Customs demand and valuation require final assessment, reliable electronic evidence and tested witness statements before reassessment.

A customs demand under Section 28 could not be sustained for consignments still under provisional assessment, because a short-levy demand on the footing of final assessment is premature until assessment is finalised. The valuation dispute over remaining imported batteries also turned on unreliable and incomplete evidence: the seized electronic material was unavailable at adjudication, computer-generated evidence requirements were not met, the alleged wire transfers were not linked to the disputed bills of entry, the market data related to different specifications, and relied-upon witnesses were not produced for cross-examination. The demand and penalties on that valuation issue were therefore not finally upheld and the matter was remanded for fresh determination.

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Issues: (i) whether demand under Section 28 of the Customs Act, 1962 could be sustained in respect of consignments that were still under provisional assessment; and (ii) whether the declared transaction value of the remaining imported batteries could be rejected and re-determined on the basis of the seized electronic records, emails, wire transfers, market survey and other surrounding material.

Issue (i): whether demand under Section 28 of the Customs Act, 1962 could be sustained in respect of consignments that were still under provisional assessment.

Analysis: The declared demand in relation to the Power ROC consignments rested on bills of entry that had not attained final assessment. Where assessment remains provisional, a demand of short levy on the footing of completed assessment does not survive until finalisation. The record also showed that the demand was founded on that pending provisional stage and not on a final assessment.

Conclusion: The demand for those consignments could not be sustained; it was set aside in favour of the appellant.

Issue (ii): whether the declared transaction value of the remaining imported batteries could be rejected and re-determined on the basis of the seized electronic records, emails, wire transfers, market survey and other surrounding material.

Analysis: The valuation dispute turned on the reliability and evidentiary worth of the material gathered during investigation. The seized hard disk and pen drive were found to be unavailable at the adjudication stage, the appellant was not afforded participation at the time of retrieval, and the requirements governing computer-generated evidence were not satisfied. The Tribunal also found that the alleged wire transfers were not specifically correlated with the disputed bills of entry, the NIDB data related to different battery specifications, and the inference drawn from the import cost sheet proceeded on assumptions. In addition, the witnesses whose statements were relied upon had not been offered for cross-examination, giving rise to a serious procedural defect. In these circumstances, the valuation issue required reconsideration rather than final affirmation of the re-determined value.

Conclusion: The valuation-based demand and penalties for the remaining consignments were not finally upheld and the matter was remanded for fresh determination; the appellant succeeded on this issue to that extent.

Final Conclusion: The adjudication on duty, valuation and penalty did not attain finality across the board. Relief was granted against the confirmed demand for the provisional-assessment consignments, while the remaining valuation dispute was sent back for reconsideration in accordance with law.

Ratio Decidendi: A customs valuation demand cannot be sustained on unreliable electronic evidence, uncorroborated financial trails and untested statements, and where the assessment itself remains provisional the demand under Section 28 cannot be invoked as if the assessment were final.

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