2022 (9) TMI 24 - AT - Customs

Valuation of imported goods - undervaluation - rejection of declared value - Admissibility of evidences - corroboration of the printouts with any independent evidence - demand is raised on the basis of an investigation conducted by the department pursuant to the search operation office premises of Appellant importer - cross-examination of witnesses. Whether the appellants undervalued the 6 V and 12 V batteries they imported from Honk Kong/ China over the years? - Whether the allegation made by the department legally sustainable in the face of the evidence put forth by investigation? HELD THAT - On close reading of Section 138C of the Act, 1962, it is observed that the Customs Act has prescribed the detailed procedure to accept the computer printouts and other electronic devices as evidences. It has been stated that in any proceedings under the Customs Act, 1962, where it is desired to give a statement in evidence of electronic devices, it shall be evidences of any matter stated in the certificate. In present case we find that the mandatory provisions of Section 138C of the Act were not complied as regard use of printouts as evidence. From the facts of the case and the Panchnama prepared for opening up of hard disks and their mirror image, it is clear that the same were not undertaken in presence of any authorized person. The entire case is based upon the electronic documents as evidence. However no compliance with the provisions of Section 138C has been made to establish the truthfulness of neither the documents nor the seizure memo was made and neither the same was presented before adjudicating authority. Thus the evidence of electronic devices in the form of printouts cannot be relied upon as evidence. When the department conducted market survey and the persons were there witness, it was their duty to mention name of person on such Proforma invoice or to find such person from cross examination as the Appellant were not made present during market survey. The market survey was conducted in absence of Appellant and they could not be expected to name the person who has issued such Proforma invoice. When the revenue itself does not knows as to who has issued such Proforma invoice and there is no statements of makers of such invoice, in that case the Proforma invoices has no evidentiary value. Further as the cross examination was not given the Proforma invoices cannot be relied upon. The redetermination of value under Rule 3 (1) on the basis of printouts and other documents taken from Hard disks is not sustainable. Further in case of M/s Suqian Yongda Imp Exp Trade Co. Ltd. and Guanzhou NPP Power Co. Ltd. the value has been re-determined under Rule 5 of Valuation Rules. As there is no evidence hence the transaction value was proposed based upon correspondence with local buyers through emails and printout from hard disks - in the instant case the Appellant had imported more than 15 lakhs batteries from suppliers over the period of time and were regular importer in bulk. Hence the imports cited by the revenue are not comparable and cannot be said to be contemporaneous. Similarly in case of 12 Volt battery we do not find any evidence to reject the declared value apart from reliance based on printouts and also on the face of the facts that no contemporaneous imports of such bulk quantity has been relied upon. There is no reason to reject the declared prices and the impugned order is not sustainable. Similarly, in appeal filed by Shri Kapil Garg, as the charges of undervaluation are not sustainable, hence there is no reason to impose penalty upon him - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Admissibility of electronic evidence.
2. Compliance with Section 138C of the Customs Act, 1962.
3. Validity of the market survey and valuation method.
4. Reliability of statements and retractions.
5. Comparison with contemporaneous imports.

Issue-wise Detailed Analysis:

1. Admissibility of electronic evidence:
The appellant disputed the admissibility of printouts from hard disks and pen drives seized during the investigation, arguing that these printouts were not admissible as evidence. The Tribunal noted that the printouts were not taken in the presence of any authorized person, and no certificate as required under Section 138C of the Customs Act, 1962 was prepared. The Tribunal cited multiple judgments, including Anvar P.V. v. P.K. Basheer & Others, to conclude that the electronic evidence did not meet the legal requirements and thus could not be relied upon.

2. Compliance with Section 138C of the Customs Act, 1962:
The Tribunal observed that the mandatory provisions of Section 138C were not followed. The seized electronic devices were not opened in the presence of the appellant or any authorized person, and the printouts were not accompanied by the necessary certificate. The Tribunal emphasized that the absence of compliance with Section 138C rendered the electronic evidence inadmissible.

3. Validity of the market survey and valuation method:
The Tribunal found that the market survey relied upon by the Revenue was conducted in the absence of the appellant and was based on quotations for single pieces of batteries, which were not comparable to the bulk imports made by the appellant. The Tribunal held that valuation could not be based on mere quotations without evidence of actual sales at those prices. The Tribunal also criticized the denial of cross-examination of the representatives who provided the quotations, further undermining the reliability of the market survey.

4. Reliability of statements and retractions:
The Tribunal noted that the statements of Shri Kapil Garg, which were used to support the undervaluation allegation, were retracted. The Tribunal held that retracted statements, in the absence of corroborative evidence of payment over and above the declared value, had no evidentiary value. The Tribunal cited several judgments to support this view, including Vinod Solanki v. UOI and Mohtesham Mohd Ismail v. Special Director.

5. Comparison with contemporaneous imports:
The Tribunal found that the imports cited by the Revenue for comparison were not contemporaneous as they involved smaller quantities compared to the bulk imports made by the appellant. The Tribunal held that the declared value could not be rejected based on such non-comparable imports. The Tribunal also noted that previous investigations and market surveys had already established the value of similar batteries imported by the appellant, further supporting the declared value.

Conclusion:
The Tribunal set aside the impugned order, finding that the electronic evidence was inadmissible, the market survey was unreliable, and the retracted statements had no evidentiary value. The Tribunal allowed the appeals with consequential reliefs, if any.

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