth and accuracy of the imported goods then it shall be deemed that the transaction value cannot be determined under Rule 3. Admittedly, the appellant had imported the goods from a trader and had provided the trader’s invoice. But the Joint Commissioner asked for manufacturer’s invoice and the appellant failed to provide it evidently because he had not bought the goods from manufacturer. As far as the market value of the goods in Indian market is concerned, it can be much higher than the international market price and that itself does not give the Joint Commissioner a reasonable doubt regarding the truth or accuracy of the transaction value. We do not find that the Joint Commissioner had a reasonable doubt regarding the truth or accuracy. Admittedly, there was no difference between the description of the goods or the quantity on examination. The only difference was that the goods were classified by the appellant according to it’s understanding and not according to the classification decided by the Joint Commissioner while re-assessing the Bills of Entry. There was no mis-declaration whatsoever. Therefore, the confiscation of the goods under section 111 (m) of the Act, the imposition of redemption fine and consequential penalty under section 112 of the Act in the impugned order cannot be sustained. Appeal is partly allowed upholding the classification of the imported goods under CTI 8708 99 00 and setting aside the rest of the impugned order. The amount of duty needs to be re-calculated, as above. The matter is remanded to the original authority for the sole purpose of calculation. Appeal is allowed by way of remand. The appellant will be entitled to consequential relief, if any. Issues: (i) Whether the imported goods are correctly classifiable under CTI 6303 99 90 (textile curtains) or under CTI 8708 99 00 (parts and accessories of motor vehicles); (ii) Whether the transaction value declared by the importer was rightly rejected by the original authority leading to confiscation, redemption fine and penalties under the Customs Act, 1962, and whether those consequential measures were sustainable.Issue (i): Whether the goods are classifiable under CTI 6303 99 90 or CTI 8708 99 00.Analysis: The goods imported were described and sold as car accessories (shades) made of PVC/synthetic sheet meant to be fixed on vehicle windows. Chapter 63 headings (including CTH 6303) pertain to textile curtains and related articles, whereas Chapter 87 (CTH 8708) covers parts and accessories of motor vehicles. The factual material showed the articles were not curtains or drapes of textile material but vehicle accessories sold as such; the appellant's own documents described them as car accessories. The Tribunal applied tariff nomenclature and the specific-description-over-general-description principle to identify the correct heading.Conclusion: The classification is in favour of the Revenue and against the assessee.Issue (ii): Whether the transaction value declared should have been rejected and whether confiscation, redemption fine and penalties under sections 111(m), 112 and 125 of the Customs Act were sustainable.Analysis: The Valuation Rules provide that transaction value is the primary basis unless the proper officer has reasonable doubt and follows Rule 12 procedures. The Joint Commissioner rejected the declared transaction value relying on a market survey report not placed on record and on differences between Indian retail prices and declared value. The importer had provided the trader's invoice; the authority's request for a manufacturer's invoice did not, by itself, generate a reasonable doubt. No identical imports or application of Rules 4 or 5 were shown. There was no mis-declaration in description or quantity; only a disagreement on classification and valuation. Confiscation under section 111(m) requires goods not to correspond in value or other particulars with the entry; that was not established.Conclusion: The rejection of the transaction value, the confiscation, the redemption fine and the penalties (other than classification-related duty) are in favour of the assessee and against the Revenue.Final Conclusion: The appeal is partly allowed the Tribunal upholds the departmental classification of the goods under CTI 8708 99 00 but sets aside the re-determination of transaction value, the confiscation, redemption fine and penalties imposed on that basis; the matter is remanded to the original authority solely for recalculation of duty consistent with these findings.Ratio Decidendi: Where imported articles are, on the facts, vehicle accessories made of non-textile material and are specifically described and sold as such, they are classifiable under the parts-and-accessories heading (CTH 8708) rather than textile-curtain headings; conversely, absent a proper Rule 12-based reasonable doubt supported by contemporaneous evidence, a declared transaction value must be accepted and cannot be displaced by an unrecorded market survey, and confiscation under section 111(m) is not sustainable without proof that the goods did not correspond with the entry.