Old and Worn Clothes Imported Without Valid Specific License: CESTAT Upholds 10% Redemption Fine and 5% Penalty [Read Order]

In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Kolkata upheld a 10% redemption fine and a 5% penalty in a case involving the import of old and worn clothing without a valid specific license. The case is an appeal by the assessee/ appellant  M/s S. S. Traders, who imported used and fumigated clothing that was assessed and subjected to confiscation due to licensing issues.

The imported goods fell under Tariff Item No. 63090000 of the First Schedule of the Customs Tariff Act, which mandates that such items are restricted and can only be imported with a valid specific license. The importers, however, did not possess the required license. Consequently, the customs authority enhanced the value of the imported goods, which increased from the declared US$1.10 per kg to US$1.316 per kg. Following this, a redemption fine and penalty were imposed by the customs authorities.

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Initially, the adjudicating authority had imposed redemption fines and penalties in the range of 20-35% and 10-20%, respectively. However, on appeal, the Commissioner of Customs (Appeals), Kolkata, reduced these to 10% for the fine and 5% for the penalty. Dissatisfied with the reduction, the Revenue department filed an appeal, seeking an enhancement of both the fine and the penalty.

The tribunal reviewed the case and referred to an earlier judgment in Venus Traders vs. Commissioner of Customs (Import), Mumbai (2019), which dealt with similar issues of imports of used clothing without proper licensing. The tribunal upheld the confiscation of goods under Section 111(d) of the Customs Act, 1962, for the lack of a valid import license but concluded that a redemption fine of 10% and a penalty of 5% were appropriate under the circumstances.

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The tribunal, comprising Mr. R. Muralidhar (Judicial Member) and Mr. Rajeev Tandon (Technical Member), ruled that the decision of the appellate authority was sound and aligned with previous precedents. As a result, they dismissed the appeal filed by the Revenue and confirmed the reduced fines and penalties, declaring them sufficient to meet the ends of justice.

To Read the full text of the Order CLICK HERE

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