Saurabh Kapoor Vs Principal Commissioner of Customs (CESTAT Delhi)
Proforma Invoices couldn’t replace commercial invoices prepared after negotiation and accepted by Customs
Conclusion: Proforma invoices could not replace commercial invoices prepared after negotiation and accepted by customs. Statement recorded under section 108 of the Customs Act could not be relied upon since the mandatory procedure under section 138B was not followed and the alleged proforma invoices were not duly proved or corroborated with evidence. Consequently, the finding of under-valuation and the resultant confiscation and penalties under sections 112(b)(ii) and 114AA were unsustainable.
Held: Assessee was a partner in Chandra Impex and associated with M/s Chandra Chemicals, which imported spray paints from China between 2015 and 2019. The Customs department alleged undervaluation of imports based on proforma invoices retrieved from assessee’s email account. Department relied upon the proforma invoices and the retracted statement to reject the declared transaction value under Rule 12 of the Customs Valuation Rules, 2007 and to re-determine value under Rule 9, leading to confiscation and penalties under Sections 111(m), 112(b)(ii) and 114AA. Assessee argued that the statement under Section 108 was obtained under coercion and was immediately retracted through a written letter. They further argued that procedure prescribed under Section 138B of the Customs Act was not followed, making the statement inadmissible as evidence. It was also argued that the proforma invoices could not be treated as proof of actual transaction value because they were not linked to the imports in question and were never retrieved under a proper panchnama. Assessee maintained that the commercial invoices, prepared after negotiation and verified by customs at the time of clearance, represented the true transaction value. Department argued that the proforma invoices showed higher values and that assessee’s voluntary statement confirmed undervaluation. It was contended that the subsequent retraction was an afterthought and that the penalties imposed were justified in light of the evidence collected. It was held that Tribunal observed that the statement recorded under Section 108 could not be relied upon as the mandatory procedure under Section 138B of the Customs Act had not been followed. The statement, not having been tested by examination or cross-examination before the adjudicating authority, lacked evidentiary relevance. The printouts of e-mails were not recovered under a proper panchnama, and no cogent link existed between the alleged proforma invoices, and the commercial invoices filed before Customs. The prior 13 consignments, duly cleared on assessment, could not be presumed undervalued without evidence. Consequently, rejection of transaction value, confiscation, and penalties were unsustainable.
