AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 1626
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....ation No.25/1999 - CUS dated 28.02.1999 as amended by Notification No.09/2004 dated 08.01.2004 in respect of goods imported in various firms/companies created in the name of his relatives, employees and business partners and being controlled/managed by the Appellant No.(1). Name of said firms are as below : (i) Tirupati Overseas (ii) NeelKanth Enterprises (iii) Saraswati Enterprises (iv) Bhagwati Enterprises (v) M/s Jain Impex (vi) M/s Cosmic Enterprises (vii) M/s Radhe Tradelinks (viii) M/s Sovitec International (ix) M/s Jain Prints (x) M/s Evershine Industries (xi) M/s Emm Kay Associates (xii) M/s Pragati Enterprises 2.1 It is pertinent to mention here that M/s Jain Impex is proprietorship firm of the Appellant No.(1) himself. M/s Cosmic Enterprises, M/s Jain Prints, and M/s Sovitec International are also Proprietorship/partnership firms of family members (son/nephew) of Appellant No.(1). 2.2 Searches were conducted by DRI Officers at the premises of Appellant on 01.08.2007 and various other premises. During searches at premises of Appellant CPU, several note books/di....
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....ave been imposed with penalty under Section 112(a) and 112(b) of the Customs Act. Further, certain other individuals have also been imposed with personal penalty. 2.7 Aggrieved from the said order, the appellants are in appeal before us. 3. The ld.Counsel for the appellants submits as under : (i) The allegation of violation of condition of Notification No. 25/1999 has been made on the basis of visits/searches conducted by the DRI Officers at premises of concerned firms availing the said benefit wherein, as per the department, it was found that no manufacturing activities were going on, neither were there any plant and machinery to manufacture the required goods by using imported goods. (ii) The allegation of customs duty evasion on account of undervaluation has been made on the basis of certain entries found in the notebook/diary resumed from premises of Appellant which were explained by him during recording of his statements by DRI during investigation. It is pertinent to mention that the entire demand has been raised and confirmed on the basis of entries alleged to have been mentioned in the diary/note book resumed from the premises of Appellant in relation to only el....
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....orting granite block to China through his firm without claiming duty drawback and other export benefits but undervalued the export invoice on the request of his Chinese buyers in order to save customs duty likely to incur by his buyers in China. It has been further alleged that differential amount in relation to his exports to his Chinese buyers were being paid to the suppliers of Appellant (Sh. P. C. Jain) towards differential amount in respect of imports made by the Appellant No.(1) in different firms and equivalent payment in Indian currency used to be made by the Appellant No.(1) to Sh. D. P. Jain here in India. It is pertinent to mention that neither any documentary evidence regarding remittance of differential amount in respect of imported goods has been adduced by the department in the SCN, nor have there been any discussion of any such evidence in the Impugned Order. All the allegations are based on statements. (vii) The show cause notice was issued without RUDs. So request to provide RUDs were made vide letter dated 07.10.2010. Several reminder requests were also made by the Appellant No.(1). However, without providing documents, hearing notices were issued to the Appel....
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....ng import and local sale documents. It is, thus, evident that the aforesaid documents are very vital and appears to have direct bearing on the allegation of duty evasion on account of violation of condition of Notification No.25/1999 as well as in respect of the allegation of undervaluation and other allegations made on the basis of entries in diary resumed from premises of Appellant No.(1). (xiii) The appellant, in response to subsequent hearing notices issued by the Adjudicating Authority, inter alia, submitted that they are unable to prepare defence reply without having aforesaid RUDs and also that not providing the same is clear violation of Hon'ble High Court's directions. However, the personal hearing was further fixed on 25.09.2024 with an intimation that the case shall be adjudicated on the basis of RUDs which were already provided to the appellant. The appellant, in response, vide letter dated 21.09.2024, inter alia, requesting for documents as earlier sought, also requested for cross-examination of persons whose statements have been relied upon in the show cause notice to make allegation against them so that they could get chance to bring out the truth. (xiv....
