M/s. Sri Sai Balaji Traders vs CC APPEALS-SEA Ch-II

IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI

Customs Appeal No. 40487 of 2026

(Arising out of Order-in-Appeal Seaport C. Cus. II No. 536/2026 dated 10.06.2026
passed by the Commissioner of Customs (Appeals – II), Chennai)

M/s. Sri Sai Balaji Traders Appellant
Door No. 13/10, Elango Nagar
nd
2 Street, Thirumalai Nagar
South Tiruppur
Tirupur – 641 607.

Vs.

Commissioner of Customs Respondent
Chennai II Commissionerate
Custom House, 60, Rajaji Salai,
Chennai – 600 001.

APPEARANCE:

Shri E. Ramesh, Advocate for the Appellant
Shri N. Mohan, Authorized Representative for the Respondent

CORAM

Hon’ble Shri M. Ajit Kumar, Member (Technical)


FINAL ORDER NO. 41149/2026

Date of Hearing : 13.10.2026
Date of Decision: 30.10.2026


This appeal is filed by the appellant against Order-in-Appeal
Seaport C. Cus. II No. 536/2026 dated 10.06.2026 passed by the
Commissioner of Customs (Appeals – II), Chennai.
Factual Matrix
2. The Appellant, engaged in the wholesale trading and distribution
of fabrics, imported 22,366.19 kg of “Remnant Stock of Cotton Knitted
Fabrics (100% Cotton Knitted W:1.6M)” of Vietnamese origin through
Chennai Port and filed Bill of Entry No. 6050579 dated 10.10.2024
under CTH 60062200, declaring a CIF value of USD 1.20 per kg and an

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assessable value of ₹23,02,936/-. DGFT Notification No. 33/2024-25
dated 01.10.2024 revised the import policy for dyed cotton fabrics
under CTH 6006 2200 from “Free” to “Prohibited”, except for imports
having a CIF value of USD 3.5 per kg or above. Accordingly, the
Department treated the goods as restricted imports. The Appellant,
vide letter dated 22.10.2024, submitted that the goods had arrived at
Ho Chi Minh Port on 29.09.2024 and were loaded on 30.09.2024,
though the Bill of Lading was issued on 05.10.2024, and requested
adjudication without a Show Cause Notice or personal hearing. The
Adjudicating Authority ordered confiscation under Section 111(d) of
the Customs Act, 1962, while permitting redemption for re-export on
payment of a fine of ₹15,000/- under Section 125(1), and imposed a
penalty of ₹25,000/- under Section 112(a). The Commissioner
(Appeals) upheld the order, giving rise to the present appeal before
this Tribunal.
Submissions made by the Appellant
3. Shri E. Ramesh, Ld. Counsel appeared for the appellant and Ld.
Authorized representative Shri N. Mohan appeared for the respondent.
3.1 Shri E. Ramesh, Ld. Counsel for the appellant submitted that:
A The Appellant submits that the principal issue is whether the
imported “Remnant Stock of Cotton Knitted Fabrics” attracts the
minimum import price (MIP) condition prescribed under DGFT
Notification No. 33/2024-25 dated 01.10.2024. The goods were
declared under CTH 6006 2200, pursuant to which the Department
ordered confiscation under Section 111(d) of the Customs Act, 1962,
imposed a redemption fine of ₹15,000/- for re-export and a penalty of
₹25,000/- under Section 112(a).

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B. The Appellant initially approached the Hon’ble High Court in W.P.
No. 36039 of 2024, wherein, by interim order dated 21.12.2024,
release of the goods was permitted subject to conditions and solely for
re-export. Subsequently, Test Report No. 3705/MCH/15.10.2024 came
to the Appellant’s notice, recording the fabric as “Printed”. The
Appellant contends that the goods are consequently classifiable under
CTH 6006 2400, rather than CTH 6006 2200, and therefore fall outside
the scope of the MIP condition under the said Notification.
C. Upon the test report being brought to its notice, the Hon’ble High
Court, in W.P. No. 39103 of 2025, by order dated 17.03.2026, granted
liberty to the Appellant to pursue the statutory appellate remedy.
D. However, the Appellate Commissioner, by the impugned Order,
dismissed the appeal, declining to consider the test report on the
grounds that it was not intended for classification purposes, lacked
specified formal particulars and had not been relied upon to seek
amendment of the Bill of Entry before adjudication. The Appellant
submits that these objections are extraneous to the substantive issue,
particularly as the authenticity of the test report was not questioned.
The finding that the fabric was printed materially affects its
classification and, consequently, the applicability of the MIP condition.
The Appellant therefore contends that the impugned order warrants
setting aside.
E. The Appellant further submits that the goods have remained
detained for nearly two years, causing substantial financial hardship
and raising concerns regarding deterioration and loss of value. As the
accumulated detention, demurrage and storage charges allegedly
exceed the value of the goods, the Appellant seeks a direction to the

