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Tribunal Order Summary (Ramesh Nair, Member (J)) — Pronounced 14-12-2015

Factual and Procedural Background

The appeals challenge Orders-in-Original Nos. 74/2012 and 78/2012 passed by the Commissioner of Customs (Import), New Custom House, Mumbai (dated 27-11-2012 and 3-12-2012). The impugned orders confirmed demands of customs duty, confiscation of seized goods, redemption fines and penalties against appellants including M/s. Shreenath Enterprises (proprietorship of Mrs. Tejas Venkatraman), M/s. G.N.G. & Co. (partners Shri Prakashchandra Pandya and Shri Nandgopal Govindswamy Naidu), and others. The department alleged misdeclaration of value and description of various imported goods (including AB King Pro, 5 in 1 Air O Space Sofa, Slim N Lift, Sauna belt, Tool Kits, Magic Bullet, Drill machines, Diamond Blades) imported mainly from Chinese suppliers. Searches of premises led to seizure of documents and goods; statements of several persons were recorded under Section 108 of the Customs Act, 1962. Show Cause Notices (SCNs) were issued invoking extended limitation under Section 28(1) and penalties under Sections 114A, 114AA and 112. The Commissioner adjudicated the SCNs and confirmed duty, confiscation and penalties; the appellants challenged those orders before the Tribunal.

Legal Issues Presented

  1. Whether the departmental evidence (including alleged confessional statements of Shri Prakashchandra Pandya and Shri Nandgopal Naidu, seized documents such as pages 124 & 125 of File A1, computer printouts and email printouts, and a Hong Kong customs report) is admissible and sufficient to establish misdeclaration/undervaluation of imported goods and to justify reassessment and recovery of differential duty and penalties.
  2. Whether confessional statements of co-accused (recorded under Section 108) which were subsequently retracted can be relied upon as substantive evidence for adjudication and imposition of penalties.
  3. Whether computer-generated evidence (printouts and emails) was admissible in the absence of compliance with statutory safeguards (Section 138C etc.) and proof of authenticity/source.
  4. Whether enhancement of assessable value after original assessment (when values had already been enhanced at the time of import on contemporaneous imports) can be further re-opened and enhanced again by a subsequent show cause notice.
  5. Whether extended period of limitation under Section 28(1) and imposition of penalties under Sections 114A, 114AA and 112 were correctly invoked in the factual matrix of the case.

Arguments of the Parties

Appellants' Arguments (summarized)

  • The departmental case relies heavily on pages 124 & 125 of File A1 and on statements of Prakash Pandya; those pages are unsigned, unstamped, without supplier name or currency and cannot be treated as reliable evidence of actual transaction values.
  • Prakash Pandya’s statements (recorded between 19-4-2006 and 29-6-2006) were retracted by letters dated 31-7-2006; confessions of co-accused cannot be substantive evidence without independent corroboration (relying on cited Supreme Court and Tribunal authorities).
  • No evidence of remittance of differential amounts to foreign suppliers was shown; precedent was cited that undervaluation cannot be established unless remittance is proved.
  • Computer printouts and email printouts were not authenticated and were not recovered in accordance with statutory requirements (invoking Section 138C and relevant Tribunal authority), and their source was not disclosed; authenticity must be proved before admission.
  • The Hong Kong report and foreign documents were not produced as authenticated documents under Mutual Legal Assistance procedure; the report carries a caveat and its annexures/invoices were not supplied.
  • The appellants (in particular Telebrands India Pvt. Ltd.) are purchasers only; there is no evidence they fixed import values or paid amounts over and above invoiced sums, so they should not be penalised.
  • Several procedural/contentions: seized computers/documents were not returned despite requests, causing prejudice; delay in issuing SCN (final SCN issued on 6-4-2010) after arrests and bail; failure to re-interrogate after retraction; and lack of confrontation on certain documents.
  • Requested that impugned orders be set aside and appeals allowed with consequential reliefs.

Revenue's Arguments (summarized)

