2019 (3) TMI 1444 - AT - Customs

Export of prohibited item - allegation against the appellant is that they have exported rice, pulses and semolina in the guise of non-prohibited items - DGFT N/N. 33/2007, dated 08.10.2007, No.93/2008, dated 04.04.2008 and 15/2006, dated 27.06.2006 as amended - principles of natural justice - Held that - The foremost point raised by the appellant is that they have not been supplied with copy of the actual invoices submitted by them to the department at the time of export. It is alleged by the department that the invoices submitted at the time of export of prohibited items but appellant has actually exported such items. For this, the proforma invoices retrieved from computer is relied. Thus, it is the case of department that the actual invoices were altered - In the first round of litigation, the appellant had put forward their grievance that they were not supplied the relied upon documents and, therefore, were not able to defend the case. Inspite of specific direction by Tribunal and repeated requests on the part of the appellant, it is seen that the department has not been able to give copies of the relied upon documents. This is clear from the letter issued by the department dated 23.10.2017. When the show-cause notice is issued proposing to impose such huge penalties, the department ought to have taken sufficient care to supply all relied upon documents to the appellants - The adjudication conducted without supply of entire relied upon documents is against principles of natural justice and vitiated. Inspite of the order of the Tribunal the department has given some screen shots only and have not supplied the copy of documents. For this reason itself, the confiscation and penalty cannot sustain. Admissibility of evidences - Held that - Section 138C of the Customs Act deals with admissibility of micro-film, facsimile, copies of documents and computer printouts, as documents and evidence. The said section provides for certain requirements to be complied to make the statement from the computer to be admissible in evidence. In the present case, there is no certificate produced as required under sub-section (4) of section 138C. The department is founded on suspicion and assumptions and not supported by any material or evidence. So also, the non-supply of documents to the appellant inspite of the direction given in the remand order by the Tribunal has seriously vitiated the proceedings - the department has failed to prove the allegations raised in the show-cause notice - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Non-supply of relied upon documents.
2. Admissibility and reliability of computer data as evidence.
3. Retraction of statements by the appellant's Director.
4. Delay in forensic analysis of seized electronic devices.
5. Alleged suppression of original invoices and export of prohibited goods.
6. Denial of opportunity to cross-examine witnesses.
7. Compliance with section 138C of the Customs Act for computer documents.
8. Alleged alterations in invoices and discrepancies in export data.

Issue-wise Detailed Analysis:

1. Non-supply of relied upon documents:
The appellant emphasized that the Tribunal directed the department to hand over copies of relied upon documents, which was not complied with. Despite repeated requests, the appellant was not provided with the actual invoices used at the time of export. The department only furnished unclear screen shots of 52 shipping bills, which were insufficient for the appellant to defend their case. The adjudication proceedings were thus vitiated for non-compliance with the principles of natural justice.

2. Admissibility and reliability of computer data as evidence:
The department retrieved invoices from the appellant's computer, which allegedly showed the export of prohibited goods. The appellant argued that these were proforma invoices and not the actual ones filed at the time of export. The department failed to comply with section 138C of the Customs Act, which outlines the requirements for admitting computer documents as evidence, including the necessity of a certificate under sub-section (4). The absence of such compliance rendered the computer data inadmissible.

3. Retraction of statements by the appellant's Director:
The appellant's Director, Shri Vishnukumar, retracted his statement, claiming it was made under compulsion. The department relied on this statement without strong corroboration. The Tribunal noted that retracted statements without corroborative evidence cannot be solely relied upon.

4. Delay in forensic analysis of seized electronic devices:
The seized hard disks and laptop were sent for forensic analysis after a delay of two and a half years. The CFSL report dated 20.10.2011 indicated that relevant files were retrieved from the digital storage media. The delay in obtaining the forensic report raised questions about the integrity and reliability of the evidence.

5. Alleged suppression of original invoices and export of prohibited goods:
The department alleged that the appellant suppressed original invoices and exported prohibited goods like rice, pulses, and semolina. However, the show-cause notice did not rely on the 53 shipping bills seized from the appellant's premises or the invoices submitted at the time of export. The department did not conduct inquiries with overseas buyers or the appellant's bankers regarding the realization of export proceeds.

6. Denial of opportunity to cross-examine witnesses:
The appellant requested to cross-examine the officers who examined and stuffed the export containers, which was denied by the adjudicating authority. The Tribunal cited the Hon'ble Apex Court's decision in M/s. Andaman Timber Industries, emphasizing that denying the opportunity to cross-examine witnesses violates the principles of natural justice.

7. Compliance with section 138C of the Customs Act for computer documents:
The appellant argued that the department did not comply with section 138C(4) of the Customs Act, which requires a certificate for the admissibility of computer documents. The absence of such a certificate meant that the computer data could not be accepted as evidence.

8. Alleged alterations in invoices and discrepancies in export data:
The department alleged that the appellant altered the description of goods in the invoices to export prohibited items. However, there was no evidence to support these allegations. The Tribunal noted that mere suspicion cannot substitute proof and that the department failed to provide concrete evidence of alterations in invoices.

Conclusion:
The Tribunal found that the department's case was based on suspicion and assumptions without substantial evidence. The non-supply of relied upon documents, non-compliance with section 138C, and denial of the opportunity to cross-examine witnesses seriously vitiated the proceedings. Consequently, the confiscation and penalties imposed were set aside, and the appeals were allowed with consequential relief.

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