CESTAT Delhi: Electronic Data From Unsealed CPU Without Certificate U/S 139C Cannot Be Relied Upon For Customs Assessment
Pranav B Prem
The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), has held that electronic evidence retrieved from an unsealed CPU without a certificate under Section 139C of the Customs Act, 1962, cannot be relied upon for determining the value of imported goods. The Tribunal observed that since the CPU was not sealed at the time of seizure and remained unsealed for 47 days in the office of the Directorate of Revenue Intelligence (DRI), the authenticity of the retrieved data was questionable, and any assessment or redetermination of value based on such data was unsustainable in law.
Background
The appellants, including M/s KDS Exports, M/s Gokul Overseas, M/s Krish Enterprises, and M/s K.K. Enterprises, imported artificial flowers from China between 2002 and 2006. The proper officer assessed their Bills of Entry at US$ 1.46 per kg, rejecting the declared invoice values under Section 14 of the Customs Act, which then required valuation based on the prices at which goods were ordinarily sold in the course of international trade. The importers paid the customs duty as per the enhanced values determined by the proper officer.
Subsequently, the DRI initiated an investigation, alleging that the importers had undervalued their goods and that the actual prices were found in the CPUs seized from their premises. Two CPUs were seized under a panchnama dated 28.09.2006, but they were not sealed at the time of seizure and remained unsealed until 15.11.2006, when the DRI examined them, printed two Excel sheets, and then sealed them. Later, on 04.12.2006, the DRI broke the seals, forensically examined one CPU using “Encase Forensic” software, and retrieved 51 pages of data purportedly showing higher invoice values ranging from US$ 4 to US$ 6 per kg. The adjudicating authority relied on these retrieved values to raise differential duty demands and imposed penalties and redemption fines on the importers and their representatives.
Appellants’ Submissions
The appellants argued that the printouts taken from the unsealed CPUs had no evidentiary value since they were not under their control after seizure and were only sealed after 47 days. They further contended that no certificate under Section 139C(2) of the Act was issued by the officers, rendering the electronic evidence inadmissible.
It was also submitted that during the relevant period, assessments were to be made only by the proper officer, and no provision existed permitting the DRI to re-assess the already finalized Bills of Entry. The appellants highlighted that the proper officer had already enhanced the values based on contemporaneous imports, which formed the legitimate basis under Section 14. A second enhancement by the DRI amounted to reviewing the proper officer’s own order, which was not legally permissible.The appellants also pointed out that the goods had already been cleared and were not available for confiscation under Section 111(m) of the Act and that the show-cause notice (SCN) was issued beyond the statutory six-month period under Section 110(2), making the seizure invalid.
Revenue’s Stand
The Revenue contended that the DRI investigation uncovered parallel invoices reflecting the actual higher prices and that the data retrieved from the CPU proved intentional undervaluation. It was argued that the documents could be admitted in evidence under Section 139 of the Customs Act, which allows the presumption of authenticity of documents unless proven otherwise. The department also relied on earlier Tribunal rulings to support the admissibility of the data.
Tribunal’s Findings
The Tribunal noted that, unlike in previous cases such as Nitin Khandelwal v. Principal Commissioner of Customs (2024), where the electronic data was retrieved directly from the email server, the present case involved data retrieved from the seized CPU after forensic analysis. Therefore, Section 139C of the Act, dealing with admissibility of electronic records, squarely applied. The Bench observed: “In the absence of any certificate under Section 139C, the data cannot be relied upon. Furthermore, the computer/CPU was not sealed at the time of panchnama and was lying with the investigating agency for 47 days after which it was first examined and then sealed, which raises questions about the authenticity of the data.”
The Tribunal further emphasized that assessment during the relevant period had to be based on values at which such goods were ordinarily sold in the course of international trade, i.e., on contemporaneous import values, and not on electronic data of dubious authenticity. The proper officer’s assessment at US$ 1.46 per kg was thus consistent with Section 14 as it stood before the 2007 amendment.
Holding that the redetermination of values based on the CPU data was unsustainable, the CESTAT set aside the adjudicating authority’s order demanding differential duty and imposing penalties. It concluded that since the electronic evidence lacked authenticity and the CPU had remained unsealed for a significant period, it could not form the basis of assessment. The Bench allowed all seven connected appeals filed by the importers and their representatives, granting consequential reliefs and disposing of the miscellaneous applications.
The Tribunal reiterated that electronic evidence must strictly comply with Section 139C of the Customs Act to be admissible. Since the seized CPU was unsealed at the time of seizure and remained in custody without certification, the alleged data could not be relied upon. Consequently, all differential duty demands and penalties were set aside, and the appeals were allowed in favour of the importers.
Appearance
Counsel for Appellant/ Assessee: Dr. Seema Jain and Shri Vimlesh Kumar
Counsel for Respondent/ Department: Shri Rakesh Kumar
Cause Title: KDS Exports v. Commissioner of Customs (ICD) New Delhi
Case No: Customs Appeal No. 57 Of 2009
Coram: Dr. Rachna Gupta (Judicial Member), P.V. Subba Rao (Technical Member)