  • The statements of Prakash Pandya were recorded on multiple dates and confirmed; the retraction letters were addressed to the Commissioner but were received/marked to the investigating officers and therefore not valid retractions in substance; even if taken as retractions they are afterthoughts and do not vitiate the statements.
  • The departmental reliance on seized worksheets/pages and email evidence is justified: the worksheet (pages 124–125) reflects actual values and was recovered in the search; emails and computer material were available in the seized file and were shown to Pandya during his statement, and printouts corroborate the content.
  • Section 139(b) (and Section 139 generally) provides statutory presumptions which support reliance on the foreign documents/evidence (as submitted by the department).
  • Once the department obtained evidence of actual transaction value (admitted by Pandya), Rule 8 of the Customs Valuation Rules and Section 28 were available to re-determine value and invoke extended limitation due to fraud/misdeclaration; reliance placed on authorities where fraud permits reopening under Section 28.
  • On Telebrands/Israni: evidence suggests purchaser awareness of actual values (costing sheets discussed with Israni; introduction of supplier by Israni), and thus aiding/abetting allegations justify penalties against Telebrands and its director.
  • The Department is not required to prove undervaluation with mathematical precision; the cumulative documentary and testimonial evidence suffices to sustain the demand and penalties.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bussa Overseas Properties Ltd. (S.C.) Unsigned/unstamped internal papers cannot be treated as evidence to prove undervaluation (as applied in the opinion). The Tribunal applied this ratio to doubt the evidentiary value of pages 124–125 of the seized file and refused to treat them as conclusive proof of undervaluation.
Mohtesham Mohd. Ismail (S.C.) Confession of co-accused cannot be treated as substantive evidence; confessions require close scrutiny and corroboration. The Tribunal relied on this authority to hold that retracted statements of Pandya/Naidu could not be accepted as evidence without independent corroboration.
Francis Stanly @ Stalin v. Intelligence Officer, NCB [2006 (13) SCALE 386] Confession only if voluntary and free from pressure can be accepted; requires scrutiny and corroboration. Cited (within Mohtesham) as authority supporting need for corroboration; the Tribunal referred to this principle when evaluating confessions and retractions.
Vinod Solanki v. Union of India (S.C.) Burden lies on the Department to prove that confession was voluntary; courts must consider time and nature of retraction. The Tribunal invoked this principle in assessing the weight of Pandya's statements and the timing/nature of retraction.
K.P. Abdul Majeed v. Commissioner of Customs, Cochin (Tri.-Bang.) Authority on validity/effect of retraction addressed to certain officers (as relied upon by Revenue). Revenue relied on this to argue retraction not valid; Tribunal examined the actual receipt/marking of the retraction letter and concluded it did reach investigating officers, but still accepted retraction as effective because department made no rebuttal.
Pundole Sharrukh & Co. v. Commissioner of Customs (Gen.), Mumbai (Tri.-Mum.) Principle that retraction delayed beyond first opportunity may be treated as afterthought. Relied on by Revenue to argue retraction after months is suspect; Tribunal nonetheless concluded department did not rebut and accepted retraction.
Shailesh Amulakh Jogani v. Union of India (Bom.) Cited regarding retraction/afterthought principles (as per Revenue submissions). Referenced by Revenue; Tribunal's reasoning considered retraction's reception and departmental response rather than simply the timing issue.
Surjeet Singh Chhabra v. Union of India (S.C.) Confessional statements made before customs officers, though retracted within a short period, may operate as admission (as held by Apex Court in that case). Revenue cited this; Tribunal distinguished the facts and relied on the absence of departmental rebuttal and other evidentiary failings to conclude confessions could not be treated as substantive here.
Reshmi Petrochem Ltd. (T) Authority cited for the proposition that undervaluation cannot be established unless remittance is proved. Tribunal applied this principle and found no evidence of remittance of differential amounts, undermining the undervaluation case.
Dee Kay Exports (T) Authority cited on requirement of proving remittance to establish undervaluation. Used by Tribunal to support view that absence of remittance proof defeats undervaluation allegation.
Shah and Shantibhai (T) Authority cited regarding need to prove remittance for undervaluation. Cited by Tribunal to reinforce that remittance must be shown; no such proof existed.
Agarvanshi Aluminium Ltd. (T) Admissibility of computer printouts requires compliance with statutory conditions (Section 138C); non-compliance renders printouts inadmissible. Tribunal applied this reasoning to reject computer printouts/e-mails where conditions in Section 138C were not met or provenance was not established.
Premier Instruments & Controls (Tri.-Chennai) / International Computer Ribbon Corporation (Tri.-Chennai) Authorities holding that unauthenticated computer printouts not recovered under mahazar and not confronted cannot be admitted. Tribunal relied on these authorities (as cited in Agarvanshi) to find computer printouts unreliable evidentially in the instant case.
Agrawal Round Rolling Mills Ltd. (T) Adjudicating authority should examine witnesses whose statements are relied upon and permit cross-examination (analogy to Section 9D(2) Central Excise / Section 138B Customs). Tribunal held that the Commissioner ought to have examined Prakash Pandya under Section 138B and permitted confrontation/cross-examination; failure to do so weighed against the department.
Tejwal Dyestuff Industries (T) Caution against reliance on strategic confessional statements which are retracted; need for fuller investigation. Tribunal cited this to criticize department’s reliance on confessions without conducting fuller enquiries after retraction.
M/s A.H. Incorporation v. Commissioner of Customs, Delhi (Tri.-Del.) Authority on re-determination of value under Section 28 in cases of fraud where contemporaneous import data justified reassessment. Revenue relied on this as supporting reopening on fraud grounds; Tribunal found that its facts did not align with the present case and did not permit re-enhancement where contemporaneous values had already been used at first assessment.
Commissioner of C. Ex., Surat-I v. Neminath Fabrics (cited) Referenced by Revenue as authority on invoking extended limitation in fraud cases. The Tribunal noted Revenue's reliance but disposed the case on merits and did not separately decide the limitation point.
Commissioner of Central Excise, Aurangabad v. Bajaj Auto (S.C.) Referenced by Revenue on extended period/limitations in certain cases (as cited). Referenced by Revenue; Tribunal decided on merits without addressing limitation in detail.
CC v. South India Television P. Ltd. (S.C.) Foreign investigation reports without authenticated foreign documents cannot be relied upon for enhancement of value. Tribunal applied this principle to reject reliance on the Hong Kong report where authenticated invoices were not furnished and the report carried a caveat.
Collector v. East Punjab Traders (S.C.) For presumption under Section 139 to apply, authenticated foreign documents must be obtained from the foreign customs authority. Tribunal relied on this authority to hold that Section 139 presumptions did not apply because authenticated copies of foreign invoices were not produced.
Best & Co. v. CC (Tribunal) Authority cited by department on foreign reports/evidence (specific principle not detailed in opinion). Tribunal distinguished Best & Co. on facts and held it was not applicable in the peculiar facts of the instant case.
CC v. Paras Electronics (Tribunal) Principle that once an assessing officer has enhanced value on contemporaneous imports and the BE is finally assessed, a second show cause to further enhance value is impermissible. Tribunal applied this principle to hold that where values had already been enhanced at assessment based on contemporaneous imports, further enhancement by subsequent show cause was not permissible.
CC v. Lord Shiva Overseas (Tribunal) Authority discussing impermissibility of piecemeal re-loading of value after final assessment/enhancement. Relied on by Tribunal to support the conclusion that further re-assessment was not permissible where values had been enhanced initially.
Hitaishi Fine Craft Industries Pvt. Ltd. (cited) Discussed in context of valuation/enhancement principles (specific rule not fully elaborated in opinion). Referenced in Tribunal's discussion on limits to re-enhancement; applied in reasoning against second re-loading of value.
Shimnit Machine Tools & Equipment Ltd. v. CC (Tribunal) Discussed as authority where once declared values were enhanced and BE was finally assessed, further loading is not sustainable. Tribunal cited this to bolster the conclusion that the department could not re-enhance values already enhanced at assessment.
Informatika Software v. CC (P), Kolkata Authority on limits to enhancement based on proforma invoices/quotations (as cited in opinion). Referenced by Tribunal in the broader line of authorities limiting further enhancement after assessment.
Malhotra Impex v. CC (Tribunal) Authority holding second-time enhancement of value by show cause notice is not sustainable. Tribunal relied on this to conclude that subsequent re-enhancement was not sustainable in the present facts.
SRK Enterprises v. CC (Tribunal) Authority remarking that ignoring accepted contemporaneous lower import price is discriminatory and untenable. Used by Tribunal to support view that once contemporaneous lower prices are accepted, they cannot be ignored to re-enhance value.
Arvind Exports (CC, Cochin v. Arvind Exports (P) Ltd.) Authority referenced on finality of valuation once assessed and appealable adjudication is made (specific principle cited in opinion). Referenced by Tribunal in the context that a valuation once finally determined cannot be reopened without proper grounds.

Court's Reasoning and Analysis

The Tribunal carefully reviewed the submissions and the record and proceeded in a stepwise manner:

  1. Reliability of Confessions: The Tribunal observed that the department heavily relied upon statements of Shri Prakashchandra Pandya and Shri Nandgopal Naidu. Both had retracted their so-called confessional statements by letters dated 31-7-2006. The Tribunal found that the retraction letters had been marked to and reached the investigating officers. The department made no attempt to rebut these retractions or to record counter-statements or to re-examine the deponents, and consequently the Tribunal concluded the statements could not be accepted as evidential confessions.
  2. Deficiencies in Seized Documents (pages 124 & 125): The Tribunal examined the seized pages relied upon by the department and noted multiple deficiencies: unsigned, unstamped, lacking supplier name and currency, and with descriptions that did not tally with invoice descriptions. Citing Bussa Overseas and other authorities, the Tribunal held such documents could not be treated as reliable evidence to prove undervaluation.
  3. Absence of Proof of Remittance: The Tribunal emphasized that there was no tangible evidence of remittance of any differential amounts to foreign suppliers. Applying authorities cited by parties, it noted that undervaluation allegations commonly require proof of outward remittance to establish that declared invoice values were not the transaction values.
  4. Admissibility and Authenticity of Computer/Email Printouts: The Tribunal found that email printouts and computer-generated material were not supported by adequate proof of provenance and the statutory safeguards under Section 138C were not shown to have been complied with. The source of certain emails was undisclosed and printouts were taken after statements were recorded. Relying on Agarvanshi Aluminium and allied authorities, the Tribunal held that these printouts were not admissible as substantive evidence without proper authentication.
  5. Foreign Report from Hong Kong: The Tribunal scrutinized the Hong Kong Trade Investigation Bureau letter relied upon by the Commissioner and observed that the report did not name the appellants, the annexure was unsigned, invoice copies were not authenticated or produced under Mutual Legal Assistance, and the report carried a caveat restricting its use. Relying on Supreme Court authorities (Collector v. East Punjab Traders; CC v. South India Television), the Tribunal found the Hong Kong material inadmissible for enhancement in the absence of authenticated foreign documents.
  6. Effect of Prior Enhancement Based on Contemporaneous Imports: The Tribunal noted that in several instances the assessing officers had already enhanced declared values at the time of import based on contemporaneous imports. Applying precedent (e.g., CC v. Paras Electronics; Lord Shiva Overseas; Shimnit Machine Tools), the Tribunal held that where values have been finally determined on contemporaneous data, subsequent re-enhancement by a later show cause notice is not permissible without showing that initial enquiries were inadequate.
  7. Cumulative Conclusion: On the cumulative effect of the above defects — retracted confessions, unreliable seized internal sheets, lack of remittance proof, inadmissible computer/email documents, and absence of authenticated foreign invoices — the Tribunal concluded that undervaluation was not established and the departmental demand, confiscation, fines and penalties (being consequential) could not be sustained. The order was decided on merits; the Tribunal therefore did not need to resolve the limitation point.

