The CESTAT allowed three connected appeals by Hemendra Rai, Rajiv Shewaramani and Aditya Gupta, set aside penalties imposed on them for alleged involvement in undervaluation of imported furniture via parallel invoices, as authorities improperly relied on retracted section 108 statements and un-certified email printouts without following sections 138B/138C procedures.
Background
- Importer (presumably linked to appellants) filed Bills of Entry for furniture/furniture parts; investigation alleged undervaluation using parallel invoices, supported by statements of appellants (foreign nationals/partners) recorded u/s 108 Customs Act and email printouts submitted by Rajiv Shewaramani.
- Additional Commissioner rejected declared transaction value u/r 12 of CVR 2007 (parallel invoices), re-determined value u/r 3, and imposed penalties on appellants as “part and parcel of the fraud”.
- Commissioner (Appeals) upheld, relying on the s.108 statements (acknowledging emails showing dual invoice system) despite retraction in replies.
Key Procedural Issues
Reliance on retracted s.108 statements:
- Authorities used statements to prove undervaluation/misdeclaration without examining makers as witnesses before adjudicator and forming opinion on admissibility “in interests of justice” per s.138B(1)(b) r/w s.138B(2).
- S.138B makes s.108 statements relevant only after: (i) witness examination by adjudicator; (ii) adjudicator’s reasoned opinion for admission; (iii) opportunity for cross-examination. Mandatory safeguard against coerced confessional statements during inquiry.
Admissibility of email printouts:
- Printouts relied on to corroborate statements (e.g., Gautam Gupta acknowledging them), but no panchnama drawn, no s.138C(4) certificate from responsible official verifying computer production/accuracy, and statements retracted.
- S.138C deems computer printouts/microfilms/facsimiles as documents/evidence only if s.138C(2) conditions met (regular use, proper operation etc.) and s.138C(4) certificate provided. Non-compliance renders inadmissible.
Tribunal’s Reasoning
S.138B violation fatal:
- Procedure mandatory (Surya Wires, Ambika International P&H HC, Hi Tech Abrasives CG HC, Its My Name Del HC, Drolia Electrosteel); failure precludes reliance on statements as evidence.
- Distinguished T.N. Malhotra (relied only on voluntariness, unaware of s.138B). No witness examination/cross-exam despite retraction request.
S.138C non-compliance:
- No certificate u/s 138C(4); statements retracted/not disputed via certification (contra Suresh Kumar SC allowing substantial compliance where statements unretracted). Here, no panchnama, retracted statements → inadmissible.
Consequence:
- No valid evidence of undervaluation; cannot reject declared value u/r 12 or impose penalties. Impugned orders unsustainable.
Outcome
Orders of Additional Commissioner (18.03.2019) and Commissioner (Appeals) (14.12.2022) set aside; appeals allowed
Download Final Order Click Here
For Other Legal Notes Click Here