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....ded Section 28 of the Customs and was challenged in 2021 before the Delhi High Court, quashed the SCN by holding that, "The mention of the words, "where it is not possible to do so", in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period of time. The legislature in its wisdom has provided a specific period for the authority to discharge its functions. The indifference of the concerned officer to complete the adjudication within the time period as mandated, cannot be condoned to the detriment of the assessee. Such indifference is not only detrimental to the interest of the taxpayer but also to the exchequer." (xviii) He also relied on the judgment of this Tribunal in case of Kopertek Metals (P) Ltd. Vs. Commissioner of CGST (West), New Delhi reported in (2025) 29 Centax 28 (Tri-Delhi), wherein, the CESTAT, by following the judgment in case of Swatch Group of Delhi High Court (supra), decided 209 appeals by setting aside the adjudication orders passed beyond the period stipulated in sub-section (11) of section 11A of the Central Excise Act (which is pari materia to unamended Section 28 (9) of the Customs Act). (xix) ....
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....ing financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time "where it is possible to do so" cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence." It further held, in para, 86, ".... The inaction and the state of inertia which prevailed thus leads us to the inevitable conclusion that the respondents clearly failed to discharge their obligation within a reasonable time. The issuance of innumerable notices would also not absolve the respondents of their statutory obligation to proceed with promptitude bearing in mind the overarching obligation of ensuring that disputes are resolved in a timely manner and not permitted to fester. Insofar as the assertion of the assessees' seeking repeated adjournments or failing to cooperate in the proceedings, it may only be noted that nothing prevented the respondents from proceeding ex parte or refusing to reject such requests if considered lacking in bona fides." (xxii) He submitte....
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....aken from CPU and printouts of E-mails, are not admissible as evidences without complying with statutory provisions of Section 138C of the Customs Act, 1962 read with Section 65B of the Evidence Act, 1872. As far as printouts taken from CPU and email are concerned, it is a settled position of law that such printouts are not admissible as evidence without complying with statutory requirements of Section 65B of the Evidence Act read with Section 138C of the Customs Act. DRI, in the instant case, seized a CPU from the house of the appellant during the search conducted on 01.08.2007. The CPU was examined and data was retrieved vide panchnama dated 02.08.2007 but without complying with Section 138C of the Customs Act read with Section 65B of the Evidence Act. In the show cause notice it has been stated that the CPU corroborates the fact that 25000 pieces of VCD, 50,000 pieces of DVD remote and 28000 pieces of VCD lens were purchased by the appellant vide Invoice No. SG/724/06/2007 and the actual value of these goods was USD 85137.25. The retrieved documents from the CPU also appears to indicates that 72,000 pieces of VCD pick up were purchased vide Invoice No. 12233062007 and the actual....
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....her submitted that the aforesaid judgment in Anvar P. V. (supra) has been further followed by the Hon'ble Supreme Court in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & other reported in AIR 2020 SC 4908. Reliance in this regard, is also placed upon the order of Principal Bench of Delhi CESTAT in the case of Trikoot Iron and Steel Casting Ltd., vs. Additional Director General (Adjudication), Directorate General of GST Intelligence, [2024 (10) TMI 672-CESTAT-New Delhi). Reliance is also placed upon the case of Jeen Bhavani International and Mahesh Chandra Sharma Vs. Commissioner of Customs, Nhava Sheva III reported in 2022 (8) TMI 237-CESTAT, Mumbai which has been upheld by the Hon'ble Supreme Court vide order dated 27.02.2023. Further, reliance is also placed upon the case of S.N. Agrotech Vs. Commissioner of Customs, New Delhi reported in 2018 (361) ELT 761 (Tri-Del.). (xxxi) He further submitted that the explanation given in the statement of Appellant No.(1) with respect to diary cannot be relied upon. As far as entries stated to have been explained by the appellant in note book are concerned, same also cannot be relied upon as initial statements of Appella....
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.... pertinent to submit here that in famous case of Jain Hawala Diary (titled as CBI Va V.C. Shukla & Others reported in (1998) 3 SCC 410, the Hon'ble Supreme Court held that statement alone shall not be sufficient evidence to charge any person with liability. Reliance is also placed upon the case of Surya Wires Pvt. Ltd. Vs. Principal Commissioner, CGST [Excise Appeal No. 51148 of 2020-Final Order Nos.50453-50454/2025 dated 01.04.2025], wherein, this Tribunal, with respect to demand raised on the basis of explanation given in statements regarding entries made in incriminating documents resumed during search, held that, "the adjudicating authority while recording the finding on loose papers has placed reliance upon the statement of Harsh Agrawal made during the inquiry/investigation under section 14D of the Customs Act. The procedure contemplated under section 9D of the Central Excise Act was not followed and, therefore, no reliance can be placed on the statement of Harsh Agrawal in connection with loose papers recovered from the factory premises of the appellant". (xxxv) In any case, he submitted that it is a settled position of law that each import is an assessment by itself ....
