2018 (4) TMI 856 - AT - Customs

Tribunal Invalidates Order: Electronic Evidence Inadmissible

The Tribunal set aside the impugned order, finding electronic evidence inadmissible due to non-compliance with Section 138C of the Customs Act, 1962. ... Admissibility of electronic records and computer printouts under Section 138C of the Customs Act - Requirement of certificate identifying electronic record and manner of production - Parimateria of Section 138C with Section 65B of the Evidence Act - Oral evidence cannot substitute statutory certificate for electronic records - Admissions do not cure statutory non compliance for electronic evidenceAdmissibility of electronic records and computer printouts under Section 138C of the Customs Act - Requirement of certificate identifying electronic record and manner of production - Parimateria of Section 138C with Section 65B of the Evidence Act - Admissions do not cure statutory non compliance for electronic evidence - Whether computer printouts and other electronic documents seized during search could be admitted as evidence in the adjudication in absence of the certificate required under Section 138C. - HELD THAT: - The Tribunal held that Section 138C prescribes a mandatory procedure for admitting computer printouts and other electronic records and is parimateria to Section 65B of the Evidence Act. The recorded material in this case consisted primarily of computer printouts and other electronic documents retrieved from laptops and electronic devices seized during search. The record did not contain the certificate required by Section 138C(4) identifying the electronic record, describing how it was produced, giving particulars of the device and dealing with the conditions in subsection (2). Reliance solely upon oral statements admitting the documents did not cure the statutory non compliance. Applying the principle laid down by the Supreme Court in Anvar P.V. (regarding Section 65B), the Tribunal concluded that in absence of the statutory certificate the electronic records were inadmissible and could not support confirmation of differential duty or penalties. The Tribunal further considered and distinguished a contrary Tribunal decision relied upon by Revenue on the ground that that decision did not consider the Anvar P.V. ruling. [Paras 8, 9, 11, 12]Electronic documents and computer printouts seized were inadmissible for want of the certificate mandated by Section 138C; accordingly the adjudicating authority's reliance on such evidence to confirm differential duty and penalties was unsustainable.Procedure for examination of witnesses under Section 138B of the Customs Act - Whether non compliance with the procedure in Section 138B required separate adjudication. - HELD THAT: - Counsel for appellants contended that witnesses were not examined as per Section 138B. The Tribunal observed that while force may lie in that submission, the principal evidence relied upon by Revenue (electronic records) was held inadmissible for statutory non compliance with Section 138C. Given that the core case fell on the inadmissibility of electronic evidence, the Tribunal found it unnecessary to further examine or decide the procedural objections under Section 138B. [Paras 13]Section 138B compliance issue noted but not adjudicated on merits because inadmissibility of electronic evidence rendered further discussion unnecessary.Final Conclusion: Because the investigating agency did not produce the certificate required by Section 138C for the seized electronic records, those computer printouts and electronic documents were inadmissible; the Tribunal set aside the adjudicating authority's order confirming differential duty, interest and penalties and allowed the appeals. Issues Involved:1. Admissibility of electronic evidence under Section 138C of the Customs Act, 1962.2. Compliance with Section 138B of the Customs Act, 1962 regarding the examination of witnesses.3. Confirmation of differential duty and penalties based on alleged under-valuation and misdeclaration of imported goods.Issue-wise Detailed Analysis:1. Admissibility of Electronic Evidence under Section 138C of the Customs Act, 1962:The primary contention of the appellants was the inadmissibility of electronic evidence due to the absence of a certificate as mandated by Section 138C of the Customs Act, 1962. The appellants relied on the Supreme Court's decision in Anvar P.V. vs. P.K. Basheer & Others (2014) and the Tribunal's decision in Telebrands Pvt. Ltd. vs. C.C. (2016). Section 138C outlines the conditions under which computer printouts and electronic records can be admitted as evidence, requiring a certificate that identifies the document, describes its production, and is signed by a responsible official. The Tribunal found that the DRI officers did not comply with these requirements, as the electronic documents were not accompanied by the necessary certificate. Consequently, the evidence obtained from electronic devices was deemed inadmissible, leading to the conclusion that the adjudicating authority's reliance on such evidence was flawed.2. Compliance with Section 138B of the Customs Act, 1962 Regarding the Examination of Witnesses:The appellants argued that the adjudicating authority failed to examine witnesses in compliance with Section 138B of the Customs Act, 1962. This section mandates the examination of witnesses to establish the truth of their statements. The Tribunal noted that the adjudicating authority did not follow the prescribed procedure for examining witnesses, as highlighted by the Delhi High Court in J&K Cigarette vs. Collector of Customs (2009) and the Punjab & Haryana High Court in G-Tech Industries vs. Union of India (2016). However, since the demand of duty could not be sustained due to the inadmissibility of electronic evidence, the Tribunal found it unnecessary to delve further into the compliance with Section 138B.3. Confirmation of Differential Duty and Penalties Based on Alleged Under-Valuation and Misdeclaration of Imported Goods:The adjudicating authority had confirmed the demand of duty along with interest and imposed penalties on the importers, based on the alleged under-valuation and misdeclaration of imported goods. The evidence for the actual price was retrieved from electronic devices, which the appellants disputed. The Tribunal found that the entire case was based on electronic evidence that did not comply with Section 138C requirements. As a result, the confirmation of differential duty and penalties could not be upheld. The Tribunal also noted that the decision in M/s. Laxmi Enterprises vs. C.C., which was relied upon by the Revenue, did not consider the Supreme Court's judgment in Anvar P.V., making it inapplicable to the present case.Conclusion:In conclusion, the Tribunal set aside the impugned order, finding that the electronic evidence relied upon by the adjudicating authority was inadmissible due to non-compliance with Section 138C of the Customs Act, 1962. Additionally, the failure to examine witnesses as per Section 138B further weakened the Revenue's case. Consequently, the appeals filed by the appellants were allowed, and the adjudged demands against them were dismissed.