Relevancy of statements under section 108 and admissibility of email printouts in customs valuation-procedural safeguards lacking, reassessment set aside

Statements recorded under the power to summon cannot be treated as relevant evidence unless the statutory procedure for admitting investigative statements is followed, including examination as a witness and an opportunity for cross examination; accordingly such statements were held inadmissible and could not justify re determination of transaction value. Computer and email printouts require prescribed evidentiary formalities and a certificate for computer output and appropriate contemporaneous panchnama for digital evidence; absent these safeguards the printouts were inadmissible. The valuation reassessment and penalties based solely on those statements and printouts were set aside.

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Issues: (i) Whether statements recorded under Section 108 of the Customs Act, 1962 could be relied upon in adjudication without following the procedure in Section 138B of the Customs Act; (ii) Whether printouts of emails/computer printouts could be relied upon without compliance with Section 138C of the Customs Act, 1962.

Issue (i): Whether statements recorded under Section 108 of the Customs Act, 1962 are relevant and admissible in adjudication proceedings absent compliance with Section 138B(1)(b) of the Customs Act, 1962.

Analysis: Section 108 enables recording of statements by Gazetted Officers during inquiries. Section 138B(1)(b) makes such statements relevant in proceedings only after the person who made the statement is examined as a witness before the adjudicating authority and the adjudicating authority forms the opinion that the statement should be admitted in evidence in the interests of justice; thereafter an opportunity for cross-examination must be afforded to the affected person. Tribunal and High Court authorities cited in the judgment establish that the procedure under Section 138B(1)(b) is mandatory and failure to follow it renders the recorded statements not relevant and inadmissible for proving the truth of their contents.

Conclusion: The statements recorded under Section 108 of the Customs Act, 1962 could not be relied upon by the Principal Commissioner without compliance with the mandatory procedure prescribed by Section 138B(1)(b) of the Customs Act, 1962. This conclusion is in favour of the assessee.

Issue (ii): Whether printouts of emails/computer printouts can be relied upon in adjudication proceedings without compliance with Section 138C of the Customs Act, 1962.

Analysis: Section 138C deems computer printouts admissible as documents if the conditions in subsection (2) are satisfied and, for admissibility, a certificate under subsection (4) identifying the document and describing its production and related matters is required (or compliant equivalents as recognized by precedent). The Principal Commissioner recorded valuation findings based on email printouts without any certificate or record demonstrating compliance with Section 138C(4). In addition, the statements relied upon were retracted, undermining any suggestion of due compliance.

Conclusion: The printouts of emails were not admissible in the absence of compliance with Section 138C(4) of the Customs Act, 1962. This conclusion is in favour of the assessee.

Final Conclusion: Because neither the mandatory procedure for admitting Section 108 statements under Section 138B(1)(b) nor the certification/conditions required by Section 138C(4) were satisfied, the findings rejecting declared transaction value under Rule 12 and re-determining value under Rule 3 of the 2007 Valuation Rules and the penalties imposed could not be sustained; the impugned order is set aside and the appeals are allowed.

Ratio Decidendi: Statements recorded under Section 108 of the Customs Act, 1962 acquire relevance in adjudication only after the maker is examined as a witness before the adjudicating authority and the authority forms a written opinion under Section 138B(1)(b) permitting admission (with opportunity for cross-examination), and computer printouts/email printouts are admissible only upon satisfying the conditions of Section 138C and the certification requirement of Section 138C(4).

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