Customs Duty Set aside for Non-Compliance with Section 138C

The Customs Excise and Service Tax Appellate Tribunal delivered a significant ruling on admissibility of electronic evidence in customs proceedings and the procedural safeguards required under Section 138C of the Customs Act, 1962.

The Tribunal set aside customs duty demands, confiscation, and penalties imposed upon Bhaijaan Stores and its partners in an alleged undervaluation case involving imports from China. 

The Tribunal held that electronic evidence in the form of email printouts and computer-generated documents cannot be relied upon unless mandatory statutory requirements under Section 138C are strictly complied with. The Bench observed that the Revenue failed to furnish the statutory certificate contemplated under Section 138C and therefore the electronic records became inadmissible in evidence. 

The ruling further emphasized that:

• retracted statements without corroborative evidence; 

• denial of cross-examination; and 

• absence of proof of extra consideration paid abroad

cannot sustain allegations of undervaluation under customs law. 

The decision assumes major importance in customs investigations increasingly relying upon electronic records, emails, and digital evidence.