2023 (9) TMI 937 - AT - Customs

Valuation of imported old and used worn clothing - restricted item or not - enhancement of value - confiscation - imposition of redemption fine and 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 held that the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, 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 penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals. The redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld - there are no infirmity in the impugned order and the same are upheld - appeal of Revenue dismissed.

Summary

Issues:
The issues involved in the judgment are the enhancement of redemption fine and penalty imposed on imported old and used worn clothing, classification under Tariff Item No.63090000, applicability of Section 111(m) and Section 111(d) of the Customs Act, 1962, and compliance with licensing requirements under the Foreign Trade Policy.

Enhancement of Redemption Fine and Penalty:
The Revenue appealed against the order which enhanced the declared value of imported old and used worn clothing, leading to the imposition of redemption fine and penalty. The Adjudicating Authority had imposed redemption fine and penalty at specific rates, and the Revenue sought further enhancement. However, the Tribunal, after hearing the arguments and examining the records, upheld the redemption fine and penalty imposed by the adjudicating authority. The Tribunal referred to a previous case where it was observed that confiscation under Section 111(d) of the Customs Act was justified for the import of restricted items without the required license. The Tribunal reduced the redemption fine to 10% of the assessed value and the penalty to 5%, considering the failure to comply with licensing requirements.

Applicability of Section 111(m) and Section 111(d) of the Customs Act:
The Tribunal analyzed the invocation of Section 111(m) and Section 111(d) of the Customs Act in the case of imported old and used worn clothing. It was noted that Section 111(m) could not be applied as the proceedings were initiated before the filing of bills of entry, and confiscation under Section 111(d) was justified due to the import of restricted items without the necessary license. The Tribunal emphasized that the redemption fine should not exceed the market price of the goods and that a proper survey was essential for determining the fine. Despite challenges to the margin of profit and market survey validity, the Tribunal upheld the confiscation under Section 111(d) while reducing the redemption fine and penalty.

Compliance with Licensing Requirements under Foreign Trade Policy:
The case involved the import of old and used worn clothing classified under a restricted tariff item, requiring a specific license for importation. The Tribunal acknowledged the failure to comply with the licensing requirements under the Foreign Trade Policy, leading to the confiscation of goods under Section 111(d) of the Customs Act. While upholding the confiscation, the Tribunal reduced the redemption fine and penalty to ensure the ends of justice were met. The Respondent did not appeal against the confirmed duties and penalties, and the Tribunal found the redemption fine and penalty imposed by the adjudicating authority sufficient for justice, thereby upholding the impugned order.