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....efined importer as 'means a person who imports or intend to import and holds an IEC number, unless otherwise specifically exempted. (xxxviii) He submitted that it has been held in various pronouncements that only a person who has filed bill of entry came be held as importer and the demand of differential duty other than the said person who has filed bills of entry is not sustainable. It is fact on record that the persons whose firms have been alleged to have been controlled operated by the Appellant No.(1), themselves applied for IEC. opened bank accounts, did excise formality etc. and signed respective documents. The manufacturers with buyers of imported goods and suppliers of imported goods have been done through proper banking channel. The fact is that said persons were being helped by the Appellant No.(1) because of being in same trade and having experience. The same cannot be attributed against the Appellant No.(1) herein, Reliance is placed upon Nalin Z Mehta va. Commissioner of Customs, Ahmedabad -2014 (303) ELT 267 (Tri. Ahmd.). Brij Mohan Sood v Commissioner of Customs, Kandla[2007 (217) ELT 570(Tri- Ahd)). Chaudhary International v. CC. Bombay - 1999 (109) ELT. 371....
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....I wanted. (xxxxi) It may further be pertinent to note that DRI also recorded statement of Mr. Surender Gupta, Prop. of M/s Excel Trading Corp. Lajpat Rai Market who was buyer of M/s Bhagwati Enterprises. Mr. Surender Gupta had stated that they have been purchasing CD Deck mechanism and remote control from M/s Bhagwati Enterprises. This also proves that the above said firms have been manufacturing finished goods and the allegations of mis-use of Customs Notification No.25/1999 is fabricated. (xxxxii) The entire allegation has been made only on the ground that during search on 1.8.2007 of the premises of the manufacturers, no manufacturing facility was found in their premises and based on the statements of the Appellant and co notices recorded under duress. In this regard, it may be relevant to note that the Appellant and other manufacturers had surrendered their Registration and stopped manufacturing in 2006 long before the present investigation has been initiated which is evident from the following facts: (i) M/s Sarswati Enterprises vide letter dated 19.06.2006 addressed to the Assistant Commissioner, Central Excise, Division IV surrendered the Central Excise regist....
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....mand confirmed on the basis of allegation of under valuation is not sustainable. He submits that it has been alleged that value of various consignments of declared goods (i.e. parts of CD Deck mechanism and remote control and DVD/CVD) imported by the Appellant in various firms (alleged to have been controlled/managed by the Appellant) has been mis- declared. (xxxxv) Again, he contended that the entire allegation of under-valuation has been made on the basis of statements of the Appellant and partners/owners of various firms as stated above and on the basis of some of the noting in the diary and CPU recovered from the residence of the Appellant. It has already been explained above that neither said statements can be relied upon, nor said documents retrieved from CPU and e-mail or entries found in note book, can be relied upon. Moreover, as stated above, Appellant retracted from his statements vide letter dated 03.08.2007. It is settled position in law that statements recorded under pressure and coercion have no evidentiary value and retracted statements are not reliable evidence. The Appellant in this regard relies upon the case of Mohtesham Mohd. Ismail vs Spl Director, Enforcem....
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....ocumentary evidence in the form of contemporaneous data support the case of the Appellant and hence, the allegation of undervaluation is not sustainable. (xxxxix) It is a settled position in law that transaction value can be rejected only if there is evidence of contemporaneous import at higher price. There is catena of case law where the Hon'ble Apex Court and Tribunals holding that allegation of undervaluation has to be supported by price of contemporaneous imports. Reliance in this regard is placed on the following decisions: Commissioner of Customs, Calcutta vs South India Television (P) Ltd [2007 (214) ELT3(SC), Century Metal Recycling Pvt Ltd vs UOI [2019 (367) ELT 3 (SC), Commissioner of Customs, Vishakhapatnam vs Aggarwal Industries Ltd [2011 (272) ELT 641 (SC), Agarwal Metals and Alloys vs Commissioner of Customs, Kandla [2021 (378) ELT 155 (Tri-Ahd)], Savaram D. Patel vs Commissioner of Customs, Ahmedabad [2014 (312) ELT 193 (Tri-Ahd, Commissioner of Customs (Imports), Mumbai vs Ganpati Overseas [2023 (10) TMI (364)]. (xxxxx) Further, he submitted that without prejudice to the above, it is pertinent to mention that the Appellant No.(1) has also stated about cert....
