Custom, Excise & Service Tax Tribunal
Jeen Bhavani International vs Commissioner Of Customs -Nhava Sheva - ... on 1 August, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH,MUMBAI
REGIONAL BENCH - COURT NO. 01
Customs Early Hearing Application No. 85378 of 2021
In
Customs Appeal No. 85843 of 2020
(Arising out of Order-in-Original No. 25/2020-21/Commr/NS-III/CAC/JNCH dated
02.07.2020 passed by Commissioner of Customs (NS-III), JNCH, Nhava Sheva)
Jeen Bhavani International .....Appellant
A-71, Rustomji Adarsh Regal, Marve Road,
Malad, (W), Mumbai-400 067.
VERSUS
Commissioner of Customs- .....Respondent
Nhava Sheva-III
JNCH, Nhava Sheva, Taluka- Uran,
District- Raigad, Maharashtra- 400 707.
WITH
Customs Early Hearing Application No. 85379 of 2021
In
Customs Appeal No. 85844 of 2020
(Arising out of Order-in-Original No. 25/2020-21/Commr/NS-III/CAC/JNCH dated
02.07.2020 passed by Commissioner of Customs (NS-III), JNCH, Nhava Sheva)
Mahesh Chandra Sharma Karta .....Appellant
A-71, Rustomji Adarsh Regal, Marve Road,
Malad, (W), Mumbai-400 067.
VERSUS
Commissioner of Customs- .....Respondent
Nhava Sheva-III
JNCH, Nhava Sheva, Taluka- Uran,
District- Raigad, Maharashtra- 400 707.
Appearance:
Mrs. Nisha Bineesh, Advocate for the Appellant
Shri Manoj Das, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER NO. A/85674-85675 / 2022
2
C/85843 & 85844/2020
Date of Hearing:14.03.2022
Date of Decision:01.08.2022
PER: S. K. MOHANTY
The appellants have filed the miscellaneous applications, seeking
early hearing of the appeals. On going through the averments made in
the said applications, we are of the view that the prayer made for out-
of-turn hearing can be considered in the interest of justice.
Accordingly, the miscellaneous applications are allowed. With the
consent of both sides, the appeals are taken up together for hearing
today and a common order is being passed.
2. These appeals are directed against the Order-in-Original No.
25/2020-21/Commr/NS-III/CAC/JNCH dated 02.07.2020 (for short
referred to as the "impugned Order"), passed by Commissioner of
Customs, JNCH, Nhava Sheva.
3. Brief facts of the case are that the appellants herein, M/s Jeen
Bhavani International, imported 63 consignments of Linen Yarn, Ramie
Yarn and other misc. items from various overseas suppliers, based in
China; during the period between 01.08.2014 and 10.11.2016, the
appellant filed bills of entry classifying the said goods under CTH
53061090 and 53089010; goods were assessed by the department
and ordered for clearance of the same for home consumption, in terms
of Section 17 of the Customs Act, 1962 (for short, referred to as the
"Act of 1962"). On the basis of specific information received, indicating
that the appellant indulged in gross under valuation of the imported
goods, Directorate of Revenue Intelligence (DRI), Zonal Unit, Surat
conducted a detailed investigation into the matter. Department issued
a Show Cause Notice (SCN) proposing rejection of the declared value
of goods in terms of Rule 12 of the Customs Valuation (Determination
of Prices of the imported goods) Rules, 2007 (for short, referred to as
"CVR 2007"); re-determination of the same under Section 14(1) of the
Customs Act, 1962 read with Rules 3(1) and 10(1)(e) of CVR, 2007;
confiscation of goods under Section 111(m) Customs Act, 1962;
recovery of the differential customs duty along with interest in terms
of Section 28(4) and 28AA ibid respectively and imposition of penalties
3
C/85843 & 85844/2020
on the appellants and other persons/entities under Sections 112(a),
112(b), 114A, 114AA and 117 ibid.
3.1. The SCN was adjudicated by the learned Commissioner of
Customs, JNCH, Nhava Sheva, by relying on documents namely, cargo
transportation insurance policies, copies of emails, invoices and
Statements etc. He passed the impugned Order-in-Original, inter alia:
(i). Rejecting the declared value of Rs.6,81,09,687/- in respect
of 21 consignments of the disputed goods under Rule 12 of CVR
2007 and re-determining the same at Rs.9,41,16,126/-under
Section 14(1) the Customs Act, 1962 read with Rule 3(1) and
Rule 10(1)(e) of CVR, 2007;
(ii). Holding that the impugned goods are liable for confiscation
under Section 125 of the Customs Act,1962; imposing fine in lieu
under Section 125 ibid, since the goods were not physically
available;
(iii). demanding differential Customs duty, of Rs. 78,09,736, in
terms of Section 28(4) of the Customs Act, 1962 along with
interest under Section 28 AA ibid
(iv). Appropriating an amount of Rs.42, 00,000, deposited by the
appellant during investigation, towards the duty liability
mentioned at (iii) above.
