2015 (11) TMI 82 - AT - Customs

Valuation Import of Worn Clothing Value enhanced to US 1.40 per KG from US 0.80 Goods confiscated with redemption fine and penalty - Appellant contended that upward revision of value was not as per law as transaction value has to be accepted in absence of any evidence to reject the same - Transaction value first needs to be rejected before determining value Held that - Goods involved in present case are worn garments whose value depends upon the condition, quality and nature of goods and in the absence of goods, it is impossible to arrive at the correct value thus there was no legal basis available to Commissioner (Appeals) to enhance value from US 0.80 per KG to US 1.40 per KG - Confiscation is legally sustainable as appellant did not have any import licence - Redemption fine determined on a reasonable basis having regard to margin of profit and penalty imposed is in no way arbitrary or unreasonable Decided partly in favour of assessee.

Summary

Issues:
1. Valuation of imported worn clothing
2. Confiscation of goods under Customs Act, 1962
3. Redemption fine and penalty determination
4. Applicability of Customs (Determination of Value of Imported Goods) Rules, 2007

Valuation of imported worn clothing:
The appeal was filed against the Order-in-Appeal that enhanced the value of worn clothing imported from US$ 0.80 to US$ 1.40 per KG. The primary adjudicating authority had revised the value based on recommendations from the Special Investigation and Intelligence Branch. The appellant argued that the transaction value should be accepted unless there is evidence to reject it. The Tribunal noted that the appellant had voluntarily accepted the value of US$ 0.80 per KG without the need for a Show Cause Notice. Citing previous judgments, the Tribunal stated that once the appellant accepted the value and the goods were released, contesting the valuation later was not permissible.

Confiscation of goods under Customs Act, 1962:
The primary adjudicating authority had ordered the confiscation of the goods under sections 111(d) and 111(l) of the Customs Act, 1962, as the appellant did not have an import license for the restricted goods. The Tribunal found the confiscation to be legally sustainable due to the lack of an import license for the goods.

Redemption fine and penalty determination:
The primary adjudicating authority had imposed a redemption fine and penalty on the appellant. The Tribunal noted that the redemption fine was determined reasonably based on the margin of profit as assessed by Customs through market surveys. The penalty imposed was considered not arbitrary or unreasonable for the offense committed.

Applicability of Customs (Determination of Value of Imported Goods) Rules, 2007:
The Commissioner (Appeals) had increased the value to US$ 1.40 per KG based on a recommendation from the Directorate of Revenue Intelligence (DRI). The Tribunal found that there was no legal basis for this increase as the recommendation did not align with the Customs Rules. The Tribunal emphasized that the value determination for worn clothing depended on various factors, making it challenging to arrive at the correct value without physical inspection of the goods.

In conclusion, the Tribunal partially allowed the appeal by setting aside the value enhancement by the Commissioner (Appeals) and upholding the primary adjudicating authority's order regarding the valuation of the imported worn clothing.