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....ed on the statement of the Appellant No.(1) and Gaurav Jain and based on the entry in diary. DRI failed to appreciate the Appellant No.(1) and other importers had imported exactly the same quantity which was declared in the Bills of Entry and Invoice. During the relevant period, there was no procedure for self-assessment. Customs at the port of import examined the goods before granting 'out of charge' with reference to quantity and quality of the goods declared in the invoice. By no chance, Appellant No.(1) could import increased quantity of goods escaping notice of Customs Authority. It is beyond comprehension as to how it is possible to mis declare quantity of goods. DRI has redetermined value with reference to the enhanced quantity which is blatantly incorrect. (xxxxxiii) He further submitted that the penalties imposed on the Appellants are also not sustainable. The Appellant No.(1) not being the importer can not be held liable to pay differential duty. Hence, imposition of penalty under 114A is not sustainable. It may be noted that in the Twenty Seventh Report of the Standing Committee of Finance, the legislative intention behind insertion of Section 114AA was discus....
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....) on intelligence that the appellants have been engaged in evasion of Customs duty by way of doing undervaluation and violating conditions of Notification No.25/1999 - CUS dated 28.02.1999 as amended by Notification No.09/2004 dated 08.01.2004. 6.1 We further take note of the fact that in this case, during the course of investigation, CPU, several note books/diary, files containing import documents pertaining to the above firms, blank cheque, were resumed from the Appellant No.(1) and certain documents were retrieved from the said CPU and e-mail account of son of the Appellant No.(1). 6.2 Further, during the course of investigation, the statement of the appellants were recorded and on the basis of these statements, a case has been made out against the appellants of undervaluation of the imported goods and to deny the Notification No.25/1999 - CUS dated 28.02.1999 as amended by Notification No.09/2004 dated 08.01.2004. 6.3 For better appreciation of facts to avail the benefit of the said Notification, the Appellant No.(1) was required to follow the procedure as laid down in Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996....
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....ty Commissioner of Customs]. - (1) On the basis of the application countersigned by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise], the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] at the port of importation shall allow the benefit of the exemption notification to the importer. [Provided that where the importer has filed the application in respect of his estimated requirement for a quarter, the said [Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall debit in the said application, the quantity and value of imports made under a particular consignment, also indicating particulars of the bill of entry, before allowing the benefit of the exemption notification to the importer.] (2) The [Assistant Commissioner of Customs or Deputy Commissioner of Customs] shall forward a copy of the bill of entry containing the particulars of import, the amount of duty paid and other relevant particulars to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise. RULE 6. Procedure to be followed by the [Assistant Commissioner of Central Excise or Deputy Comm....
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....it of the said Notification to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] indicating the estimated quantity and value of such goods to be imported, particulars of the notification applicable on such import and the port of import. The said application shall be countersigned by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise who shall certify therein that the manufacturer is registered in his office and has executed a bond to his satisfaction in respect of end use of the imported goods in the manufacturer's factory and indicate the particulars of such bond. On the basis of the application countersigned by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, the Assistant Commissioner of Customs or Deputy Commissioner of Customs at the port of importation shall allow the benefit of the exemption notification to the importer. Thereafter, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall forward a copy of the bill of entry containing the particulars of import, the amount of duty paid and other relevant particulars to the Assistant Commissioner ....
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....ued Discharge Certificate to the appellant. The investigations in this case have been started by the DRI in August, 2007. At that time, the appellants were not having manufacturing facility, as they have surrendered the registration in 2005 or 2006 and discontinued manufacturing. The reason for denial of the Notification is that during the course of investigation, the appellants were found non-existent. Therefore, it cannot be said that the benefit of Notification No.25/1999 - CUS dated 28.02.1999 as amended by Notification No.09/2004 dated 08.01.2004, can be denied to the appellants merely on the basis that the appellants were non-existent. Therefore, the allegation that the appellants were having no manufacturing on the said premises at the time of search, is not sustainable. 6.5 Further, as per the appellant, the RUD-29, which was not supplied to the appellants, was related to import on the basis of records obtained from the various jurisdictional Central Excise Authorities. The said documents has not been placed on record by the Revenue. The said documents could have established the case of the appellants that whether they were not having any manufacturing facilities during ....
