2022 (2) TMI 370 - AT - Customs

Undervaluation of imported goods - Paper Cup machines and Blankets - rejection of transaction value - redetermination of value - admissible evidence or not - documents in the form of computer printouts / extracts of WhatsApp messages/ images and load port documents/papers submitted by the shipping agents - Confiscation - penalty - HELD THAT - There is difference in the models as mentioned in the proforma invoices and the commercial invoice, Learned Adjudicating authority proceeds to confirm the value reflected in the proforma invoice, relying on the statement dt. 20.6.2017 of Shri Raghuveer Swamy (an outsider). It is found further that the Learned Commissioner takes a peculiar stand that nevertheless, once the notice is issued alleging such a serious charge based on certain sets of evidences, the onus to prove otherwise shifts upon the importer and they were under obligation to rebut the allegation with cogent documentary evidence to substantiate their claim and corroborate with evidence, which they have failed to do. Rather, importer has questioned the allegation and evidences on mere technical grounds. The argument by the adjudicating authority is not only specious but also not legally tenable. The allegations, if any, have to be proved by the Revenue authorities alleging the same. It is incorrect to say that the appellant has to disprove the allegations with cogent evidence. Such an argument runs against the settled position of law and as such the same is not acceptable. The Courts and Tribunals have consistently held that proforma invoices cannot be evidence, at least in themselves. What is material is the transaction value. Revenue is required to prove with evidence that the payments over and above, the price reflected in commercial invoices are actually made. In the instant case the same is absent - the adjudicating authority himself observes that there is a difference in the particulars mentioned in proforma invoice, and the invoices submitted along with bills of entry. In the instant case, the investigation has revealed the actual transaction value based on cogent evidences. Therefore, the actual price taken being the transaction value under Section 14 of the Customs Act, 1962, we find that the observations of the Learned Commissioner are very curious. Once the goods are assessed and cleared, there was no reason for rejecting the declared value and redetermining the same following the CVR, 2007 sequentially. First of all, the declared transaction value needs to be rejected and the value requires to be redetermined in terms of CVR, 2007, and it was incumbent upon the investigation and the adjudicating authority to show reasons for rejection of the declared assessable value and the results as to how the price adopted for rejecting the value is determined. This is a settled principle of valuation as held by this Tribunal as well as various Courts. The show cause notice and the OIO are not maintainable and that the OIO is liable to be set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Allegation of undervaluation of imported goods.
2. Admissibility and genuineness of evidence (proforma invoices, WhatsApp messages, load port documents).
3. Jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue show cause notices.

Detailed Analysis:

1. Allegation of Undervaluation of Imported Goods:
The appellant, a proprietary concern, imported Paper Cup machines and Blankets from China. The Directorate of Revenue Intelligence (DRI) alleged undervaluation of these imported goods based on two show cause notices issued. The Commissioner of Customs (Preventive) Jodhpur adjudicated the matter and rejected the transaction value declared by the appellant, re-determined the value, and imposed penalties under Section 114A and Section 112 of the Customs Act, 1962. The appellant contested the rejection of the declared value, arguing that the proforma invoices used by the department were not reliable and lacked legal sanctity.

2. Admissibility and Genuineness of Evidence:
The evidence relied upon by the department included proforma invoices, WhatsApp messages retrieved from a Samsung mobile phone, and load port documents submitted by shipping agents. The appellant challenged the genuineness and admissibility of this evidence, arguing that the proforma invoices were not correlated with the Bills of Entry and lacked the necessary seals and signatures. The WhatsApp messages were contested on the grounds that the mobile phone was not recovered following the due process under Section 138C of the Customs Act, 1962. The load port documents were also disputed as they were not authenticated by the Customs authorities at the respective port of export.

The Tribunal found that the proforma invoices could not be the basis for redetermination of value as they were mere offer letters and did not conclusively establish the transaction. The WhatsApp messages and other electronic evidence were not retrieved following the procedure laid down under Section 138C, thereby losing their evidentiary value. The load port documents were also found to be unreliable as they were not obtained through official channels and lacked proper authentication.

3. Jurisdiction of DRI Officers to Issue Show Cause Notices:
The appellant argued that the officers of the Directorate of Revenue Intelligence (DRI) were not proper officers and lacked jurisdiction to issue the show cause notices, citing the Supreme Court's decision in the Canon India case. The Tribunal acknowledged this argument but chose not to deliberate on it, as the show cause notice and the Order-in-Original (OIO) were found to be not maintainable on merits.

Conclusion:
The Tribunal concluded that the evidence relied upon by the department was not legally tenable and that the proforma invoices, WhatsApp messages, and load port documents could not be the basis for rejecting the declared transaction value. The Tribunal set aside the impugned order and the show cause notice, allowing the appeals filed by the appellant with consequential relief as per law.