Voluntary Section 108 statements and original electronic records substantiate rejection of declared customs transaction value.

M/s Kusum Overseas, a proprietorship concern of Shri Gagan Vohra, imported food products through ICD Tughlakabad. Acting on information that the importer was under-invoicing the goods and mis-declaring their retail sale price (RSP/MRP), the Directorate of Revenue Intelligence searched the importer’s business, warehouse and residential premises on 05.05.2016. A laptop and documents were recovered, and the seized goods were inventoried and handed over to the appellant under superdginama.

In statements recorded under Section 108 of the Customs Act, 1962, the appellant allegedly admitted that the goods had been imported at values lower than the actual prices and that the MRP had been mis-declared. Statements of the appellant’s customs broker’s manager and G-Card holder were also recorded. Forensic examination of the laptop allegedly yielded supplier invoices, emails and other documents indicating higher prices and actual transaction details.

The department rejected the declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and proposed redetermination under Rules 4 to 9. The differential duty was calculated at ₹49,74,457, and ₹30,00,000 deposited during investigation was proposed to be appropriated. Confiscation under Section 111(m) and penalty under Section 114A of the Customs Act were also proposed.

The proposals were confirmed by the adjudicating authority’s Order-in-Original dated 26.03.2018.

Before the Tribunal, the appellant challenged the order on grounds of denial of relied-upon documents, breach of natural justice, impermissible reliance on Section 108 statements without cross-examination, coercive deposit of ₹30,00,000, and improper rejection and redetermination of the transaction value.

1. Whether reliance on the appellant’s and customs broker’s statements recorded under Section 108 of the Customs Act, 1962, without permitting cross-examination, violated the principles of natural justice and Section 138B of the Act?

2. Whether the electronic documents and supplier invoices retrieved from the appellant’s laptop constituted admissible and reliable evidence, including whether a certificate under Section 65B(4) of the Evidence Act was necessary?

3. Whether the declared transaction value was validly rejected under Rule 12 of the Customs Valuation Rules, 2007, and whether the value was redetermined sequentially under Rules 4 to 9 read with Section 14 of the Customs Act, 1962?

4. Whether the consequential differential duty, confiscation and penalty proceedings were sustainable?

The Tribunal applied Section 14 of the Customs Act, 1962, under which imported goods are ordinarily valued on the basis of their transaction value, subject to the statutory valuation rules. Rule 12 of the Customs Valuation Rules, 2007 permits rejection of the declared value where the proper officer has reasonable doubt regarding its truth or accuracy, after which valuation must proceed sequentially under Rules 4 to 9.

The Tribunal considered Section 108, which authorises Customs officers to record statements during inquiry, and Section 138B concerning the evidentiary use of such statements. It relied on Ramesh Chandra Mehta v. State of West Bengal, Illias v. Collector of Customs, and K.I. Pavunny v. Assistant Collector for the proposition that a voluntary confession to a Customs officer is not barred as a confession to a police officer.

It also referred to Swadeshi Polytech Ltd. v. Collector and J.K. Cigarettes Ltd. v. CCE concerning the circumstances in which cross-examination may be denied.

Regarding electronic evidence, the Tribunal relied on Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal for the distinction between an original electronic record and a secondary copy, holding that Section 65B(4) certification is required for secondary electronic evidence but not where the original electronic record itself is produced.

The Tribunal distinguished the valuation principles in Eicher Tractors Ltd. v. Commissioner of Customs and Commissioner of Customs v. South India Television (P) Ltd. by finding that the present case involved admissions and documentary evidence establishing that the declared values were not genuine.

The Tribunal found that the statements relied upon were those of the appellant, the proprietor, and persons acting for or connected with the appellant’s customs broker. It held that denial of cross-examination in these circumstances did not breach natural justice, particularly because the appellant’s own statement amounted to an admission of under-invoicing and MRP mis-declaration.

The Tribunal further treated the laptop data and recovered supplier invoices as reliable documentary evidence because they were obtained from the appellant’s own laptop, forensically examined in his presence, and supported by the investigation record. Applying Arjun Panditrao Khotkar, it held that a Section 65B(4) certificate was unnecessary where the original electronic record was produced.

On valuation, the Tribunal concluded that the admissions, supplier invoices, emails and other recovered documents created a sufficient basis for doubting the declared transaction value under Rule 12. It therefore upheld rejection of the declared value and accepted the adjudicating authority’s finding that redetermination had been carried out sequentially under Rules 4 to 9. The alleged mis-declaration of MRP/RSP was also treated as relevant to computation of the additional customs duty component.

The Order-in-Original confirming the differential duty of ₹49,74,457, appropriating the ₹30,00,000 deposit, and sustaining the related confiscation and penalty proceedings was upheld. The appeal was consequently dismissed.