Customs statement evidence requires mandatory section 138B compliance before reliance in adjudication.

A statement recorded by customs officers under section 108 of the Customs Act, 1962 does not become admissible in adjudication unless the mandatory conditions in section 138B are satisfied. Where clause (a) does not apply, the maker must first be examined before the adjudicating authority, and only then may cross-examination follow if the statement is to be relied upon. If this procedure is not followed, the statement lacks evidentiary relevance and cannot support a penalty. On the stated facts, the penalty could not be sustained because it rested solely on a section 108 statement and section 138B was not complied with.

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Issues: Whether a statement recorded under section 108 of the Customs Act, 1962 can be relied upon in adjudication when the procedure contemplated under section 138B of the Customs Act, 1962 has not been followed.

Analysis: Section 108 empowers customs officers to summon persons and record statements during inquiry. Section 138B makes such statements relevant only in the limited circumstances set out in clause (a), or, where clause (a) does not apply, after the maker of the statement is examined before the adjudicating authority and the authority forms an opinion that the statement should be admitted in evidence in the interests of justice. The procedure is mandatory and must be followed before the statement can acquire evidentiary relevance in adjudication. If the statement is to be relied upon, the person making it must first be examined, and cross-examination can follow only thereafter. As the impugned penalty rested solely on the appellant's statement recorded under section 108, and the statutory procedure under section 138B was not complied with, the statement could not be treated as relevant evidence.

Conclusion: The reliance on the appellant's statement was impermissible, and the penalty could not be sustained.

Ratio Decidendi: A statement recorded under section 108 of the Customs Act, 1962 cannot be treated as relevant evidence in adjudication unless the mandatory requirements of section 138B are satisfied.

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