The impugned Order-in-Original and the order of the Appellate Authority shall stand set aside only to the limited extent of paragraph 25(G), whereby a penalty of Rs.5,00,000/- has been imposed separately on
2026:MHC:1030
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 11.03.2026
CORAM:
THE HONOURABLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W. P.(MD)Nos.16463 and 16884 of 2018and
W.M.P.(MD)Nos.14599, 14905 & 14906 of 2018
W.P.(MD)No.16463 of 2018:-
I.Thirumani … Petitioner -vs-
Special Intelligence and Investigation Bureau,
SIIB,
Customs House,
Tuticorin. … Respondent
PRAYER:- Writ Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records in OIA 74 /2018, dated 13.03.2018 in OIO 63 / 2017 and quash and set aside the orders passed in OIA 74 / 2018, dated 13.03.2018 in OIO 63 / 2017.
For Petitioner : Mr.Ka.Raamakrishinan
For Respondent : Mr.R.Gowrishankar
Senior Standing Counsel
W.P.(MD)No.16884 of 2018:-
M/s.Rajeswari Traders,
Through its Proprietor,
I.Thirumani,
171/1, Chathiram Street,
Tuticorin – 628001. … Petitioner -vs-
1.The Commissioner of Appeals,
No.1, Williams Road, Cantonment,
Tiruchirappalli.
2.The Additional Commissioner of Customs,
Office of the Commissioner of Customs,
Customs House, New Harbour Estate, Tuticorin.
3.Special Intelligence and Investigation Bureau,
SIIB,
Customs House,
Tuticorin. … Respondents
PRAYER:- Writ Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorari, calling for the records in OIA 73 /2018, dated 13.03.2018, on the file of the first respondent and on the file of the second respondent in OIO 63 / 2017 and quash the orders passed in OIA 73 / 2018, dated 13.03.2018, on the file of the first respondent and on the file of the second respondent in OIO 63 / 2017, dated 28.02.2017.
For Petitioner : Mr.Ka.Raamakrishinan
For Respondents : Mr.R.Gowrishankar
Senior Standing Counsel
COMMON ORDER
These two writ petitions are connected and are therefore disposed of by this common order.
2. These writ petitions are filed challenging the impugned order dated
13.03.2018. By the said order, the appeals filed by the petitioner as against the Order-in-Original passed by the Additional Commissioner of Customs, Tuticorin, in O.I.O.No.63/2017 dated 28.02.2017, came to be rejected.
3. Upon hearing the learned counsel for the petitioner and upon perusing the material records placed before this Court, the case of the petitioner, in brief, is as follows:-
(i) The petitioner, namely, I.Thirumani, trading as M/s.Rajeswari
Traders, a proprietary concern, purchased 186.030 metric tons of Heavy Melting
Iron Scrap from M/s.A.J. Enterprises, Madurai, on High Sea Sales basis under an agreement dated 11.04.2016. The scrap metal was imported through the vessel M.V.Kumasi from Longoni under a Bill of Lading dated 03.04.2016. Thereafter, one A.Balaji of M/s.Sriram Logistics, Customs Clearing and Forwarding Agent, Tuticorin, filed a Bill of Entry on 24.05.2016 through the Customs Broker, namely, M/s.International Shipping Corporation, Tuticorin.
(ii) With reference to the said consignment, the Adjudicating Authority issued a show cause notice dated 20.12.2016. Subsequently, a final order in O.I.O.No.63 of 2017 came to be passed imposing penalties as mentioned therein. Aggrieved by the same, the petitioner preferred appeals before the Appellate Authority, which came to be dismissed by the impugned order dated 13.03.2018. Challenging the same, the present writ petitions have been filed.
