2024 (3) TMI 871 - AT - Customs

Valuation of imported goods - stamping foils - rejection of declared value - enhancement of value - statement relied upon by the department was recorded under duress or under coercion or undue influence - It is seen that the department s case is based primarily on the evidence of retrieval of data from the hard disk seized from the premises of the appellant firm - HELD THAT - On consideration of overall circumstances in which the statement of director Shri. Ramesh K Gidwani was recorded and pattern of the same including the content of the initial statement which while indicating proforma invoice to be correct value did not mention the relevant grade of stamping foils also. The medical evidence about injuries and their treatments were mentioned while rebutting letters of the department in their retraction. It is also found that though the Hon ble High Court of Gujarat in KIRAN TEX FAB PVT LTD 1 VERSUS UNION OF INDIA THROUGH SECRETARY 6 2011 (5) TMI 941 - GUJARAT HIGH COURT has not specifically dealt with the fact of coercion while granting relief of presence of advocate. The series of statements recorded thereafter of the directors are exculpatory. It is thus clear that they were serious doubts on record as to the nature of initial statement and the onus clearly shifted on the department to indicate that the initial statement dated 13.10.2010 was voluntary and same should have been subjected to examination-in-chief by the adjudicating authority, at least in the factual background of the matter before placing reliance on the same. When statement was retracted, the investigating officer instead of pronouncing his own version as to why the statement was voluntarily, should have instead of left this job to be done by the adjudicating authority while adjudicating the matter. Another opportunity before higher officer can be an apt course of action to follow in such situation - it is found that initial statement dated 13.10.2010 could not have been relied upon without discharge of burden by the department of same being voluntary by examination of the entire statement of director by the adjudicating authority. Apart from above, it is also found that there is no evidence on record of any excess payment having been made of excess remittance, and admission of the same. Thus, it is clear that not only Customs Valuation Rules have to be sequentially followed but also that the electronic evidence can only be relied upon by the department as per provision of Section 138C which lays down various conditions in sub clause (2) about which there is no mention of the same having been followed. Thus, in the facts and circumstances of the matter enhancement of value as well as appreciation of evidence has been improperly done in the impugned order - the impugned order is therefore, set aside - appeal allowed.

Issues Involved:
1. Alleged under-valuation of imported goods.
2. Coercion in obtaining statements.
3. Non-consideration of contemporaneous import data.
4. Reliance on proforma invoices for valuation.
5. Non-compliance with procedural requirements in evidence collection.

Summary:

1. Alleged Under-Valuation of Imported Goods:
The Appellant, a company trading in hot stamping foils, imported consignments from China. The Department alleged under-valuation based on proforma invoices and initial inculpatory statements from the Director, Mr. Ramesh K Gidwani. The Appellant argued that the goods were correctly valued and the invoices were for different grades of goods.

2. Coercion in Obtaining Statements:
The Appellant contended that the Director's initial inculpatory statement on 13.10.2010 was obtained under duress. Medical evidence was provided to support claims of coercion. The statement was retracted on 18.10.2010. The Hon'ble Gujarat High Court allowed the presence of an advocate during further interrogations, which led to exculpatory statements from the Director.

3. Non-Consideration of Contemporaneous Import Data:
The Appellant provided data of contemporaneous imports at similar prices, which the Department failed to consider. The Tribunal emphasized that the Department must provide evidence of higher-priced contemporaneous imports to substantiate under-valuation claims.

4. Reliance on Proforma Invoices for Valuation:
The Department relied on proforma invoices for 'A' grade goods to allege under-valuation. The Appellant argued that the actual imports were of 'B' and 'C' grade goods, as confirmed by testing. The Tribunal noted that proforma invoices cannot be equated with actual invoices and emphasized the need for proper valuation under Customs Valuation Rules.

5. Non-Compliance with Procedural Requirements in Evidence Collection:
The Appellant highlighted procedural lapses in the seizure and handling of documents and electronic evidence. The Tribunal observed that electronic evidence must comply with Section 138C of the Customs Act, which was not followed.

Conclusion:
The Tribunal found that the Department failed to discharge the burden of proving under-valuation and that the initial statement was obtained under coercion. The enhancement of value and appreciation of evidence were improperly done. The impugned order was set aside, and the appeals were allowed with consequential relief.

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