Customs statement evidence requires Section 138B compliance before Section 108 statements can displace transaction value.

Statements recorded under Section 108 of the Customs Act cannot be used to prove the truth of their contents unless the mandatory safeguards in Section 138B are satisfied. Where the maker is required to be examined before the adjudicating authority, the authority must also form the requisite opinion on admissibility in the interests of justice and afford cross-examination. In the absence of this procedure, reliance on such statements is impermissible, and transaction value cannot be rejected on that basis.

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Issues: Whether statements recorded under Section 108 of the Customs Act, 1962 could be relied upon to reject the transaction value under Rule 12 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 when the procedure under Section 138B of the Customs Act, 1962 was not followed.

Analysis: The transaction value had been rejected solely on the basis of statements recorded during investigation under Section 108. The governing legal position requires that, where the conditions in Section 138B(1)(a) are not attracted, a statement recorded during inquiry becomes relevant only after the person who made it is examined as a witness before the adjudicating authority, the authority forms an opinion that it should be admitted in evidence in the interests of justice, and an opportunity of cross-examination is afforded. This procedure is mandatory, and without compliance no reliance can be placed on such statements for proving the truth of their contents.

Conclusion: Reliance on the Section 108 statements was impermissible in the absence of compliance with Section 138B of the Customs Act, 1962, and the order rejecting the transaction value could not be sustained.

Ratio Decidendi: Statements recorded under Section 108 of the Customs Act, 1962 are not admissible for proving the truth of their contents unless the mandatory procedure under Section 138B of the Customs Act, 1962 is followed, including examination before the adjudicating authority and opportunity of cross-examination.

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