The Chandigarh Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the Adjudicating Authority’s decision of redemption fine ( RF ), and penalty ( PP ) reduction ranging from 10-5% for unlicensed import of used clothes citing in line with principles of fairness.
Maa Lakshmi Enterprises, the respondent had imported old and used worn clothing that had been fumigated. They declared value of the imported goods was enhanced from US$ 1.10 per kg to US$ 1.316 per kg.
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The customs authority imposed confiscation, redemption fine ( RF ), and penalty ( PP ) due to the classification of the goods under Tariff Item No. 63090000. Under the Foreign Trade Policy 2015-2020 and the Handbook of Procedures, the import of goods under this tariff heading was restricted and required a specific import license.
The Appellate Authority reduced the redemption fine ( RF ) and penalty ( PP ) from the adjudicating authority’s original range of 20-35% and 10-20% to 10% and 5% respectively. Aggrieved by the AA’s order, the revenue was appealed before the Chandigarh Bench of CESTAT arguing that the lower rate imposed by the Appellate Authority was insufficient.
The department’s counsel argued that the goods were restricted and a higher penalty should be imposed to deter non-compliance with import regulations.
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The two-member bench comprising R. Muralidhar ( Judicial Member ) and Rajeev Tandon ( Technical Member ) referred to a similar case, Venus Traders vs. Commissioner of Customs ( Import ), Mumbai. In this case, the confiscation under Section 111(d) for lack of a specific import license was upheld but RF was reduced to 10% and the penalty to 5%, citing justice considerations.
The tribunal observed that the respondent did not file any appeal against the confirmed duties, RF, and PP which shows the respondent agreed with the AA’s decision.
Following the Venus Traders case observation, the tribunal also held that the Appellate Authority’s decision to reduce the RF and PP to 10% and 5% was consistent with earlier rulings and in line with principles of fairness.
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Therefore, the tribunal upheld the Appellate Authority’s order of imposing RF at 10% and PP at 5%. The department’s appeal was dismissed.
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