Holding and Implications

HOLDING: The Tribunal allowed the appeals. The operative finding in the order is:

ALL APPEALS ARE ALLOWED, with consequential relief.

Immediate Consequences for the Parties

  • The demands for differential customs duty confirmed by the Commissioner of Customs were set aside insofar as they rested on the evidence found unreliable by the Tribunal.
  • Confiscation of seized goods, redemption fines and all penalties imposed consequential to the demand were held unsustainable and therefore set aside.
  • The Tribunal decided the case on merits and expressly noted it was not addressing the limitation issue.

Broader Implications

The Tribunal's decision confined itself to the facts and evidence of the case. The order emphasized evidentiary standards: the need for authenticated documentary proof (including authenticated foreign invoices or proper procedure for obtaining such documents), proof of remittance to establish undervaluation, careful treatment of confessional statements (especially when retracted), and compliance with statutory safeguards for computer-generated evidence. The Tribunal did not announce a new general rule beyond the application of existing authorities; it resolved the dispute by applying established precedents and evidentiary principles to the record before it.

Order pronounced in Court on 14-12-2015.

Show full summary ...

    Tele Brands (India) Pvt. Ltd. v. Commissioner of Cus. (Import), Mumbai

    [Order per : Ramesh Nair, Member (J)]. - These appeals are directed against the orders-in-original Nos. 74/2012/CAC/CC(I) AB/VI, dated 27-11-2012 and 78/2012/CAC/CC(I)/AB/VI, dated 3-12-2012 passed by the Commissioner of Customs (Import), New Custom House, Ballard Estate, Mumbai wherein demand of customs duties, confiscation of seized goods, redemption fines, penalties were confirmed against the appellants.

    2. The facts of the case are that the demands were confirmed on allegations of misdeclaration of value and description of imported goods by the appellants M/s. Shreenath Enterprises, a proprietorship firm of Mrs. Tejas Venkatraman and M/s. GNG & Co., a partnership firm of partners Shri Prakashchandra Pandya and Shri Nandgopal Govindswamy Naidu and aiding and abetting therein by Shri Prakash Pandya, Shri Hitesh Israni and Telebrands India Pvt. Ltd.

    2.1 M/s. Shreenath Enterprises was operating from the premises of M/s. G.N.G. & Co. the work of both the firms was being looked after by S/Shri Prakash Chandra Premshankar Pandya and Shri Nandgopal Naidu. The premises of the said M/s. G.N.G. & Co. and M/s. Shreenath Enterprises and M/s. Telebrand India Pvt. Ltd., were searched and incriminating documents were recovered. Further goods which were purchased by M/s. Telebrand from the above firms were identified and detained. Further goods were also detained from the premises of a dealer M/s. Teleproduct.

    2.2 During course of investigation statements of S/Shri Prakash Chandra Premshankar Pandya and Nandgopal Naidu, Hitesh Israni and CHA were recorded under Section 108 of the Customs Act, 1962.

    3. The investigation revealed that -

    3.1 The appellants had imported various goods including AB King Pro (Exercise Bench), 5 in 1 Air O Space Sofa (Inflatable Sofa Bed), Slim N Lift (Female Shorts), Sauna belt (Fat Reduce Belt), Tool Kits, Magic Bullet (Food Processors), Drill M/c and Diamond Blades from China and supplied it to Telebrand and these goods were mainly imported from/through M/s. China 5 Star Products and M/s. Creative Nations International.

    3.2 During the search of the office of the appellants, various documents were seized. Page Nos. 124 and 125 of the seized file contain a statement of account containing details of the goods imported by M/s. G.N.G. & Company and M/s. Shreenath Enterprises and also the details of payment. The chart also shows the value of the goods declared to Customs and also the details of payment made separately in addition to value shown in the invoice.

    3.3 Shri Prakash Chandra Pandya in his statement dated 19-4-2006 has confirmed the details of entry made regarding payment made or to be made to M/s. China 5 Star Product’s Company Pvt. Ltd. That they have requested China 5 Star Products Co. to give them two sets of invoices, one set for bank purposes in which the value was shown less as compared to the actual value of the goods and the other the actual value invoice. The invoice meant for bank purpose which showed lower value was declared to the customs and duty was paid at such lower value.  Payments to the suppliers were however made as per the actual value of the goods. Shri Pandya confirmed his above statement vide his statement dated 3-5-2006 and 29-6-2006. In his above statements Shri Pandya gave further details regarding actual value of the goods. Shri Pandya has further stated that statement of account referred to above was sent by Shri Felix of China 5 Star Products Co. Ltd. China which was seized during the course of search on 18-4-2006. That in Col. No. 6 the value as declared in the invoices submitted for Customs is mentioned whereas the actual invoice amount (i.e. the actual value of the goods imported is mentioned in Col. No. 8 and the balance amount (i.e. the difference between the actual invoice value and the value shown in the bank  invoice) is shown in Col. No. 10. The appellants had made the remittance to the supplier i.e. China 5 Star Products Co. Ltd. as per the bank invoice through Bank of India, Mulund (West) Branch and the balance amount were arranged through unauthorized channel to the supplier.

    3.4 In his various statements Shri Nandgopal Swami Naidu, other partner of M/s. G.N.G. & Co. confirmed the correctness of statement of Shri Pandya.

    3.5 Two E-mails recovered from the seized file (1). E-mail dated 16-6-2005 from Shri Prakash Pandya to Shri Felix wherein it has been mentioned that “Tuesday you will receive t.t. from Dubai for balance 2 container”, Monday I will make 4 more container t.t”, e-mail dated 15-6-2005 from Prakash Pandya wherein it mentions that “I don’t understand why you not received money but by Dubai bank has already sent money on Friday from Dubai today I will send you the remittance letter so you push the bank.

    3.6 From these e-mails it appeared that the balance amounts were arranged through a bank in Dubai. E-mail dated 23-8-2005 from Shri Felix of China 5 Star Products, stating -

    “Subject : Proforma Invoice
    Dear Prakash
    “we have enclosed PI for FOB NINGBO USD 18, pl confirm and for Bank the price is not changed, it is still USD 7.50
    Regards Felix.
    E-mail dated 23-8-2005                   05.56.09
    Subject; Re : LAST PRICE OF AB KING PRO
    OK the price is accepted because Chinya is my best friend”

    Regards Prakash.”

