Reliance on Central Excise statements in Customs proceedings upheld; diversion of exempt imports sustained duty demand and penalty.

Statements recorded by Central Excise officers under section 14 were treated as usable in Customs proceedings because the provision did not bar reliance on such evidence and the officers were regarded as Customs officers for that purpose. The duty demand was not found barred by limitation where the imported goods were alleged to have been diverted from the declared end use and the record supported misuse of the exemption regime. On the facts, the factual findings of diversion and manipulation of accounts were not displaced, so the duty demand and penalty were sustained.

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Issues: (i) Whether statements recorded by Central Excise officers under section 14 of the Central Excises and Salt Act, 1944 could be relied upon in proceedings under the Customs Act, 1962. (ii) Whether the demand of duty was barred by limitation. (iii) Whether the duty demand and penalty were sustainable on the facts.

Issue (i): Whether statements recorded by Central Excise officers under section 14 of the Central Excises and Salt Act, 1944 could be relied upon in proceedings under the Customs Act, 1962.

Analysis: Section 14 empowers summoning of persons and production of documents in inquiries under that Act, but it does not say that statements so recorded are unusable for any other purpose. The officers were also treated as Customs officers by notification, and the adjudicating authority had already dealt with this aspect. The contention that the statements were inadmissible in Customs proceedings was therefore not accepted.

Conclusion: The statements were held to be usable in the Customs proceedings, against the assessee.

Issue (ii): Whether the demand of duty was barred by limitation.

Analysis: The imports were made under an exemption regime requiring end-use proof, and the department alleged diversion of the imported old newsprint together with manipulation of raw material accounts. The prior issuance of end-use certificates did not assist the appellant in the face of the finding that the goods were not put to the declared use. The reliance placed on a different case was rejected as distinguishable.

Conclusion: The demand was held not to be barred by limitation, against the assessee.

Issue (iii): Whether the duty demand and penalty were sustainable on the facts.

Analysis: The import consignments, the quantity involved, and the duty calculation were stated in the notice. The appellant did not effectively rebut the factual findings of diversion and manipulation, and no satisfactory basis was shown to dislodge the quantified demand. In those circumstances, the adjudication confirming duty and imposing penalty was upheld.

Conclusion: The duty demand and penalty were upheld, against the assessee.

Final Conclusion: The appeal failed in all material respects, and the adjudication confirming duty and penalty was sustained.

Ratio Decidendi: Evidence recorded under a statute may be relied upon in Customs proceedings where the statute does not prohibit such use and the officers are empowered under the Customs framework; a duty demand based on diversion of exempted imported goods and supported by factual findings of misuse is not defeated merely by issuance of end-use certificates or by a limitation plea unsupported on the record.

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