Part I : Customs Enquiries and Criminal Jurisprudence: Admissibility of Statements under Section 108

Part I : Customs Enquiries and Criminal Jurisprudence: Admissibility of Statements under Section 108

In this article, attempt has been made to ignite discussion on following issues, namely,

• Whether, in light of the right against self-incrimination under Article 20(3) of the Constitution, a statement recorded under Section 108 of the Customs Act before a Gazetted Officer of Customs can be relied upon by another authority, such as the Commissioner, as a relevant piece of evidence to form a reason to believe that a person has committed an offence under the Customs Act, particularly when a copy of such statement is not furnished to the arrested person at the time of arrest.
• Whether a statement recorded under Section 108 of the Customs Act during a particular inquiry can be treated as a confessional statement in subsequent proceedings, and whether such proceedings are deemed to be judicial proceedings for the purpose of all other actions under the Customs Act.
• Whether statements recorded under Section 108 of the Customs Act, without administering the caution or warning contemplated under Section 183 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), are admissible and relevant for the purpose of effecting arrest under the Customs Act, particularly where the Customs Officer fails to inform the person that they are not bound to make a confession and that any such statement may be used as evidence against them.
• Whether a noticee is entitled to receive a copy of the statement recorded in deemed judicial proceedings under the Customs Act, especially when such statement is relied upon by the Commissioner to form a reason to believe that the person is guilty of an offence under the Act.

At the outset, a disclaimer must be added to clarify that the purpose of this article is to highlight the importance of rethinking the issues mentioned above, and not to address or answer the references cited. The recent judgments rendered by the various Constitutional Courts and Benches of Hon’ble CESTAT across India establishes that Section 138B of Customs Act and Section 9D of the Central Excise Act mandates that statements made under section 108 of Customs Act or section 14 of Central Excise Act can only be considered relevant if the person making the statement is examined as a witness before the adjudicating authority, and the authority forms an opinion to admit the statement in evidence. The Courts have emphasized that Section 138B of Customs Act and Section 9D are mandatory and substantive provisions. The statements recorded under Section 108/section 14 during the investigation cannot be relied upon unless the procedure under Section 138B/Section 9D is followed, as established in precedents set by Constitutional Courts. It has been repeatedly held that no tax liabilities or penalties can be fastened based on statements where such statement has not been examined and made relevant. Only relevant statement can be used to prove facts. The issue of relevancy of statement and use of statement as admissible evidence in any proceedings under statute has been dealt in detail in previous articles.

II. Plain reading of relevant statutory provisions

The provisions of the Customs Act, 1962, relevant for discussion, are reproduced below:

Section 108 of Customs Act. Power to summon persons to give evidence and produce documents. –

(1) Any Gazetted Officer of customs shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act.

(2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.

(3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required:

Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance under this section.

(4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).”

SECTION 138B. Relevancy of statements under certain circumstances. – 

(1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, -

(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or

(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.

(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court.

It must be noted that Section 108 deals with the power to summon persons to give evidence. Nowhere can it be deduced from the plain reading of the above provision that statement recorded is a confessional statement before Court or it automatically becomes a relevant piece of evidence for the purpose of any other proceedings under Customs Act or even other acts. Any such interpretation would amount to reading intoSection 108 words that are not present. Such a reading would, in effect, renders Section 138B of the Act redundant, as Section 138B specifically governs the relevancy and admissibility of statements in proceedings under the statute.

What can be gleaned from the various decisions of the Apex Court is that a statement made under S.108/S.14, while admissible, does not automatically translate into their being relevant to the proceedings unless they satisfy the statutory stipulations laid down to consider them relevant. This is because there is a difference between relevancy and admissibility according to the general principles of evidence law. Otherwise, this would tantamount to an incongruous circular reasoning that the details contained in the statement are being presumed to be relevant, and are relevant, since the statement is admissible. In other words, a statement being used as evidence to prove itself and thus becoming admissible. In fact, the Honorable Supreme Court has in K I Pavunny’s case explicitly stated how an inculpatory statement is to be dealt with prior to placing reliance thereon, when it was held that the Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction.