    3.6 Invoices of China 5 Star Products raised on Hotbrand UAE and TV Mart WORLDWIDE Malaysia. In these cases AB KING PRO has been supplied to these importers at the instance of Shri Prakash Pandya and Shri Nandgopal. In his statement dated 19-4-2006 Shree Pandya has explained these transactions. The actual price is US $ 18.00. China 5 Star has billed these parties in UAE and Malaysia at US $ 21.00. Out of this US $ 3 was given to G.N.G. & Co./M/s. Shrinath Enterprises. However while importing AB KING PRO they have declared the price at US $ 7.50 before Customs. Similarly details regarding other goods is given in Para 9.1.5 to 9.1.12 of the SCN.

    3.7 Report received from Customs authorities at Hong Kong confirm the misdeclaration of the value of Air sofa imported by the one appellant M/s. Shreenath Enterprises from M/s. CNI, China.

    3.8 M/s. G.N.G. & Co. has also imported goods like Armature Starter Coil, Wheel Cover, Cover Plate, Pinion, Metal Shafts, Wing Block, Plastic Jar etc. by misdeclaration of value as detailed in the SCN.

    3.9 During the period July, 2005 to April, 2006, Shreenath Enterprises filed 13B/Es for clearance of different goods 12 consignments were cleared from JNCH and from Mumbai Customs and M/s. G.N.G. filed 30B/Es for the clearance of different goods out of which 24 consignments were filed through JNCH and 6 were filed through Air Cargo Complex, Mumbai, to mislead the department from knowing the actual value of the goods, they misdeclared the description of the goods and value. That actual value of the goods should be as shown in the SCN/OIO. Appellants were issued show cause notices for recovery of duty short paid invoking the extended period of limitation under Section 28(1) and imposition of penalties under Section 114A, 114AA and 112 of the Customs Act, 1962.

    3.10 The said SCNs have been adjudicated, demand of duty has been confirmed and RF and PP has been imposed vide the impugned Orders-in-Original dated 27-11-2012 and 3-12-2012.

