TaxTMI 
TaxTMI 
2025 (10) TMI 798
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....of gold) with the customs authorities. The order also imposes a penalty upon the appellant under section 112 of the Customs Act. 2. Customs Appeal No. 50791 of 2020 and Customs Appeal No. 50792 of 2020 have been filed by Vipul Jain (Partner of the appellant) and Sanjeev Jain (Manager of the appellant) to assail that part of the order dated 09.01.2020 passed by the Principal Commissioner that imposes penalties upon them under section 114AA of the Customs Act for the acts of omission and commission, including deliberate mistake of overlooking the procedure envisaged in the Notification. 3. The appellant is engaged in the manufacture of jewellery for domestic sale and export. Vipul Jain is a partner of the appellant and Sanjeev Jain is the Manager of the appellant. The present dispute relates to 18.7 kgs of gold procured by the appellant from MMTC that imported gold after giving a bank guarantee as security deposit to MMTC against possible duty liability MMTC in terms of provisions of the Notification. 4. The appellant availed the benefit of a Scheme called "Export Against Supply by Nominated Agencies" as contained in the Notification. The period involved in this appeal from ....
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....mphasis supplied) 7. 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 the manner specified in the corresponding entry in column (3) of the said Table, namely :- Serial number Notification number and date Amendments (1) (2) (3) ***** ***** ***** 5. 57/2000-Customs, dated the 8th May, 2000, G.S.R. 413 (E), dated the 8th May, 2000 In the said notification,- (I) in the opening paragraph (i) in clause (a), for the word, letter and figures "paragraph 4A.14", the word, letter and figures "paragraph 4.46" shall be substituted; ....
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....belief that the gold jewellery exported in between 21.09.2015 to 21.10.2015 by the appellant, out of 18.7 kgs of duty free gold procured from MMTC, was not exported and a show cause notice dated 29.11.2017 was issued to the appellant demanding the duty of Rs. 46,48,286/-. The show cause notice also proposed confiscation of gold jewellery under section 111(o) of the Customs Act and also proposed penalty under sections 112 and 114AA of the Customs Act. The relevant portions of the show cause notice, in so far as it concerns the appellant are reproduced below: "26. ***** (v) ***** Therefore, it appears that M/s Ambica Vikas Udyog has diverted the duty free gold as detailed above taken from M/s. MMTC and has not exported the gold jewellery manufactured from said duty free gold in contravention of conditions laid down in Notification No. 57/2000-Customs dated 8th May, 2000. (vi) Further, during investigation it has been found that 1700 grams of duty free gold procured by M/s. Ambica Vikas Udyog from M/s. MMTC was declared non export for failing to fulfil export obligation. (vii) In view of the above, M/s. Ambica Vikas Udyog is liable to pay Customs du....
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....rved: "61. The above statements divulging the modus operandi which in itself presents a background underlying the roles played by all the concerned investigation which eventually culminated in the issuance of instant show cause notice when seen in the light of the written submissions made in this respect and also the records of personal hearing, it becomes incumbent upon me to discuss the following points: ***** ***** Whether duty forgone on imported gold can be recovered from exporters: ***** 63. As can be seen, there are two nominated agencies namely M/s Bank of Nova Scotia and M/s MMTC Ltd. from whom the manufacturers cum exporters namely M/s Nikkamal Jewellers, M/s Prem Jewellers, M/s Ambika Vikas Udyog and M/s Krishan Chander Ramesh Chander (P) Ltd. had procured the gold. After manufacturing the jewellery from the said he said gold, these exporters with the help of companies/persons namely M/s Ambika Vikas Udyog (through Sh.Vipul Jain and Sh.Sanjeev Jain) and M/s Rishabh Cargo Care (through Sh. Neeraj Jain and Sh. Pankaj Jain) are getting the said jewellery exported through "hand carry" export. The gold is being imported by M/s MMTC....
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....lved in this appeal is from 21.09.2015 to 21.10.2015 during which period the second proviso to the Notification, of which violation has been alleged, had been omitted, there was no obligation on the part of the appellant to export jewellery having gold equivalent to the gold imported within a period of 120 days from the date of issue of the gold. Learned counsel, therefore, submitted that demand could not have been raised against the appellant for non-fulfillment of the conditions of the Notification nor penalty could have been imposed upon the appellant. Learned counsel also pointed out that the impugned order is based on statements made by 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 . Learned counsel also submitted that rec....
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....e appellant is that the statements made under section 108 of the Customs Act could not have been considered relevant as the procedure contemplated under section 138B of the Customs Act had not been followed also deserves to be accepted. 22. 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 proceed....
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....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 statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence." 24. 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 lay....
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....s 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. 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 s....
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....id 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 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) 25. 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. 26. The Principal Commissioner has also referred to a Circular dated 14.10.2009 which prescribes a detailed procedure for implementing the prov....