2023 (4) TMI 267 - AT - Customs

Classification of imported goods - Cotton Knitted Sorted Rags - to be classified under Customs Tariff Heading (CTH) 63109020 or under CTH 60062200 - misdeclaration of value or not - Circular No. 20/2011-Cus. dated 15.4.2011 - HELD THAT - As regards the requirement of an import license it is seen that on examination of the goods in BE 5550200 dated 23.12.2011, it was found to be fabric waste and cutting of factory textiles in torn and dirty condition in various sizes and width more than ten inches. Some pieces were in continuous length and some were in small length. In the case of Bill of Entry No. 6068307 dated 22.2.2012, the goods were found to be sorted fabric cotton knitted clips in small cut pieces of various sizes / length . Goods were cutting waste/ mutilated woven worn-out garments found not to be completely in running length, they were cut into small pieces which could not be used in the manufacture of chindi rugs and also for pulling of fabrics. They hence do not come under the purview of Boards circular 20/11-cus dated 15.04.2011. Such goods which are totally unserviceable and beyond repair, are classifiable under CTH 63109020 and can be imported only under a license from DGFT. The issue regarding cut fabrics which are not in continuous length with a maximum width restriction of 10 inches not being given the benefit of Circular No. 20/2011-Cus. dated 15.4.2011 was decided in Revenue s favour by the Hon ble Tribunal in M/S. ANISHA IMPEX VERSUS COMMISSIONER OF CUSTOMS, TUTICORIN 2015 (3) TMI 164 - CESTAT CHENNAI . The redemption fine and penalty in the facts and circumstances found to be excessive and modify the same to Rs 2,00,000/- (two lakhs) fine and Rs 1,00,000/- (one lakh) penalty - appeal allowed in part.

Summary

Issues:
The issues involved in this case are misdeclaration of goods under Customs Tariff Heading (CTH), exemption claim under ISFTA Notification, requirement of import license from DGFT, re-determination of value of imported goods, confiscation of goods, imposition of penalty, and excessive redemption fine.

Misdeclaration of Goods:
The appellant, M/s. Shri Shyam Sundar Textiles Pvt. Ltd., filed two Bills of Entry for the clearance of 'Cotton Knitted Sorted Rags'. Customs officers found that the goods were mis-declared under CTH 60062200 instead of CTH 63109020. The appellant imported cotton knitted coloured rags without a valid import license from DGFT, contravening Customs Act, 1962. Notice was issued to the appellant for misdeclaration.

Requirement of Import License:
The original authority held that imported cutting waste/mutilated woven worn-out garments are restricted for import and not covered under Board Circular No. 20/2011-Cus. The goods were confiscated with an option to redeem them on payment of a fine. The appellant contested the requirement of an import license, stating that the goods did not fall under the restriction.

Re-determination of Value:
The original authority re-determined the value of the goods under Rule 5 of Customs Valuation Rules, 2007, as the declared value was considered very low. The appellant challenged this re-determination, stating that they were not provided with samples of similar goods or the basis for the revaluation.

Confiscation and Penalty:
The original authority imposed a penalty on the importer and confiscated the goods covered by both Bills of Entry. The lower appellate authority upheld this decision. The appellant appealed for the reversal of the re-determined assessable value, setting aside of confiscation, and reduction of fine and penalty.

Judgment:
The appellate tribunal found that the goods imported by the appellant required an import license from DGFT as they were classified as cutting waste/mutilated woven worn-out garments not suitable for use. The tribunal agreed with the re-determination of the value of the goods and upheld the impugned order on merits. However, the excessive redemption fine and penalty were modified to Rs 2,00,000 and Rs 1,00,000 respectively. The appeal was disposed of with the above modifications.