TaxTMI 
TaxTMI 
2026 (6) TMI 193
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....fine and penalties. Aggrieved by the said orders, the Department had filed appeals before the Commissioner (Appeals) challenging the quantum of redemption fine and penalty, while the importers, as respondents, filed cross-objections contesting the findings on valuation, confiscation and penalty. The Commissioner (Appeals), however, upheld the Orders-in-Original and rejected the Department's appeals. 1.2 The facts briefly stated are that the appellants are engaged in import and trading of worn clothing. During July 2017 to May 2018, they filed several Bills of Entry at Chennai declaring goods as "old and worn unmutilated clothing fumigated" under CTH 6309 0000 and declared value based on supplier invoices. On examination, the goods were found to be mixed used garments. The adjudicating authority rejected the declared value under Rule 12 of the Valuation Rules, 2007 and re-determined the value under Rule 5 based on alleged contemporaneous imports. The goods were also held to be restricted under the Foreign Trade Policy for want of DGFT licence and were confiscated under Sections 111(d) and 111(m), with an option for redemption under Section 125. Penalties were imposed under Sectio....
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....as no misdeclaration as the goods were correctly declared as used clothing and the examination reports support the same. Even if treated as restricted, confiscation and penalties are not automatic and the redemption fine imposed is excessive and disproportionate. 5. The Ld. Authorized Representative appearing for the department supported the findings of the adjudicating authority and the Commissioner (Appeals). It was submitted that the goods imported by the appellants are restricted items under the Foreign Trade Policy and therefore their import without a valid license renders them liable for confiscation under the provisions of the Customs Act. The departmental representative further argued that the declared value of the goods was unreasonably low and did not reflect the prevailing market value of similar goods. According to the department, the enhancement of value was based on contemporaneous import data available with the department and was therefore justified. The learned Authorised Representative also contended that the redemption fine and penalty imposed in the present case are reasonable and necessary in order to discourage import of restricted goods in violation of poli....
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.... from disputing the enhancement is legally untenable and cannot be sustained. 8.4 The appellants placed reliance upon the decision of the Tribunal in Crystal Dot Scan Pvt. Ltd. v. Commissioner of Customs - 2011 (263) E.L.T. 401 (Tri.-Bang.), wherein the Tribunal reiterated that transaction value cannot be rejected merely because the declared price appears lower than prices of other imports. The Tribunal observed: - Transaction value cannot be rejected merely because the declared price appears low in comparison with other imports. Unless reliable evidence is produced to establish that the declared price is not genuine, the transaction value must be accepted. 8.5 The nature of the goods involved in the present case has also been addressed in the decision of the Tribunal in Prayas Woollens Pvt. Ltd. v. Commissioner of Customs - 2016 (332) E.L.T. 376 (Tri.-Mumbai), which was also relied upon by the appellants. The Tribunal observed that where goods consist of mixed consignments of second-hand garments or rags, the valuation cannot be based on generalized assumptions. The Tribunal held in Para 5 & 6 of the Order that: - "5. We have carefully considered the submis....
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....duced any evidence to show that additional consideration has flowed from the importers to the suppliers. No record exists as to whether any market survey god conducted to appraise the value of consignments when the same was suspected. 8.8 It is also relevant to note that the goods imported by the appellants consist of mixed consignments of used garments which inherently vary in quality, condition and composition. In such circumstances, the adoption of a uniform benchmark value without establishing comparability is contrary to the scheme of the valuation rules. 8.9 In the absence of reliable evidence demonstrating that the declared value is incorrect, the rejection of the transaction value cannot be sustained. Consequently, the enhancement of value carried out in the impugned orders is liable to be set aside, and we accordingly set aside the same. ISSUE NO. (ii): Whether confiscation of the imported goods is justified 9.1 The next issue concerns the confiscation of the imported goods under Sections 111(d) and 111(m) of the Customs Act, 1962. The adjudicating authority has held that the goods imported are second-hand garments, the import of which is restricted under the F....
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....was placed on Commissioner of Customs v. K. M. Cherian - 2014 (312) E.L.T. 663 (Tri.-Chennai) where the Tribunal observed that redemption fine must be reasonable and proportionate to the circumstances of the case. 10.4 We have carefully considered the submissions made by both sides and perused the records. While the import of second-hand garments without the requisite licence renders the goods liable for confiscation under Section 111(d) of the Customs Act, the absence of any deliberate misdeclaration or intent to evade duty is a significant mitigating factor. It is also noted from the Grounds of Appeal that the imported goods consist of low-value used clothing intended for resale in economically weaker segments, particularly in markets such as the North-Eastern region, where such goods cater to the needs of underprivileged sections of society. This aspect weighs with us while arriving at a just and equitable determination of the quantum of redemption fine. Further, we find that the appeal records do not indicate that any market survey or study was conducted in the presence of the importer to ascertain the prevailing market value of the goods or ascertain the margin of profit av....