Custom, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata : In an appeal filed against the impugned order wherein penalties imposed on the appellant under Section 114-AA, Customs Act, 1962 (Customs Act) was upheld, the two-member Bench of Ashok Jindal (Judicial Member)* and K. Anpazhakan (Technical Member) set aside the penalties and held that the conditions mentioned in Section 114-AA, Customs Act were not satisfied as there was no cogent, tangible or corroborative evidence on record. Furthermore, the electronic record in the form of the DVD, could not be treated as admissible evidence in the absence of any verification as to its genuineness.
Background:
The appellant, a 2009 Batch IRS officer, pleaded against penalties imposed on him under Section 114-AA, Customs Act vide the orders passed by the original authority, which was further upheld by order in appeal.
Revenue-respondent submitted that during the course of investigation by Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit, in the matter of fraudulent exports made by various exporters through Petrapole Land Customs Station by a syndicate using the IECs of two firms, wherein the goods were either found to be misdeclared in terms of quality, quantity and value or junk to earn undue duty drawback, a DVD was found at the premises of one of the firms, namely Spak Enterprises Pvt. Ltd. along with other incriminating documents. It was alleged that the DVD had data related to export through Land Customs Station, whose computer name was “Petrapole”.
Officers of the DRI searched the house of a private person (JB) on 21 February 2016, after two months from seizure of the said DVD and recorded his statements. It was alleged that from the statement of JB recorded on 22 September 2016, it was clear that he had voluntarily admitted his own involvement in fabricating documents for export of items to Bangladesh during 2012-2013 and 2013-2014 along with other departmental officers, including the appellant, in which drawback benefits were deposited in the bank accounts of the concerned exporters which were taken by JB and allegedly given to the appellant. Show-cause notices were issued proposing recovery of alleged fraudulently availed drawback from various exporters. The said notices also proposed imposition of penalty on the appellant, along with other co-accused, under Section 114-AA, Customs Act. Commissioner of Customs (Appeals) passed the impugned orders-in-appeal, rejecting the appeals filed by the appellant and upholding penalties under Section 114-AA, Customs Act on the appellant. Thus, further appeal was filed.
Analysis, Law and Decision
The Tribunal noted the contentions raised by the Revenue regarding maintainability of the appeal under Section 129-A, Customs Act. The Tribunal held that the appellant had not claimed duty drawback and had challenged only the penalty imposed under Section 114-AA, Customs Act, hence, the appeal was held to be maintainable before the Tribunal.
Issue 1: Whether the electronic record in the form of the so-called DVD in the instant case could be admissible as evidence for imposition of penalty under Section 114-AA, Customs Act on the appellant in this case, without verifying its genuineness, veracity or reliability from the original electronic device by/from which these are created, or not.
The Tribunal observed that the primary evidence which was used to implicate the appellant in the alleged offence was the information available in the DVD which was recovered from premises of Spak Enterprises Pvt. Ltd., along with the statements recorded in connection with the DVD. The appellant had questioned the veracity of the DVD and the documents contained therein on the ground that the original copy of the said DVD projected by the Revenue was destroyed from the beginning of its recovery and was not available as evidence. It was also submitted by the appellant that the computer device utilised for creation of the said DVD was not available with the respondent; thus, it was contended that the entire allegation against him was levelled on the basis of documents obtained from a forged DVD and that compliance under Section 138-C, Customs Act, was not done.
The Tribunal observed that seizure of the DVD and arrest of JB, alleged to be involved with the appellant, after two months from seizure of DVD, raised serious question on the conduct of the investigation. The Tribunal observed that the source and authenticity of electronic records, such as the said DVD in this case, were required to be ensured, in order to be used as evidence. Since, electronic records were more susceptible to tampering, alteration, transposition, excision, etc., without such safeguards, an order based on unproved or unverified electronic records like DVDs could lead to travesty of justice. The Tribunal noted that in the present case, the DVD was never in existence to support the case of the respondents and not available from the beginning of its recovery for appellant to refute, in spite of his request. The Tribunal further noted the submission that the hard disk of the said computer utilised for creation of the DVD, taken possession of by the DRI officers, was not placed before original authority before finalisation of the adjudication orders. The appellant pointed out that the DVD was admittedly found to be broken inside a sealed cover, under DRI custody.
