TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 341
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....der dated 09.01.2020 passed by the Principal Commissioner that imposes a penalty of Rs. 10 lakhs upon him under section 112 of the Customs Act and Rs. 10 lakhs under section 114AA of the Customs Act for acts of omission and commission, including role played for facilitating the diversion of the export bound gold jewellery to the domestic area. 3. M/s. Rishubh Cargo Care [the Firm] is a proprietorship concern. Neeraj Jain is the proprietor of the firm and Pankaj Jain is the manager of the firm. The firm is engaged in providing services of preparation of documents for export of gems and jewellery, packing list, invoice, Shipping Bills, export declaration and documentation and registration for IEC. 4. The appellants claim that the documents prepared by the firm were as per the information supplied by the exporter. The exporter, after signing the documents, visited the customs office for appraisement of jewellery items to be exported. Pankaj Jain used to remain present alongwith the exporter at office of the Appraiser at Jhandewalan during the appraisement of jewellery so that if any amendment/addition was required to be made in the documents prepared by the firm of the appellant....
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....fice at Jhandewalan and then transporting the same consignment with the escorting customs officers to the IGI Airport T-3 and obtaining the original detention receipt. In the reply Pankak Jain stated: "***** It is submitted that I was provided with signed documents of the exporter/authorized signatory by the staff of the Firm/Exporter. I was also provided with an authority letter from the firms to deposit the consignment and obtain the original Detention Receipt on their behalf. It is submitted that I received the following documents only from the staff of Mr. Sanjeev Jain and Mr. Vipul Jain of M/s Ambika Udyog and Prem Jewellers & Nikkamal Jewellers namely :- 1. Packing List 2. Invoice 3. Shipping Bill 4. EDF Form The authority letter was duly signed by the representatives of firm in their competent capacity. Subsequently, all the goods were sealed in a tin box. The goods brought by the representative of the exporting party were labelled with their signatures on a sheet of paper which was stuck on the tin box. This sheet/sticker was also stamped and signed by the customs appraisal officer and exporting party. L....
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....aking the law for any mora/immoral purpose. It is submitted that I never made any false declaration for the Authority letter issued to me for the carriage of goods. I am not even remotely involved in the alleged conspiracy of duty evasion. I have worked in good faith with the exporting firm. I had no knowledge about the malafide intention of the firm and their representatives. I have submitted all the documents related to this transaction which were in my possession to the competent authority and fully cooperated in the investigation." (emphasis supplied) 9. The Principal Commissioner did not accept the contentions and recorded the following findings: "79. I find that in the instant case penalty under Section 112 and 114AA of the Customs, Act, 1962 has been proposed to be imposed upon M/s Nikkamal Jewellers, M/s Prem Jewellers, M/s Ambika Vikas Udyog and M/s Krishan Chander Ramesh Chander (P) Ltd. in their capacity as exporters who summarily failed in fulfilling their export obligation in terms of notification No. 50/2000-Cus. I also find that similar penalties have also been proposed against various persons who for the acts of omission and commi....
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....ewellery for domestic use. In any case, penalties under sections 112 and 114AA of the Customs Act could not have been imposed upon the appellant as the show cause notice does not allege any fault in the documents prepared by appellants and the appellant also had no knowledge or reason to believe that the gold jewellery would be handed over by the international passengers to the domestic passengers. Learned counsel also submitted that the impugned order is based on statements made by various persons under section 108 of the Customs Act regarding the modus operandi, but these statements cannot be considered as relevant for the purpose of proving the facts since the procedure contemplated under section 138B of the Customs Act was not followed. In support of this contention learned counsel placed reliance upon a decision of the Tribunal in M/s. Drolia Electrosteel P. Ltd. vs. Commissioner, Customs, Central Excise & Service Tax, Raipur [Excise Appeal No. 52612 of 2018 decided on 30.10.2023]. 11. Shri C. Dhanasekharan, learned special counsel appearing for the department, however, supported the impugned order and submitted that it does not call for any interference in this appea....
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....ent equivalent to the imported gold/silver/platinum within a period of 120 days from the date of issue of gold/silver/platinum to the exporters, or such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs, on sufficient cause being shown may allow, and binding himself to pay on demand duty on quality of gold/silver/platinum representing the difference between the quantity issued and that contained in the exported jewellery or articles: *****" (emphasis supplied) 15. The second proviso to the opening paragraph of the Notification was deleted by Notification No. 33/2015-Cus dated 15.05.2015 and the relevant portion is reproduced below: "Notification No. 33/2015-Cus dated 15.05.2015 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notification of the Government of India in the Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be amended or further amended, as the case may be, in th....
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.... of the Customs Act had not been followed. 19. 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 as follows: "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 attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Cour....
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....he 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 statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence." (emphasis supplied) 21. The same view was taken by this Bench in Drolia Electrosteel. The Tribunal, while examining the provisions of section 9D of the Central Excise Act, held: "13. Of the above, the 35 statements of various persons recorded under the Central Excise Act will be relevant to the proceedings only as per section 9D which lays down the procedure to be followed to make them relevant and the exceptions to such procedure. ***** 14. Evidently....
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....f 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. 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 examined as a witness in the case before the adjudicating authority, and ....
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....ement 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 cross-examination 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) 22. In view of the aforesaid decisions of the Tribunal, it has to be held that the statements made under section 108 of the Customs Act, on which reliance has been placed by the Principal Commissioner, could not have been considered as relevant. 23. In this view of the matter, penalties could not have been imposed upon Neeraj Jain and Pankaj Jain under section 112(m) of the Customs Act. 24. Penalty has also been imposed upon Neeraj Jain and Pankaj Jain under section 114AA ....