Supreme Court | Electronic Evidence Admissible Under Customs Act Without S.138C(4) Certificate If Admitted in S.108 Statement | CESTAT Order Set Aside
Kiran Raj
The Supreme Court of India Division Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan held that compliance with Section 138C(4) of the Customs Act, 1962 had been duly satisfied through records of proceedings and statements recorded under Section 108 of the Act. The Court set aside the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had allowed the appeals of the assessees, and directed that the matters be remanded to the Tribunal for rehearing on grounds other than Section 138C(4).
The appeals arose under Section 130E of the Customs Act, 1962 at the instance of the Revenue, challenging the decision of the CESTAT, New Delhi dated 17 April 2018. The Tribunal had set aside the order of the Additional Director General (Adjudication), Directorate of Revenue Intelligence (DRI), which had earlier imposed penalties upon the assessees.
The respondents were engaged in the import of branded food items from various countries, which were sold in Delhi and Mumbai. Acting on information, the DRI conducted raids on both business and residential premises of the respondents, leading to the seizure of documents and electronic devices. Investigation revealed that the respondents had allegedly failed to declare the actual retail sale price (RSP) and maximum retail price (MRP) of imported goods, resulting in short payment of customs duty.
It was alleged that the importers declared lower RSP/MRP, thereby evading duties. Consequently, a show cause notice dated 6 June 2016 was issued to the respondents demanding differential duties amounting to Rs. 9,24,50,644 from respondent no. 1 and Rs. 9,83,614 from respondent no. 2. The notice also proposed recovery of interest, imposition of penalties, and confiscation of imported goods.
The Adjudicating Authority, by order dated 17 July 2017, confirmed the demand with interest and penalties. The respondents appealed to the CESTAT. The Tribunal found that the evidence relied upon by the department, namely computer printouts and data retrieved from electronic devices, was inadmissible due to non-compliance with Section 138C(4) of the Customs Act, which requires certification for admissibility of electronic evidence.
The Tribunal relied on the Supreme Court’s ruling in Anvar P.V. v. P.K. Basheer that electronic evidence without the requisite certificate under Section 65B of the Evidence Act is inadmissible. It held that Section 138C of the Customs Act was pari materia with Section 65B of the Evidence Act, and since no certificate had been produced for the seized documents, the evidence could not be relied upon. On this basis, the Tribunal set aside the adjudication order and allowed the appeals of the respondents, without examining other issues including Section 138B of the Act.
The Revenue appealed to the Supreme Court, contending that the Tribunal erred in disregarding the records of proceedings and statements recorded under Section 108 of the Customs Act, which demonstrated compliance with statutory requirements.
The Revenue’s counsel argued that the respondents had acknowledged the documents during the course of proceedings, and such acknowledgment sufficed to meet the requirements of Section 138C(4). Reliance was placed on Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, where the Supreme Court held that while Section 65B(4) of the Evidence Act is mandatory, circumstances may exist where strict compliance is excused. The counsel emphasized that the respondents had authenticated the documents through their signatures during proceedings.
Documents produced by the Revenue included detailed Records of Proceedings dated 6 July 2015, 21 July 2015, and 21 April 2016. These proceedings recorded the extraction of data from seized electronic devices, witnessed by company officials and directors, and authenticated by their signatures on hundreds of printed pages. Statements of directors Nikhil Asrani and Aseem Asrani, and founder Suresh Kumar Asrani, recorded under Section 108 of the Act, confirmed the authenticity of seized data.
The respondents’ counsel opposed the appeals, contending that acknowledgments in statements could not substitute the statutory requirement of certification under Section 138C(4). It was further submitted that, in case the appeals were allowed, the matters should be remanded to the Tribunal for adjudication of other issues not considered earlier.
The Court recorded that Section 138C(4) of the Customs Act mandates certification identifying documents, devices involved, and compliance details, signed by a responsible person. The Bench noted: “Sub-section 4 of Section 138C makes it abundantly clear that if any statement is to be read into evidence and such documents are computer printouts, then a certificate has to be obtained in accordance with (a), (b) and (c) of sub-section 4.”
The Court compared Section 138C(4) with Section 65B(4) of the Evidence Act, describing them as pari materia provisions. It referred to Arjun Panditrao Khotkar, observing: “Though Section 65B(4) is mandatory, yet it would all depend on the facts of each case, how the same could be said to have been duly complied with.”
Considering the records of proceedings and statements recorded under Section 108, the Court stated: “When we say due compliance, the same should not mean that a particular certificate stricto senso in accordance with Section 138C(4) must necessarily be on record. The various documents on record in the form of record of proceedings and the statements recorded under Section 108 of the Act, 1962 could be said to be due compliance of Section 138C(4).”
The Court emphasized that the respondents never retracted their statements recorded under Section 108, nor disputed them even in replies to the show cause notices: “At no point of time the statements recorded under Section 108 of the Act, 1962 came to be retracted. Even while giving reply to the show cause notice, the contents of such statements recorded under Section 108 were not disputed.”
The Court also relied on Kum. Shubha @ Shubhashankar v. State of Karnataka, noting: “A certificate not given in the prescribed format per se will not make it invalid, especially when the authenticity of these marked documents is not in dispute.”
The Supreme Court concluded that there was due compliance with Section 138C(4) of the Customs Act. Accordingly, it allowed the Revenue’s appeals in part. The Court directed:
The judgment and order of the CESTAT dated 17 April 2018 were set aside. The appeals filed by the assessees before the Tribunal were ordered to be restored to their original file and reheard. The Tribunal was directed to adjudicate all issues raised by the parties, other than Section 138C(4), on their own merits.
The Court clarified: “It is needless to clarify that on remand the Tribunal shall rehear the entire appeals on their own merits without being influenced in any manner by any of the observations made by this Court. Our observations are confined only on the issue of Section 138C(4) of the Act, 1962.”
Pending applications, if any, were disposed of.
Advocates Representing the Parties
For the Petitioners: Ms. Nisha Bagchi, Senior Advocate
For the Respondents: Mr. Ashish Batra, Advocate
Case Title: Additional Director General Adjudication, Directorate of Revenue Intelligence v. Suresh Kumar and Co. Impex Pvt. Ltd. & Ors.
Neutral Citation: 2025 INSC 1050
Case Number: Civil Appeal Nos. 11339-11342 of 2018
Bench: Justice J.B. Pardiwala, Justice K.V. Viswanathan