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Proper Officer to issue the requisite certificate for waiver of such
charges under Regulation 6(1)(l) of the Handling of Cargo in Customs
Areas Regulations, 2009.
F. Accordingly, the Appellant prays that this Hon’ble Tribunal set
aside the impugned Order-in-Appeal dated 10.06.2026, hold that the
goods are classifiable under CTH 6006 2400 and are not subject to the
MIP condition under DGFT Notification No. 33/2024-25 dated
01.10.2024, direct waiver of detention, demurrage and storage
charges for the period of detention until clearance, and grant such
other reliefs as may be deemed fit in the interests of justice.
Submissions made by the Respondent-Revenue
3.2 Shri N. Mohan Ld. Authorized representative who appeared for
the respondent stated that:
A. During assessment, the Bill of Entry was referred to the Port
Assessment Group on the ground that the imported goods appeared
classifiable under CTH 60062200 and attracted the restriction
prescribed under DGFT Notification No.33/2024-25 dated 01.10.2024.
The Department observed that the declared CIF value was below the
prescribed minimum import price of USD 3.5 per kilogram and was
hence prohibited for import and was rightly directed to be re-exported.
B. The laboratory test report recording the fabric as “printed” was
issued in connection with examination for hazardous azo dyes and not
for determining tariff classification. It further contends that the report,
produced as a printout or screenshot, lacks authentication and
essential particulars, and that the discrepancy in the report numbers
further undermines its evidentiary value. The Appellant has also failed
to furnish independent supporting material, such as manufacturer’s

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specifications, supplier declarations or technical literature, to establish
classification under CTH 60062400.
C. The Revenue further submits that the Bill of Entry and
contemporaneous import documents consistently declared the goods
under CTH 60062200, attracting DGFT Notification No. 33/2024-25
dated 01.10.2024. The Appellant neither sought amendment of the
declared classification nor disputed it during the assessment
proceedings, raising the claim for reclassification only subsequently.
Accordingly, the Revenue contends that the test report is insufficient
to establish classification under CTH 60062400 and that the
classification originally declared under CTH 60062200 should be
maintained.
D. The Ld. A.R. prayed that the appeal may be rejected.
Discussion and Findings
4. I have carefully considered the submissions made by the Ld.
Counsel for the Appellant and the Ld. Representative for the Revenue
and perused the records of the case. The principal issue for
determination is whether the imported goods, described as “Remnant
Stock of Cotton Knitted Fabrics (100% Cotton Knitted W:1.6M)”, are
correctly classifiable under CTH 6006 2200, as declared in the Bill of
Entry, or under CTH 6006 2400, as claimed by the Appellant, and
whether the import restriction prescribed under DGFT Notification No.
33/2024-25 dated 01.10.2024 is applicable to the goods.
4.1 I find that the goods were imported under Bill of Entry No.
6050579 dated 10.10.2024, declaring a CIF value of USD 1.20 per kg.
The Department proceeded on the basis that the goods fell under CTH
6006 2200 and were subject to the revised import policy under the

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aforesaid DGFT Notification, which prohibited imports below the
prescribed minimum import price of USD 3.5 per kg. Consequently, the
goods were confiscated under Section 111(d) of the Customs Act,
1962, with an option for redemption for re-export on payment of a fine
of ₹15,000/-, besides imposition of a penalty of ₹25,000/- under
Section 112(a) of the Act.
4.2 The principal contention of the Appellant is that Test Report No.
3705/MCH/15.10.2024, from the Customs Lab, describes the fabric as
“printed” and, therefore, the goods merit classification under CTH 6006
2400 instead of CTH 6006 2200. According to the Appellant, the goods,
would fall outside the scope of the MIP condition relied upon by the
Department.
4.3 The Revenue, on the other hand, submits that the test report
was obtained in connection with examination for hazardous azo dyes
and was not intended to determine tariff classification. It also questions
the evidentiary value of the document on account of its form, absence
of authentication particulars and discrepancy in the report numbers.
Further, the Revenue points out that the Appellant declared the goods
under CTH 6006 2200 and did not seek amendment of the Bill of Entry
during the assessment proceedings.
4.4 I find that the fact that the laboratory examination was
conducted for detecting hazardous dyes does not, by itself, render the
technical observations recorded therein irrelevant for considering the
nature and characteristics of the goods. Equally, however, the
description “printed” in a laboratory report cannot, in isolation,
conclusively establish the appropriate tariff classification. Classification
must be determined with reference to the relevant tariff headings, their

