2023 (9) TMI 22 - AT - Customs

Scope and validity of the evidence collected from the emails - rejection of declared value on Bill of Entry - re-determination of transaction value - cross-examination of witnesses - demand of differential duty alongwith interest and penalty - HELD THAT - Rejection of declared value on Bill of Entry is a serious charge and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons - It is found that the DRI officers conducted search operation in the business premises of M/s Plastic Cottage Trading Co. and M/s Winsor Enterprises. Panchama s both dated 11-4-2017 were prepared in respect of recovery of records/ documents/ files/ print outs of emails and sets of invoices retrieved from emails /computers/ mobile phones and laptop. The issue involved in these cases is mainly confined for determination, as to whether, the transaction values declared by the importer/ appellant are correct or otherwise. The adjudicating authority observed that the evidence for the actual price was retrieved from the E-mails and invoices retrieved from E-mails. The authenticity of all the said Email printouts was admitted by partners of the appellant in their statements. On the other hand, the appellants disputed the veracity and authenticity of the evidences, collected through electronic devices. On reading of Section 138C of the Customs Act, 1962, it is seen that the Legislature had prescribed the detailed procedure to accept the computer printouts and other electronic devices as evidences. It has been stated that any proceedings under the Act, 1962, where it is desired to give a statement in evidence of electronic devices, shall be evidences of any matter stated in the certificate - In the present case, the provisions of Section 138C of the Act were not complied with to use the computer printouts as evidence. It is noted that the certificate was not prepared during the seizure of the electronic devices, as required under the law. In the instant case, it is found that the entire case proceeded on the basis of the electronic documents as evidence. But the investigating officers had not taken pain to comply with the provisions of the law to establish the truthfulness of the documents and merely proceeded on the basis of the statements. Hence, the evidence of electronic devices, as relied upon by the adjudicating authority cannot be accepted. Upon perusal of the judgment of the Hon ble Supreme Court in the case of ANVAR P.V VERSUS P.K. BASHEER AND OTHERS 2014 (9) TMI 1007 - SUPREME COURT , it is noted that the Apex Court has categorically laid down the law that unless the requirement of Section 65B of the Evidence Act is satisfied, such evidence cannot be admitted in any proceedings - Section 138C of the Customs Act is parimateria to Section 65B of the Evidence Act. Consequently, the evidence in the form of computer printouts, etc., recovered during the course of investigation can be admitted in the present proceedings, only subject to the satisfaction of the subsection (2) of Section 138C ibid. The statements cannot be the sole reason to confirm the charge of undervaluation - It is noted that in the present matter there are no evidences produced by the department that the excess amount over and above the invoice price was paid to suppliers. There is no evidence as to how the Appellant came into possession of cash alleged to be differential amount towards goods imported, nor there is any evidence of any cash being handed over to any person, representing suppliers in India. Department had failed to produce corroborative evidences regarding the undervaluation of imported goods. Hence, the charge of undervaluation of imported goods in the present matter is not sustainable. The duty demand confirmed against the appellant M/s. Plastic Cottage Trading Co. and penalties imposed upon it is not sustainable. For the same reason, the penalty imposed on the co-appellants namely, Shri Junaid Kudia and Shri Zaid Kudia is also not sustainable. Therefore, the impugned order confirming the adjudged demands on the appellants is set aside - Appeal allowed.

Summary

Issues Involved:
1. Rejection of Declared Assessable Value
2. Admissibility of Electronic Evidence
3. Cross-Examination of Witnesses
4. Reliance on Retracted Statements
5. Finality of Bills of Entry Assessment

Summary:

1. Rejection of Declared Assessable Value: The adjudicating authority rejected the declared assessable value of Rs. 2,46,56,053/- for 31 consignments and re-determined it at Rs. 16,19,37,406/-, confirming differential customs duty of Rs. 4,04,17,003/- along with interest and penalties. Similarly, for consignments through Nhava Sheva port, the declared value of Rs. 13,35,107/- was re-determined at Rs. 70,27,005/-, confirming differential duty of Rs. 16,75,752/-. The Tribunal found that the rejection of declared value must be based on cogent examination of evidence, which was not done in this case.

2. Admissibility of Electronic Evidence: The Tribunal emphasized the importance of compliance with Section 138C of the Customs Act, 1962, which prescribes the procedure for admitting computer printouts as evidence. The investigating officers failed to comply with these provisions, making the electronic evidence inadmissible. The Tribunal referred to the Supreme Court's judgment in Anvar P.V. vs. P.K. Basheer, which mandates adherence to Section 65B of the Evidence Act for electronic records.

3. Cross-Examination of Witnesses: The appellants' request for cross-examination of Mr. Zulfikar, from whose email account the incriminating invoices were retrieved, was denied. The Tribunal held that cross-examination is a natural right and an important component of natural justice, and its denial was improper. The Tribunal also noted that the adjudicating authority did not follow the procedures prescribed under Section 138B of the Customs Act, 1962.

4. Reliance on Retracted Statements: The appellants argued that the statements recorded under pressure by DRI were retracted and should not be relied upon. The Tribunal agreed that retracted statements cannot be the sole basis for confirming charges of undervaluation and noted the lack of corroborative evidence from the department.

5. Finality of Bills of Entry Assessment: The Tribunal observed that the Bills of Entry had already been assessed at the time of importation, and without an appeal or review, these assessments had attained finality. Therefore, further re-determination of value was unsustainable.

Conclusion: The Tribunal set aside the impugned order, stating that the duty demand and penalties imposed on the appellants were not sustainable. The appeals were allowed with consequential relief to the appellants as per law.