ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 03.11.2025
CESTAT Chennai Sets Aside Penalty in PVC Flex Banner Import
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case concerning the import of PVC flex banners allegedly misdeclared as originating from Malaysia to evade anti-dumping duties. The case involved multiple appellants, including Appellants and M/s. Calcutta Canvas Co., who challenged the Order-in-Original No. 50362/2016 dated 30.09.2016 passed by the Commissioner of Customs, Chennai-II.
Background of the Case
The Directorate of Revenue Intelligence (DRI), Chennai Zonal Unit, initiated an investigation based on intelligence reports alleging that Indian importers were importing PVC flex banners of Chinese origin through Malaysia. The investigation claimed that the goods were misdeclared as being of Malaysian origin to avoid anti-dumping duties. The investigation led to the seizure of goods and documents, and a Show Cause Notice (SCN) was issued on 18.02.2016, proposing differential duty, confiscation of goods, and penalties.
The appellants argued that the allegations were based on presumptions and lacked substantive evidence. They contended that the Certificate of Origin (COO) issued by the Malaysian Government was valid and could not be disregarded without proper verification. Furthermore, they challenged the admissibility of electronic evidence cited in the SCN, citing procedural lapses in data retrieval and certification under Section 138C of the Customs Act, 1962.
Key Arguments and Judgments
- Certificate of Origin (COO): The appellants argued that the COO certificates issued by the Malaysian Ministry of International Trade and Industry were valid and should not be arbitrarily disregarded. They cited several case laws emphasizing the importance of verifying the authenticity of such certificates before making allegations of fraud. The Tribunal agreed, stating that the revenue authorities failed to follow the prescribed procedures for verifying the COO certificates with Malaysian authorities.
- Admissibility of Electronic Evidence: The Tribunal noted that the electronic evidence relied upon by the revenue authorities was not admissible due to the absence of a certificate under Section 138C(4) of the Customs Act, 1962. The Tribunal referred to landmark judgments, including Anvar P.V. vs. P.K. Basheer and Arjun Panditrao Khotkar vs. Kailash Kishanrao Goratyal, which established the mandatory requirement of certification for electronic evidence under Section 65B of the Indian Evidence Act.
- Valuation of Goods: The Tribunal found that the valuation method used by the revenue authorities was not supported by the Customs Valuation Rules, 2007. The alleged undervaluation of goods was not substantiated with credible evidence.
- Imposition of Penalty: The Tribunal held that the charge against Shri Manoj Arjun Gore of obtaining fake COO certificates was not proven, as the revenue authorities did not investigate the authenticity of the certificates with Malaysian authorities. Consequently, the imposition of penalties on the appellants was deemed unjustifiable.
Final Order
After a detailed examination of the case, the Tribunal concluded that the revenue authorities failed to provide substantial evidence to support their allegations. The impugned order was set aside, and the appellants were granted consequential relief as per the law.
Source: CESTAT Chennai
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