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terms and applicable interpretative rules, read with the established
characteristics of the imported goods.
4.5 I also find that the Revenue’s concerns regarding the form and
authenticity of the Test Report are not well-founded. The report was
obtained at the instance of the Revenue to test for hazardous azo dyes.
The Appellant has referred to the report having been rendered by the
Customs Lab. As stated by the Appellant, such reports are processed
as a part of the e-Sanchit electronic record, an online paperless
document-processing system introduced by the CBIC under the Single
Window Interface for Facilitation of Trade (SWIFT). Had the report not
formed part of the official electronic record, its authenticity could
readily have been easily verified with the official laboratory concerned
and from the importer and appropriate action taken, if warranted. The
report is detailed and covers eleven test parameters, of which only one
relates to azo dyes. This further militates against the contention that
the examination was confined to testing for hazardous azo dyes. If the
Revenue entertained any doubt regarding the contents or authenticity
of the report, it could have sought a clarification, verification or re-test
from the laboratory during adjudication. Having failed to do so, the
Revenue cannot now question its authenticity without any supporting
material. We further note that the report expresses no opinion on the
classification of the cotton knitted fabrics; it merely records the factual
finding that the goods are ‘printed’.
4.6 The goods were found prohibited, mainly on the ground that the
appellant had itself classified the goods under CTH 6006 2200 in the
Bill of Entry. No amendment was sought to change the classification,
prior to the Adjudication. The Bill of Lading was issued on 05.10.2024

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i.e. after DGFT Notification No. 33/2024-25 dated 01.10.2024 revised
the import policy for dyed cotton fabrics under CTH 6006 2200 from
“Free” to “Prohibited”, except for imports having a CIF value of USD
3.5 per kg or above.
4.7 I find that a matter may be remanded by an Appellate Authority
only where the evidence on record is insufficient for the appellate
authority to adjudicate the issue conclusively. [See: Naresh Kumar
and Company Vs Commissioner, Service Tax - 2026-TIOL-282-
HC-KOL-ST]. An unwarranted remand would merely prolong the
litigation, especially in a case where the goods are still awaiting
clearance. Accordingly, I proceed to examine the merits of the case
based on the material available on record.
Test Memo
4.8 I find that the goods have after test been found to be as under,
as per the impugned Test Report:

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4.9 Notification 33/2024-25 is reproduced below for ease of
reference.
Notification No. 33/2024-25 New Delhi, Dated: 1"
October, 2024

Subject: Imposition of Minimum Import Price on
Synthetic Knitted Fabrics up to 31 December
2024-reg.


S.O.: In exercise of powers conferred by Section 3 and Section
5 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of
the Foreign Trade Policy, 2023, as amended from time to time,
and in partial modification to Notification No. 77/2023 dated
16.03.2024, the Central Government hereby extends the
condition of Minimum Import Price (MIP) on the following
5 ITC (HS) Codes of Synthetic Knitted Fabrics from 15th
September, 2024 το 31 December 2024 as under:


ITC (HS)
Item Description Existing
Revised
Existing
Revised Policy
Code
Import
Import
Policy
Condition
Condition
Policy
Policy
60063100 - Of synthetic
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and above
per kilogram
60063200 - Of synthetic
fibres
-- Unbleached or
bleached
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and above
per kilogram
60063300 - Of synthetic
fibres
-- Dyed
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and above
per kilogram
60063400 - Of synthetic
fibres
-- Of yarns of
different colours
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and above
per kilogram
60069000 -- Other Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and above
per kilogram

fibres
-- Printed
2. All other terms and conditions in the Notification No.
77/2023 dated 16.03.2024 shall remain unchanged.

3. In addition to the above, the Central Government hereby
revises the Import Policy Condition of the following ITC
(HS) Codes under Chapter 60 of ITC(HS) 2022 , Schedule-1
(Import Policy), for the period upto 31" December, 2024, with
immediate effect:

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ITC (HS)
Item
Description
Existing
Revised
Existing
Revised Policy
Code
Import
Import
Policy
Condition
Condition
Policy
Policy
60019200 - Other: -- Of
manmade
fibres
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60041000 Knitted or
crocheted
fabrics of a
width
exceeding 30
cm, containing
by weight 5
per cent or
more of
elastomeric
yarn or rubber
thread, other
than those of
heading 60.01
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60049000 - Other Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60053600 - Of synthetic
fibres
-- Other,
unbleached or
bleached
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60053790 --- Other Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60053900 - Of synthetic
fibres
-- Other, prined
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60062200 - Of cotton: --
Free Prohibited - However,
import is
‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram
60064200 - Of artificial
fibres:
-- Dyed
Dyed
Free Prohibited - However, import
is ‘Free’ if CIF
value is 3.5 US
Dollar and
above per
kilogram

Effect of the Notification: Minimum Import Price (MIP) on
Synthetic Knitted Fabrics is extended from 15th September 2024

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to 31 December 2024. Further, MIP of US Dollar 3.50 per
Kilogram on CIF Value has also been imposed on 08 new ITC
(HS) Codes of various kinds of Knitted fabrics for the period up
to 31" December, 2024.

