The rejection of a declared transaction value under the Customs Valuation Rules requires evidence of comparable, contemporaneous imports; otherwise, the valuation remains unsustainable. Furthermore, redemption fines and penalties for importing restricted goods must be proportionate to profit margins and the absence of malicious intent.

Per Mr. VASA SESHAGIRI RAO

The present batch of 4 appeals is filed by M/s. Kayen Exim Pvt. Ltd. and M/s. Eskay Enterprises (hereinafter referred to as “Appellant Nos. 1 & 2”) against the Orders-in-Appeal Nos. 190 to 324/2018 dated 23.05.2018 (hereinafter referred to as the “impugned orders”), whereby the appeals filed by the Department against the Orders-in-Original relating to import of used garments were rejected in Appeal. In the adjudication proceedings, the declared transaction value was rejected, the assessable value was enhanced, and the goods were confiscated with imposition of redemption fine and penalties. Aggrieved by the said orders, the Department had filed appeals before the Commissioner (Appeals) challenging the quantum of redemption fine and penalty, while the importers, as respondents, filed cross-objections contesting the findings on valuation, confiscation and penalty. The Commissioner (Appeals), however, upheld the Orders-in-Original and rejected the Department’s appeals.

1.2 The facts briefly stated are that the appellants are engaged in import and trading of worn clothing. During July 2017 to May 2018, they filed several Bills of Entry at Chennai declaring goods as “old and worn unmutilated clothing fumigated” under CTH 6309 0000 and declared value based on supplier invoices. On examination, the goods were found to be mixed used garments. The adjudicating authority rejected the declared value under Rule 12 of the Valuation Rules, 2007 and re-determined the value under Rule 5 based on alleged contemporaneous imports. The goods were also held to be restricted under the Foreign Trade Policy for want of DGFT licence and were confiscated under Sections 111(d) and 111(m), with an option for redemption under Section 125 . Penalties were imposed under Section 112(a). The Commissioner (Appeals), by the impugned orders, upheld these findings.

2. Being aggrieved by the impugned appellate orders, the importers have filed the present appeals before this Tribunal. Since all the appeals arise out of a common set of facts and involve identical issues relating to valuation of imported used clothing, they are taken up together and disposed of by this common order. The details of the appeals filed are tabulated below: -

3. The Ld. Advocate Shri N. Viswanathan appeared on behalf of the Appellant and advanced detailed submissions in support of the Appeal and the Ld. Authorized Representative Ms. Rajini Menon appeared for the Revenue who has affirmed the findings in the impugned order.

4.1 The Ld. counsel submitted that the enhancement of value is arbitrary and contrary to the Customs Valuation Rules. It was contended that the declared transaction value was duly supported by invoices and import documents, and no evidence has been brought on record to show that the value was incorrect or that any additional consideration had flowed from the importer to the supplier. It was argued that rejection of transaction value under Rule 12 requires valid grounds supported by cogent evidence, which is absent in the present case. The reliance on alleged contemporaneous imports without producing supporting documents or establishing comparability in terms of quality, quantity and commercial level was also challenged.

4.2 It was further submitted that the goods consisted of mixed lots of used clothing varying in quality, condition and usability, and therefore cannot be compared with other consignments for valuation purposes. The adoption