(v). Imposing a Penalty, of Rs. 78, 09,736, on the appellant
under Section 114A ibid;
(vi). Imposing a Penalty of Rs. 3,00,00,000, under Section
114AA ibid and penalty of Rs. 7,50,000 under Section 112(a) ibid
on Shri Mahesh Chandra Sharma, Karta of M/s. Jeen Bhavani
International
4. Mrs. Nisha Bineesh, learned Advocate appearing for the
appellants submits that other than the contents in the Panchanama,
the department has not relied upon any substantial evidence in the
form of documents or otherwise to strengthen the case of Revenue in
support of under-valuation of goods and subsequent confirmation of
the adjudged demands on the appellants; referring to both the SCN
and the impugned order, she submits that the statutory requirements
have not been complied with by the department inasmuch as the
important aspects regarding the year of manufacture of the computer,
model number, the exact location of the premise where the same was
4
C/85843 & 85844/2020
kept and more importantly, the statement was not recorded from the
person, who operated the same, were not discussed by the lower
authorities; further, there is no whisper in the Panchanama with
regard to description of CPU, the location in the searched premises
where it was installed and the manner in which it was seized; the data
obtained from the mail id is contrary to the provisions of Section 138C
ibid and that in absence of the statement recorded from the senders of
the E-mails, validity of the same is at stake and cannot be relied upon
as tangible evidence to prosecute the appellants.
4.1. With regard to the issue of retracted statements furnished by the
appellants belatedly, she submits that there was no in-ordinate delay
in filing the retraction statement inasmuch as copies of the statements
recorded under summon were not furnished by the department
immediately after signing of the same during the course of
investigation; since the contents of the statements were made known
to the appellant through the RUDs annexed to the SCN dated
05.07.2009; thereafter, within reasonable time/nearest opportunity,
the retraction letter was filed on 05.09.2019; the retraction made by
the appellants needs to be considered as valuable piece of evidence
and contrary contentions of Revenue are required to be discarded for
achieving the ends of justice, more particularly, in the situation when
no credible evidence in the form of documents/records were relied
upon for adjudication of the dispute;
4.2. As regards the report furnished by the Regional Forensic
Laboratory dated 01.05.2017, learned Advocate submits that for
seizure of CPU, the procedures laid down in the Customs statute have
not been observed by the Respondent inasmuch as Supurdnama along
with Panchanama is required to be drawn simultaneously at the time
of seizure of a computer or CPU, which admittedly has not been done,
owing to the reason that the Panchanama nowhere specified that the
Supurdnama has been drawn before seizure of the CPU; she submits
also that the Panchanama does not contain the description of CPU
namely, the name, model, make, year of manufacture and specific
place, where the same was kept; in the absence of these vital details,
adjudication proceedings are vitiated;
5
C/85843 & 85844/2020
4.3. With regard to issuance of the SCN dated 05.07.2019, she
submitted that the extended period of limitation as per sub-section (4)
of Section 28 cannot be invoked and the demand, if any, should be
confined only to the normal period prescribed in the statute; the
alleged imports took place during the period between 01.08.2014 and
10.11.2016, whereas, the SCN was issued on 15.07.2019, which was
much beyond the normal period; all the import and connected
documents were submitted by the appellant at the time of filing the
Bills of Entry and during the course of Panchanama proceedings on
10.11.2016 and therefore, the proceedings initiated for recovery of the
adjudged demands are clearly barred by limitation of time.
4.4. Learned Advocate has relies upon the following judgments.
(a) Varsha PlasticsPvt. Ltd. Vs. Union of India -2009 (235) E.L.T. 193 (S.C.)
(b) Kranti Associates Pvt. Ltd vs Masood Ahmed Khan - 2011(273) E.L.T.
34(S.C.)
(c) Tele Brands India Pvt. Ltd. Vs Commissioner of Cus. - Import, Mumbai -
2016(336) E.L.T 97 (Tri-Mumbai)
(d) I.S Corporation vs. Commissioner, - 2016 (339) E.L.T. A 125 (Tri.-Mumbai)
(e) S.N. Agrotech vs. Commissioner Of customs, New Delhi - 2018(361) E.L.T.