    4. Shri Anil Balani, Advocate, ld. counsel for the appellants made the following submission :

    (1)     The show cause notices rely on pages 124 & 125 from the seized file No. A1. The values mentioned in the said pages 124 & 125 are adopted as the correct assessable values. The learned Commissioner has accepted the proposals in the show cause notice and taken the values appearing on pages 124 & 125 to be the correct values. This approach is not correct for the following reasons :-
    (a)      Tejas, who is the Proprietor of Shreenath Enterprises, is the wife of Venkatraman, brother of Nandgopal Naidu. The demand of duty is confirmed against Tejas on the basis of the said two pages allegedly recovered from Prakash Pandya and his retracted confessions.
    (b)      The said two pages are not signed by any person nor do they bear the stamp of any company. The name of the foreign supplier is not mentioned on the said two pages. The currency is also not indicated.
    (c)      The descriptions of the goods in the invoices are different from the descriptions mentioned on the said pages 124 & 125. The descriptions do not match or do not tally and it is impossible to correlate the descriptions. E.g. the description Slim & Lift according to the department is the actual description for goods declared to be female shorts/under garments (tight hosiery). As per Supreme Court judgment in the case of Bussa Overseas Properties Ltd. [ (S.C.)] such documents cannot be treated as evidence to prove undervaluation.
    (d)     The confessions of Prakash Pandya recorded between 19-4-2006 upto 29-6-2006 were retracted by letters dated 31-7-2006. Though the retractions were served, there was no rebuttal offered by the DRI. In the case of Mohtesham Mohd.  Ismail [ (S.C.) = (S.C.)], the Hon’ble Supreme Court has held that confession of a co-accused person cannot be treated as substantive evidence. Para 16 of the said judgment reads as under :-
    “We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvananthapuram [2006 (13) SCALE 386], this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek corroboration of the purported confession from independent sources.”
    In the case of Vinod Solanki [ (S.C.) = (S.C.)] the Hon’ble Supreme Court has inter alia held as under :-
    (1)        Burden to prove that confiscation was voluntary is on the department.
    (2)        Court must bear in mind the time of retraction, nature and manner and other relevant factors to arrive at a finding.
    (3)        Enquiry was not conducted on alleged remittance of foreign exchange abroad.
    (e)      Prakash Pandya was arrested on 19-9-2007 and he was released on bail. In terms of the bail order Prakash attended the office of the DRI regularly thereafter. But no confessional statement was recorded. The SCN finally came to be issued after a long delay on 6-4-2010.
    (f)       In view of Shri Prakash Pandya’s retraction, the department ought to have interrogated him again.
    (g)      Shri Prakash is alleged to have admitted that they have requested their supplier to give two sets of invoices - one for the bank and customs purpose and the other with the actual values. However, in the search operations the two sets of invoices were never recovered. This proves that the confessions were false.
    (h)     In the circumstances, the learned Commissioner ought to have examined Prakash Pandya as laid down under Section 138B of the Customs Act in the course of the adjudication proceedings. In the case of Agrawal Round Rolling Mills Ltd. [ (T)] the Hon’ble Tribunal has held that the Adjudication Authority, in accordance with the Provisions of Section 9D(2) of the Central Excise Act, 1944 must examine the witnesses whose statements have been relied upon by the Department and thereafter must permit their cross-examination by the Appellant.
    (i)       In the case of Tejwal Dyestuff Industries [ (T)] the Tribunal has held as under :-
    “Recording of the confessional statement would not put an end to the investigation and the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller investigation. It appears that the Revenue Officers in the present case have fallen victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not making a fuller investigation, thinking that the confessional statements are made and not retracted, was already done.”
    (j)       The Notice does not contain any evidence of remittance of differential amounts (as mentioned in the said pages 124 & 125) to the foreign suppliers. In the following judgments it is held that undervaluation cannot be established unless remittance is proved :
    (1)        Reshmi Petrochem Ltd. - (T);
    (2)        Dee Kay Exports - (T);
    (3)        Shah and Shantibhai - (T).
    (2)     The SCN has relied upon computer printouts also. In the list of relied upon documents on pages 77 & 78 Sr. No. 18 refers to printouts taken from the computer under panchnama dated 29-6-2006. However, for Sr. No. 19 which refers to emails correspondence with the suppliers, the source is not disclosed. Such email correspondence from undisclosed sources was shown to Prakash on 3rd May, 2006 and his confessions were recorded. However, para 5.3 of the Notice records that on 29-6-2006 the seal of the computer was broken for the first time and printouts were obtained. The learned Commissioner ought to have asked the investigators to disclose the source of the email correspondence shown to Prakash on 3-5-2006. It is well settled that the authenticity of the documents must be established before taking them into evidence.
    Reliance is placed on Section 139 of the Customs Act in this connection.
    (3)     The Hong Kong Customs documents are not mentioned in the list of RUD (Annexure-A to SCN) and Prakash Pandya was never asked about the same while recording his statements.
    (4)     Even for the computer printouts allegedly recovered from Prakash Pandya’s computer, requirements of Section 138C were not fulfilled. In the case of Agarvanshi Aluminium Ltd. [ (T) the Hon’ble CESTAT has held as under : -
    “From the above provisions, it is clear that for admissibility of  computer printout there are certain conditions have been imposed in the said section. Admittedly condition 4C of the said section has not been complied with and in the case of Premier Instruments & Controls (supra) this Tribunal relied on the case of International Computer Ribbon Corporation - (Tri.-Chennai) wherein this Tribunal has held that “computer printout were relied on by the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the printout and was not even confronted. The Tribunal rejected the printouts and the Revenue’s finding of clandestine manufacture and clearance. Thereafter it was found that there is strong parallel between the instant case and the case cited. Nothing contained in the printout generated by the PC can be admitted as evidence for non-fulfilment of the statutory condition.”
    In this case also, we find that the parallel situation as to the decision of Premier Instruments & Controls (supra). Therefore, the printout generated from the PC seized cannot be admitted into evidence for non-fulfilment of statutory condition of Section 138C of the Customs Act, 1962.”
    (5)     Shri Balani in addition to the above common submission, also made specific submission in respect of appellant M/s. G.N.G. & Co. as  under :
    (1)(a) The source of e-mail correspondence relied upon by the department is not disclosed unlike RUD in Sr. No. 17 of Annexure-A. It was not recovered under any Panchnama.
    (b)      Panchnama dated 18-4-2006 refers to copies of invoices and other documents, Challan Books, etc. However, it does not mention any e-mail correspondence.
    (c)      Signature of Ashwin Gupta is missing on the said e-mails unlike pages 124 & 125 of seized File No. A1.
    (d)     The said e-mail correspondence was not shown to Prakash Pandya while recording his statement dated 19-4-2006. It was shown to Prakash Pandya for the first time on 3-5-2006.
    (e)      There is no reference to seized File No. A1 in the statement dated 3-5-2006 of Prakash Pandya. E-mail file was shown to Prakash Pandya instead of seized File No. A1.
    (f)       Proforma Invoices (Pages 7 & 8) mentioned in Sr. No. 17 of Annexure-A of the SCN were allegedly recovered on 29-6-2006. The same were never shown to Prakash Pandya. They were shown to Nandgopal Naidu for the first time on 18-1-2010 i.e. after more than 3½ years. However, the said invoices are unsigned and unstamped.
    (g)      Two computers and several seized documents/records were never returned in spite of repeated requests and reminders of the appellants. This has prevented the appellants from countering the allegations made by the department more effectively. The action of the department is contrary to and in violation of C.B.E. & C. Circular No. 42/88-CX, dated 24-5-1988 and the law laid down by the Hon’ble Bombay High Court in the case of Silicon Graphics System (India) Pvt. Ltd. [ (Bom.)].
    (h)     Regarding computer printouts (pages 13 to 19) mentioned in Sr. No. 17 of Annexure-A to SCN, no question was asked to anybody under Section 108. There is no confession about the same. Therefore it cannot be treated as incriminating evidence in support of the department’s case.
    (i)       Regarding Proforma Invoice dated 23-8-2005 (Page 9) showing value @ $18/- relied upon in Sr. No. 16 of Annexure-A to the SCN, no statement was recorded although it was allegedly shown to Prakash Pandya on 3-5-2006. Significantly it is not figuring on pages 124 & 125 of seized File No. A1.
    (6)     The SCN has relied upon computer printouts also. In the list of relied upon documents on pages 77 & 78 Sr. No. 18 refers to printouts taken from the computer under panchnama dated 29-6-2006. However, for Sr. No. 19 which refers to emails correspondence with the suppliers, the source is not disclosed. Such email correspondence from undisclosed sources was shown to Prakash on 3rd May, 2006 and his confessions were recorded. However, para 5.3 of the notice records that on 29-6-2006 the seal of the computer was broken for the first time and printouts were obtained. The learned Commissioner ought to have asked the investigators to disclose the source of the email correspondence shown to Prakash on 3-5-2006. It is well settled that the authenticity of the documents must be established before taking them into evidence. Reliance is placed on Section 139 of the Customs Act in this connection. In support of this submission relied upon the judgment of Agravanshi Aluminium (supra).
    (7)     Pages 55 & 57 mentioned in statement dated 18-1-2010 of Nandgopal Naidu refer to computer printouts of 2 proforma invoices for Air Sofa Massage. Both the said proforma invoices are neither signed nor stamped by the foreign supplier. For the first time they were shown to Nandgopal Naidu on 18-1-2010 after a delay of 4 years from the date of alleged seizure on 18-4-2006. Signature of Prakash Pandya was never obtained on these invoices and he was never shown the said invoices.
    The goods are massage chair imported from China. Supplier M/s. Creative Nation shipped 5-in-1 Air sofa which is a different commodity.
    (8)     Without prejudice to the above, penalty is imposed on Nandgopal Naidu without disclosing his involvement and role.
    (9)     In the circumstances, it is humbly prayed that the impugned Order be set aside and the appeals be allowed with consequential reliefs to the appellants.
    (10)  Shri Balani during the hearing also submitted copies of letters dated 8-5-2006 from foreign suppliers M/s. China 5 Star Products Co. Ltd. and letter dated 22-8-2006 from M/s. Creative Nations International Ltd. addressed to the Assistant Commissioner of Customs, New Custom House wherein both the foreign suppliers confirmed that they received payments against their supplies only the amount mentioned in the invoice and also confirmed the price at which invoices were raised.
    (11)  Shri Vikram Nankani, Sr. Counsel appearing on behalf of M/s. Telebrand India Pvt. Ltd. and it’s director Shri Hitesh Israni submits that the relationship of Telebrand with M/s. Shreenath Enterprises and M/s. G.N.G. & Co. is only as a buyer of the goods. In the entire investigation, no evidence came on record to show that Telebrand is anything to do with the valuation of the imported goods purchased by them from the Indian suppliers. Therefore even if there is any undervaluation, it is on the part of importer and Telebrand are nowhere concern with the import price. Shri Hitesh Israni in his statements never admitted any role in the valuation of the imported goods. It is also not under dispute that Telebrand has made the payment towards purchase of the goods which was billed and it is not the case that Telebrand made any payment over and above the invoiced amount. In this undisputed facts, there is no reason to implicate Telebrand in this case and therefore the ld. Commissioner erred in imposing penalties on Telebrand and Shri Hitesh Israni.

    5. On the other hand Shri V.K. Singh, ld. Special Consultant appearing on behalf of the Revenue reiterates the findings of the impugned order. He made additional submissions as under :

    (1) On retraction - Statements of Shri Prakash Pandya were recorded on 19-4-2006, 21-4-2006, 25-4-2006, 3-5-2006 and 29-6-2006. In his statement he was shown his earlier statement and he confirmed that to be true and correct. That he retracted his statements only on 31-7-2006. That retraction has been made vide a letter dated 31-7-2006 addressed to Commissioner of Customs (received in the office of Commissioner on 7-8-2008). A retraction has to be necessarily addressed to the officer to whom the statement was given. The letter addressed to the Collector has to be treated only as representation or complaint and not a valid retraction. As held by the Hon’ble CESTAT in the matter of K.P. Abdul Majeed v. Commissioner of Customs, Cochin, (Tri.-Bang.). Therefore retraction is not a valid retraction. Further, the so called retraction has been made three and half months after recording of first statement. The retraction is to be made on the first available opportunity otherwise it to be treated as an afterthought as held in the matter of -
    (ii)    Pundole Sharrukh & Co. v. Commissioner of Customs (Gen.), Mumbai - (Tri.-Mum.)
    (iii)   Shailesh Amulakh Jogani v. Union of India - (Bom.).
    That in case of Surjeet Singh Chhabra v. Union of India - (S.C.), Hon’ble Apex Court has held that confessional statement made before customs officer though retracted within six days is an admission and binding since customs officers are not police officer. In any case mere retraction of confession not sufficient to make confessional statement irrelevant. In this regard, the following judgments are relied :
    Vinod Solanki v. Union of India - (S.C.) = (S.C.)