4. The learned counsel for the petitioner would submit that the petitioner had originally declared 186,030 kilograms of cargo, whereas it is the stand of the respondent Department that the actual weighment was 198,260 kilograms. According to the learned counsel, even assuming that there was any misstatement or misdeclaration and that an excess quantity was found, the authorities ought to have accepted the declared value in the first instance. Even otherwise, if the authorities were not inclined to accept the declared value, proper reasons ought to have been assigned for rejecting the same and thereafter, in terms of Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 [hereinafter referred to as ”the Rules”], the value of similar goods sold for export to India ought to have been taken into consideration for determining the value of the goods.
5. It is further submitted that the issue is no longer res integra and is governed by the pronouncement of the Hon’ble Supreme Court in Century Metal Recycling Private Limited and another vs. Union of India and others[1] and also in Commissioner of Central Excise and Service Tax, Noida vs. Sanjivani Non-Ferrous Trading Private Limited[2]. The Hon’ble Supreme Court has categorically held that while rejecting the declared value, there must be proper application of mind. Even thereafter, there must be sufficient evidence on record with regard to the value of similar goods and such comparison must relate to the relevant point of time. Only thereafter the authorities can determine the value. According to the learned counsel, the said procedure has not been followed in the present case and therefore, the orders of the Adjudicating Authority as well as the Appellate Authority are liable to be quashed.
6. Secondly, it is submitted that when the second summon was issued, the investigating authority had not obtained due permission from the Adjudicating Authority and therefore, the entire exercise is vitiated.
7. The third contention of the learned counsel for the petitioner is that when penalty has been imposed on the petitioner, namely I.Thirumani, another penalty has also been imposed on the proprietary concern, namely, M/s.Rajeswari Traders. Since a proprietary concern is not a separate legal entity distinct from its proprietor, the imposition of separate penalties amounts to duplication and is therefore, unsustainable in law.
8. Per contra, the learned Senior Standing Counsel appearing for the respondents, by placing reliance on paragraphs 7 to 9 of the counter affidavit, would submit that the Consent Form produced by the petitioner from the buyer was found to be forged. Therefore, the respondents had reason to believe that the declared value was not correct. Once such reasonable doubt arose, the declared value was rejected in terms of Rule 12 of the Rules and thereafter, the authorities proceeded to determine the value in accordance with Rules 4 to 9 of the Rules.
9. It is further submitted that under Rule 5 of the Rules, the value of similar goods exported to India at or about the same time is required to be taken into account. In the present case, based on the available data and records, it was found that the same category of Heavy Melting Scrap exported to India was valued at Euro 0.21559 per kilogram. By converting the same into Indian currency at the prevailing exchange rate at the relevant point of time, the assessable value was determined. Therefore, according to the learned Senior Standing Counsel, there is no error whatsoever in the valuation adopted by the respondents.
10. With regard to the second contention, it is submitted that the second summon was issued only in connection with an enquiry relating to violation of the Customs Brokers Licensing Regulations, 2013 and not in relation to the same transaction.
11. Insofar as the issue of penalty is concerned, it is contended that where afirm and its partners are involved, separate penalties can be imposed under the provisions of law.
12. The learned counsel for the respondents would also contend that the petitioner has an effective alternative remedy of appeal and without availing the same, the present writ petitions are not maintainable.
13. I have considered the rival submissions made on either side and perused the material records placed before this Court.
14. Firstly, with regard to the objection relating to the availability of an alternative remedy, it is seen that these writ petitions were entertained as early as in the year 2018 and the respondents have already filed their counter affidavits on merits. At this stage, it would be inappropriate to relegate the petitioner to avail the alternative remedy.
15. The first ground raised by the writ petitioner relates to the valuation ofthe goods. In this regard, Rule 12 of the Rules is extracted hereunder for ready reference.
”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;
(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.”
16. Thus, on a consideration of the above provision, it can be seen that when the Proper Officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he is empowered to enquire into the same and reject the declared value and thereafter, proceed to determine the value in accordance with law.
17. In the present case, since the very consent letter produced by the petitioner is held to be forged, I do not find any error in the authority rejecting the value declared by the petitioner.
