2024 (8) TMI 728 - AT - Customs

Department cannot reject previously accepted depreciated values for imported machines without proper justification under Section 138C(4)

M/s. Media Graphics Versus Commissioner of Customs, Chennai II, Shri R. Janardhanan Partner of M/s. Media Graphics Versus Commissioner of Customs, Chennai II, Shri S. Varadharaj Partner of M/s. Media Graphics Versus Commissioner of Customs, Chennai II

M/s. Media Graphics Versus Commissioner of Customs, Chennai II, Shri R. Janardhanan Partner of M/s. Media Graphics Versus Commissioner of Customs, Chennai ... Issues Involved:1. Alleged undervaluation of imported second-hand offset printing machines.2. Admissibility of electronic evidence.3. Validity of the assessment based on Chartered Engineer's Certificate.4. Legality of penalties imposed on the firm and its partners.Issue-wise Detailed Analysis:1. Alleged Undervaluation of Imported Second-Hand Offset Printing Machines:The appellant, M/s. Media Graphics, imported second-hand offset printing machines and declared a total assessable value of Rs.1,60,61,285/-. However, the Directorate of Revenue Intelligence (DRI) alleged that the actual value was Rs.3,16,37,782/-, leading to an evasion of customs duty amounting to Rs.41,09,269/-. The Ld. Adjudicating Authority confirmed the differential duty under Section 28 of the Customs Act, 1962 (CA 1962) with interest and imposed penalties under Sections 114A, 112(b), and 114AA on the firm and its partners respectively. The appellants contested this, arguing that the value was determined based on an 'Inspection Report and Valuation Certificate' by a Chartered Engineer (CE) as per Board's Circular No. 25/2015, and that the department had no basis to revise the value without following proper procedures.2. Admissibility of Electronic Evidence:The department relied on electronic evidence such as WhatsApp chats and data from mobile phones and hard disks to support the claim of undervaluation. The appellants argued that these electronic records were not certified as required under Section 138C of CA 1962, making them inadmissible. The Tribunal agreed, citing the Supreme Court's judgment in Anvar P.V. Vs P.K. Basheer, which mandates a certificate under Section 65B of the Evidence Act for electronic evidence to be admissible. The Tribunal found that the lack of such a certificate was fatal to the department's case.3. Validity of the Assessment Based on Chartered Engineer's Certificate:The Tribunal noted that the assessment of the imported machines was initially based on the depreciated value determined by a CE's Certificate, which was accepted by the department at the time of import. The SCN only sought to discard the declared value and not the depreciated value from the CE's Certificate. The Tribunal emphasized that the assessment based on a procedure established by a Board's circular cannot be deemed incorrect unless the CE's Certificate is challenged and conclusively disproved, which was not done in this case.4. Legality of Penalties Imposed on the Firm and Its Partners:Given that the department failed to prove undervaluation and the inadmissibility of the electronic evidence, the Tribunal concluded that the demand for differential duty and the penalties imposed on the firm and its partners could not be sustained. The Tribunal set aside the impugned order, thereby nullifying the penalties.Conclusion:The Tribunal found that the department failed to follow the proper procedures and provide admissible evidence to support the claim of undervaluation. The assessment based on the Chartered Engineer's Certificate was valid, and the penalties imposed were unjustified. Consequently, the Tribunal set aside the impugned order and allowed the appeals, providing the appellants with consequential relief as per law. The appeals were disposed of accordingly.