2022 (8) TMI 237 - AT - Customs

Valuation of imported consignments - Linen Yarn, Ramie Yarn and other misc. items from various overseas suppliers, based in China - rejection of declared value - redetermination of the rejected value - retraction of relied statements - Section 28 of Customs Act,1962 - HELD THAT - The requirements of Section 17 ibid have not been complied with diligently by the Customs department inasmuch as the value declared by the importer at the stage of self-assessment was not disputed, the payments made towards the duty liability was accepted and that the disputed goods were also cleared for the intended purpose. These facts are evidenced for the findings recorded in the impugned order at paragraphs 5.9, 6.1(ii) and (iv) - it can be concluded that in absence of non-compliance of the provisions contained in Section 17 ibid, more particularly, sub-section (5) therein, the assessments cannot be considered as complete or final. The provisions with regard to search of premises are contained in Section 105 ibid. It has been mandated that the provisions of Code of Criminal Procedure, 1898 relating to searches shall, as the case may be, apply to searches conducted under the Customs Act, 1962. The basic purpose and objective of drawing Panchanama has been made clear in Section 100(4) in the said code. As per the statutory mandates and the law laid down by the judicial forums, the purpose for drawing the Panchanama is to conveyance the court that the officer-in-charge has in fact carried out the investigation, search or seizure, if any, and have acted upon the directions of the court and guard the case from unfair dealings on the part of the officers - it is apparent that the manner of drawing a Panchanama prescribed in the statute has not been scrupulous followed by the Department. It is also an admitted fact on record that excepting the Panchanama used as a corroborative piece of evidence; no substantive documents were relied upon to strengthen the case of Revenue that there was mis-declaration of goods. Section 138C ibid deals with the situation, where the computer printouts cannot be considered having evidentiary value in certain circumstances. Various conditions have been prescribed under the statute. Admittedly, in this case, the prescribed conditions have not at all been complied with by the department. More particularly, the required certificate in terms of sub-section (4) of Section 138C ibid has not been furnished by the department. Further, in the case of TELE BRANDS (INDIA) PVT LTD, HITESH ISRANI, SHREENATH ENTERPRISES, PRAKASH CHANDRA PANDYA, GNG CO, NANDGOPAL NAIDU VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI 2016 (1) TMI 97 - CESTAT MUMBAI , the Tribunal by relying upon various authoritative judgments has also held that the computer printouts allegedly recovered from the computer of the assessee cannot be relied upon as admissible evidence, in absence of compliance of the conditions laid down in Section 138C ibid - In the instant case, it is not established that the computer in question was in regular use by the appellant in the course of his business. No certificate whatsoever, as required under the provisions of Section 138C (2) was obtained. It is settled proposition of law that if a certain act is to be done by a certain authority, in a particular manner, the same should be done in the manner in which it is ordained. There are no short cuts in investigation. Seizure of CPU and alleged data retrieved - department has concluded that there was parallel set of invoices for the 21 Bills of Entry, wherein the actual invoice values have been shown, which were less than the declared invoice values - HELD THAT - The procedures laid down under Section 138C have not been observed by the department, in addition to non mentioning of the details of the CPU, the place of installation in the premise, custodian of the CPU etc. - the documents retrieved, lost their evidentiary value and cannot be relied upon for upholding the charges of undervaluation of goods and demand of the differential duty. The higher insured value of consignments and payment of premium to the insurance companies cannot be the justifiable ground for rejection of the transaction value, as several factors are involved for negotiation between the parties to the contract of sale, including the insurance companies. Higher value may be declared for insurance purposes for claiming higher compensation in case or damaged to the insured goods. Moreover, there is every chance that the appellants have mis-declared the value to the insurance companies. Such mis- declaration at the best may be an offence under some other law but cannot be a conclusive proof for establishing undervaluation of imported goods - Department has not conducted any enquiry to find out the reasons for declaring high value for insurance policies by the overseas entity and as to whether such values were correct - the rejection of declared value, on the basis of value declared to insurer, is not legal, proper and justified. Retraction of statements - HELD THAT - The statements were recorded by the department from Shri Mahesh Chandra Sharma on different dates in a span of 3 years. However, the copies of same were not furnished to the appellant immediately on completion of the summon proceedings. Upon receipt of the SCN together with the RUD s, the appellant came to know about the content in the statements, though made by him and thus, had sent the retraction letter within the reasonable time. Thus, it cannot be said that there is inordinate delay in filing the retraction letter. Further, the letter of retraction cannot be discarded on such ground, without examining the genuineness of the transactions and for that purpose, to verify the authenticity of available documents and those retrieved during the course of investigation, which admittedly has not been done by the department. In this context, the law is well settled that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability and having also made a few payments as per the statement, it cannot lead to self- assessment or self-ascertainment - The whole case cannot rest simply on the basis of a retracted statement though belatedly. Thus, it is evident that none of the evidences relied upon by the department, to allege the under valuation resorted to by the appellants, stand the scrutiny of Law - the department reliance on retracted statements, documents retrieved from computer without following due procedure as per law and the arguments on the basis of insurance policies fall flat - appeal allowed.

