Pranav B Prem

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) held that imports and filing of the Bill of Entry are transactions of business under the Customs Act and that Section 114AA would squarely apply to such transactions. The Tribunal was hearing an appeal filed by Shri Nitin Khandelwal, Manager of M/s Wide Impex, challenging the order passed by the Principal Commissioner of Customs (Import), ICD, Tughlakabad, New Delhi, which had imposed a penalty of ₹30,00,000 under Section 112(a) and another ₹30,00,000 under Section 114AA of the Customs Act, 1962.

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Background

The importer, M/s Wide Impex, had filed Bill of Entry No. 435561 dated 11.12.2017 for clearance of goods and self-assessed the duty payable. Acting on intelligence inputs that the goods were mis-declared in description and value, the Special Intelligence and Investigation Branch (SIIB) examined the consignment and found several discrepancies — certain goods were in excess, some were not declared, and the value of several items appeared too low. Samples were also sent to the Central Revenue Control Laboratory (CRCL) for analysis. Subsequent investigation revealed that the importer had also filed another Bill of Entry No. 6646028 dated 02.06.2018, where similar discrepancies were found. The actual invoice for this consignment was also discovered in an Excel sheet submitted by the appellant during investigation.

Investigation and Statements

During the course of inquiry, the owner of the importer, Shri Mayank Khandelwal, did not appear but authorized his elder brother and Manager, Nitin Khandelwal, to represent him. In his statement dated 09.01.2018, Nitin Khandelwal admitted that he used to visit China, place orders for goods on behalf of Wide Impex, and undervalue goods by submitting fake invoices for customs clearance. He explained that the difference between the actual price and the declared value was paid directly to the Chinese exporter by the local buyers in India.

He also revealed that two invoices were generated for each consignment — one genuine invoice showing the value in RMB and another fake invoice showing the value in USD, which was submitted to Customs. He voluntarily opened his email account in the SIIB office, printed the Excel sheet containing actual invoice details, signed it, and handed it over to officers.

Contentions of the Appellant

The appellant argued that the Excel sheet relied upon by the Department was inadmissible under Section 65B of the Indian Evidence Act, as it lacked the necessary certification. He further claimed that only the invoices submitted along with the Bills of Entry should be considered and not the RMB values appearing in the Excel sheet. It was also contended that the statement made by him was retracted later, that there was no mis-declaration of value, and that penalty under Section 114AA applies only to exports, not imports. Reliance was placed on the 27th Report of the Standing Committee on Finance of the Lok Sabha to support this argument.

Department’s Stand

The Revenue contended that this was a clear case of mis-declaration and undervaluation. It argued that the appellant had himself produced the Excel sheet after downloading it from his own email account, and thus, its authenticity could not be questioned. The Department also relied on Section 139 of the Customs Act, which allows presumption of truth for official documents, and defended the penalties imposed.

Findings of the Tribunal

The Bench observed that sufficient opportunity of hearing was provided to the appellant. Despite multiple notices and adjournments, he failed to attend the personal hearings. The Tribunal further noted that Section 65B of the Evidence Act did not apply in this case, as the Excel sheet was not a computer output but a document voluntarily opened, printed, and signed by the appellant from his email account. Rejecting the contention that the statement was retracted, the Bench remarked that “there are several details in the statement dated 09.01.2018 which could be within the exclusive knowledge of the appellant alone.” Hence, the Tribunal found no reason to doubt the authenticity of the document or the voluntariness of the statement.

On the issue of applicability of Section 114AA, the Tribunal clarified that the provision penalizes any person who “knowingly or intentionally makes, signs or uses any declaration or statement which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Customs Act.” It emphasized that both imports and the filing of Bills of Entry constitute transactions of business under the Customs Act, and therefore, Section 114AA applies equally to import-related mis-declarations. The Bench noted that the Standing Committee report cited by the appellant merely discussed the background of introducing Section 114AA but did not restrict its applicability to export transactions alone.

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Considering the total value of goods liable for confiscation (₹36,01,70,703), the Tribunal found the penalties of ₹30,00,000 each under Sections 112(a) and 114AA to be modest and reasonable. Concluding that the appellant had indeed made incorrect declarations in the Bills of Entry, the CESTAT upheld the penalties and dismissed the appeal.

Appearance

Counsel for Appellant/ Assessee: Shri Bharat Bhushan and Shri Pratik Kumar

Counsel for Respondent/ Department: Shri Nikhil Mohan Goyal and Shri Rakesh Kumar

Cause Title: Nitin Khandelwal v. Principal Commissioner, Customs

Case No: Customs Appeal 50914 Of 2021

Coram: Justice Dilip Gupta (President), P.V. Subba Rao (Technical Member)