2024 (5) TMI 22 - AT - Customs

Procedural lapse u/s 138B leads to annulment of penalties and confiscation orders in customs case.

Shri Manish Singhal, Proprietor M/s Singhal Traders, Shri Dinesh Bharadwaj and Shri Ravinder Pal Jindal Versus Commissioner of Customs, New Delhi

The judgment concluded that the procedural non-compliance under section 138B rendered the statements and CRCL test report inadmissible, leading to the ... Mis-declaration of Mud additive chemicals for oil well - Confiscation - Valuation - Payment of redemption fine - Penalty - denial of the cross examination by the Commissioner - Relevancy of statements u/s 138B - HELD THAT:- It is a well-settled legal position that unless the statements have been put through the process prescribed u/s 138B, they are not relevant at all to prove the case. By not following the procedure prescribed in section 138B, the Commissioner has rendered all the six statements (RUD- 4 to RUD-9) irrelevant to prove the case. The only other important document is the test report of the CRCL. Shri Singhal’s assertion was that what was attempted to be exported was Mud Additive Chemical and according to the CRCL, it was urea. Therefore, if Shri Singhal wanted to cross examine the chemical examiner who had tested the sample and said that it was urea, it is but just and proper. However, the Commissioner denied cross examination. Once all the statements and the test report of CRCL are ignored, nothing survives in this case and the impugned order cannot be sustained. To sum up: (a) By not following the procedure prescribed under section 138B, the Commissioner rendered all the six statements relied upon in the SCN irrelevant to the case; (b) By denying cross examination the Commissioner has also rendered the test report of CRCL irrelevant to prove the case of the department. (c) De hors the statements and the test report of the CRCL, nothing survives in the impugned order. Thus, all three appeals are allowed and the impugned order is set aside insofar as it pertains to Shri Singhal, Shri Bharadwaj and Shri Jindal. Issues:The judgment involves the confiscation of goods attempted to be exported, liability of goods already exported, imposition of penalties under various sections, denial of cross-examination, relevance of statements under section 138B, and test report of CRCL.Confiscation of Goods Attempted to be Exported:The Commissioner of Customs, ICD, Tughlakabad confiscated goods attempted to be exported under Shipping Bill No. 1163482 dated 19.04.2010 valued at Rs. 4,47,750/- under section 113 (d), (h), and (i) and allowed redemption on payment of a fine. Additionally, goods previously exported were found liable for confiscation, and sale proceeds were confiscated with further investigation ordered.Imposition of Penalties:Penalties were imposed on various parties under different sections - Rs. 25,00,000/- each on Shri Manish Singhal u/s 114 and 114AA, Rs. 5,00,000/- each on M/s. Amit Enterprises, M/s. Paras Enterprises, and M/s. Vansh Enterprises u/s 114, and Rs. 10,00,000/- on Shri Ravinder Pal Jindal and Rs. 5,00,000/- on Shri Dinesh Bharadwaj u/s 114.Denial of Cross-Examination and Relevance of Statements:The appellant sought to cross-examine the chemical examiner and other persons whose statements were relied upon. The Commissioner denied cross-examination, leading to a discussion on the relevance of statements under section 138B of the Customs Act, 1962. It was highlighted that statements must adhere to the conditions specified in the Act to be considered relevant for proving a case.Test Report of CRCL:The test report from the Central Revenue Control Laboratory (CRCL) played a crucial role in the case. The disagreement between the exporter's assertion and the CRCL's findings led to a demand for cross-examination of the chemical examiner. The denial of this cross-examination was considered unjust, rendering the test report irrelevant to prove the department's case.Conclusion:The judgment concluded that the failure to follow the prescribed procedure under section 138B made the statements and the test report irrelevant for proving the case. As a result, the impugned order was set aside in favor of the appellants - Shri Singhal, Shri Bharadwaj, and Shri Jindal.