Chennai CESTAT Lets Importer Clear $1.20/kg Printed Cotton Fabric, Finding DGFT’s $3.50 MIP Does Not Cover Its Tariff Code

The appellant imported 22,366.19 kg of “Remnant Stock of Cotton Knitted Fabrics” from Vietnam under Bill of Entry dated 10 October 2024, declaring the goods under CTH 6006 2200 at a CIF value of USD 1.20 per kg.

DGFT Notification No. 33/2024-25 dated 1 October 2024 made imports under that code prohibited unless the CIF value was at least USD 3.50 per kg.

Customs confiscated the goods under Section 111(d) of the Customs Act, 1962, allowed redemption for re-export on payment of a fine, and imposed a penalty under Section 112(a).

The Commissioner (Appeals) upheld the order.

Before the Tribunal, the appellant relied on a Customs laboratory report describing the fabric as “printed” and claimed classification under CTH 6006 2400, which it argued was outside the notification’s restriction.

Sections 111(d), 112(a), and 125 of the Customs Act, 1962 govern confiscation of goods imported contrary to a prohibition, related penalties, and redemption of confiscated goods.

The relevant Customs Tariff distinguishes cotton knitted fabrics that are dyed under CTH 6006 2200 from those that are printed under CTH 6006 2400.

DGFT Notification No. 33/2024-25, issued under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, imposed a USD 3.50 per kg minimum import price condition on specified tariff codes, including CTH 6006 2200; the reproduced notification did not include CTH 6006 2400.

The Tribunal also applied the principle that administrative discretion must be exercised reasonably and fairly, not arbitrarily, relying on S.S. Das v. Union of India [2026 INSC 980].

It cited Naresh Kumar and Company v. Commissioner, Service Tax, 2026-TIOL-282-HC-KOL-ST, for the proposition that remand is appropriate only where the evidence is insufficient for the appellate authority to decide the matter.

The Tribunal treated the laboratory report’s description of the fabric as “printed” as relevant evidence of the goods’ characteristics, although not conclusive by itself of tariff classification.

It rejected the Revenue’s objections to the report’s authenticity and evidentiary value, noting that it was a detailed report obtained through Customs, that the Revenue had not sought verification or retesting, and that the report had not been shown to be incorrect.

The Tribunal further held that the appellant’s original tariff declaration and failure to seek amendment before adjudication did not foreclose consideration of classification, particularly where the appellant had raised the issue before the adjudicating authority.

On the evidence, it found the goods to be 100% cotton, weft-knitted, printed fabrics and applied the tariff distinction between dyed and printed cotton fabrics.

Because the goods fell under CTH 6006 2400, rather than the code covered by the relevant restriction, the minimum import price condition did not apply.

It set aside the Order-in-Appeal and permitted clearance for home consumption, subject to completion of assessment formalities and payment of applicable duty.

It also directed that the Proper Officer may issue suitable orders waiving detention, demurrage, and storage charges for the period of detention until clearance, as the storage was not attributable to the appellant.