The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that unauthenticated documents allegedly obtained from foreign customs authorities cannot, by themselves, establish misdeclaration of the country of origin of imported goods.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) consequently set aside substantial customs duty demands, confiscation and penalties imposed on importers accused of routing Pakistani-origin dry dates through the UAE while declaring Saudi Arabia as the country of origin.
The department alleged that consignments of dry dates imported into India had actually originated in Pakistan but were routed through Jebel Ali, Dubai, and falsely declared as products of Saudi Arabia to evade the 200% Basic Customs Duty imposed on Pakistani-origin goods following Notification No. 05/2019-Customs.
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The investigation also alleged violations of the Plant Quarantine (Regulation of Import into India) Order, 2003, as the importers had not produced the requisite phytosanitary certificates from the declared country of origin. Based on these allegations, the customs authorities confirmed duty demands, ordered confiscation of goods and imposed penalties under various provisions of the Customs Act.
Saurabh Kapoor, on behalf of importer contended that the entire case rested on documents purportedly received from the Federal Customs Authority, UAE, through overseas enquiries. According to them, these documents: were unsigned and unstamped. Did not bear authentication by UAE Customs. Were not accompanied by any primary correspondence explaining how they were obtained. Included screenshots and electronic records without compliance with statutory requirements governing admissibility of electronic evidence. Contained inconsistencies in container numbers and other shipment details.
The appellants further argued that they had repeatedly sought copies of the communications through which these documents were obtained, but these were never supplied, depriving them of an effective opportunity to challenge the evidence.
The Tribunal rejected the Commissioner’s reasoning that the importers had failed to disprove the authenticity of the overseas documents.
It held that the burden of proving allegations of misdeclaration lies entirely upon the Revenue, and not upon the importer.
According to the Bench, once the authenticity of foreign documents is questioned, customs authorities must establish: how the documents were procured, whether they were properly authenticated by the foreign customs authority, and whether statutory requirements governing electronic evidence under the Customs Act had been satisfied.
The Tribunal observed that the department had failed to satisfy these fundamental evidentiary requirements.
The Bench undertook an extensive review of judicial precedents concerning Customs Overseas Intelligence Network (COIN) reports and foreign customs information.
Referring to earlier CESTAT and Supreme Court decisions, it reiterated that raw intelligence inputs cannot be treated as conclusive evidence; unauthenticated photocopies and unsigned foreign documents have limited evidentiary value; foreign customs reports must be supported by independent corroborative evidence before they can justify customs demands.
The Tribunal emphasized that while verified investigative reports from foreign authorities may be relied upon, mere printouts or unauthenticated documents cannot be accepted as “Gospel truth.”
After analysing the record, the Tribunal found that Revenue had failed to establish the alleged Pakistani origin of the consignments.
The tribunal noted several deficiencies, including: absence of authenticated customs documents, lack of evidence explaining their procurement, absence of proper certification, failure to establish the financial trail linking payments to Pakistani suppliers, and reliance primarily on website printouts and screenshots.
The Bench concluded that the material relied upon by the department remained insufficient to prove deliberate misdeclaration of country of origin.
The Tribunal also examined the confiscation of consignments that had already been assessed and cleared for home consumption.
It observed that customs officers had examined the consignments before permitting clearance, and in some cases, the Special Intelligence and Investigation Branch (SIIB) had also conducted inquiries.
Since the allegation of misdeclaration itself was not proved through credible evidence, the Tribunal held that confiscation of already-cleared goods on that basis could not survive. It further observed that goods cleared for home consumption cease to remain “imported goods” under the Customs Act.
However, the Tribunal distinguished the issue relating to phytosanitary certificates.
It held that where seized consignments lacked mandatory phytosanitary documentation under the Plant Quarantine (Regulation of Import into India) Order, 2003, confiscation was legally sustainable irrespective of the failure of the country-of-origin allegation.
Accordingly, seized consignments remained liable for confiscation, although the Tribunal found that penalties imposed under Section 112 could not be sustained where such penalties had not even been proposed in the show cause notice.
The CESTAT ordered complete allowance of the appeals filed by Findoc Impex and its partner Vaneet Gupta; modification of the order against TRB International, restricting confiscation only to the seized consignments lacking phytosanitary certificates; permission to redeem those seized goods upon payment of a redemption fine of ₹5 lakh, subject to submission of the required phytosanitary certificate; and setting aside the remaining findings relating to customs duty, country-of-origin allegations, confiscation, redemption fine and penalties.
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