It must be noted that Section 108 of the Customs Act does not compel a person to incriminate themselves and they can maintain silence if their answers are likely to incriminate them. This aligns with the right against self-incrimination under Article 20(3) of the Constitution, as established in KK. GOENKA Versus SUPERINTENDENT OF CUSTOMS PREVENTIVE - 1978 (7) TMI 107 - CALCUTTA HIGH COURT. Reference is invited to said case wherein it was held that “under Section 108 of the Customs Act, the authorities have no right to compel any person to give evidence against himself because this provision is subject to constitutional bar as contained in article 20(3). Therefore, any person can at all time during the enquiry by the Customs Authority, decline to answer to any question which may incriminate him.”

In Wasiuddin Ahmed v. District Magistrate, Aligarh - AIR 1981 S.C. 2166 - it was held by the Supreme Court:

..... The need for observance of procedural safeguards, particularly in cases of deprivation of life and liberty is of prime importance to the body politic. It is, therefore, imperative that the detaining authority must appraise a detenu of his constitutional right under Article 22(5) to make a representation against the order of detention and of his right to be heard before the Advisory Board. The right of the detenu to make a representation under Article 22(5) would be, in many cases, of little avail if the detenu is not informed of his right.

It may be contended that the empowered officer under Section 108 of the Customs Act must administer a caution or warning to the person summoned that any confessional statement made may be used as evidence against them. The arresting authority must examine whether there is a legal obligation for such a warning, similar to the requirement under Section 164(2) Cr. P.C., before recording a confessional statement and subsequently rely on confessional statements for the purpose of concluding guilt and thereby recording his arrest.

It must be noted that there is no specific provisions in the Customs Act for recording confessional statements, implying the necessity to adhere to Section 164(2) Cr. P.C. for such recordings. However, at the same time, there is no prohibition under customs statute against recording incriminating statements. In light of judicial precedents, including KEHAR SINGH Versus STATE DELHI ADMINISTRATION - 1988 (8) TMI 423 - Supreme Court, argument can be advanced that the non-compliance with the mandatory provisions of Section 164(2) Cr. P.C. renders a confessional statement inadmissible in evidence. It may be contended that the statements recorded under Section 108 of the Customs Act without the required caution or warning are inadmissible for the purpose of proceedings such as recording of arrest or prosecutions.

In view of above, it can be argued that nothing in text of section 108 suggests that statement recorded under Section 108 automatically becomes gospel truth. It is merely a tool to collect evidence.  Further, it must be noted that every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860. It is clear that legal fiction of deemed judicial proceedings is limited to Section 193 and Section 228. Hard fact remains that Custom Officer recording the statement is not vested with powers of Civil Court unlike Tribunal, Advance Ruling authorities or those under PMLA. It remains a fact that statements are not recorded under Oath. It remains a fact that statement is recorded by an Officer in controlled atmosphere like during search or in Custom Offices and not under Oath and after informing him about right against self incrimination. It remains a fact that a copy of statement is not provided to person immediately after such limited deemed judicial proceedings. In fact, persons are arrested based on such confessional statement without serving a copy to them.

In this regard, it must also be pointed out that unlike other authorities like Advance Ruling authority, tribunal or those under PMLA have explicit powers of Civil Court. Section 50 of PMLA deals with Powers of authorities regarding summons, production of documents and to give evidence, etc. It states that “(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:— (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a 1 [reporting entity] and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidavits; (e) issuing commissions for examination of witnesses and documents; and (f) any other matter which may be prescribed.” Chapter VB and particularly Section 28L of Customs Act vests power of Civil Court on authority and appellate authority. It states that “the Authority or Appellate Authority shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908).” As per Section C of Customs Act, “the Appellate Tribunal shall, for the purposes of discharging its functions, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:— (a) discovery and inspection; (b) enforcing the attendance of any person and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions”. It is pertinent to note that such provisions are absent in Section 108 of Customs Act.

