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2023 (9) TMI 311 - AT - CustomsDetermination of classification and valuation - culpability of the noticee - Old Worn Clothing Completely Fumigated or not - Imposition of penalty - charging of interest - HELD THAT - A garment which shows signs of wear and tear, sufficient or otherwise, will be classifiable under CTH 6309 and a garment having no signs of wear and tear will be classified on merit under its respective heading. It may be pertinent to point out here that it is only the reasonable belief of the seizing officers that is the basis for concluding that the goods were not having sufficient wear and tear and as such could not be treated as old and used garments classifiable under CTH 6309. There is no expert opinion rendered by any technical person, nor is there a report from the testing agency onto the actual state and nature of goods. In the given situation, the re-examination of the goods not having been done completely, determination of the actual nature of the impugned goods have to be based on the basis of available records. On record, is the specific finding of the Examination Committee pointing out the old and used nature of the goods - a very small percentage of bales which on re-examination by DRI, had been found to contain quilts, bags, curtains, etc. would also have to go alongwith old and used worn clothing as for their valuation and classifiable under CTH 6309 or the appropriate heading under the Customs Tariff. The declared assessable value of old and used garments imported was rejected, in terms of Explanation 1(iii)(a) to Rule 12, wherever the declared value was less than USD 0.60 per Kg CIF. It is a well settled principle that in case of old and used goods, if the value is liable for rejection, the same cannot be determined under Rules 4 to 8 as these goods do not have uniform standards and can only be re- determined under Rule 9 of CVR, 2007 - Similar view has been taken by the Tribunal in the matter of BK. SPINNING MILLS (P) LTD. VERSUS COLLECTOR OF CUSTOMS, COCHIN 1999 (8) TMI 359 - CEGAT, NEW DELHI wherein it was held that the (erstwhile) Rule 8 of the Customs Valuation Rules was correctly applicable in case of subject goods for which there was no uniform standard. Therefore, based on market enquiries undertaken, the assessing officer re-determined the value of such goods - there are no qualms with such valuation arrived at. Imposition of penalty - charging of interest - HELD THAT - The goods have been determined to be old and used garments. These are restricted for the purpose of import and require an import licence for import and clearance. For the purpose and related aspects like lack of a valid licence for import and the excess weight, the adjudicating authority has subjected the importer to appropriate action in law. Thus, he has rightly confiscated the said goods under Section 111(m) of Customs Act, 1962 and also imposed penal liabilities. Admitting their own handicap at subjecting the goods to a comprehensive examination on account of infrastructural constraints, it is deeply distressing that the Revenue prefers to subject the importers to the implication of a frivolous appeal. The impugned order calls for no interference. The order passed by the learned Commissioner is upheld and the appeal filed by the revenue is dismissed.
Issues Involved:
1. Methodology of Examination by DRI 2. Classification of Imported Goods 3. Valuation of Imported Goods 4. Imposition of Penalty and Interest Issue 1: Methodology of Examination by DRI The primary issue was the challenge to the methodology of examination undertaken by the Directorate of Revenue Intelligence (DRI). The Commissioner observed that a scientific method of examination was not adopted by the DRI. The examination was not comprehensive, as only 9%-10% of consignments were burst open, and the rest were visually examined. The Tribunal emphasized the necessity of a thorough and scientific examination to accurately determine the nature and quantity of the imported goods. Issue 2: Classification of Imported Goods The classification of the goods was disputed, with the DRI re-examining the consignments and concluding that they contained garments with "no signs of appreciable wear," contrary to the initial declaration of "old and worn clothing." The Tribunal noted that the classification should be based on whether the goods showed signs of wear and tear. Without a complete re-examination and expert opinion, the Tribunal upheld the initial classification as "old and used garments" under Tariff Item 63090000. Issue 3: Valuation of Imported Goods The DRI sought to enhance the value of the goods, treating them as other than "old and used articles." The Tribunal referred to the case of M/s. S.S. Impex, emphasizing that the value of old and used goods cannot be enhanced without rejecting the declared value on proper grounds. The declared value was rejected only if it was less than USD 0.60 per Kg CIF. The Tribunal found no plausible reason for the revaluation and upheld the declared value based on market enquiries and existing norms. Issue 4: Imposition of Penalty and Interest The goods were determined to be "old and used garments," which are restricted for import and require a license. The adjudicating authority confiscated the goods under Section 111(m) of the Customs Act, 1962, and imposed penalties. The Tribunal found the penalties appropriate given the lack of a valid import license and excess weight. Conclusion: The Tribunal dismissed the appeal filed by the Revenue, upholding the order passed by the learned Commissioner. The methodology of examination by DRI was found inadequate, the classification and valuation of goods were upheld as initially determined, and the penalties imposed were deemed appropriate.
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