    5.1 In view of the above it is submitted that there was no retraction by Shri Pandya and even if his letter is taken as retraction it is an afterthought hence his statements are true and correct.

    5.2 It was further submitted that the ld. Commissioner erred in relying on e-mails sent and received by Prakash Pandya as printout from the computers was taken subsequent to recording of statement dated 3-5-2006 (printout was taken on 29-6-2006). In this regard it submitted that, copy of the E-mails were also available in the file seized from M/s. GNG & Co. on 18-4-2006. These  E-mails were shown to Shri Pandya at the time of recording of his statement on 3-5-2006 and Shri Pandya has confirmed about the contents of the E-mail as true (last part of para 5.2 of SCN).

    5.3 The worksheet prepared by Prakash Pandya did not reflect undervaluation it was prepared only to obtain maximum payment from Telebrand by showing higher costing. In this regard it is stated that Shri Pandya in his statement has explained about the various entries made in costing sheet available at page 124-125 of the file seized on 18-4-2006. He has categorically stated that value shown in the costing sheet is correct value of the goods. The sheet prepared for showing to M/s. Telebrand are other than these sheets. Costing sheets prepared and shown to M/s. Telebrand are also enclosed with SCN. (reference to worksheet shown to M/s. Telebrand is made in para 7.1.15 of the SCN).

    5.4 The department has not proved that the documents in Para 9.1.3 of the SCN viz. was Statement of accounts given by China 5 Star Products, as there is no sign, stamp or seal of China 5 Star Products Co. Ltd. on the said documents. That instead of co-relating Pandya’s confessional statement with the said statement, the Commissioner should have held that the statements were not corroborated with any credible documentary evidence of undervaluation. In this context it is submitted that this chart was received from M/s. GNG & Company during the course of search of his premises. When asked to explain about these details given in chart, Shri Pandya has explained that these chart contains details regarding value of the imported goods (value shown in the invoice, actual value etc.). Therefore Adjudicating authority has correctly relied on these documents. In this context I also rely on the provisions of Section 139(b) of the Customs Act, 1962. This is also corroborated by the e-mails kept in the file and printout taken from the computer.

    5.6 That at the highest declared value can be rejected on the basis of confessional statements, however, assessable value has to be determined on contemporary import of identical similar goods on record. The Commissioner erred in determining assessable value on the basis of statements which were ultimately retracted. It is submitted that the value given in the statements are based on the records recovered from the premises of the importer. These value were also confirmed by Shri Pandya to be true. The Department has therefore correctly  relied upon these values as these values are real transaction value.

    5.7 That once value was enhanced by the department after referring to NIDB Data, value could not be further enhanced. This was not a ground taken by the appellant in reply to SCN or at the time hearing a ground taken in appeal. Further appellant have not stated as to whether the value was enhanced in case of all bills of entry or only few. On perusal of the SCN it is seen that only in respect of three bills of entry (i.e. at Sl. 10, 11 and 13-page 59 of the appeal) value was enhanced at the time of original assessment. Further this is case where the importer had misdeclared the value of goods. When the value was enhanced even at that time importer was aware regarding the correct value of goods, he was also aware that value enhanced by the appraising officer is much lower than actual value, still he chose not to declare the correct value of imported goods. After Investigation Department came to know about the actual value of the goods. Therefore value has been redetermined correctly as re-determined value was correct transaction value. In this case, the assessee committed fraud and has misdeclared and suppressed the true value. They have thus committed fraud on the revenue. It is established law that fraud unravels all hence the assessment has been rightly reopened in terms of provisions of Section 28 of the Customs Act, 1962. In support of this submission, reliance is placed on the Hon’ble CESTAT judgment in the case of M/s. A.H. Incorporation v. Commissioner of Customs, Delhi - (Tri.-Del.).

    5.8 Ld. Commissioner has invoked Rule 4 and Rule 8 of the CVR, 1988 simultaneously. - As there was evidence regarding the actual transaction value of the goods, which was admitted by Shri Pandya. The Adjudicating Authority has correctly re-determined the value invoking provisions of Rule 8 of Valuation Rules.

    5.9 As this is case where value has been misdeclared the demand has correctly been confirmed invoking the extended period of limitation. Reliance is placed on (i) , Commissioner of C. Ex., Surat-I v. Neminath Fabrics and (ii) (S.C.), Commissioner of Central Excise, Aurangabad v. Bajaj Auto.

    5.10 It is well settled law the Department is not required to prove its case with mathematical precision. Evidence as discussed above clealy shows that appellant had misdeclared the value of the imported goods in order to evade the payment of duty.

    5.11 As regards role of M/s. Telebrands India and its Managing Director Shri Hitesh Israni it may be observed they are purchaser of all goods imported by M/s. GNG & Co. The importer in their costing sheet has shown the value of the goods twice. This was discussed by the importer for fixing the value of the imported goods with Shri Hitesh Isarani. This shows that Shri Hitesh Israni was aware regarding the actual value of the goods. The supplier of 5 in 1 Sofa M/s. CNI Hong Kong was introduced to the importers by Shri Hitesh Israni and after clearance this sofa was sold to M/s. Telebrand. Investigations in the matter revealed that the value of 5 in 1 sofa was misdeclared and that Shri Hitesh Israni was aware regarding the actual value of the sofa. These evidences shows that M/s. Telebrand and Shri Israni has aided and abetted the acts of misdeclaration of the importer and they are liable for imposition of penalty.

    From the findings of the Commissioner of Customs and submissions made above, it is clear that appellant has not made out any case. It is therefore submitted that Hon’ble Tribunal be pleased to uphold the order passed by the Commissioner of Customs and reject the appeals.

    6. We have carefully considered the submissions made on behalf of appellants as well as the submissions made by the ld. Special Counsel on behalf of the Revenue and perused the records.

    7. We observed that the department heavily relied upon the statements of Shri Prakashchandra Pandya and Shri Nandgopal Govindwamy Naidu. We find that both the persons have retracted their so called confessional statements vide letter dated 31-7-2006. Therefore the said statements cannot be considered as confessional statements. The ld. Special Consultant appearing on behalf of the Revenue relying on judgment of K.P. Abdul Majeed (supra) submits that the retraction letter was addressed to the Commissioner, whereas the retraction should be necessarily addressed to the officer before whom statement was given. On perusal of the copies of the said retraction letter submitted to the Commissioner, produced by the ld. Counsel, it clearly shows that the said letter has been marked and reached to the concerned investigating officers. Therefore even the retraction letter is addressed to the Commissioner but since it has reached to the concerned officer, it is as good as submitted to the said investigating officer. Moreover, if at all there is any objection of the department on the said retraction, nothing prevented the departmental officers to reject the same with cogent reason or to record a counter statement in context with the retraction. We have seen that no such effort was shown by the department. In such situation, the retraction letter cannot be discarded. We are therefore of the view that statements which were retracted cannot be accepted as evidence.