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....y paid on the raw materials purchased from Amarnath Industries. 15. Learned counsel for the appellant submitted that Amarnath Industries has been granted refunds on the basis of orders passed by the Jurisdictional Assistant Commissioner and these orders were not challenged. The CENVAT credit could not have, therefore, been denied to the appellant. 16. This submission advanced by the learned counsel for the appellant deserves to be accepted in view of the decision of the Gauhati High Court in Commissioner of C. Ex., Shillong vs. Jellalpore Tea Estate18, wherein it was held: "14. Insofar as the present case is concerned, the prescription of law required that the order of the Assistant Commissioner passed on 29-4-2002 could be challenged only by resorting to Section 35-E of the Act. The Revenue could not initiate collateral proceedings to set aside the order dated 30-4-2002 by resorting to the enabling power under Section 11A of the Act. 15. Consequently, we are of the opinion that : (i) Section 11A of the Act is not applicable to the facts of the case since the issue raised did not concern any approval, acceptance or assessment relating to the rate....
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.... cannot claim Modvat credit in Goa because duty need not be paid outside Goa. 6. As we have observed that the assessment is allowed to be final, it would not be legal and proper to allow the Revenue to raise the question on the basis of Modvat credit. Indeed, now the payment of excise duty must be treated as valid, therefore, the claim of Modvat credit must be treated as excise duty validly paid." (emphasis supplied) 19. The same view was taken by the Bombay High Court in Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises19 . It was held: "10. Apart from the above, in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. In these circumstances, the CESTAT following its decision in the case of Ashok Enterprises - 2008 (221) E.L.T. 586 (T), Super Forgings - 2007 (217) E.L.T. 559 (T), S.A.I.L. - 2007 (220) E.L.T. 520 (T) = 2009 (15) S.T.R. 640 (Tribunal), M.P. Telelinks Limited - 2004 (178) E.L.T. 167 (T) and a decision of the Gujarat High C....
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....f proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 11. As already noticed hereinabove, subsection (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of....
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.... said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." (emphasis supplied) 25. The Commissioner found that since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from Amarnath Industries, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner also observed that the case against the appellant is not only on the basis of statements of employees of Amarnath Industries, but also on circumstantial test reports and, therefore, denying the right of cross examination would not be violative of principle of natural justice. 26. These observations made by the Commissioner in the impugned order are clearly contrary to the principles enunciated by the Allahabad High Court in Parmarth Iron and the Punjab and Haryana High Court in Jindal Drugs. In the first in....
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....ding before a Court." 5. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 6. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.&K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.) = 2011 (22) S.T.R. 225 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. 7. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. As already noticed herein above, sub-section (1) of Section 9D sets out the circumstances in which a s....
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..... While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioner has also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 21831/1994, dated 3-1-1995 [since reported in 1995 (75) E.L.T. A177 (S.C.)], wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 13. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examine....
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.... cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 17. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 18. It is only, therefore,- (i) after the person whose statement has already been recorded before a Gazetted Central Excise officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 19. Clearl....
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....lated by Section 9D of the Act and the law laid down by various judicial Authorities in this regard including the principles of natural justice in the following manner :- (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the show cause notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No. 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e., before Respondent No. 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e., to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examination-in-chief before the adjudicating authority, i.e., before Respondent No. 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No. 2 to rely on the said evidence while adjudicating the matter. Neither, ....
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....erial, thus, which has to be considered is, untested and uncorroborated. A party is called upon to reply to the said show cause notice in order to enable the Revenue to know the stand of the assessee, in the context of the material produced as to whether the proceedings should be further proceeded with. It is an opportunity to the party being proceeded against to disclose any material that the party may have to rebut the prima facie opinion. Even if, the assessee fails to reply to the show cause notice, that does not amount to an ‗admission' of the contents of the show cause notice in the absence of any statutory provision and it is always open to an assessee to cross-examine the witnesses whose statements are relied upon or sought to be examined on behalf of the Revenue. At the stage of show cause notice, there is no adjudication. It is only a step in the process of adjudication. The show cause notice by itself is not an order of assessment. The order of assessment will be passed only after considering the evidence and the material, which is placed before the quasi judicial authority/tribunal. Therefore, as the show cause notice is based on prima facie material and ....
