Case Name: Additional Director General Adjudication, Directorate of Revenue Intelligence versus Suresh Kumar and Co. Impex Pvt. Ltd. & Ors.
Court: Supreme Court of India
Case Number: Civil Appeal Nos. 11339-11342 of 2018
Date of Judgment: 20th August 2025
Quorum: Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice K.V. Viswanathan
Facts
The petitioners, M/s Suresh Kumar and Co. Impex Pvt. Ltd, were in the business of importing branded food items from different nations and selling them in cities such as Delhi and Mumbai. Raids at the business and residential premises of the petitioners were carried out by the Directorate of Revenue Intelligence (DRI) on the basis of certain inputs regarding under-voicing. Laptops, desktops, and external hard disks were confiscated during these attacks.
On scrutiny of the seized devices, it was established that the respondents had made incorrect declaration in the Bills of Entry and declared lesser RSP and MRP than that realized in the market and there by the respondents short paid the duty. In view of the above, the department served show cause notices to recover differential duties of Rs. 9.24 from respondent no. 1 and Rs. 9.83 lakhs from respondent no. 2 as well as applicant for penal interest and confiscation of goods.
The demand was upheld by the adjudicating authority but in appeal, CESTAT allowed the appeals on the ground that the electronic record had not been certified in terms of Section 138C(4) of the Customs Act, rendering it inadmissible.
Issue
An issue before the Supreme Court was whether it was correct on the part of CESTAT to have set aside the case of the revenue only for non-production of a certificate under Section 138C(4), even when the respondents had admitted the authenticity of unaccounted papers in statements made under Section 108. It also considered the nature of compliance envisaged under 138C(4) and the connection with Section 65B of Evidence Act.
Arguments by the Petitioner
- Exporters under-valued imports based on a lesser RSP/MRP for evasion of customs duty.
- The electronic records impounded were genuine and accepted by the respondents in the form of Section 108 statements.
- There was in substance full compliance with s 138C(4) in respect of signed proceedings and acknowledgments.
- A strict certificate of production is not always required, and a liberal interpretation is permissible as held in Arjun Panditrao Khotkar v. Kailash Gorantyal.
- CESTAT went wrong in admitting appeals only for the certificate in despit of genuineness and admission.
- No revolution of admission by defendants; proof was still admissible.
- The lack of certification was a mere technical blemish which should not preclude such reliable evidence.
- Appeals should be permitted as evasion was proved by the evidence on record.
Arguments by the Respondent
- Soft copies did not have the prescribed Section 138C(4) certificate so they stand excluded.
- Statements under Section 108 cannot do duty as certification: Procedural safeguards must be adhered to.
- Appeals were rightly allowed by CESTAT as no certificate was filed.
- There was no question regarding the genuineness of documents; however, admissibility depended upon strict observance.
- Sections 138B and 138C are designed to uphold the rights of the parties and should be respected.
- Even a deeming would not operate as a statutory certification in lieu of such statutory certification, it will only be a tacit condonation.
- This evidence was properly excluded by the Tribunal, consistent with the rule of the Supreme Court.
Analysis
The Court also carried out a detailed scrutiny of Section 138C(4) of the Customs Act which provides for producing a certificate describing computer-generated documents and the manner in which they were produced. It observed that this provision bore close resemblance to section 65B (4) of the Indian Evidence Act, 1872 applicable to the admissibility of electronic records in the aggregate.
Pressing into service the ratio in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal [(2020) 7 SCC 1], the Court echoed that though mandatory, “the certificate provision is flexible enough to admit of situational adjustment.” This, however, is subject to the Latin maxims impotentia excusat legem (inability excuses the law) and lex non cogit ad impossibilia (the law does not compel impossibilities) so that if a party, after having done his or her best, cannot obtain the certificate, strict non-compliance should not make the evidence inadmissible.
In the present matter, the Adjudicating Officer found the respondents have admitted the impounded electronic records. This was evidenced by the letter to the Director of Investigation on 14th October 2008, records of proceedings with the respondents present and signed printouts from the respondents’ laptops and hard disk.
Notably, these admissions were never retracted. Referring to Shubha v. State of Karnataka, the Court reiterated that a certificate in the form not precise is not to make evidence inadmissible if the evidence is not disputed. It also pointed out that CESTAT did not consider the procedural aspect of Section 138G.
The Court referred the case back to the Tribunal for a de novo hearing without regard to any statement regarding the question of certification.
Decision
The Supreme Court, partly allowing the Revenue’s appeals, set aside the order of CESTAT. It was of the view that it is not imperative to strictly adhere to the requirement of Section 138C(4) for proving electronic evidence, substantial compliance by 108 statements and signed proceedings is good enough. As the respondents had all along admitted the genuineness of the seized document and had not suppressed the same at any point of time, there could not have been any lack of formal certificate to render the evidence inadmissible.
Consequently, the Court set aside the decision of CESTAT on technical grounds and had the matter remanded to CESTAT for a fresh decision on merits and not on the grounds of non-compliance of Section 138C (4).
Conclusion
The Court explained that certification of electronic evidence (as mandated by Section 138C(4) of the Customs Act as well as Section 65B(4) of the Evidence Act) must be liberally construed and would depend on the facts and circumstances of each case. Signed statements and hearing records of authenticity must also be afforded their due value. In view of the above, the matter was remanded back to CESTAT to decide the appeals on merits by setting aside the acquittal as per technical certification. The ruling highlights the need to balance due process against the evidence of customs duty evasion cases and thus it can be said that the cause of fairness supersedes rigid procedural technicalities.
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WRITTEN BY Stuti Vineet