Under our justice dispensation system, only substantive evidence for proving a fact in issue or a relevant fact would be admissible. In other words, a witness should testify about what he saw, heard, sensed and perceived and must offer himself for cross-examination by the adversary and hearsay evidence is inadmissible, exceptions being res gestae evidence, admission against the interest of the maker which would include confessions and dying declarations. A previous statement of a person, per se, which does not fall within the above said categories, cannot be treated as a substantive piece of evidence and can be used either to corroborate his testimony in the Court under Section 157 of the Evidence Act or contradict him under Section 145. In fact, one cannot even use the statement recorded by a Magistrate under Section 164 Cr.P.C. of a witness as a substantive piece of evidence. A statement given by a witness to the police under Section 161(3) Cr.P.C. cannot even be used to corroborate his testimony in the Court, but, can be used only to contradict him. The law being thus, certain Revenue statutes like the Customs Act, etc. provide for a special rule of evidence for treating a statement of a person as a substantive piece of evidence. The Parliament, in its wisdom, reposed faith in the investigation of Revenue offences by Revenue officers and also was aware of the difficulties that would be faced by them.

III. Insertion of specific statutory provisions like Section 138B dealing with relevancy of statements

Section 138B was inserted into the Customs Act was vide clause 19 of the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1973 (Act 36 of 1973). At this juncture, it is worth to reproduce relevant extracts from Customs Act indicating the statement of objects and reasons for bringing this Section 138B in the act.

Statement of Objects and Reasons of Amending Act 36 of 1973.-

The Law Commission in its Forty-seventh Report on Trial and Punishment of Social and Economic Offences has made certain recommendations for amending certain statutes like the Customs Act, 1962, the Gold (Control) Act, 1968, the Central Excises and Salt Act, 1944, and Foreign Exchange Regulation Act, 1947. The study team on Leakage of Foreign Exchange through Invoice Manipulation had also, in its Report, made certain recommendations for amending some of the said Acts. This Bill seeks to amend the Customs Act, 1962, the Gold (Control) Act, 1968 and the Central Excises and Salt Act, 1944, in the light of the aforesaid recommendations of the Law Commission and the Study Team. The amendments to these Acts proposed in the Bill mainly seek to make the punishments prescribed there under more severe and to make certain other provisions therein with regard to the rules of evidence and procedure with a view to removing the loopholes noticed in the working of those Act and making their enforcement more severe.

 2. The Notes on clauses explain in detail the various provisions in the Bill

Above amendment in year 1973 was made as a consequence of the 47th report of the Law Commission of India on “Trial and Punishment of Social and Economic Offences” submitted to the Government of India in February, 1972. Report extensively recommends amendments to various provisions of Customs Act, especially, those dealing with Presumption and evidence and Administrative Adjudications. Chapter 14 of the report deals with Administrative adjudications. For the purpose of the discussion at hand the observations of the Commission were as follows:

“14.1 Statements made in administrative adjudications:

Many of the Acts dealing with economic offences empower the enforcement officers to summon and examine witnesses. The statements made by these witnesses before such officers are not, however, admissible in evidence in the subsequent criminal prosecutions. We are of the view that these statements, if recorded by officers of sufficiently high status, to be determined by the Government should be admissible in such prosecutions, since they are very often the earliest officially recorded version of the facts.”

14.2 Certain conditions and safeguards will, no doubt, be necessary. Reference in this connection may be made to the Evidence Act, which has a provision relating to the admissibility of a statement made in a previous judicial proceeding. The relevant provision in the Evidence Act, is as follows:

“33. Evidence given by a witness in a judicial proceeding, or before any person authorized by law to take it, is relevant for the purpose of proving, in a subsequent judicial proceeding, or in a later stage of the same judicial proceeding, the truth of the facts which it states, when the witness is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or if his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable:

Provided—

• that the proceeding was between the same parties or their representatives in interest;
• that the adverse party in the first proceeding had the right and opportunity to cross-examine;
• that the questions in issue were substantially the same in the first as in the second proceeding.