    7.1 It is seen that the prices at which the appellants sold the imported goods to Telebrands India P. Ltd. is not disputed by the Department in the show cause notice, and is the actual local sale price paid to the appellants by Telebrands India P. Ltd.

    7.2 We find that although the show cause notice and the impugned Order heavily rely on pages 124 & 125 from the seized File No. A1, and the values mentioned therein, however, it is seen that in the case of 5 in 1 Sofa Bed/Air Lounge the value mentioned in these seized documents has not been accepted for the purpose of valuation in the show cause notice itself, as evident from 2nd row of Table at Page 30 of the show cause notice itself. Therefore, the contents of these seized documents are doubted by the Department in the show cause notice itself. Moreover, Tejas, who is the Proprietor of Shreenath Enterprises, is the wife of Venkatraman, brother of Nandgopal Naidu. The demand of duty is confirmed against Tejas on the basis of the said two pages allegedly recovered from Prakash Pandya and his retracted confessions. These two pages are not signed by any person nor do they bear the stamp of any company. The name of the foreign supplier is not mentioned on the said two pages. The currency is also not indicated. The descriptions of the goods in the invoices are different from the descriptions mentioned on the said pages 124 & 125. The descriptions do not tally and it is impossible to correlate the descriptions. We find that as per the ratio laid down by the Hon’ble Supreme Court in Bussa Overseas Properties Ltd., (S.C.), such documents cannot be treated as evidence to prove undervaluation. Moreover, Shri Prakash Pandya immediately retracted by letters dated 31-7-2006 the confessions recorded from 19-4-2006 upto 29-6-2006. No rebuttal to these retractions were served on him by the department. No further statements of Shri Prakash Pandya after his retraction were recorded. No two parallel invoices were recovered in any search operations. Enquiry was not conducted on alleged remittance of foreign exchange abroad. In the circumstances, the learned Commissioner ought to have examined Prakash Pandya before considering his statement as relevant as required under Section 138B of the Customs Act in the course of the adjudication proceedings. In Agrawal Round Rolling Mills Ltd., (T), the Tribunal has held that the Adjudicating Authority, in accordance with the Provisions of Section 9D(2) of the Central Excise Act, 1944 (pari materia to Section 138B of the Customs Act, 1962) must examine the witnesses whose statements have been relied upon by the Department and thereafter must permit their cross-examination by the appellant. In the case of Tejwal Dyestuff Industries, (T), the Tribunal has held as under :-

    “Recording of the confessional statement would not put an end to the investigation and the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller investigation. It appears that the Revenue Officers in the present case have fallen victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not a making fuller investigation, thinking that the confessional statements are made and not retracted, was already done.”

    7.3 The Hon’ble Supreme Court in Mohtesham Mohd. Ismail, (S.C.) = (S.C.), held that confession of a co-accused person cannot be treated as substantive evidence while observing in Para 16 of the said judgment as under :-

    “We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvananthapuram [2006 (13) SCALE 386], this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek corroboration of the purported confession from independent sources.”
    In the case of Vinod Solanki, (S.C.) = (S.C.) the Hon’ble Supreme Court has inter alia held that the burden to prove that confession was voluntary is on the department. Court must bear in mind the time of retraction, nature and manner and other relevant factors to arrive at a finding.

    7.4 We find that there is no evidence of remittance of differential amounts (as mentioned in the said pages 124 & 125) to the foreign suppliers. It is a trite law that undervaluation cannot be established unless remittance is proved as held by the Tribunal in Reshmi Petrochem Ltd. - (T), Dee Kay Exports - (T) and Shah and Shantibhai - (T).

    7.5 In the case of Agarvanshi Aluminium Ltd., (T) the Tribunal held as under :-

    “From the above provisions, it is clear that for admissibility of computer printout there are certain conditions have been imposed in the said section. Admittedly condition 4C of the said section has not been complied with and in the case of Premier Instruments & Controls (supra) this Tribunal relied on the case of International Computer Ribbon Corporation - (Tri.-Chennai) wherein this Tribunal has held that “computer printout were relied on by the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the printout and was not even confronted. The Tribunal rejected the printouts and the Revenue’s finding of clandestine manufacture and clearance. Thereafter it was found that there is strong parallel between the instant case and the case cited. Nothing contained in the printout generated by the PC can be admitted as evidence for non-fulfilment of the statutory condition.” In this case also, we find that the parallel situation as to the decision of Premier Instruments & Controls (supra). Therefore, the printout generated from the PC seized cannot be admitted into evidence for non-fulfilment of statutory condition of Section 138C of the Customs Act, 1962.”

    7.6 The source of the alleged emails correspondence with the suppliers is not disclosed. Such email correspondence from undisclosed sources was shown to Prakash on 3rd May, 2006 and his confessions were recorded. However, para 5.3 of the notice records that on 29-6-2006 the seal of the computer was broken for the first time and printouts were obtained. Even for the computer printouts allegedly recovered from Prakash Pandya’s computer, requirements of Section 138C were not fulfilled. The authenticity of the documents therefore is not beyond doubt for accepting the same as substantive evidence.

    7.7 A lot of emphasis was given by the Learned Commissioner on letter dated 14th May, 2007 of Deputy Head, Trade Investigation, Hong Kong addressed to the Consulate General India, Hong Kong contending that in the case of imports of Inflatable Sofa Beds from CNI - Creative International (HK) Ltd. there were corresponding Invoices issued by Creative Nations International Limited, Philippines on the Indian buyers which showed a higher price than that appearing in the Invoices of CNI - Creative International (HK) Ltd. We are not impressed with the argument. We find that name of the appellant M/s. GNG & Co. do not even figure in this report. The Annexure to the Report is not even signed, the authenticated copies of the alleged Invoices of Creative Nations International Ltd. in Philippines referred to in the said Annexure have not been provided. It neither indicates description, quantity and unit price of the goods nor any dates of such alleged invoices indicated. The invoice numbers mentioned on the same for comparison are not even tallying. Prakash Pandya was never interrogated with respect to the report received from abroad while recording his statements. The said letter also bears a caveat to the effect that the said document is not to be shown/copied to a third party or used in any proceeding. In fact the covering letter of the Consulate General of India, Hong Kong to the DRI makes it clear that the said letter bears the said caveat and if a caveat free report has to be obtained, the procedure under Mutual Legal Assistance Ordinance, Hong Kong SAR ought to be followed by DRI. Obviously the said procedure has not been followed in this case and the letter which is received with the said caveat cannot be used in the present proceeding. Moreover, no authenticated copies of the alleged invoices of Creative Nations International Limited, Philippines have been forwarded with the said letter/report of Hong Kong Trade Investigation Bureau. In the absence of such authenticated copies being supplied, no reliance can be placed on the said report. In CC v. South India Television P. Ltd. - (S.C.), the Hon’ble Supreme Court held that mere Investigation Report of the Hong Kong Excise and Customs [which had a similar caveat as in the present case as would appear from the Tribunal’s decision reported in ] without authenticated copies of the foreign documents relied upon the report being furnished cannot be relied upon for enhancement of value. Thirdly, no imports in the present case were made by the appellants from the Philippines Company and hence the alleged invoices of the Philippines Company are irrelevant. The ld. Commissioner seriously erred in holding that such documentary evidences are admissible under Section 139 of the Customs Act, 1962. The ld. Commissioner erred in not appreciating that no authenticated copies of the invoices of Creative Nations International Limited, Philippines referred to in the letter of 14th May, 2007 of Deputy Head, Trade Investigation, Hong Kong have been received and hence Section 139 is not applicable. As held by the Supreme Court in the case of Collector v. East Punjab Traders, (S.C.), for the presumption under Section 139 to apply, authenticated copies of the invoices referred to in the report ought to have been obtained from the Hong Kong Customs. The judgment of this Tribunal in Best & Co. v. CC (supra) which is relied upon by the department, is not applicable in the peculiar facts of the instant case. In the present case the Hong Kong Customs report has not provided any documents under Mutual Legal Assistance Agreement/ordinance but has only provided some information exercising informally extra-territorial jurisdiction. As per the observations of the Hon’ble Supreme Court in the case of CC v. South India Television P. Ltd. - (S.C.) and Collector v. East Punjab Traders - (S.C.) the authenticated copies of the foreign documents should have been produced by Customs. The aforesaid letter dated 14-5-2007 is not relevant to the import made by M/s. GNG & Co. as their name is not appearing in the said report.

