Electronic Data without Section 138C Certification Inadmissible: CESTAT Rejects DRI’s Electronic Evidence in Customs Case [Read Order]
The Tribunal clarified that retrieved forensic data cannot be relied on for re-determination of the value of imported goods.
![Electronic Data without Section 138C Certification Inadmissible: CESTAT Rejects DRI’s Electronic Evidence in Customs Case [Read Order]](https://images.taxscan.in/h-upload/2025/11/11/2104316-electronic-data-cestat-rejects-dris-electronic-evidence-customs-case-taxscan.webp "Electronic Data without Section 138C Certification Inadmissible: CESTAT Rejects DRI’s Electronic Evidence in Customs Case [Read Order]")
The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, ruled that electronic data retrieved from unsealed computers without certification under Section 138C of the Customs Act, 1962, cannot be relied upon to determine the value of imported goods.
The appellants are KDS Exports, Gokul Overseas, Krish Enterprises and others who had imported artificial flowers from China during the years 2002-2006 through the Inland Container Depot (ICD), Tughlakabad, New Delhi.
The Directorate of Revenue Intelligence (DRI) initiated investigations alleging undervaluation of the imported goods. It was alleged that the actual purchase prices were much higher than those declared in the Bills of Entry. According to the DRI, two computer CPUs were seized from the appellants’ premises, which contained “true” invoices reflecting higher prices ranging from USD $4 to USD $6 per kilogram.
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The CPUs were not sealed at the time of seizure and remained unsealed for 47 days before being sealed. Forensic examination of one CPU was subsequently carried out using “Encase Forensic” software, and data was retrieved from it.
A show cause notice (SCN) was thereafter issued proposing redetermination of the value under Section 14 of the Customs Act, 1962, and demanding differential duty along with redemption fines and penalties. The Commissioner of Customs, ICD Tughlakabad, through Order-in-Original, confirmed the duty demand aggregating to over ₹2.76 crore and imposed redemption fines and penalties on the importers and individuals. Aggrieved, the appellants approached the Tribunal.
Represented by Dr. Seema Jain and Vimlesh Kumar, the appellants argued that the printouts taken from the seized CPUs could not be relied upon as the CPUs were unsealed at the time of seizure and were left unsealed for 47 days. It was submitted that no certificate as required under Section 138C(2) of the Customs Act, 1962, had been issued, and therefore, the electronic data lacked evidentiary value.
Subsequently, during the relevant period, assessment of Bills of Entry was carried out by the proper officer, who had already enhanced the declared values to USD $1.46 per kilogram based on contemporaneous import values. The DRI’s second enhancement of value based on retrieved data amounted to an impermissible review of the proper officer’s order.
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As per Section 110(2) of the Customs Act, 1962, the confiscation could not be ordered since the goods were no longer available as the SCN was barred and the penalties imposed on both proprietorship firms and individuals were unsustainable.
Represented by Rakesh Kumar, the Revenue argued that the DRI had recovered genuine commercial invoices from the appellants’ computers and emails, corroborated by statements recorded during the investigation. It was urged that Section 139 of the Customs Act, 1962, which provides that the court shall presume the genuineness of documents unless proved otherwise. Further, argued that penalties were imposed on authorised signatories and not on proprietors.
The Bench comprising Dr. Rachna Gupta, Judicial Member and P.V. Subba Rao, Technical Member noted that the computers were not sealed at the time of seizure and were lying unsealed with the DRI for 47 days before being examined and sealed. Thus, the forensic analysis carried out subsequently lacked the procedural safeguards required under Section 138C of the Customs Act, 1962, which mandates certification of electronic records to ensure their authenticity.
CESTAT observed that while Section 139 of the Customs Act allows a presumption of authenticity for certain documents, that presumption cannot override the specific requirement under Section 138C concerning electronic records. The failure to comply with this statutory requirement and the lack of seizure rendered the retrieved data unreliable.
The tribunal ruled that the DRI’s reliance on this data as proof of undervaluation was unsustainable. Accordingly, all seven appeals and miscellaneous applications were allowed with the grant of consequential relief.
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