TMI Blog2022 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... isions 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 - 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. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence under some other law but cannot be a conclusive proof for establishing undervaluation of imported goods - 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 - the rejection of declared value, on the basis of value declared to insurer, is not legal, proper and justified. Retraction of statements - HELD 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Customs (Import) Mumbai reported in [2016 (336) ELT 97 (Tri.Mum)] held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ordaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiry 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 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 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 acknowledg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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