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....e adjudicating authority were not examined In-Chief and when the witness has not been examined, therefore, the question of making an opinion of the admissibility of the said statement as an evidence, does not arise. Consequently, the statement recorded during the course of investigation cannot be relied upon without following the procedure laid down under Section 138B(1)(b) of the Customs Act, 1962 as held by the judicial pronouncements cited above. In view of this, we hold that the statement recorded during the course of investigation cannot be relied upon to allege under-valuation against the appellants. 7.5 We further take note of the facts that whether the printouts taken from CPU and the printouts of E-mail, are admissible evidences in the absence of complying with the provisions of Section 138C of the Customs Act, 1962 is pari materia to Section 36B of the Central Excise Act, 1944. 7.6 The said issue has been examined by this Tribunal in the case of Trikoot Iron & Steel Casting Limited Vs. Additional Director General (Adjn.), Director General of GST Intelligence (Adjudication Cell) vide Final Order No.58546/2024 dated 09.09.2024, wherein this Tribunal has observed as un....
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....ccession over that period; or (c) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combination of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, - (a) identifying the document containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer, (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevan....
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....ntral Excise Act deals with cases where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed thereunder. Such certificate should be signed by a person occupying a responsible position in relation to the operation of the device in question or the management of the relevant activities. In such a case it shall be evidence of any matter which is stated therein. It specifically mandates production of a certificate: (i) identifying the document containing the statement and describing the manner in which it was produced; (ii) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer, (iii) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate. 19. The Central Excise Act contains a specific provision that describes the manner in which the admissibility of computer print outs will be accepted as evidence in proceedings initiated under the Central Excise Act. 20. In respect of section 65B of the Evidence Act, which is pari materia to the....
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....rdinary course of the said activity. 14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought t....
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....ch were produced in court, without due certification. Those CDs cannot be admitted in evidence since the mandatory requirements of Section 65B of the Evidence Act are not satisfied. It is clarified that notwithstanding what we have stated herein in the preceding paragraphs on the secondary evidence on electronic record with reference to Sections 59, 65A and 65B of the Evidence Act, if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act, the same is admissible in evidence, without compliance of the conditions in Section 65B of the Evidence Act." (emphasis supplied) 21. The aforesaid judgment of Supreme Court in Anvar P. V. was followed by the Supreme Court in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & others 5, though with a slight modification. The Supreme Court held that if the original device is not produced, then electronic record can be produced in accordance with section 65B (1) of the Evidence Act together with the requisite certificate under section 65B (4). The relevant portions of the judgment of the Supreme Court are reproduced below: " 18. Sections 65A and 65B occur in Chapter V of the Ev....
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....he Evidence Act does not include electronic records. 22. Section 65B(2) then refers to the conditions that must be satisfied in respect of a computer output, and states that the test for being included in conditions 65B(2(a)) to 65(2(d)) is that the computer be regularly used to store or process information for purposes of activities regularly carried on in the period in question. The conditions mentioned in subsections 2(a) to 2(d) must be satisfied cumulatively. 23. Under Sub-section (4), a certificate is to be produced that identifies the electronic record containing the statement and describes the manner in which it is produced, or gives particulars of the device involved in the production of the electronic record to show that the electronic record was produced by a computer, by either a person occupying a responsible official position in relation to the operation of the relevant device; or a person who is in the management of "relevant activities" - whichever is appropriate. What is also of importance is that it shall be sufficient for such matter to be stated to the "best of the knowledge and belief of the person stating it". Here, "doing any of the followin....
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....ed, is owned and/or operated by him. In cases where "the computer", as defined, happens to be a part of a "computer system" or "computer network" (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as "...if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act...". This may more appropriately be read without the words "under Section 62 of the Evidence Act,...". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited. xxxxxxxxxxxx 72. The reference is thus answered by stating that: (a) Anvar P.V. (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgment in Tomaso Bruno (supra), being per i....