761 (Tri. - Del.)
(f) Rajesh Gandhi vs. Commissioner Of Custom Mumbai - Import, 2019 (366)
E.L.T. 529 (Tri. - Mumbai)
(g) Century Metal Recycling Pvt. Ltd. Vs. Union of India - 2019 (367) E.L.T. 3
(S.C.)
(h) Agarwal Metals & Alloys vs. Commissioner Of Customs, Kandla - 2021 (378)
E.L.T. 155 (Tri. -Ahmd.)
(i) Vinod Solanki vs. Union of India - 2009 (223) E.L.T. 157 (S.C.).
5. On the other hand, Shri Manoj Das, learned Authorized
Representative appearing for Revenue reiterates the findings recorded
in the impugned order and submits that the Panchanama drawn in this
case on 10.11.2016 is the only piece of uncontroverted evidence,
which has not been disputed by the appellant; the appellant in his
statement recorded under summons has stated the detailed modus
operandi adopted by the appellant in gross undervaluation of the
goods and for that purpose, has voluntarily made payment of Rs.
42,00,000/-towards the differential duty, during the course of
investigation; referring to the statements, of the appellant, recorded
by the DRI on different dates, he submits that the retraction made
vide letter dated 05.09.2019 by the appellant was almost two and half
years after the first statement and three and half months after the
last statements cannot be considered, more so, as the statements
were not extracted under threat of arrest; retraction of statement after
6
C/85843 & 85844/2020
in-ordinate delay without adducing some evidence that same were
obtained forcefully/by coercion/undue influence is clearly self-serving
after-thought and loses its significance.
5.1. Learned AR further submits that the report received from the
Regional Forensic Science Lab conclusively proved 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; on a conjoint reading of the Email messages retrieved
and the parallel invoices indicates that the appellant was mis-declaring
the description, quantity and value of certain consignments. As
regards, the marine insurance policies recovered from the appellant,
he submits that the import consignments were insured under
insurance cover provided by three Chinese insurance companies;
scrutiny of which reveals that the insured value in respect of 42
consignments was 110% of the invoice value and in respect of the
disputed 21 consignments the value has been enhanced, meaning
thereby that by showing high value cargo, the appellant has mis-
declared the value for the purpose of evading customs duty liability.
Learned authorised representative relies on the following.
a) Pyare Lal Bhargava v State of Rajasthan - AIR 1963 SC 1094.
b) Surjeet Singh Chhabra v. Union of India - 1997 (98) E.L.T. 646 (S.C.)
c) State (NCT) of Delhi vs. Navjot Sandhu @ Afasan Guru - 2005, 11
SCC 600.
d) BalkrishnaChhaganlalSoniVs. State of West Bengal 1983 (13) ELT
1527 (SC).
6. Heard both sides and examined the case records, including the
written note of submissions filed by both sides. The department had
inter alia, relied upon the evidences namely, panchnama of search of
residence-cum-office of the Appellant dated 11.10.2016; import
dockets containing import documents, received from the CHA;
statements of Shri Mahesh Sharma recorded on different dates; EDI
data on past imports received from the EDI Section/JNCH; Email
messages retrieved from email account of Shri Mahesh Sharma; data
recovered from CPU of Shri Mahesh Sharma by the Regional Forensic
Science Lab., etc.
7
C/85843 & 85844/2020
7. On perusal of the impugned order, it transpires that upon
assessment of the disputed Bills of Entry by the proper officer, the
subject goods were allowed for home clearance on payment of
appropriate customs duties on the value declared by the appellant and
that based on investigation conducted by the officers of DRI; the
present proceedings were initiated by the department under Section
28 of Customs Act,1962, alleging undervaluation of goods, which
ultimately has resulted in confirmation of the adjudged demands on
the appellant.
7.1. Insofar as assessment of duty liability is concerned, Section 17
ibid through various sub-sections contained therein has provided inter
alia, for self- assessment of duty leviable on the imported goods by
the importer itself [sub-section (1)]; verification by the proper officer
with regard to the entries made by the importer in the Bill of Entry in
terms of Section 46 ibid and for that purpose, to examine or test the
imported goods [sub-section (2) and (3)]; that in the eventuality,
whereupon the proper officer is not satisfied on the basis of the
available documents/evidences that the self-assessment has not been
done correctly by the importer, then in such case, he will re-assess the
duty leviable on the disputed imported goods [sub-section (4)]; finally,
it has been mandated that in compliance to sub-rule (4) above, the
proper officer shall pass a speaking order on the re-assessment within
the prescribed time limit, where the importer has not specifically
confirms his acceptance of the said re-assessment [sub-section (5)].
