TaxTMI 
TaxTMI 
2026 (6) TMI 266
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....m July 2017 to May 2018, the appellant filed several Bills of Entry at Chennai declaring the goods as "old and worn unmutilated clothing fumigated" under CTH 6309 0000 and declared the transaction 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 Customs 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 a DGFT licence and were confiscated under Sections 111(d) and 111(m) of the Customs Act, 1962, with an option for redemption under Section 125. Penalties were imposed under Section 112(a). The Commissioner (Appeals), by the impugned orders, upheld these findings. 2. Being aggrieved by the impugned appellate orders, the appellant has filed the present appeals before this Tribunal. Since all the appeals arise out of a common set of facts and involve identical issues relating to valuation of imported used clothing, they are taken up together and disposed of by this common order. The details of the appeals are tabulate....
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....itted that the goods imported by the appellants are restricted items under the Foreign Trade Policy and therefore their import without a valid licence 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 policy restrictions. 6. Upon consideration of the rival submissions made by the appellants and the Revenue and on perusal of the records of the case, the following questions arise for determination in these appeals: - i. Whether the rejection of the declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and the consequential re-determination of va....
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....unal 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 submission made by both the sides. We find that though in the adjudication order the authority has relied upon the price of contemporaneous goods, but no any evidence in support of contemporaneous import was adduced. The goods imported by the appellant is rags which admittedly a residual product. The residual product cannot be of standard quality. As regards its characteristics, quality, size, shape, colour etc....
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....y 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 Foreign Trade Policy unless supported by a valid licence issued by the Director General of Foreign Trade. The appellants have not disputed that the goods are second-hand garments; however, they have contended that the goods were correctly declared in the Bills of Entry and that there was no deliberate attempt to violate the import policy. 9.2 The appellants have also relied upon CBEC Circular No. 22/2010-Cus dated 26.07.2010, which prescribes procedural requirements such as fumigation and comp....
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....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 available in such trade. 10.5 We also find that the nature of the trade in used clothing, being highly heterogeneous and catering to price sensitive segments, inherently involves limited and uncertain profit margins. The socially sensitive end-use of such goods, coupled with the absence of any reliable market study or evidence of higher realizable value, cannot be ignored while determining the quantum of fine. It is well settled that redemption fine should bear ....