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.... framed as indicated earlier, after considering the report of the Committee constituted by the Chief Justice's Conference in April, 2016." (emphasis supplied) 22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that: (i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by a computer; (ii) Any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) of section 65 of the Evidence Act are satisfied, without further proof or production of the original; (iii) In view of the provisions of section 65(4) of the Evidence Act, a certificate must accompany the electronic record like computer printout, compact disc, video compact disc or pen drive, pertaining to which a statement is sought to b....
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....ence Act. A certificate is also required to accompany the said of computer printouts as prescribed under section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgment that all the safeguards as prescribed in Section 65B (2) & (4), to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act are pari materia. 15.3 It is evident from the appeal that the investigation officers while seizing has failed to take safeguards as mandated under section 36B of Central Excise Act. Further the cloning process of the hard-disks and retrieval of the data is admissible for want of cross examination of, Sh. Vipul Saxena, who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to admissible evidence in terms of Section 3....
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.... the context of the provisions of section 36B of the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory. 27. The contentions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined in the light of the aforesaid observations. 28. What transpires from the two Panchnamas dated 04.07.2013 and 15.07.2013 is:- (i) The officers found that Vaibhav Goel "removed a hard disc from his kitchen and tried to throw it away"; (ii) During the search, the officers found "three computer monitors installed in a room on the first floor of rear side of the house above the dog house in which some documents and seven pen-drives were also found"; (iii) However, no CPU wa....
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....ard drive mentioned at serial no. 1 was attached with the CPU and printers resumed from the residence of Vaibhav Goel on 04.07.2013 and printouts of the data stored in the hard drive and Toshiba 4GB pen drive were taken; (xv) The other hard drives and pen drives did not contain any relevant data and so printouts were not taken. 29. It is not in dispute that the hard disk from which the printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that Vaibhav Goel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen Vaibhav Goel actually remove the hard disc from the CPU. It only records that Vaibhav Goel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner lying near the dog house. What needs to be noticed is that if Vaibhav Goel had thrown the hard disk, it would not have been found hidden in a corner of a room near the dog house....
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....itself should be treated as a certificate or that the adjudicating authority was justified in itself examining whether the conditions set out in section 36B (4) of the Central Excise Act had been satisfied." Admittedly, the printouts taken from CPU and the printouts of E-mails have not been examined in terms of the procedure laid down under Section 138C of the Customs Act, 1962,therefore, the said documents are not admissible to allege the undervaluation against the appellants. 7.7 We further take note of the facts that the charge of undervaluation is based only on the basis of some documents recovered during the course of investigation and the statements made by the appellants. The transaction value can be rejected, if there is an evidence of contemporaneous import on higher price. The said issue has been examined by the Hon'ble Apex Court in the case of Commissioner of Customs, Calcutta Vs. South India Television (P) Limited reported in 2007 (214) ELT 3 (S.C.), wherein the Hon'ble Apex Court has observed as under : "5. We also quote hereinbelow Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, as it stood at the relevant time :....
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....yer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule." 6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), "value" is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the....
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.... importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of "deemed value". Therefore, invoice price can be disputed. However, it is for the Depar....
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....e in order to claim more rebate. The goods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal. 8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs Valuation Rules refers to the transaction value. Utilization of the word ‗the' as definite article indicated that what should be accepted as the transaction value for the purpose of assessment under the Customs Act is the price actually paid by the importer for the particular transaction, unless it ....
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.... Once all the documents are received by the Petitioners to their satisfaction in terms of whatever has been referred to in the Show-Cause Notice, it will then be open to the Petitioners to file a comprehensive reply within a period of eight weeks thereafter. In case, the Petitioners desire for some additional documents, they should also be supplied to them. Once the reply is received, the adjudication proceedings will commence and proceed in accordance with law. In the intervening period and till the adjudication proceedings commences, the Petitioners shall not be subjected to any form of coercion. Subject to an application for certified copy being made and proof in support thereof being produced, let a plain photocopy of this Order, duly countersigned by the Assistant Registrar (Court), be handed over to the learned Counsel for the parties, on usual undertaking." In spite of direction of the Hon'ble Calcutta High Court, the relied upon document has not been provided to the Appellant No.(1) with the observation that the same are not traceable. In that circumstances, we hold that whole of the adjudication proceedings are not sustainable in the absence of ....