7.2. On going through the case records, we have noticed 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). Further, we find that there is no
whisper either in the SCN or the impugned order that any speaking
order has been passed by the department as mandated in sub-section
(5) of Section 17 ibid in support of re-assessment of the disputed Bills
8
C/85843 & 85844/2020
of Entry and that the importer-appellant has furnished any
confirmation in writing that they do not wish to have any speaking
order, confirming the proposed action for such re-assessment.
Therefore, under such circumstances, it cannot be inferred that the
assessments of the Bills of Entry were made under Section 17 ibid
read with Section 2 (2) ibid. In other words, 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.
8. We find that the learned adjudicating authority has relied upon
the documents/records namely, Panchanama of search of residence-
cum-office of the Appellant, dated 11.10.2016; import dockets
containing import documents, received from the CHA; seven numbers
of statements of Shri Mahesh Sharma recorded on different dates; EDI
data on past imports received from the EDI Section/JNCH, email
messages retrieved from email account of Mahesh Sharma and data
recovered from CPU of Shri Mahesh Sharma by the Regional Forensic
Science Lab., to conclude that the charges framed in the SCN with
regard to undervaluation of goods are proved and accordingly, the
appellants are liable to pay the differential duty along with interest and
are also exposed to the penal consequences as per the statute.
9. 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. We find that the description,
make, model, number, year of manufacturing etc. of the seized
computer has not been furnished by the Department in the
Panchanama drawn by them. Further, no statement has been recorded
9
C/85843 & 85844/2020
from the person who operated the seized computer. Though, there is
reference of seizure of CPU from the premises of the appellant, but the
description of such CPU and the location of installation of the same
were not forthcoming from the statement drawn by the Department. It
is further observed that the emails were drawn in violation of the
provisions laid down under Section 138C ibid. The Department also
failed to obtain the statement from the sender of the emails, Mr. Yang
Xiao Jiang; thus, validity of the emails is at stake and same cannot be
relied upon as per the mandates of statute. From the above
discussions, 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.
10. The learned AR for Revenue submits that Revenue has relied
upon the following facts on record to corroborate with the deposition of
the appellants, in support of under valuation of goods in question:
i. The Appellant stated in first deposition in 15.11.2016 has
stated that he would pay the differential duty and has
actually deposited Rs.42,00,000/- vide TR-6 challans
dated 03.12.2016,25.01.2017 and 09.02.2017.
ii. Emails messages dated 14.06.2016, 25.08.2016 and
03.11.2016 retrieved from the email address of the
Appellant provided the actual description, quantity and
value of the consignments imported; they prove the mis-
declaration of description, quantity and value.
iii. Forensic Analysis of the CPU of the computer system of
the Appellant which was seized at the time of search
Appellant's flat in Mumbai by Forensic Science Lab also
reveals that the Appellant has parallel invoices saved in
his computer. Comparison of the two sets of invoices also
reveals value disparity between the declared value and
the actual value paid to the supplier.
10
C/85843 & 85844/2020
iv. Clinching documentary evidences in form of marine cargo
insurance notes issued by different insurance companies
to different suppliers show the actual values of the import
consignment which tally with the admitted values
admitted by the Appellant.
11. It is an admitted fact that during the course of investigation, the
appellant had paid an amount of Rs.48,00,000/- which was
appropriated in the impugned order towards duty liability in respect of
21 consignments. Such payments made by the appellant cannot be
decisively linked with the differential amount between the re-
determined values considered in the impugned order vis-a-vis as
declared by the importer-appellant in the disputed Bills of Entry.
Further, the person, residing in India, to whom the alleged amount
was paid by the appellant, as claimed by the department, has not been
questioned about the further disposal of money and ultimate payment
to the foreign supplier; it could have been tangible evidence. No
summonses were issued to either such person or the foreign supplier
and no statements were recorded for ascertaining the fact or purpose
of the payment of the alleged amount. Furthermore, since the
appellant has retracted the statements recorded under summons
issued on different dates, such retracted statements cannot be relied
upon in isolation to conclude that the payment made during the course
of investigation was towards the differential duty on the goods
imported by the appellant. Hence, it is evident that the department
has failed to establish that there was financial flow back to the
overseas supplier against supply of the alleged goods. It is a settled
principle of law that undervaluation cannot be established, unless
remittance is proved. We find that it has been held in a number of
cases that charge of undervaluation cannot be proved unless payment
of extra consideration, over and above, the price declared or shown in
the invoice, is proved. In the case of NPT Papers Pvt Ltd & Others V. C.
