1999(08)LCX0214
IN THE CEGAT, COURT NO. IV, NEW DELHI
Ms. Jyoti Balasundaram, Member (J) and Shri Lajja Ram, Member (T)
B.K. SPINNING MILLS (P) LTD.
Versus
COLLECTOR OF CUSTOMS, COCHIN
Final Order No. 732/99-D, dated 10-8-1999 in Appeal No. C/152/96-D
Cases Quoted
Garg Woolen Mills (P) Ltd. v. Additional Collector — 1998(09)LCX0066 Eq 1998 (104) ELT 0306 (S.C.) — Relied on [Paras 4, 5, 7]
Mala Combers — Final Order No. C/105/94-D, dated 21-2-1994 — Referred [Para 4]
Advocated By : Shri K.K. Anand, Advocate, for the Appellant.
Shri R.S. Sangia, DR, for the Respondent.
[Order per : Jyoti Balasundaram, Member (J)]. - The appellants herein imported 78 bales of old and used synthetic garments from USA during February, 1994. The Bills of Entry were assessed to duty on second appraisement basis classifying them under Customs Heading 6310.90 as “Completely Pre-mutilated Synthetic/Woolen rags” allowed to be imported without licence as per the provisions of the Export Import Policy 1992-97. Examination of the goods revealed that only 11 bales contained pre-mutilated rags while the remaining 67 bales valued at Rs. 9,02,427/- were found to contain serviceable non-mutilated used clothes. The value declared in the invoice i.e. Rs. 5,20,847/- did not appear to be correct transaction value.
2. The Adjudicating authority confiscated the goods with option to redeem the same on payment of a fine of Rs. 2,25,000/- and also imposed a personal penalty of Rs. 1,13,000/-. The Lower Appellate Authority set aside the Original authority’s order and remanded the matter for de novo adjudication. The Adjudicating Authority, on remand, confiscated the entire consignment with option to redeem the same on payment of fine of Rs. 4 lakhs and imposed a penalty of Rs. 1 lakh.
3. In the impugned order, the Commissioner (Appeals) set aside the confiscation of 11 bales as he found that these consisted of mutilated rags and were therefore, importable without import licence under OGL. He, however, upheld the confiscation of remaining 67 bales, classified them under CTH 63.09, confirmed the valuation arrived at by the Deputy Commissioner, but reduced the redemption fine to Rs. 3.5 lakhs. He did not alter the quantum of penalty or the value arrived at by the Adjudicating Authority. Hence this appeal.
4. The learned Counsel, Shri K.K. Anand submits that the goods ought to have been allowed to be cleared after accepting the importers request for mutilation, as per previous judgments of the Tribunal in several cases. He seeks to distinguish the judgment of the Supreme Court in the case of Garg Woolen Mills reported in [1998(09)LCX0066 Eq 1998 (104) ELT 0306 (S.C.) = 1998 (029) RLT 619] wherein the Supreme Court has held that absolute confiscation of non-mutilated worn clothing is justified in case of patent fraud committed in importing goods for violation of the Import Control Order by clarifying that the case decided by the Hon’ble Supreme Court related to import by a non-existent unit, while in the present case, the appellant is admittedly in existence and an actual user of shoddy yarn and therefore, submits that the Supreme Court judgment cannot be applied to the facts of the present case which are entirely different. He submits that out of the 67 bales, only 20 bales contained cotton jeans which cannot be considered as useable for the manufacture of shoddy yarn but the remaining bales consisted of used garments which could be used for shoddy yarn manufacture, and should have been allowed to be released after mutilation. Regarding classification, he draws our attention to the Tribunal’s order in the case of Mala Combers (Final Order No. C/105/94-D, dated 21-2-1994) wherein the Tribunal has set aside the classification of non-mutilated serviceable garments under CTH 63.09 and submits that, therefore, the importers claim of classification under CTH 63.10 should be accepted. He submits that the valuation of the goods has also been wrongly arrived at since prices of imports of comparable goods were available but there has been no comparison with such import while enhancing the value by nearly 100%. Lastly he submits that in any event, the redemption fine cannot exceed the quantum earlier fixed by the pre-remand order and could not be enhanced to Rs. 3.5 lakhs, as has been done in the present case.
5. The learned DR relies entirely upon the judgment of the Garg Woolen Mills case (supra) and submits that when there is no dispute that import consisted of 67 bales of dutiable serviceable garments which were not at all mutilated, the question of allowing them to be cleared after mutilation does not arise as what has been imported is, used or worn clothing and not rags. He submits that the classification claim of the goods under heading 63.10 is also not correct since that heading covers only rags and the goods in this case are definitely not rags but worn clothing covered by heading 63.09.
6. Regarding valuation of goods, the lower authorities have applied the Valuation Rules in seriatim and correctly applied Rule 8 (Best Judgment Assessment). In these circumstances, he prays that the order of the Adjudicating Authority and the Lower Appellate Authority may be upheld and the appeal rejected.
7. We have carefully considered the submissions of both the sides and we agree with the learned DR that the confiscation of 67 bales is correct in law since what was imported was worn and used clothing with no degree of mutilation and therefore, the Supreme Court judgment in the case of Garg Woolen Mills wherein the Supreme Court has held that the request for mutilation would be considered in the context of (a) of bona fide import and (b) depending upon the extent of mutilation already upon the goods is attracted since in this case the goods were found to be totally serviceable garments, the judgment applies on all fours. Classification under Customs Heading 6309 is appropriate as the goods are used and worn clothing. Application of Rule 8 of Valuation Rules also cannot be faulted in case of such goods for which there is no uniform standard. However, the appellants contention that the redemption fine cannot exceed the quantum first fixed in the order of the Deputy Commissioner before remand, cannot be enhanced is correct. Therefore, while upholding the impugned order regarding the classification, confiscation and valuation of the goods, we however, reduce the redemption fine to Rs. 2.25 lakhs as fixed by the Deputy Commissioner in the first adjudication order. The penalty quantum does not require to be interfered with, having regard to the value of the goods.
Equivalent 2000 (117) ELT 604 (Tribunal)
Equivalent 1999 (035) RLT 0252