TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 613
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....Intelligence [DRI]. Statement of various persons, including the appellant, were recorded and ultimately a show cause notice dated 04.12.2000 was issued to 26 persons including the appellant. 3. The case setup by the department in the show cause notice is that Sundram Export exported 96,800 pieces of CD-ROMs at highly inflated Freight on Board [FOB] value of US 19$ per piece. Another exporter, by name of Netcompware, also exported a consignment of 40,000 pieces of CDROMs at overvalued price of US 19$ per piece. The 5 shipping bills covering the above exports were filed under the DEPB Scheme. According to the department, the overvalued export was used by the exporter to fraudulently procure DEPB scrips from the Directorate General of Foreign Trade [DGFT] and subsequently these DEPB scrips were sold in the open market and were thereafter used by companies to import goods without payment of duty. It is also the case of the department that the 40,000 CD-ROMs exported by Netcompware to Hong Kong were subsequently re-imported and cleared by M/s. Arvind International [Arvind International] under a Bill of Entry dated 08.09.1998. It is said that the appellant was involved in the export of....
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....selling them to the parties known to him as evident from the statements given below: *****" (emphasis supplied) 5. The Commissioner then relied upon the statements made by Sunil Wadhwani, the appellant, Bimal Kumar Jain, Rajesh Aggarwal, Rajeev Maheshwari, Manish Goyal and Sunil Goyal, Shivraj Kapoor, Raminder Mohan Singh, Vineet Sood and Ratinder Pal Singh Bhatia made under section 108 of the Customs Act and then recorded the following finding: "All these facts clearly indicate deep involvement of Shri Deept Sarup Aggarwal in the export of CD ROM's and fraudulent availment of DEPB licenses by M/s Sundram Exports Pvt. Ltd. and M/s Netcompware Pvt. Ltd. Unless the facts were told by Shri Deept Sarup Aggarwal, no body could have speculated them. It will also not be out of place to mention here that number of initial averments in the statements of Shri Deept Sarup Aggarwal were found false. Rather it all shows that Shri Deept Sarup Aggarwal attempted to mislead the investigation. Shri Deept Sarup Aggarwal undertook all these activities in a preplanned manner with the sole intent to defraud the Govt. exchequer by way of claiming undue DEPB credits on the over-valued exports. He is....
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....ew of the statements of the appellant and other persons. 8. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 9. A perusal of the impugned order, so far as it relates to the appellant, shows that it has placed reliance upon the statements made by the appellant and other persons under section 108 of the Customs Act that he was involved in the export of CD-ROMs to confer undue benefit upon Sundram Exports and Netcompware. 10. The statements made under section 108 of the Customs Act cannot be relied upon if the procedure followed under section 138B of the Customs Act is not followed. This is what was held by the Tribunal in M/s. Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur- Excise Appeal No. 51148 of 2020 decided on 01.04.2025 . The Tribunal examined the provisions of sections 108 and 138B of the Customs Act as also the provisions of sections 14 and 9D of the Central Excise Act, 1944 and observed: "21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose att....
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....se two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statem....
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....hen the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is selfevident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of subsection (1) thereof, would be pregnable to challenge. 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 petitioners have 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. 2183/1994, dated 3-1-1995 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. 16. I....
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.... of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other 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. 20. 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 crossexamination has to precede re-examination". 16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible." (emphasis supplied) 13. Except for the aforesaid....