Statements, Email Printouts Inadmissible For Non-Compliance Of S. 138B, 138C Of Customs Act: CESTAT

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the enhancement of declared import value and the consequential penalty in a furniture import case, holding that the Customs authorities failed to comply with the mandatory evidentiary safeguards under Sections 138B and 138C of the Customs Act, 1962. The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that statements recorded during investigation are susceptible to coercion and must undergo statutory “processual filtering” before being relied upon. The Tribunal distinguished contrary decisions where Section 138B was not examined, holding that such rulings could not override explicit statutory mandates. The appeal arose from an Order-in-Appeal dated 3 December 2020, which had upheld an adjudication order rejecting the declared transaction value of imported furniture and furniture parts under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and re-determining the value under Rule 3 read with Section 14 of the Customs Act. The case stemmed from a Directorate of Revenue Intelligence (DRI) investigation alleging cartelisation, mis-declaration and undervaluation by multiple importers, based largely on email printouts and statements recorded under Section 108 of the Act The Tribunal examined whether statements recorded under Section 108 could be relied upon without following the procedure prescribed under Section 138B. It reiterated that statements recorded during investigation become relevant in adjudication proceedings only after The maker of the statement is examined as a witness before the adjudicating authority; and The authority forms a reasoned opinion that the statement should be admitted in evidence in the interests of justice, followed by an opportunity of cross-examination. Relying on a consistent line of precedent from High Courts and prior Tribunal decisions, the Bench held that the requirements prescribed under Section 138B and Section 138C are mandatory, not directory. Since the statements relied upon by the Department had been retracted and the Section 138B procedure was not followed, the Tribunal ruled that the statements could not be used to reject the transaction value or sustain allegations of undervaluation The Department had also relied on printouts of emails to allege mis-declaration and undervaluation. The Tribunal noted that Section 138C governs the admissibility of electronic records, including computer printouts, and requires satisfaction of statutory conditions, typically evidenced by a certificate identifying the document, the manner of its production, and the reliability of the computer system. The Commissioner (Appeals) failed to record any finding on compliance with Section 138C. There was no panchnama or certificate establishing the authenticity and admissibility of the email printouts. Given the retraction of statements and absence of statutory compliance, the Tribunal held that no reliance could be placed on such electronic evidence The CESTAT noted that the Department had failed to establish undervaluation through legally admissible evidence and set aside the Order-in-Appeal dated 3 December 2020; Restored the declared transaction value of the imported goods; and Quashed the penalty imposed on the importer. The appeal was allowed in full, with the Tribunal underscoring that customs valuation enhancements cannot be sustained solely on retracted statements or unverified electronic records without strict compliance with Sections 138B and 138C of the Customs Act. Case Details Case Title: Ajanta Overseas Versus Principal Commissioner of Customs (Import) Case No.: Customs Appeal No. 50374 Of 2021 Date: 20.01.2026 Counsel For Appellant: Priyanka Goel Counsel For Respondent: Nikhil Mohan Goyal Click Here To Read Order Read More: Gauhati High Court Stays Coercive Action in GST Dispute Over Consolidated Show Cause Notice Covering Six FYs

Statements, Email Printouts Inadmissible For Non-Compliance Of S. 138B, 138C Of Customs Act: CESTAT

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