C. Mundra & Others , (MANU/CS/0120/2021) Tribunal, by following the
judgments in Bayer India Ltd. V. Commissioner Of Customs, Mumbai
[2006 (198) ELT 240], upheld by Hon'ble Supreme Court [2015 (324)
ELT 17 SC] and Tele Brands (India) Pvt. Ltd. V. Commissioner Of
11
C/85843 & 85844/2020
Customs (Import) Mumbai reported in [2016 (336) ELT 97 (Tri.Mum)]
held that there should be evidence on record to show that the
importers have paid directly or indirectly any amount over and above
the invoice value. Once it is proved that there is no evidence of extra
remittance, transaction value cannot be discarded.
11.1. We find that Ahmadabad Bench of the Tribunal in the case of M/s
Sunland Metal Recycling Industries, vide Final Order A/11871-
11874/2019 dated 10.01.2019, has recorded the following findings:-
9. Most pertinently we find that the whole case is also based upon
allegation that the differential amount was paid by the Appellant
through Hawala Channels or transfer. However we find that in the
show cause notice not a single person was identified or
investigations were made as whom the differential value amount
was handed over. Except naming Chaganlal no person has been
named. There is no evidence as to how the Appellant came into
possession of cash alleged to be differential amount towards
scrap import neither there is any evidence of any cash being
handed over to any person representing suppliers. In absence of
same the allegation of undervaluation cannot be supported.
11.2. In the instant case before us too, we find except admittance by
the appellant in the retracted statement, no proof has been adduced
the department to prove payment to overseas supplier. No enquiries
even have taken place in that direction. Therefore, simple averment by
the appellant during the recording of the statement cannot be relied
upon in the absence of corroborative evidence.
12. In this case, out of 63 consignments of the disputed goods
imported by the appellant during the period between 01.08.2014 and
10.11.2016, the declared value of 42 consignments was accepted by
the department and in respect of 21 consignments, such value was
rejected solely based on the emails retrieved from the email address of
the appellant. From the submissions made by the learned Advocate
and on perusal of the records, we find that description of the goods
mentioned in the invoices is different from the description contained in
the email; the quantities of goods imported by the appellant were also
different as mentioned in the email; that there is no allegation by the
12
C/85843 & 85844/2020
department that over and above the quantity mentioned in the
commercial invoices, the appellant had imported any further goods
reflected in the email's; the statement of the sender of the email was
not taken nor was he cross examined in the manner provided in the
statute. Therefore, the charges of undervaluation, without proper
substantiation, would not meet the ends of justice in support of
confirmation of the adjudged demands.
12.1. 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. In this context, the Tribunal in
the case of S.N. Agrotech (supra) has held that in absence of
certificate required under Section 138C ibid, the electronic documents
in the form of computer printouts cannot be relied upon by Revenue
for confirmation of the adjudged demands. The relevant paragraphs in
the said order are extracted herein below:
"7. Section 138C of the Act, 1962 provides admissibility of micro films,
facsimile copies of documents and computer printouts as documents and as
evidence. For the proper appreciation of the case, Section 138C of the Act, 1962
is reproduced below :
SECTION 138C. Admissibility of micro films, facsimile copies of documents
and computer printouts as documents and as evidence. - (1) Notwithstanding
anything contained in any other law for the time being in force, -
(a) a micro film of a document or the reproduction of the image or
images embodied in such micro film (whether enlarged or not); or
(b) a facsimile copy of a document; or
(c)a statement contained in a document and included in a printed material
produced by a computer (hereinafter referred to as a "computer printout"), if
the conditions mentioned in sub-section (2) and the other provisions contained
in this Section are satisfied in relation to the statement and the computer in
question, shall be deemed to be also a document for the purposes of this Act and
the rules made there under and shall be admissible in any proceedings there
under, without further proof or production of the original, as evidence of any
contents of the original or of any fact stated therein of which direct evidence
would be admissible.
