Transaction value under the Customs Valuation Rules cannot be rejected based on generalized assumptions or without concrete evidence of contemporaneous, comparable imports. Penalties and redemption fines for imports without licenses must be reasonable, proportionate to profit margins, and reflect the absence of fraudulent intent.

Per Mr. VASA SESHAGIRI RAO

The present batch of 3 appeals is filed by M/s. Sabari Infra Pvt. Ltd. (hereinafter referred to as the “Appellant”) against the Orders-in-Appeal Nos. 34 to 36/2019 dated 31.01.2019 (hereinafter referred to as the “impugned orders”), whereby the appeals filed by the appellant against the respective Orders-in-Original relating to import of used garments were rejected, upholding the enhancement of assessable value, confiscation of goods and imposition of redemption fine and penalties.

1.2 The facts briefly stated are that the appellant is engaged in the import and trading of used clothing. During the period from July 2017 to May 2018, the appellant filed several Bills of Entry at Chennai declaring the goods as “old and worn unmutilated clothing fumigated” under CTH 6309 0000 and declared the transaction 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 Customs 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 a DGFT licence and were confiscated under Sections 111(d) and 111(m) of the Customs Act, 1962, 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 appellant has 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 are tabulated below: -

3. The Ld. Advocate Shri 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.

4. The Ld. Advocate Shri Viswanathan for the Appellants, made detailed submissions which are summarized as follows: -

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 of a uniform value per kilogram without examining the characteristics of each consignment was argued to be contrary to the valuation rules. The learned counsel also contended that the adjudicating authority failed to follow the mandatory sequential application of valuation methods and mechanically invoked Rule 5.

4.3 On confiscation and penalties, it was submitted that there was no misdeclaration as the goods were correctly declared as used clot