Summary

Issues Involved:
1. Early hearing of appeals.
2. Allegation of undervaluation of imported goods.
3. Compliance with statutory procedures for re-assessment and seizure.
4. Admissibility and reliability of evidence, including electronic records.
5. Invocation of extended period of limitation.
6. Validity of retracted statements.
7. Use of insurance policy values as evidence of undervaluation.

Issue-wise Detailed Analysis:

1. Early Hearing of Appeals:
The appellants sought early hearing of their appeals. The tribunal allowed the miscellaneous applications for early hearing in the interest of justice and took up the appeals for hearing together.

2. Allegation of Undervaluation of Imported Goods:
The appellants were accused of gross undervaluation of imported goods, leading to the issuance of a Show Cause Notice (SCN) proposing rejection of the declared value under Rule 12 of the Customs Valuation Rules, 2007 (CVR 2007) and re-determination under Section 14(1) of the Customs Act, 1962. The Commissioner of Customs adjudicated the SCN, rejecting the declared value of Rs. 6,81,09,687/- and re-determining it at Rs. 9,41,16,126/-, demanding differential customs duty and imposing penalties on the appellants.

3. Compliance with Statutory Procedures for Re-assessment and Seizure:
The tribunal observed that the requirements of Section 17 of the Customs Act, 1962, regarding self-assessment and re-assessment of duty, were not diligently complied with by the Customs department. The tribunal noted the absence of a speaking order as mandated under Section 17(5) and concluded that the assessments could not be considered final. Additionally, the tribunal found that the procedures for seizure under Section 105 and the drawing of Panchanama were not properly followed, as the description and details of the seized computer were not furnished.

4. Admissibility and Reliability of Evidence, Including Electronic Records:
The tribunal found that the evidence relied upon by the department, such as emails and data retrieved from the CPU, did not comply with the statutory requirements under Section 138C of the Customs Act. The tribunal noted the absence of a certificate as required under Section 138C(4) and held that the electronic documents could not be relied upon as admissible evidence. The tribunal cited various judgments, including S.N. Agrotech and Tele Brands (India) Pvt. Ltd., to support its conclusion.

5. Invocation of Extended Period of Limitation:
The tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could not be invoked as the SCN was issued beyond the normal period prescribed in the statute. The tribunal noted that the import documents were submitted at the time of filing the Bills of Entry and during the Panchanama proceedings, and the proceedings for recovery of the adjudged demands were barred by limitation.

6. Validity of Retracted Statements:
The tribunal found that the retracted statements of the appellants could not be relied upon in isolation to conclude the undervaluation of goods. The tribunal noted that the statements were retracted within a reasonable time and that the department failed to corroborate the statements with independent evidence. The tribunal cited the judgment in Vinod Solanki, which held that retracted confessions must be corroborated by other independent evidence.

7. Use of Insurance Policy Values as Evidence of Undervaluation:
The tribunal held that higher insured values of consignments could not be a justifiable ground for rejecting the transaction value declared to Customs. The tribunal noted that higher values might be declared for insurance purposes for claiming higher compensation in case of damage and that such mis-declaration could not be conclusive proof of undervaluation. The tribunal cited the judgment in I.S. Corporation, which held that enhancement of transaction value based on insurance policy values was unsustainable.

Conclusion:
The tribunal concluded that the department failed to substantiate the allegations of undervaluation with cogent and legally admissible evidence. The appeals were allowed with consequential relief as per law.