Custom, Excise & Service Tax Tribunal
Artex Textile Pvt Ltd vs Principal Commissioner, Customs-New ... on 7 January, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
CUSTOMS APPEAL NO. 51104 OF 2022
[Arising out of the Order-in-Appeal No. CC (A) CUS/D-II/Prev./NCH/226/
2021-22 dated 27/05/2021 passed by The Commissioner of Customs
(Appeals), New Delhi.]
M/s Artex Textile Pvt. Ltd. ......Appellant
Kh. No. 282, Gali No. 4, Industrial Area,
Shalimar Village,
Delhi - 110 088.
Versus
The Principal Commissioner of ....Respondent
Customs (Preventive), New Customs House, Near IGI Airport, New Delhi - 110 037 APPEARANCE:
Shri Prem Ranjan Kumar, Advocate for the appellant. Shri Mukesh Kumar Shukla, Authorized Representative for the Department CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 50022/2026 DATE OF HEARING : 01.10.2025 DATE OF DECISION: 07.01.2026 P.V. SUBBA RAO M/s Artex Textile Pvt. Ltd.1 filed this appeal to assail the order-in-appeal dated 27.05.20212 passed by the Commissioner of Customs (Appeals), New Delhi whereby he upheld the order dated 30.05.2019 passed by the Additional Commissioner and rejected the appellant's appeal.
1. Appellant
2. impugned order
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2. The appellant filed a Bill of entry dated 16.04.2019 declaring the goods as ―Viscose Polyamide Woven Fabric‖ [other than Upholstery Fabric, Made of Artificial Staple Fibre less than 85%] and classified the goods under the Customs Tariff Item3 5516 22 00. Based on specific intelligence the goods were examined by the officers of the Customs Preventive and were found to be woven dyed fabric. Samples were sent to the Central Revenue Control Laboratory4 and the fabric was found to be of Polyester Filament Yarn [textured 34.8% and non-textured 62.7%]. Thus the goods were found to be mis-declared. The Director of the appellant was called and after seeing the test report of the CRCL, he said that they had classified the goods on the basis of nature and composition of the fabric informed by the supplier but after seeing the test report of CRCL he agreed to the re- classification of the goods under CTI 5407 72 00 and also agreed to pay the differential duty.
3. As the goods which were declared in the Bill of Entry were different from the goods that were actually imported, the declared transaction value was rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods), 20075 and it was re-determined under Rule 5 of the Valuation Rules. Differential duty of Rs. 19,53,628/- was confirmed under section 28 of the Act. Goods were confiscated
3. CTI
4. CRCL
5. Valuation Rules 3 C/51104 OF 2022 under section 111(m) of the Act, but they were allowed to be redeemed on payment of fine of Rs. 2,00,000/- under section 125 of the Act. Penalty of Rs. 19,53,628/- [being equal to the amount of duties sought to be evade] was imposed on the appellant under section 114A of the Act.
4. Aggrieved by the order of the Additional Commissioner, the appellant filed an appeal before the Commissioner (Appeals) who, by the impugned order, upheld the decision. Hence, this appeal before us.
Submissions of the appellant
5. Shri Prem Ranjan Kumar, learned counsel for the appellant made the following submissions :-
(i) The acceptance by the appellant was a coerced acceptance ;
(ii) Even if the appellant had voluntarily accepted the enhancement of value, the assessing officer still had to follow the mandate of the statute while assessing the value of the imported goods ;
(iii) The value was enhanced to U.S. $ 0.34 per sq. mtrs.
on the basis of Bill of Entry No. 3164234 dated 05.05.2019 imported at Inland Container Depot, Ballabhgarh which was assessed at that value. As per Rule 5 of the Valuation Rules, the value that has to be applied is the declared value and not the assessed value of contemporaneous imports ;
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(iv) Redemption fine was imposed and penalties have been imposed on the appellant for mis-declaration of the nature and composition of the goods, but this mis-declaration was on account of a mistake committed by the supplier ;
(v) Imposition of redemption fine equal to the differential duty demanded was not justified as there was no intent to evade duty.
Submissions on behalf of the Revenue
6. Learned authorized representative for the Revenue vehemently supported the impugned order and asserted that it calls for no interference and made the following submissions :-
(i) As held by the Supreme Court in Commissioner of Central Excise, Madras versus Systems & Components Pvt. Ltd.6 what has been admitted by the party need not be proved. In this case, the appellant had admitted that the nature of goods was different from what was declared. The appellant was also accepted re-classification and re-assessment of the duty.
