2013 (4) TMI 653 - AT - Customs

Mis - declaration & undervaluation proceedings enhancement on value of goods - entire case is built on the premise that the impugned goods are other than Old and Used garments claimed to be classifiable under Chapter 6309 of CTA 1975. The import of worn clothing is restricted in terms of Foreign Trade Policy provisions, the subject consignment was pending adjudication by the Additional/Joint Commissioner of Customs, Custom House, Kolkata. In terms of Board s Circular No. 36/2000-Cus., dated 8th May, 2000 while importing old and used garments under CTH 63.09, the imposition of fine and penalty for violation of EXIM policy. The DRI working on information came to conclusion that M/s. A.N. Impex ought to have declared the various articles of consignments in the import documents. Giving the declaration of subject goods as old and used worn garments, the conceding by the DRI to be vague and complete. Held that - In the case before us, it is not alleged that the appellant has mis-declaced the price actually paid nor was there a mis-description of the goods imported. We find that value was sought to be enhanced by treating the impugned goods as other than old and used garments; and by comparing the sale price of earlier imported old and used garments. There is no specific findings as to how many articles are other than old and used articles, therefore, this aspect is required to be determined followed by valuation thereof. In these circumstances the case is remanded to ld. Commissioner for deciding the issue afresh while keeping in view our above observations. It is made clear that all the issues are kept open. Both sides are at liberty to produce documents in their support. Needless to say a reasonable opportunity of hearing may be granted to the appellant. The appeal is allowed by way of Remand.

Issues Involved:
1. Classification of imported goods.
2. Valuation of imported goods.
3. Imposition of fine and penalties.
4. Procedural and evidentiary aspects of the adjudication process.

Detailed Analysis:

Classification of Imported Goods:
The primary issue was whether the imported goods, described as "old and used garments," were correctly classified under Chapter Heading 6309 of the Customs Tariff Act, 1975. The Customs Authorities initially assessed the goods under this heading, but the Directorate of Revenue Intelligence (DRI) re-examined the consignment and found that most items showed "no signs of appreciable wear." The Customs Tariff Heading 6309 applies to worn clothing and other worn articles that must show signs of appreciable wear and be presented in bulk or in bales. The DRI's re-examination, which involved burst opening a sample of the bales, led to the conclusion that the goods did not qualify as worn clothing under Chapter 6309. The Tribunal noted that the DRI's findings were based on assumptions and lacked specific evidence, leading to the conclusion that the sample test by DRI was inappropriate.

Valuation of Imported Goods:
The valuation of the goods was another critical issue. The Customs Authorities initially enhanced the value from USD 0.417 per kg to USD 0.60 per kg. The DRI further sought to enhance the value based on the wholesale market prices recorded in the purchase register of M/s. Ma Vabatarini Enterprises, a wholesale trader of worn clothing. The Tribunal found that the valuation process did not follow the sequential rules provided under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Rule 12, which was used to reject the declared value, does not provide a method for determining value but rather a mechanism for rejecting declared value when there is reasonable doubt about its accuracy. The Tribunal emphasized that the transaction value should be accepted unless there is cogent evidence to reject it, as established in various Supreme Court judgments.

Imposition of Fine and Penalties:
The adjudicating authority imposed fines and penalties on M/s. A.N. Impex, Gee Pee International, and their partners for misdeclaration and undervaluation. The Tribunal found that the penalties were based on the assumption that the goods were not old and used garments, a conclusion that was not sufficiently supported by evidence. The Tribunal also noted that the procedural fairness was compromised as the statements and documents relied upon by the DRI were not subjected to cross-examination, undermining their evidentiary value.

Procedural and Evidentiary Aspects:
The Tribunal highlighted several procedural lapses in the adjudication process. The re-examination by the DRI was not comprehensive, and the methodology used was not scientifically robust. The reliance on the purchase register of M/s. Ma Vabatarini Enterprises without cross-examination of the relevant witnesses was a significant procedural flaw. The Tribunal also noted that the Customs Examination Committee's initial findings were disregarded without adequate justification. The Tribunal emphasized the need for a thorough and fair re-examination of the goods and valuation process, ensuring that all procedural safeguards are observed.

Conclusion:
The Tribunal remanded the case to the Commissioner for a fresh decision, directing a comprehensive re-examination of the goods and a proper valuation process in accordance with the Customs Valuation Rules. The Tribunal stressed the importance of procedural fairness and the need for specific evidence to support any deviation from the declared classification and value. The Commissioner was instructed to expedite the re-adjudication process, considering the perishable nature of the goods.

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