Introduction: The Commissioner of Customs Vs K.K. Woollens case, heard by CESTAT Kolkata, has brought attention to the complexities surrounding the importation of old and used worn clothing. The focus of the case was on the assessment of value enhancement, confiscation, redemption fines, and penalties levied on the respondents.
Detailed Subheading Wise Analysis
Background of the Case: The respondents imported old and used worn clothing, which were subject to value enhancement from $0.45 to $0.60 per kg. The importation of such clothing is governed by strict regulations, including Tariff Item No.63090000 of the First Schedule of the Act and Para 2.17 of Foreign Trade Policy 2009-2014.
Legal Provisions Invoked: The Adjudicating Authority imposed a redemption fine and a penalty at the rate of 19.5% and 7.8% of the assessed value, respectively. The Revenue appealed for an enhancement of these charges.
Comparison with Previous Cases: The Tribunal referred to a previous case, Venus Traders Vs. Commissioner of Customs (Import), Mumbai, to affirm that the confiscation under Section 111(d) of the Customs Act, 1962, was justified.
Controversies in the Case: The original case attracted attention for several reasons, including the absence of a 100% examination of all containers and the absence of a clear declaration of the nature/description of goods. This led to the Tribunal finding difficulty in establishing the margin of profit.
Final Decision and Implications: The Tribunal upheld the redemption fine and penalties imposed by the Adjudicating Authority, dismissing the Revenue’s appeal for enhancement. The order was found to have no infirmities and was therefore upheld.
Conclusion: The case brings to light the challenges and legal implications of importing old and used worn clothing into India. The Tribunal’s decision serves as an important precedent, confirming the legality of the penalties imposed and emphasizing the necessity for clear regulations and procedures for importation.
FULL TEXT OF THE CESTAT KOLKATA ORDER
1. The Revenue is in appeal against the impugned order.
2. The facts of the case are that the respondent imported old and used worn clothing, completely fumigated which were assessed after value enhancement, confiscation and imposition of redemption fine and penalty.
2.1 The declared value was enhanced from US$ 0.45 per kg to US$ 0.60 per kg and redemption fine and penalty were also imposed on the ground that the old and used worn clothing articles are classifiable under Tariff Item No.63090000 of the First Schedule of the Act and is restricted item for import as per Para 2.17 of Foreign Trade Policy 2009-2014, read with ITC HS Classification of import and export items 2009-2014. Import of goods under Tariff Item No.63090000 is restricted and their import is allowed only against the valid specific license.
2.2 The Adjudicating Authority has imposed redemption fine and penalty at the rate of 19.5% & 7.8% of the assessed value respectively. In some of the cases where goods are not available, no redemption fine is imposed.
2.3 Against the said orders, the Revenue is before us for enhancement of redemption fine and penalty.
3. Heard the parties and perused the records.
4. We find that this issue came up before this Tribunal in the case of Venus Traders Vs. Commissioner of Customs (Import), Mumbai reported in 2019 (365) ELT 958 (Tri.-Mumbai), wherein this Tribunal has observed as under :
“4. We find that proceedings initiated against most of the imports commenced even before the filing of bills of entry. In these circumstances, invoking of Section 111(m) which applies to ‘111(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section
(1) of Section 54;’ does not appear to be in conformity with law. Confiscation of goods is empowered when material particulars are withheld or incorrectly recorded in the declaration which, for the purpose of Section 111 of Customs Act, 1962, is the bill of entry. Therefore, whatever would be the finding on the description or value, Section 111(m) is not liable to be invoked in the absence of a declaration.
5. Confiscation under Section 111(d) has been invoked for import of ‘old and serviceable garments’ without an import licence as prescribed under Chapter 2 of the Foreign Trade Policy. Want of such licence is not disputed by the appellants. Consequently, confiscation under Section 111(d) of Customs Act, 1962 in the impugned order cannot be faulted. Release of confiscated goods to the importer is contingent upon fine in lieu imposed under Section 125 of Customs Act, 1962. The redemption fine is not, in terms of the statute, permitted to exceed the market price of the goods and the undertaking of a survey is not improper. However, such a survey, more than a decade after the import and, that too, after remand was ordered by the Tribunal, does not appear to the intent of the decision of the Tribunal. The remand order is specific in directing that the margin of profit, ascertained for computation of the fine, should be made known to the appellant. It is, therefore, the manner in which the original authority had, in the first instance, ascertained the margin of profit that was required to be supplied to the appellants. The original authority has patently failed to do so and has tried to rectify the deficiency of such ascertainment by a process that is not only bereft of validity but also inconsistent with the remand order. The Tribunal, in its remand order, had allowed determination of value of misdeclared goods. That part of the remand order appears impossible to comply with ex post facto in the light of the finding that
‘4. From the examination report (only one consignment was subjected to 100% examination on first check basis), which was already on record it appeared that imports in these cases were of mixed lot consisting of used garments and also 40% to 50% mutilated single cut garments.
20. Before proceeding further it is pertinent here to state that the exact description and quantity of goods, container wise, cannot be determined at this stage since no 100% examination of all containers was done at the time of clearance of goods. At any event all the importers had agreed during the personal hearing conducted by the then Commissioner of Customs (I), that the impugned goods were either old and used garments other than rags or they were not mutilated as per the norms laid down in this regard. It is on this agreement for the nature/description of goods, that we have to proceed further in this case. As regards the margin of profit, a market survey was done whose salient features are as follows :
in the impugned order.
6. Though the appellants question the margin of profit and the validity of market survey, there is no serious resistance to the ascertained value.
7. Considering the various issues and submissions made and 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%.”
5. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals.
6. Following the above cited decision of this Tribunal, we hold that 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.
7. Consequently, we do not find any infirmity in the impugned order and the same are upheld.
8. The appeals filed by the Revenue are dismissed.
(Dictated and pronounced in the open court.)