Supreme Court Saves Rs. 9.3 Cr Customs Duty Case from Collapse Over “Technicality”

The matter arose from imports of branded food items. Pursuant to searches at business and residential premises, desktops, laptops, external hard drives, tablets and phones were seized. Data was extracted and printouts were taken during Record of Proceedings dated 06.07.2015, 21.07.2015 and 21.04.2016, which were signed and acknowledged by company personnel. The department alleged that Bills of Entry understated RSP/MRP, resulting in short payment of duties.

A show cause notice dated 06.06.2016 demanded recovery of differential duties of Rs. 9,24,50,644/- and Rs. 9,83,614/- with interest, penalty and confiscation. The adjudicating authority, by order-in-original dated 17.07.2017, confirmed the demand. On appeal, the Tribunal, by order dated 17.04.2018, set aside the demand solely on the ground that the seized computer printouts and electronic records were inadmissible for want of the certificate under Section 138C(4), without deciding other issues. The revenue filed civil appeals before the Supreme Court under Section 130E of the Customs Act.

Main Issue: Whether electronic records and printouts seized could be rejected as inadmissible solely due to absence of a certificate under Section 138C(4), despite Records of Proceedings, signatures on the printed pages and un-retracted statements under Section 108 confirming authenticity.

SC’s Decision: The Hon’ble Supreme Court held that the requirement of Section 138C(4) stood substantially complied with in the present case. The Court was dependent on the Records of Proceedings showing extraction and printing, signatures on the printouts seized and unretracted statements made under Section 108, observing that document authenticity was not challenged in responses to the show cause notice. It was observed that insistence upon a separate certificate was unmerited in light of such contemporaneous records.

The Court also referred to applicable High Court jurisprudence on the point. The Delhi High Court in J. Sekar v. Union of India (2018) decided that Section 138C of the Customs Act is pari materia with Section 65B of the Evidence Act, and as such, certification is necessary unless situations prove to be ones of substantial compliance. The same principles were reaffirmed in Anvar P.V. v. P.K. Basheer and applied in customs cases by the Delhi High Court, highlighting the Section 65B/138C certification requirement. These considerations influenced the Court in considering whether strict adherence to a certificate was justified in the current case.

Thus, the order of the Tribunal based only on non-compliance with Section 138C(4) was set aside. The appeals were remanded to the Tribunal for consideration de novo on all other grounds except Section 138C(4), with a direction to decide on merits independently, without any influence from the limited comments of the Court.

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