Explanation.—A criminal trial or inquiry shall be deemed to be a proceeding between the prosecutor and the accused within the meaning of this section.”

14.3. We think that the safeguards mentioned in the proviso to Section 33 need not appear in the new provision which we contemplate. We are further of the view that the Court should have a discretion to admit the statement in evidence, if the circumstances of the case so require, even where the maker of the statement is a witness in the proceedings before the Court.

Though such discretion is not very frequently met with in Indian statute law, in this case, it is necessary for obvious reasons.

Twenty years ago, Stone stressed the importance of excluding similar conduct evidence (even though it is relevant otherwise than via disposition), where its effect was too prejudicial, in these words-- “where the peg is so small and the linen so bulky and dirty that a jury will never see the peg, but merely yield to indignation at the dirt.” Somewhat similar considerations make it desirable that the Court should have this power, since the provision which we are recommending is itself new.”

14.4. We, therefore recommend that a provision on the following lines may be inserted in the relevant Acts:-

A statement made and signed by a person in a proceeding under this Act before any officer authorised by law to record it, being an officer of a rank notified by the Central Government in this behalf, shall be relevant, for the purpose of proving, in a prosecution for an offence under this Act, the truth of the facts which it states - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or if his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable:

or (b) when the person who made the statement is examined as a witness in the case, and the Court is of opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.”

It is, therefore, obvious that the use of a statement made before a Custom officer cannot be pressed in aid, if the conditions stated therein are not satisfied. It is stressed that statement were made admissible as evidence after providing for conditions and safeguards which legislature envisaged as mandatory and Courts have interpreted as Mandatory and Substantive. The sum and substance of the arguments made on behalf of executive in several court proceedings has been that statement along with its content is admissible evidence because same has been recorded under Section 108. According to this view, the contents of the statement automatically become relevant solely by virtue of being recorded under Section 108. However, a plain reading of Section 108 reveals that it merely confers the power to summon persons to give evidence. There is nothing in the provision to suggest that a statement recorded under it automatically becomes relevant for other proceedings under the Act

Many of the Acts dealing with economic offences empower the enforcement officers to summon and examine witnesses. Section 108 of Customs Act is one such provision. Person can be summoned and can also be examined as witness. The Law Commission headed by Shri Pralhad Balacharya Gajendragadkar , who also happened to be 7th Chief Justice of India, in its 47th report while dealing with Chapter on administrative adjudication felt that the statements made by these witnesses before such officers are not, however, admissible in evidence in the subsequent criminal prosecutions. The Commission recommended that these statements, if recorded by officers of sufficiently high status, to be determined by the Government should be admissible in such prosecutions, since they are very often the earliest officially recorded version of the facts.  It was also felt that certain conditions and safeguards will no doubt, be necessary while bringing such statement admissible in Courts on lines of Evidence given by a witness in a judicial proceeding.

Subsequently, Section 138B was brought in the act making statements recorded under Section 108 as relevant before Court and also in relation to any other proceedings under the Act, at par with Evidence given by a witness in a judicial proceeding. However, certain conditions and safeguards were introduced in terms of Section 138_1. Furthermore, it has been made clear that statement to examine person or give evidence can be recorded during the course of inquiry as well as in other proceedings under the Act.

Sub Section 2 of Section 138B makes it clear that the provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court. Constitutional Courts have been made it clear that both sub sections are mandatory and substantive provisions. Statement recorded under Section 108 is relevant subject to fulfillment of mandatory conditions mentioned in Sub Section 1 of Section 138B.It is admissible in Court of law on lines of evidence given by a witness in judicial proceedings. At the same time, issue of relevancy of statement has been consciously been extended to any proceedings under the Act and not just prosecution proceedings. Issue is no longer res integra as far as administrative adjudications are concerned. Specific Questions of law have been framed and it has been repeatedly held that issue of relevancy and admissibility extends to other proceedings under the Act, like adjudication proceedings.

Part II to continue ***********