Customs undervaluation demand fails when electronic records are inadmissible and retracted statements lack corroboration.

Computer printouts and electronic records could not support rejection of declared customs value unless the statutory conditions for electronic evidence were met under Section 138C of the Customs Act, and witness statements were not reliable where the procedure under Section 138B was not followed and cross-examination was denied. The partners' statements were retracted, and no independent corroboration showed payment above invoice value. On these facts, undervaluation was not proved, the declared value could not be rejected, and the demand of differential duty, confiscation and penalties was unsustainable.

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Issues: Whether the demand of differential customs duty by rejection of the declared value, along with confiscation of goods and penalties, was sustainable when the case rested on computer printouts, e-mails and statements that were retracted and not subjected to the prescribed evidentiary safeguards.

Analysis: The Tribunal followed the earlier co-ordinate Bench decision arising out of the same investigation and applied the same legal approach to the present appeals. It held that computer printouts and electronic records could not be relied upon unless the requirements for admissibility of electronic evidence under Section 138C of the Customs Act, 1962 were satisfied. It also noted that the witness statements were not tested through the prescribed procedure under Section 138B of the Customs Act, 1962 and that cross-examination had not been afforded. The Tribunal further found that the partners' statements had been retracted and that there was no independent corroboration of payment of any excess amount over invoice value. On these facts, the declared value could not be rejected and the charge of undervaluation was not proved.

Conclusion: The demand of differential duty, confiscation and penalties were held to be unsustainable and the appeals were allowed.

Ratio Decidendi: Electronic records relied upon in customs adjudication are inadmissible unless the statutory conditions governing their proof are complied with, and retracted statements without corroboration cannot le sustain an undervaluation demand or consequential penalties.

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