The Tribunal observed that there was merit in the claim of the appellant that the documents available in the DVD might be fabricated. The DVD relied upon in the impugned proceedings was not the original one recovered from the premises of Spak Enterprises Pvt. Ltd. Since, the original DVD seized from the premises of Spak Enterprise Pvt. Ltd. was unavailable, which was the main source of information based on which the impugned proceedings were initiated. The Tribunal opined that without verifying original DVD, the information available in the reconstructed DVD could not be relied upon to implicate the appellant in the alleged offence. Therefore, the allegations of the respondent were without any basis, as no corroborative evidence was adduced in support of the same.
The Tribunal observed that in absence of the original DVD of the computer device used in the alleged act of forgery, the allegations levelled against the appellant in relation to forging alleged export documents or any act in relation to such forgery for imposition of penalty under Section 114-AA, Customs Act, were found to be unsubstantiated. Regarding the contentions raised by the appellant as to non-compliance of the provisions of Section 138-C, Customs Act by the respondent. The Tribunal further observed that no certificate under Section 138-C, Customs Act read with Section 65-B, Evidence Act, 1872 was procured by DRI while seizing the DVD or documents derived from such DVD. The originals of the export documents, which were actually utilised in the export proceedings and for passing through Customs Authorities of Kolkata Port were not in the possession of DRI. The Tribunal relied on Commr. of Customs v. Jeen Bhavani International, 2023 SCC OnLine SC 1537 and held that the information available in the said DVD could not be relied upon as admissible evidence against the appellant in the impugned proceedings in absence of compliance of the provisions of Section 138-C, Customs Act.
The Tribunal further held that the electronic record, in the form of the DVD could not be treated as admissible evidence, in the absence of any verification as to its genuineness, veracity or reliability from the original electronic device by/from which these are created, for the purpose of imposition of penalty under Section 114-AA, Customs Act on the appellant.
Issue 2: Whether the statement(s) recorded under the stress of investigation from Jyoti Biswas, co-accused, which was retracted before the Court of the Chief Metropolitan Magistrate (CMM) by serving the copy to the respondents on the same day in court on 22 September 2016, could be relied upon to implicate the appellant in the case, or not.
The Tribunal noted that it was alleged by the respondent that JB had connived with appellant herein for fabrication/forgery of the export documents. Admittedly, the above statement/s of JB was retracted by him in court before the CMM on 22 September 2016. The appellant contended that adjudicating authority, while imposing penalty on him, relied on the retracted statements of JB knowing that such retraction was made before the Court of the CMM on which no-objection petition was filed by DRI. The Tribunal held that no concrete or corroborative evidence was placed on record by Revenue to substantiate the above allegations. The Tribunal held that it is well settled that suspicions, howsoever strong, could not take the place of proof. It must be supported by legal, reliable, and circumstantial evidence that proves guilt beyond a reasonable doubt. However, apart from the said statement, no tangible or documentary evidence was adduced by the respondent to substantiate its case. The Tribunal further held that retracted statement of co-accused was not proved by the respondent. Consequently, in the absence of any concrete evidence, the statement recorded from JB, which was retracted before a court of law, could not be relied upon in the instant proceedings against the appellant.
The Tribunal while examining the applicability of the relevant statutory provisions invoked in this case to impose penalties on the appellant noted that the conditions mentioned in Section 114-AA of the Act were not satisfied in the present case, as there was no cogent, tangible or corroborative evidence on record to show that the appellant had made any declaration, statement or document which was false or incorrect in any material particular in the transaction of any businesses for the Customs Act.
The Tribunal further held that there was nothing on record to show that the appellant was in any manner concerned with the export of goods. In absence of essential ingredients required for imposing penalty under Section 114-AA, Customs Act imposition of penalty was not justified. The Tribunal observed that the appellant was brought in these proceedings only at a later stage as his name was not mentioned in show-cause notices. Thus, provisions of Section 114-A, Customs Act could not be invoked. The Tribunal set aside the penalties imposed on the appellant under Section 114-AA, Customs Act holding it to be unsustainable.
[Vikash Kumar v. Commr. of Customs, 2026 SCC OnLine CESTAT 364, decided on 6-2-2026]
*Order by Ashok Jindal, Judicial Member
Advocates who appeared in this case:
For the Appellant(s): A.K. Pattanayak, Advocate
For Respondent(s): Tariq Sulaiman, Subrata Debnath, Authorised Representative