2024 (9) TMI 1363 - AT - Customs

Customs value enhancement upheld based on email evidence showing higher payments than declared invoice amounts

CESTAT Chennai upheld the department's rejection of declared transaction value and enhancement of customs value based on email evidence and partner's ... Levy of redemption fine and penalty - valuation of imported goods - rejection of transaction value and enhancement of value - Admissibility of e-mail evidence - non-compliance with Section 138C of the Customs Act, 1962 - HELD THAT:- Actually, there is no whisper replying to the allegation in the SCN that the appellant had opened his e-mail ID and downloaded 13 documents including the e-mail. This being so, the appellant had handed over the e-mail to the Department as part of the investigation. If there was any grievance for the appellant, he ought to have sent a letter or objection to the department stating that the email was downloaded on threat or duress. No such letter has been sent to the department. No such averment has been made in the reply to the SCN. Chapter XIII (Sections 100 to 110A of Customs Act, 1962) deals with the powers of officers for search, seizure and arrest. Section 110A provides power to inspect and Section 107 provides power to examine persons. For these reasons, the email is admissible evidence. The other evidence relied is the statement of Shri Sheetal K. Jain (appellant–active partner) recorded by Department. In his statement, it is clearly deposed by him that after negotiations, they had agreed to supply Ginger Beer @ 4.55 GBP per case. It is also stated that the appellant had made part payment and the balance amount of 99.61 is still to be paid. This clearly shows that the declared value is incorrect - It is incumbent upon the appellant to come forward with an explanation in the reply as to why they have paid an amount over and above than that has been mentioned in the invoice. The appellant has not been able to put forward any explanation in regard to higher amount paid by them. The strong inference that can be drawn from the facts is that the value declared in the Bill of Entry is not correct transaction value. The department has therefore correctly rejected the transaction value and enhanced the value on the basis of e-mail - the order of enhancement of value and the confirmation of differential duty is upheld. The rejection of declared value and enhancement of value is upheld - The redemption fine is reduced to Rs. 1,00,000/- - The penalty imposed under Section 114A of Customs Act, 1962 is reduced to Rs. 1,00,000/- - appeal allowed in part. Issues Involved:1. Legality of rejection of the declared transaction value and enhancement of value.2. Admissibility of e-mail evidence under Section 138C of the Customs Act, 1962.3. Validity of the statement recorded under Section 108 of the Customs Act, 1962.4. Appropriateness of the redemption fine and penalty imposed.Detailed Analysis:Legality of Rejection of Declared Transaction Value and Enhancement of Value:The appellant imported 2400 cartons of Non-Alcoholic Ginger Beer, declaring the value as USD 3240 (C&F). The department, based on an e-mail and a statement from the appellant's partner, found the actual value to be GBP 10,920. The department enhanced the value to GBP 10,920 under Rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and issued a Show Cause Notice (SCN) proposing to reject the declared value, confiscate the goods, and impose penalties. The original authority upheld this, ordering the appellant to pay differential duty and imposing a penalty. The Tribunal found that the department correctly rejected the transaction value and enhanced the value based on the e-mail and the statement, as the appellant failed to provide a plausible explanation for the higher amount paid to the foreign supplier. Therefore, the order of enhancement of value and the confirmation of differential duty was upheld.Admissibility of E-mail Evidence under Section 138C of the Customs Act, 1962:The appellant argued that the e-mail could not be relied upon as evidence because the department did not comply with Section 138C of the Customs Act, 1962. The department countered that the e-mail was not retrieved by them but was downloaded and handed over by the appellant himself. The Tribunal noted that the appellant did not counter this fact in their reply to the SCN. As the e-mail was downloaded and handed over by the appellant voluntarily, the Tribunal found it to be admissible evidence. The Tribunal distinguished this case from Jeen Bhavani International Vs Commissioner of Customs, Nhava Sheva, where the e-mails were retrieved by the department without compliance with Section 138C. Thus, the reliance on the e-mail was deemed proper.Validity of the Statement Recorded under Section 108 of the Customs Act, 1962:The appellant contended that the statement recorded under Section 108 of the Customs Act, 1962, was given under threat and was later retracted. The department argued that there was no mention of any threat or duress in the appellant's reply to the SCN. The Tribunal found that the appellant had not retracted the statement in the reply to the SCN and had not provided any explanation for the higher amount paid to the foreign supplier. The Tribunal noted that the statement was corroborated by the e-mail, which detailed the actual transaction value. Therefore, the statement was considered valid evidence for rejecting the transaction value and enhancing the value.Appropriateness of the Redemption Fine and Penalty Imposed:The appellant argued that the redemption fine and penalty imposed were excessively high. The Tribunal agreed that the redemption fine of Rs. 3,50,000/- was excessively high for a differential duty amount of Rs. 2,97,256/-. The Tribunal reduced the redemption fine to Rs. 1,00,000/- and also reduced the penalty under Section 114A of the Customs Act, 1962, from Rs. 3,00,000/- to Rs. 1,00,000/-, taking a lenient view.Conclusion:1. The rejection of the declared value and enhancement of value is upheld.2. The redemption fine is reduced to Rs. 1,00,000/-.3. The penalty imposed under Section 114A of the Customs Act, 1962, is reduced to Rs. 1,00,000/-.4. The appeal is partly allowed with consequential relief, if any.