2026-VIL-983-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Valuation - Rejection of Declared Transaction Value under Rule 12 of the Customs Valuation Rules, 2007 and re-determination under Rule 5 – HELD - The rejection of declared transaction value cannot be sustained merely on the ground that it appears lower than certain other imports without producing reliable evidence demonstrating that the declared value is incorrect or that additional consideration has flowed from the importer to the supplier. The acceptance of enhanced value at the time of clearance under compulsion to secure release of goods does not preclude the importer from subsequently challenging the same, as there is no estoppel in taxation matters. Where goods consist of mixed consignments of used garments which inherently vary in quality, condition and composition, adoption of a uniform benchmark value without establishing comparability of goods in terms of quality, condition or commercial level is contrary to the scheme of the valuation rules. In the absence of any detailed comparison or market survey conducted to appraise the value, rejection of transaction value is liable to be set aside - The enhancement of value carried out is set aside and the declared value is ordered to be accepted – The appeal is partly allowedrnrnConfiscation - Restricted Goods without License - Import of second-hand garments restricted under Foreign Trade Policy without valid DGFT license – HELD - Import of goods without requisite authorization or license under the Foreign Trade Policy constitutes a violation of import policy and renders the goods liable to confiscation under Section 111(d) of the Customs Act, 1962. While procedural requirements such as fumigation and compliance with health and safety regulations are prescribed, these do not override the substantive requirement under the Foreign Trade Policy that import of second-hand goods other than capital goods is restricted and requires valid license. However, in the absence of any evidence of misdeclaration with respect to description, quantity or value, confiscation under Section 111(m) is not sustainable. Accordingly, confiscation is upheld only under Section 111(d) of the Customs Act.rnrnRedemption Fine - Section 125 of the Customs Act, 1962 - Proportionality and quantum – HELD - Redemption fine should correspond broadly to the margin of profit available to the importer and should not be fixed arbitrarily without evidence. In the absence of any deliberate misdeclaration or intent to evade duty, and given the nature of trade in used clothing which is highly heterogeneous and involves limited and uncertain profit margins, fixation of redemption fine at a higher percentage is not justified. The socially sensitive end-use of goods, coupled with the absence of any reliable market study or evidence of higher realizable value, is relevant while determining quantum of fine. Redemption fine must be reasonable and proportionate to the circumstances of the case and should bear nexus to the margin of profit without assuming a punitive character. Accordingly, redemption fine at 10 per cent of the declared invoice value is held to be fair, reasonable and proportionate to the facts and circumstances of the case.
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