18. Once the declared value is rejected, the authorities are required to determine the value in accordance with Rules 4 to 9 of the Rules. As per Rule 5, the value shall be determined with reference to the transaction value of similar goods sold for export to India. In the present case, there is no dispute with regard to the nature of the goods, namely, Heavy Melting Scrap, and the respondents have adopted the prevailing rate with reference to similar goods.
19. The contention of the learned counsel for the petitioner is that the details of the data relied upon by the respondents have not been reflected in the impugned order. However, in a case of this nature, where there is no dispute with regard to the nature of the goods and the similarity of the goods is clear and categorical, and when the respondents have stated that they have relied upon the available data and fixed the value, the same can be accepted.
20. It is also to be noted that as per the value declared by the petitioner, the price of the goods works out to 0.16 Euros per kilogram. By adopting the prevailing exchange rate at the relevant point of time (1 Euro = Rs.76.70), the value would come to Rs.12.27 per kilogram. After rejecting the petitioner’s declared value, the Adjudicating Authority adopted the value of 0.21559 Euros per kilogram based on the available data. By applying the same exchange rate (1 Euro = Rs.76.70), the value per kilogram works out to Rs.16.53. Therefore, it can be seen that the increase in valuation is only marginal and does not warrant a detailed forensic examination of the data relied upon by the Adjudicating Authority.
21. For all the aforesaid reasons, I am unable to accept the submissions made by the learned counsel for the petitioner.
22. With regard to the contention relating to the second summons, it is stated that the enquiry was initiated for a different purpose, namely, with reference to a possible violation of the Customs Brokers Licensing Regulations, 2013. Further, it is evident that the said enquiry ultimately had no bearing on the conclusions reached in the Order-in-Original or in the order of the Appellate Authority, which primarily relate to the issue of valuation and weighment of the goods. Therefore, I am of the view that the question as to whether the said investigation was conducted strictly in accordance with law is not germane to the issue involved in the present case.
23. With regard to the third contention, it is to be noted that the business in question is carried on by the individual, namely I.Thirumani and the name of the proprietary concern is M/s.Rajeswari Traders. The respondents, however, have levied a separate penalty on the proprietary concern, as if it were a firm. A proprietary concern is not a separate legal entity independent of its proprietor. Even the writ petition filed separately in the name of the proprietary concern in W.P.(MD)No.16884 of 2018 is not maintainable and is only superfluous. Once penalty is imposed on the individual proprietor, namely I.Thirumani, who carries on business as the proprietor of M/s.Rajeswari Traders, a separate penalty imposed independently on M/s.Rajeswari Traders cannot be sustained.
24. In view of the above, the writ petitions are disposed of on the following terms:
(i) W.P.(MD)No.16884 of 2018 filed in the name of M/s.Rajeswari Traders, is dismissed as not maintainable.
(ii) W.P.(MD) No.16463 of 2018 is partly allowed to the following extent:-
The impugned Order-in-Original and the order of the Appellate Authority shall stand set aside only to the limited extent of paragraph 25(G), whereby a penalty of Rs.5,00,000/- has been imposed separately on
M/s.Rajeswari Traders. In all other respects, the Order-in-Original as well as the order of the Appellate Authority stand confirmed.
No costs. Consequently, the connected Miscellaneous Petitions are closed.
Neutral Citation : Yes 11.03.2026
smn2
To:-
1.The Special Intelligence and Investigation Bureau,
SIIB,
Customs House, Tuticorin.
2.The Commissioner of Appeals,
No.1, Williams Road, Cantonment,
Tiruchirappalli.
3.The Additional Commissioner of Customs,
Office of the Commissioner of Customs,
Customs House, New Harbour Estate, Tuticorin.
D.BHARATHA CHAKRAVARTHY , J.
smn2
Common order in
W.P.(MD)Nos.16463 and 16884 of 2018
11.03.2026
[1] (2019) 6 SCC 655
[2] (2019) 2 SCC 378
