CESTAT Rules, Customs Valuation Can’t Be Based On Excel Data Copied In Pen Drive
Pranav B Prem
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising Justice Dilip Gupta (President) and Shri P.V. Subba Rao (Technical Member), has held that customs valuation cannot be based on electronic data retrieved from a pen drive unless it is accompanied by a mandatory certificate under Section 138C of the Customs Act, 1962. The Tribunal ruled that such secondary electronic evidence is inadmissible in the absence of statutory compliance and that the transaction value declared by the importer cannot be rejected solely on the basis of such material.
The case arose from an appeal filed by M/s. Composite Impex and its partner Shri Rajiv Dhuper, assailing an order passed by the Principal Commissioner of Customs, New Delhi, which rejected the self-assessed transaction value declared in 30 Bills of Entry relating to the import of automotive windshields. The department alleged under-valuation by the importer and re-determined the assessable value by invoking Rules 3 and 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. A penalty of ₹5 lakh each was also imposed on both the appellant firm and its partner.
Background of the Dispute
M/s. Composite Impex imported automotive safety glass from M/s. Dongguan Benson Automobile Glass Co. Ltd., China, during the period 2015–2018. The Special Intelligence and Investigation Branch (SIIB) initiated an investigation and issued a show cause notice dated 21.08.2020 alleging suppression of transaction value. The notice was based on an Excel sheet retrieved from a pen drive, said to contain data sent via WeChat by one 'Max' of the supplier company to Rajiv Dhuper. The Excel file included details such as invoice numbers, CIF values, and payment data for the relevant import period.
The department contended that the comparison of these details with the declared values in the Bills of Entry revealed deliberate under-valuation. It alleged that the importer presented fabricated invoices to customs authorities to evade duties and that the actual values were significantly higher. The Principal Commissioner accepted this claim and rejected the declared transaction values under Rule 12 of the 2007 Valuation Rules, re-determining the value based on the figures from the Excel file. The order also invoked the extended limitation period under Section 28(4) of the Customs Act to confirm the differential duty with interest and penalty.
Contention of the Appellants
The appellants argued that the Excel file relied upon by the department was a secondary electronic record and hence inadmissible under Section 138C of the Customs Act unless accompanied by a mandatory certificate, analogous to the requirement under Section 65B of the Indian Evidence Act. It was submitted that no such certificate had been produced by the department, and the panchnama dated 25.10.2018 did not record the creation or authentication of the printout from the pen drive.
Moreover, the appellants pointed out that the Excel sheet was neither signed nor verified by the supplier, who in a letter dated 04.10.2020 categorically denied having sent the document. It was argued that the statement recorded under Section 108 of the Customs Act was retracted promptly and could not be considered reliable without due procedure under Section 138B, which mandates that such a statement must be recorded before the adjudicating authority and be subject to cross-examination.
Department’s Stand
The department argued that the data from the WeChat conversation conclusively showed under-invoicing. It relied on the statement of Rajiv Dhuper recorded under Section 108, in which he had allegedly accepted that the Excel file represented the actual account summary of transactions with the supplier. It was contended that this statement, along with evidence of higher payments to the foreign supplier, justified rejection of the transaction value and redetermination under the Customs Valuation Rules.
CESTAT's Findings
The Tribunal rejected the department’s arguments and observed that the entire case of under-valuation rested on the printout of an Excel file obtained from a pen drive, which constituted secondary electronic evidence. It noted that the data was not retrieved from a primary source but from an external storage device without the production of the mandatory certificate under Section 138C(4) of the Customs Act.
The Tribunal referred to several precedents, including Trikoot Iron & Steel Casting Ltd [Excise Appeal No. 55779 of 2023 decided on 09.09.2024], where it was held that in the absence of a certificate under Section 36B of the Central Excise Act (analogous to Section 138C), no reliance could be placed on computer-generated printouts. It also relied on the Supreme Court decisions in Anvar P.V. V. P.K. Basheer [AIR 2015 SC 180] and Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal [AIR 2020 SC 4908], which clarified the legal position that electronic records are admissible only if accompanied by the requisite certificate as proof of authenticity.
Further, the Tribunal emphasized that statements recorded under Section 108 must be subjected to procedural safeguards under Section 138B, which includes examination before the adjudicating authority and an opportunity for cross-examination. It held that since none of these procedural safeguards were followed, the statement of Rajiv Dhuper could not be relied upon to reject the transaction value.
Verdict
CESTAT concluded that both the Excel sheet printout and the statement under Section 108 were inadmissible, and hence, the rejection of the declared transaction value under Rule 12 and its re-determination under Rules 3 and 10 of the Customs Valuation Rules could not be sustained. It accordingly set aside the order dated 26.07.2021 passed by the Principal Commissioner, quashed the demand of differential duty, interest, and penalties, and allowed the appeals filed by both M/s. Composite Impex and its partner Rajiv Dhuper.
Appearance
Shri Alok Agarwal, Shri Sharad Srivastava, Shri Prachit Mahajan, Advocates for the appellant.
Shri Nagendra Yadav, Authorized Representative for the Department
Cause Title: M/s. Composite Impex V. The Principal Commissioner of Customs (Import)
Case No: Customs Appeal No. 50955 of 2021
Coram: Hon’ble Mr. Justice Dilip Gupta [President], Hon’ble Mr. P.V. Subba Rao [Member (Technical)]
[Read/Download order]