(2) The conditions referred to in sub-section (1) in respect of a computer
printout shall be the following, namely :-
13
C/85843 & 85844/2020
(a) the computer printout containing the statement was produced by the
computer during the period over which the computer was used regularly to store
or process information for the purposes of any activities regularly carried on
over that period by the person having lawful control over the use of the
computer;
(b) during the said period, there was regularly supplied to the computer
in the ordinary course of the said activities, information of the kind contained in
the statement or of the kind from which the Information so contained is derived;
(c) throughout the material part of the said period, the computer was operating
properly or, if not, then any respect in which it was not operating properly or was out of
operation during that part of that period was not such as to affect the production of the
document or the accuracy of the contents; and
(d) the information contained in the statement reproduces or is derived from
information supplied to the computer in the ordinary course of the said activities.
(3) Where over any period, the function of storing or processing information
for the purposes of any activities regularly carried on over that period as
mentioned in clause (a) of sub-section (2) was regularly performed by
computers, whether -
(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that
period; or
(d) in any other manner involving the successive operation over that period, in
whatever order, of one or more computers and one or more combinations
of computers, all the computers used for that purpose during that period
shall be treated for the purposes of this section as constituting a single
computer; and references in this section to a computer shall be construed
accordingly.
(4) In any proceedings under this Act and the rules made thereunder where it
is desired to give a statement in evidence by virtue of this section, a certificate
doing any of the following things, that is to say, -
(a) identifying the document, containing the statement and describing the
manner in which it was produced;
(b) giving such particulars of any device involved in the production of that
document as may be appropriate for the purpose of showing that the
document was produced by a computer;
(c) dealing with any of the matters to which the conditions mentioned in sub-
section (2) relate, and purporting to be signed by a person occupying a
responsible official position in relation to the operation of the relevant
device or the management of the relevant activities (whichever is
appropriate) shall be evidence of any matter stated in the certificate; and
for the purposes of this sub-section it shall be sufficient for a matter to be
stated to the best of the knowledge and belief of the person stating it.
(5) For the purposes of this section, -
(a) information shall be taken to be supplied to a computer if it is supplied
thereto in any appropriate form and whether it is so supplied directly or
(with or without human intervention) by means of any appropriate
equipment;
(b) whether in the course of activities carried on by any official, information is
supplied with a view to its being stored or processed for the purposes of
those activities by a computer operated otherwise than in the course of
those activities, that information, if duly supplied to that computer, shall
be taken to be supplied to it in the course of those activities;
14
C/85843 & 85844/2020
(c) a document shall be taken to have been produced by a computer whether it
was produced by it directly or (with or without human intervention) by
means of any appropriate equipment.
Explanation. - For the purposes of this Section, -
(a) "computer" means any device that receives, stores and processes data,
applying stipulated processes to the information and supplying results of
these processes; and
(b) any reference to information being derived from other information shall be
a reference to its being derived there from by calculation, comparison or
any other process.
8. On close reading of Section 138C of the 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, we find that the provisions of Section 138C of the
Act were not complied with to use the computer printouts as evidence. The Ld.
Counsel for the appellants submitted that there is a gross illegality committed
during the retrieval of the electronic documents. It appears from the Panchnama
and record of proceedings that the alleged date recovered from electronic
documents, so seized, were copied in a hard disk in presence of one person and,
thereafter, it was opened in front of other persons. It is noted that the certificate
was not prepared during the seizure of the electronic devices, as required under
the law.
9. The investigation is normally started after collecting the
intelligence/information from various sources. The investigating officers are
procuring the evidences in the nature of documents, statements, etc., to establish
the truth. During the evolution of technology, the electronic devices were used
as evidence. In this context, the law is framed to follow the procedure, while
using the electronic devices as evidence for authenticity of the documents, which
would be examined by the adjudicating authority during adjudication
proceeding. 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.
10. The Hon'ble Supreme Court in the case of Anvar P.V. (supra), while
dealing with Section 65B of the Evidence Act, 1872 (Pari materia to Section
138C of the Act, 1962), observed as under :
"14. Any documentary evidence by way of an electronic record
under the Evidence Act; in view of Sections 59 and 65A, can be
proved only in accordance with the procedure prescribed under
Section 65B. - Section 65B deals with the admissibility of the
electronic record. The purpose of these provisions is to sanctify
secondary evidence in electronic form, generated by a computer. It
may be noted that the section starts with a non obstante clause. Thus,
notwithstanding anything contained in the Evidence Act, any
information contained in an electronic record which is printed on a
paper, stored, recorded or copied in optical or magnetic media
produced by a computer shall be deemed to be a document only if the
15
C/85843 & 85844/2020
conditions mentioned under sub-section (2) are satisfied, without
further proof or production of the original.
15. Under Section 65B(4) of the Evidence Act, if it is desired to give
a statement in any proceedings pertaining to an electronic record, it is
permissible provided the following conditions are satisfied :
(a) There must be a certificate which identifies the electronic record
containing the statement;
(b)The certificate must describe the manner in which the electronic
record was produced;
(c) The certificate must furnish the particulars of the device involved
in the production of that record;
(d)The certificate must deal with the applicable conditions mentioned
under Section 65B(2) of the Evidence Act; and
(e)The certificate must be signed by a person occupying a responsible
official position in relation to the operation of the relevant device.
16. It is further clarified that the person need only to state in the
certificate that the same is to the best of his knowledge and belief.
Most importantly, such a certificate must accompany the electronic
record like computer printout, compact disc (CD), video compact disc
(VCD), pen drive, etc., pertaining to which a statement is sought to be
given in evidence, when the same is produced in evidence. All these
safeguards are taken to ensure the source and authenticity, which are
the two hallmarks pertaining to electronic record sought to be used as
evidence. Electronic records being more susceptible to tampering,
alteration, transposition, excision, etc., without such safeguards, the
whole trial based on proof of electronic records can lead to travesty of
justice.
17. Only if the electronic record, is duly produced in terms of
Section 65B of the Evidence Act, would the question arise as to the
genuineness thereof and in that situation, resort can be made to
Section 45A - opinion of Examiner of Electronic Evidence.
18. The Evidence Act does not contemplate or permit the proof of an
electronic record by oral evidence if requirements under Section 65B
of the Evidence Act are not complied with, as the law now stands in
India.
...........................................
...........................................
"22. The evidence relating to electronic record, as noted hereinbefore, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the Court omitted to take note of Sections 59 and 65A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65A and 65B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case, does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the 16 C/85843 & 85844/2020 requirements under Section 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible."
11. Upon perusal of the judgment of the Hon'ble Supreme Court in the case of Anvar P.V. (supra), we note 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 proceeding. We note that the Section 138C of the Customs Act is pari materia 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 as in the present proceedings only subject to the satisfaction of the sub-section (2) of Section 138C. This refers to the certificate from a responsible person in relation to the operation of the relevant laptop/computer. After perusing the record of the case, we note that in respect of the electronic documents in the form of computer printouts from the seized laptops and other electronic devices have not been accompanied by a certificate as required by Section 138C(2) as above. In the absence of such certificate, in view of the unambiguous language in the judgment of the Hon'ble Supreme Court (supra), the said electronic documents cannot be relied upon by the Revenue for confirmation of differential duty on the appellant. In the present case, the main evidence on which, Revenue has sought to establish the case of undervaluation and misdeclaration of the imported goods is in the form of the computer printouts taken out from the laptops and other electronic devices seized from the residential premises of Shri Nikhil Asrani, Director in respect of which the requirement of Section 138C(2) has not been satisfied. On this ground, the impugned order suffers from uncurable error and hence, is liable to be set aside."
12.2. Further, in the case of Tele Brands (India) Pvt. Ltd. (supra), 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. Without fulfilling the statutory requirements, subjecting the computer to forensic analysis is of no help and would not help the cause of Revenue. Therefore, we are of the considered opinion that the emails/ documents etc retrieved in the instant case are not reliable evidence for the reasons cited above.
17C/85843 & 85844/2020 12.3. With regard to seizure of CPU and alleged data retrieved there from, the 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. We find 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. Therefore, we find that as per the ratio laid down in the above referred judgments, 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.
13. Further, Revenue relies on the fact that the insurance policies contracted by the appellants for the imports indicate higher values than those mentioned in import invoices and declared in bills of entry. We find that 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. The department in this case has conveniently assumed that the value declared to insurance companies was higher than the value declared to Indian Customs. We do not think that in a case, an importer declares a lesser value to the insurance companies, for whatsoever reason it may be, department would not have considered the same as true transaction value. 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. Therefore, we are of the considered opinion that 18 C/85843 & 85844/2020 rejection of declared value, on the basis of value declared to insurer, is not legal, proper and justified. This Tribunal in the case of I.S. Corporation- 2016(339) E.L.T. A125 has taken a similar view, holding that enhancement of the transaction value on such ground is unsustainable.