    7.8 There is no tangible proof of any payment to the foreign supplier by the appellants or by Mr. Hitesh Israni of Telebrands India P. Ltd., of any amount over and above the prices mentioned in the foreign suppliers’ invoices. There is no cogent material whatsoever in the Notice issued to the appellants for proposing enhancement of the value of the said goods.

    7.9 It is not in dispute that at the time of import itself, the customs authorities had enhanced the values of the similar goods imported by other importer such as M/s. Rico Gems based on the available prices for contemporaneous imports of identical goods by other importers. We have been shown some of the Invoices, Bills of Entry showing enhancement of price and data of contemporaneous imports during the course of hearing. Once it is undisputed fact that the declared value was not accepted and for the purpose of assessment valuation was done on the basis of contemporaneous price of identical or similar goods, we find substantial force in the contention on behalf of the appellants that further enhancement of value was not permissible in the facts of the instant case. In CC v. Paras Electronics - the Tribunal held that -

    “5. We find that in this case the price declared by the respondents was not accepted and was enhanced by the assessing officer from US $270/pc to US $313/pc. Once the price was enhanced, the Revenue is supposed to make all the enquiries as it may consider necessary before increasing the price. The second show cause notice cannot be issued on the same subject when the declared price was not accepted initially and already stands enhanced….”
    In CC v. Lord Shiva Overseas - the Tribunal observed that -
    “4(e) This Tribunal, in the case of Hitaishi Fine Craft Industries Pvt. Ltd. [] had held that when a BE was assessed and declared value of USD 490 PMT was loaded to USD 600 PMT, then further proposal by a issue of show cause notice consequent to DRs enquiries, to re-value at USD 710 PMT in the case, cannot be upheld. Nothing contrary has been shown. When the proper officer had reasons to believe that the declared value in the present case of USD 0.05 per piece was not as per Section 14 and thereafter, making such enquiries, as he deemed fit, loaded it to USD 0.10 per pieces, then further proposal to reload the same cannot be approved since no ground of earlier enquiries were inadequate or otherwise doubted or taken to be incorrect. The proper officer was duty bound to make such enquiries as he deemed fit, including enquiry about the nature of goods, its classification, contemporaneous values, market values etc. and then resort to an assessment of loading. Piecemeal value leading re-adjudication is not envisaged under the Customs Act, 1962 and cannot be upheld more so when valuations as determined on the BE and assessed would be an order appealable adjudication order [see CC, Cochin v. Arvind Exports (P) Ltd. - (LB)]. No review/appeal against such an order of determination of value by the proper officer was taken by Revenue. The loading for USD 0.05 per pcs to USD 0.10 per pcs is final. That assessment, cannot be challenged by alleging misdeclaration of nature of goods, which the proper officer in the groups was in any case required to ascertain, the loading of value, on second check BE should not have been ordered. In this respect, Apex Court observations in the case Mohan Meakin Ltd. [ (S.C.)] paragraph 6 need appreciation. If the Collector failed to make a proper enquiry as to the market value of the goods and released the same after half hearted adjudication. Half hearted adjudications and failure to make proper market enquiry in this case is to be believed, how the proper officer loaded only 0.05 USD pcs is not explained in the appeal. There is no cause to upset the C.C. (Appeals) order on valuation.”
    In Shimnit Machine Tools & Equipment Ltd. v. CC - , the Tribunal observed that -
    “3. We have heard both sides. We find that in respect of 3 Bills of Entry, the declared values were enhanced and these were finally assessed. The value of Maxell brand batteries covered by Bill of Entry No. 3784, dated  20-8-1997 was loaded to Rs. 10,14,842, value of Golden Power Brand Button Cells covered by Bill of Entry No. 4004, dated 29-8-1997 was enhanced to Rs. 14,04,000/- and value of Button Cells covered by Bill of Entry No. 1423, dated 11-9-1997 was enhanced to Rs. 11,96,000/-. The loading was done on the basis of evidence of contemporaneous import data available with the department and after detailed examination of the goods. Since the Bills of Entry were finally assessed after enhancement of value, there can be no  further loading of value as held by the Tribunal in the case of Informatika Software v. CC(P), Kolkata [1997 (73) ECR 348], and Lord Shiva Overseas [] particularly on the basis of quotations/letters/price lists. No export declaration of the supplier is available with the department in respect of Maxell Brand Batteries. The loading on the basis of profoma invoice signed by Nitin and Sanghvi and issued to SANSHO, Japan cannot be relied upon as it is well-settled that value cannot be loaded on the basis of proforma invoice. The export declaration in respect of Golden Power Brand Battery Cells are unsigned photocopies and hence the persumption about their genuineness under Sec. 139 of the Customs Act is not available to the department in the light of the decision in East Punjab Traders [ (S.C.)]. Further the declarations are after a gap of about 20 days  after the departure of the vessel carrying the goods and further invoices filed with the Hong Kong Customs have not been placed on record..….”
    In Malhotra Impex v. CC - the Tribunal observed that -
    “5 ……. we find that the enhancement of the value of the imported goods second time by issuing a show cause notice is not sustainable hence set aside. Consequently, penalties are also set aside and the appeal is allowed.”
    So far as the case of A.G. Incorporation v. CC - relied upon by the learned DR is concerned, it is seen that the same is not applicable to the facts of the present case inasmuch as here it is not the case of the Department that the appellant firm somehow got the custom officer to enhance the value at the first instance and on the contrary the values of contemporaneous imports was the basis of first enhancement. In A.G. Incorporation (supra) the subsequent enhancement was done on the basis of contemporaneous imports and no lower contemporaneous price in terms of Rule 5 was available at the first instance. In SRK Enterprises v. CC - , the Tribunal held that to ignore a contemporaneous import at lower price which has been accepted by the department, would be totally discriminatory and untenable in law.

    7.10 Thus, after detailed examination of facts and records we find that the demand of differential duty and penal action cannot sustain in the facts of the instant case. Since the undervaluation of imported goods is not established, all the other confirmation such as confiscation of the goods, fines in lieu thereof, penalties on all the appellants being consequential to demand of duty, are also not sustainable. We make it clear that since this order is passed on merit, we are not addressing the limitation issue.

    7.11 In the result, all above appeals are allowed, with consequential relief.

    (Order pronounced in Court on 14-12-2015)

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    Tele Brands (India) Pvt. Ltd. v. Commissioner of Cus. (Import), Mumbai
    (Dec 14, 2015)