The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, allowed an appeal, filed by Ajanta Overseas, holding that the appellant retracted the statements made under section 108 of the Customs Act (the “Act”), it did not comply with the requirements of section 138C of the Customs Act, and had not been satisfied.
The dispute arose from an investigation conducted by the Revenue Intelligence for the undervaluation of the imported furniture and furniture parts. The alleged offence was based on the printouts of emails and statements of persons recorded under section 108 of the Act. Thereafter, the order dated March 18, 2019, rejected the declared value under rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, read with section 14 of the Customs Act, 1962, and re-determined under rule 3. The Commissioner of Customs (Appeals) rejects the appeal filed by the appellant against the order dated March 18, 2019, leading to the present appeal.
While examining the appeal, the Bench comprising Justice Dilip Gupta (President) and Ms. Hemambika R. Priya (Member–Technical) undertook a detailed analysis of the evidentiary scheme under the Customs Act. The Tribunal held that statements recorded under Section 108 cannot be relied upon unless the procedure prescribed under Section 138B is strictly followed, which requires examination of the maker of the statement as a witness before the adjudicating authority, formation of an opinion on admissibility, and grant of opportunity for cross-examination. In the present case, the statements relied upon had been retracted and the mandatory procedure was admittedly not followed, rendering them irrelevant and inadmissible.
The Tribunal further held that email printouts and electronic records relied upon by the Department were inadmissible in the absence of a certificate under Section 138C(4) of the Customs Act. It noted that no panchnama had been drawn for seizure of electronic evidence and no certificate identifying the manner of production, device, or authenticity of the computer output was placed on record. In such circumstances, reliance on email printouts to establish undervaluation was held to be legally impermissible.
The Tribunal reiterated that Sections 138B and 138C are mandatory provisions, enacted to guard against the risk of coercion and unreliability of statements recorded during investigation, and non-compliance strikes at the root of adjudication.
Accordingly, the Tribunal set aside the impugned order dated December 3, 2020, quashed the rejection of transaction value, and annulled the consequential demand and penalty. The appeal was allowed in full.
Appearances:
For the Appellant – Advocates Priyanka Goel and Sanjiv Kumar.
For the Respondent – Authorised Representatives Nikhil Mohan Goyal, with Rajesh Singh, Shiv Shankar, and M.K. Shukla.