(ii) The declared value was rejected under Rule 12 of the Valuation Rules and was re-determined under Rule 5 of the Valuation Rules based on the data of contemporaneous imports ;
6. 2004 (165) E.L.T. 136 (S.C.) 5 C/51104 OF 2022
(iii) In view of the above, the appeal may be dismissed and the impugned order may be upheld.
Findings :
7. We have considered the submissions advanced by both sides and perused the records.
8. The undisputed fact is that the goods were mis-declared in the Bill of Entry. What was declared was ‗Viscose Polyamide Woven Fabric', whereas the fabric found to be of ‗Polyester Filament Yarn'. This mis-declaration was discovered by the Customs Preventive officers on the basis of specific intelligence, examination of the goods and test by the CRCL.
When questioned, the appellant did not dispute that the goods were mis-declared. The appellant's submission was that they were mis-declared on account of the mistake of the overseas supplier. However, since the goods were already tested by CRCL, the appellant accepted the re-classification of the goods and also re-determination of the duty.
9. Next is the question of valuation. As per Rule 3 of the Valuation Rules, the value of the goods shall be the transaction value subject to Rule 12. Rule 12 provides for rejection of transaction value by the proper officer. In other words, if the transaction value is not rejected by the proper officer under Rule 12, the transaction value shall be the assessable value. If the transaction value is rejected under Rule 12 then it should be re-determined sequentially under Valuation Rules 4 to 9.
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10. In order to reject the transaction value the proper officer should, in the first place, have some reason to doubt. If he has such reason, he can call for additional information from the importer and on receiving such information or if no information is provided, and the proper officer still has a reasonable doubt about the transaction value, it shall be deemed that the assessable value cannot be the transaction value. Rule 12 reads as follows :-
―12. Rejection of declared value. -- (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub- rule (1) of rule 3.
(2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1).
Explanation. - (1) For the removal of doubts, it is hereby declared that :-
(i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 9.
(ii) The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after the said enquiry in consultation with the importers.
(iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include -
(a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed;
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(b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price;
(c) the sale involves special discounts limited to exclusive agents;
(d) the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production;
(e) the non declaration of parameters such as brand, grade, specifications that have relevance to value;
(f) the fraudulent or manipulated documents‖.
11. In this case, since the invoice was for goods different from what were imported, the proper officer had reason to doubt the transaction value. When asked, the appellant agreed to pay the differential duty. There is nothing on record to show that the appellant had produced any evidence to justify his transaction value and the invoice which was submitted along with the Bill of Entry was for different goods. Under these circumstances, the proper officer had a reasonable doubt about the truth and accuracy of the transaction value.
12. Once the transaction value is rejected, the value should be re-determined based on the transaction value of identical goods under Rule 4. If such value is not available, then the transaction value shall be based on the transaction value of similar goods under Rule 5. In this case, the transaction value was determined based on the transaction value of similar goods imported through a Bill of Entry at ICD, Ballabhgarh.
13. The submission of the learned counsel for the appellant is that even if the appellant had accepted the re-classification 8 C/51104 OF 2022 and re-determination of the value, the officer still had to follow the procedure as per the Valuation Rules. We find that the officer did so and therefore, this submission is of no relevance.
14. The second submission of the learned counsel of the appellant is that the transaction value of the contemporaneous goods must be considered whereas what was considered was the value at which the contemporaneous Bill of Entry was assessed. However, we do not find anything on the record to show that the declared value in the contemporaneous import was different from the assessed value. We, therefore, find no force in the submission of the learned counsel as well.
15. The next questions are of confiscation, imposition of redemption fine and penalty. Under Section 111(m) of the Customs Act which reads as follows :-
"Section 111 : The following goods brought from a place outside India shall be liable to confiscation :
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54‖.
16. Since the goods did not correspond to what was declared in the Bill of Entry, they were liable to confiscation under section 111(m). There is no dispute that the goods which were imported were different from the goods which were declared in the Bill of Entry. We, therefore, find no infirmity in the 9 C/51104 OF 2022 confiscation of imported goods. Having confiscated the goods, they were allowed to be redeemed on payment of redemption fine of Rs. 2,00,000/-. The goods were worth Rs. 20,90,068/-. The redemption fine imposed was only about 10% of the value of the goods. We find the quantum of redemption fine fair and balanced and it does not call for any interference.
17. Because of the mis-declaration of the goods, the duties had to be re-assessed and differential duty was to be recovered. As per section 114A of the Act, in such cases the mandatory penalty equal to the amount of duty sought to be evaded has to be imposed. The Additional Commissioner imposed penalty accordingly. The order of the Additional Commissioner has been correctly upheld by the Commissioner (Appeals) by the impugned order.
18. In view of the above, we uphold the impugned order and dismiss the appeal.
(Order pronounced in open court on 07/01/2026.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK