TaxTMI 
TaxTMI 
2025 (10) TMI 1207
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....usiness of trading chemicals and sale of spray paints after importing the same from foreign suppliers. Chandra Chemicals, during the period from 17.03.2015 to 05.08.2019, imported 14 consignments of spray paints from three foreign suppliers. According to Chandra Chemicals, the import was made at negotiated rates mentioned in the commercial invoices issued by the foreign suppliers. For the 14th consignment, Chandra Chemicals filed a Bill of Entry dated 05.08.2019 in respect of goods imported from M/s Fuqi Industries Company Ltd., China under an invoice dated 10.07.2019. 3. On 02.08.2019, the officers of the Special Investigation and Intelligence Branch conducted a search at Shop No. 1, Kingsway Camp, New Delhi. On 02.08.2019/03.08.2019, the appellant tendered his statement under section 108 of the Customs Act. The said statement records that the appellant has voluntarily shared the e-mail communication made through his e-mail account and, thereafter, put his signatures on e-mail printouts of proforma invoices sent by the supplier from page numbers 1 to 163. He also stated that the amount mentioned in the proforma invoices were paid to the supplier and the commercial invoices were....
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....hop No. 1, First Floor, Kngsway Camp, Delhi. 25-26 3. Panchnama dt. 02.08.2019, search proceedings at 2226, First Floor, Outram Line, GTB Nagar, Delhi-110032 27-29 4. Siezure memo dt. 02.08.2019 (seizure of 02 Mobile phones) 30 5. 07 original/proforma invoics retrived from email 31-38 6. Statement of Sh. Saurabh Kapoor dated 02.08.2019/03.08.2019 39-40 7. Panchnama dt. 20.08.2019 for examination proceedings in r/o BE No.4374395 dated 05.08.2019 41-42 8. Seizure Memo dated 05.09.2019 in r/o goods imported under BE No. 4374395 dated 05.08.2019 43 9. Provisional release order dated 17.09.2019 44-45 10. Summons dated 19.08.2019, 23.08.2019, 30.10.2019 and 10.12.2020 issued to Prop. Of M/s Chandra Chemicals 46-49 6. Chandra Chemicals and the appellant submitted a reply dated 01.04.2022 to the aforesaid show cause notice and denied the allegations made therein. It was stated that the demand was based on the proforma invoices retrieved from the e-mails, but the same were not retrieved under any panchnama. It was also stated that a proforma invoices cannot be considered as a regular commercial invoices for a regu....
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....e goods cannot be determined on the basis of transaction value, the same shall be determined by sequentially applying Rules 4 to 9 of these Rules. The Rule 9 provides for addition of costs of certain services to the value, and the cost of certain goods provided by the suppliers which is not the dispute in this case. Sub-rule (2) of Rule 4 mentions the conditions which have to be satisfied for acceptance of declared transaction value. Rule 12 provides for rejection of the declared transaction value when a proper officer has reasons to doubt its correctness and, in this regard, he has to arrive at this conclusion after conducting enquiry with the importers. In this case, I find that the department is in possession of actual Invoices, depicting the actual transaction value. Accordingly, the value has to be determined in terms of the provisions of Section 14(1) of the Act, ibid read with Rule3(1) of the Valuation Rules, 2007. While determining the transaction value, costs of certain services are required to be added in terms of Rule 9, which is the case here. 71.7 I do not find any infirmity on those direct evidences to form the basis of determination of the correct transactio....
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....ment is not based on suspicion but on various factors like recovery of invoices, voluntary confession made by the appellant under section 108 of the Customs Act, voluntary deposit of Rs. 5 lakhs towards differential duty and noncooperation during investigation; (iii) The seized consignment under the Bill of Entry dated 05.08.2019 was correctly held liable to confiscation under section 111(m) of the Customs Act; and (iv) Penalties under sections 112 and 114AA of the Customs Act were correctly imposed upon the appellant. 11. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 12. The case of the department is mainly based on the printouts of the seven proforma invoices that the department claims were taken from the email account of the appellant during the course of the making of the statement by the appellant under section 108 of the Customs Act. A perusal of the said statement indicates that printout of pages from 1 to 163 were taken. These 163 pages have not been made a Relied Upon Document and, therefore, it is not possible to ascertain whether the se....
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....urt is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court." 17. It would be seen that section 108 of the Customs Act enables 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 section 138B of the Customs Act. A bare perusal of subsection (1) of section 138B 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 Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be ....
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....s of the case, whether the statement should be admitted in evidence in the interests of justice. The judgment further holds that in adjudication proceedings, the stage of relevance of a statement recorded before Officers would arise only after the statement is admitted in evidence by the adjudicating authority in accordance with the procedure contemplated in section 9D(1)(b) of the Central Excise Act. The judgment also highlights the reason why such an elaborative procedure has been provided in section 9D (1) of the Central Excise Act. It notes that a statement recorded during inquiry/investigation by an Officer of the department has a possibility of having been recorded under coercion or compulsion and it is in order to neutralize this possibility that the statement of the witness has to be recorded before the adjudicating authority. The relevant portions of the judgment are reproduced below: "15. 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 inqu....
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....s has to be recorded before the adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) 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 ....
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....nt before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of subsections (1) and (2) of section 9D of the Central Excise Act, and after placing reliance on the judgment of the Punjab and Haryana High Court in Ambika International, the Chhattisgarh High Court held: "9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice. 9.4 The legislative scheme, therefore, is to ensure that the statement of any person which has been record....
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....ector Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana." (emphasis supplied) 23. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. [2021 (375) E.L.T. 545 (Del.)] decided on 01.06.2020, the Delhi High Court examined the provisions of sections 108 and 138B of the Customs Act. The department placed reliance upon the statements recorded under section 108 of the Customs Act. The Delhi High Court held that the procedure contemplated under section 138B(1)(b) has to be followed before the statements recorded under section 108 of the Customs Act can be considered as relevant. The relevant paragraphs of the judgment of the Delhi High Court are reproduced below: "76. We are not persuaded to change our view, on the basis of the various statements, recorded under Section 108 of the Ac....
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.... "14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1). There is no assertion by either side that the circumstances indicated in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. Of course, the party adversely affected by the statement will have to be given an opportunity to cross examine the person who made the statement but that comes only after the statement is, in the first place, after examination by the adjudicating authority, admitted in evidence. This has not been done in respect of any of the 35 statements. Therefore, all the statements are not relevant to the proceedings. 15. It has been held in a catena of judgments including Jindal Drugs Pvt. Ltd. versus Union Of India [2016 (340) E.L.T. 67 (P&H)] that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under ....
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....oses. 28. What is also important to notice is that after the statement under section 108 of the Customs Act was made on 2/3.08.2019, the appellant retracted the statement immediately on 03.08.2019 and the retraction has been reproduced above. The appellant clearly stated that he was made to sit in the inspection office of Special Investigation and Intelligence Branch from evening till morning and when he was given a typed statement to sign he was told that if he refused to sign he would be arrested with his family members. He further stated that to save himself from arrest and to save his family members from harassment, he signed the typed statement without even reading it. He also stated that he had signed some other documents, the contents of which he does not even know. 29. Learned counsel for the appellant has also referred to the two panchnamas, both recorded on 02.08.2019. The first panchnama of shop no. 1 records that the two panchas, namely Madhu Malik and Chandan Singh Rawat were present throughout the search proceedings from 16.00 hrs to 18.45 hrs. The second panchnama of shop premises No. 226, First Floor, New Delhi also records that Chandan Singh Rawat who was one....