CESTAT Sets Aside Rejection Of Declared Import Value Over Inadmissible Statements, Emails

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at New Delhi Bench recently held that customs authorities cannot reject the declared value of imported furniture by relying on investigation statements and email printouts unless mandatory legal safeguards are followed.

The coram comprised President Justice Dilip Gupta and Technical Member Hemambika R. Priya. The tribunal said that statements recorded during an investigation do not automatically qualify as evidence and can be relied upon only after they pass the test of admissibility.

The case concerned imports of furniture and furniture parts. The customs authorities accused importers of cartelization, misdeclaration, and large-scale undervaluation. On this basis, customs rejected the declared transaction value, re-determined it, and imposed penalties.

On the other hand, the importer argued that the department's case relied mainly on investigation statements and email printouts, which could not be treated as evidence unless procedures under the Customs Act were followed.

The department, however, argued that these materials were enough to establish undervaluation and justify rejection of the declared value.

The tribunal disagreed. It held that statements recorded during inquiry acquire evidentiary value only after the person making the statement is examined before the adjudicating authority and the authority independently decides that the statement should be admitted in evidence.

Explaining the legal position, the tribunal said,

“In view of the provisions of subsection (2) of section 138B of the Customs Act, the provisions of subsection (1) of the Customs Act shall apply to any proceedings under the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice.”

On the email printouts relied upon by the department, the tribunal found that the legal requirements for electronic evidence had not been met.

It noted that no certificate had been produced and no panchnama had been drawn for the electronic records.

“There is nothing on the record to show that a panchnama was drawn for the email printouts.”

With both the investigation statements and email printouts found to be inadmissible, the tribunal held that there was no basis to reject the declared value or levy penalties. As a result, the order passed by the Commissioner (Appeals) was set aside and the importer's appeal was allowed.

For Appellant: Priyanka Goel and Sanjiv Kumar

For Respondent: Nikhil Mohan Goyal, Rajesh Singh, Shiv Shankar and M.K. Shukla