(issued from F. No. 01/89/180/Misc-39/AM-05/PC-
2[A]/E-1425)
4.10 The relevant tariff classification heading pertaining to CTH 6006
is reproduced hereinbelow for ease of reference:
6006 OTHER KNITTED OR CROCHETED
FABRICS

6006 10 00 - Of wool or fine animal hair kg. *10% -
- Of cotton
6006 21 00 -- Unbleached or bleached kg. *10% -
6006 22 00 -- Dyed kg. *10% -
6006 23 00 -- Of yarns of different colours kg. *10% -
600624
00
-- Printed kg. *10% -
- Of synthetic fibres
6006 31 00 -- Unbleached or bleached kg. *20% -
6006 32 00 -- Dyed kg. *20% -
6006 33 00 -- Of yarns of different colours kg. *20% -
6006 34 00 -- Printed kg. *20% -
- Of artificial fibres
6006 41 00 -- Unbleached or bleached kg. *20% -
6006 42 00 -- Dyed kg. *20% -
6006 43 00 -- Of Yarns of different colours Kg. *20% -
6006 44 00 -- Printed kg. *20% -
6006 90 00 - Other kg. *10% -

5. The Departmental authorities ordinarily attach considerable
evidentiary value to expert opinion from those they have referred a
matter, though they are not bound to accept such reports
unquestioningly, particularly where they are perfunctory or otherwise
unsustainable. But then they are required to state so transparently at
the outset and put the importer on notice suitably. In the present case,
we find that the Test Report is detailed. Its findings merit acceptance,
particularly since the Revenue has neither challenged the report as
being incorrect on the tested parameters nor sought a re-test. The
Department has sought to discredit the report on the ground that its
format was improper, while accepting that it was intended to test for
hazardous azo dyes. No enquiry was made into how a report, now

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questioned on other grounds, came to be incorporated into the
Customs electronic assessment system. The casual manner in which
this serious issue was addressed suggests a predetermined conclusion,
reached without examining the evidentiary value or effect of the test
report. The report, therefore, constitutes relevant and reliable evidence
that must be duly considered in deciding the issue in dispute.
6. As regards the classification declared by the importer, it cannot
be presumed that the importer possesses expert knowledge of tariff
classification. The appellant has contended that importers are
handicapped in accessing the Test Report, as they can view it only on
a computer screen or obtain a printout at the discretion of the officers
concerned. The submission has not been rebutted. In these
circumstances, the importer’s failure to seek amendment of the
declared classification in the Bill of Entry cannot, be held against it. The
importer did, however, avail itself of the opportunity to present its case
including the change in classification, before the Adjudicating
Authority. It was, therefore, incumbent upon the Adjudicating
Authority to examine the classification dispute as per the discretionary
jurisdiction vested in him, in all its relevant aspects and arrive at a
reasoned conclusion after considering the test results, the applicable
tariff entries, the relevant DGFT Notification and the governing legal
principles. The Hon’ble supreme Court very recently in S.S. DAS VS.
UNION OF INDIA [2026 INSC 980, Dated: 09.09.2026], while
examining the scope of discretion held:
“59. We need to remind the administrative officers
that discretion is not a charter for arbitrariness.
Discretion vests an officer empowered to decide . . . . with
a choice between alternatives. When the statute, rule or
regulation provides guidance for its exercise, the action
must conform to it. When the statute, rule or regulation is

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silent, the power cannot be exercised whimsically or
arbitrarily; it must be informed by reasonableness and
fairness, as abuse or unfair use is never the legislative
intent . . .”
(emphasis added)

7. On examination of the facts, I find that the impugned goods are
100% cotton weft-knitted and printed fabrics made from spun yarn,
having a GSM of 182.0 and a width of 216.0 cm. Under the Customs
Tariff, ‘Other knitted or crocheted fabrics’ of cotton, which are printed,
are classifiable under CTI 6006 2400. Such goods are not covered by
DGFT Notification No. 33/2024-25 dated 01.10.2024. Accordingly, the
impugned goods do not fall within the ‘prohibited’ category, being
outside the purview of the said Notification. This being so the goods
are free to be imported, as no other restrictions have been stated in
the impugned order and hence the order merits to be set aside.
Conclusion
Accordingly, the impugned order is set aside. The goods are permitted
to be cleared for home-consumption after completing assessment
related formalities, including the payment of appropriate duty. The
Appellant is eligible for consequential relief. Accordingly, the storage of
goods not being on account of the appellant, the Proper Officer may
also issue suitable orders for waiver of detention, demurrage and
storage charges for the period of detention until clearance by Customs.
The appeal is disposed of on the said terms.
(Order pronounced in open court on 30.10.2026)



Sd/-
( M. AJIT KUMAR )
Member (Technical)
Rex