13.1. Moreover, it's not the case of the department that the insurance policies were suppressed by the appellant. The appellant has been submitting the said insurance policies along with the other documents on each of the imports. Its surprising that the department has not questioned the same any time and not even to ascertain the CIF value for assessment. Department having kept silent on the documents submitted by the appellants from time to time and failing to verify the same immediately, cannot take recourse to invocation of extended period on this count.
14. We find that revenue heavily relies on the statements of Shri Mahesh Chandra Sharma, though retracted later. The adjudicating authority has held that no documents are available in the case records to show that the statements, recorded between November, 2016 and June, 2019, were retracted by the appellant. Further, he also held that belated retraction has no evidentiary value and the evidences available on record in the form of statements cannot be ignored. On perusal of the appeal records, we find that by letter dated 05.09.2019, addressed to the adjudicating authority, the appellant had retracted all the statements, assigning the reason that the appellant had never stated regarding mis-declaration of value, quantity or description of goods and accordingly, deny the whole statements recorded under Section 108 ibid. It has further been stated that the statements were obtained by threat, duress etc. 14.1. We find 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 19 C/85843 & 85844/2020 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. In the case of Vinod Solanki [2009 (223) E.L.T. 157 (S.C.)], the Hon'ble Supreme Court has ruled that the initial burden to prove that the confession was voluntary is upon the department and that evidence brought by confession if retracted, must be corroborated by other independent and cogent evidence. Madras High Court in the case of Shri Nandi Dhall Mills India Private Limited held that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability and has also made a few payments as per the statement, cannot lead to self- assessment or self-ascertainment. Though the judgement was pronounced in respect of GST, it goes to indicate that acceptance by the appellant during the course of recording the statement is not just enough and the same has to be confirmed by adducing independently corroborative evidence. The whole case cannot rest simply on the basis of a retracted statement though belatedly.
14.2. We find that the appellants have shown enough cause for delayed retraction. Learned Commissioner has simply brushed the same aside. He should have examined the appellant during the adjudication proceedings in terms of Section 138(B) of the Customs Act, 1962, to confirm the veracity. Learned adjudicating authority could have examined the officers too. Section 138B (1) ibid deals with the aspect of relevance of statements under certain circumstances. It has been provided that a statement made and signed by a person during any enquiry or proceeding shall be relevant, for the purpose of 20 C/85843 & 85844/2020 proving an offence, when the person, who made the statement, is examined as a witness in the case before the court. In this case, having acknowledged that the retraction has been made by the appellant in the course of the adjudication proceedings, more specifically, during the period between issuance of SCN and passing of the impugned order, it was incumbent upon the learned adjudicating authority to examine the person, who made the statement. However, the adjudicating authority chose to rely on the statement alone as evidence, which is beyond the scope and ambit of the statutory provisions. Thus, contents of the retracted statement cannot simply be brushed aside, to conclude that the appellant has indulged into the activity of undervaluation of goods.
15. The ratio of the judgments relied upon by Revenue is distinguishable from the facts and circumstances of the present case inasmuch as the facts involved in those cases and the nature of offence is entirely different. In the instant case, no iota of evidence was submitted by Revenue regarding under valuation of goods. The only credible evidence, according to Revenue was the insurance policy taken by the supplier for the higher value of the goods. Revenue failed in appreciating the purpose of the insurance policy was entirely different and has no connectivity with the customs statute, wherein the transaction value alone is to be considered for determination of the duty liability and not otherwise. Further, corroboration of the data retrieved from the email of the seized computer/CPU lost their evidentiary value inasmuch as the provisions of Section 138C have not been complied with by the department. Ratio of the judgment in the case of Pyare Lal Bhargava (supra), relied upon by Revenue support the case of appellant inasmuch as the Hon'ble Supreme Court has held that it is unsafe to rely upon a confession, much less on a retracted confession, unless the court is satisfied that the retracted confession is true and voluntarily made and has been corroborated in material particulars.
16. In view of the above discussion, it is evident that none of the evidences relied upon by the department, to allege the undervaluation 21 C/85843 & 85844/2020 resorted to by the appellants, stand the scrutiny of Law. We find that 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 which as per our discussion above fall flat. Therefore, we are of the considered opinion that the department failed to substantiate the allegations by cogent and legally admissible evidence. Under the circumstances, the benefit should undoubtedly go to the appellants.
17. In the result, the appeals are allowed with consequential relief, if any, as per law.
(Order pronounced in the open court on 01.08.2022) (S.K. Mohanty) Member (Judicial) (P. Anjani Kumar) Member (Technical) Sinha