TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1176
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....alties under sections 114A and 114AA of the Customs Act have been imposed upon Sachin Soni; and penalties under section 112(a)(ii) and section 114AA have been imposed upon Rajiv Shewaramani, Hemendra Rai and Aditya Gupta. 2. The dispute is in respect of the 44 Bills of Entry that were filed during the period from April 2016 to November 2016 relating to furniture and furniture parts that were imported. The appeals were heard on two issues relating to the applicability of section 138B and section 138C of the Customs Act. 3. To appreciate the aforesaid two issues, it would be appropriate to briefly state the necessary facts. 4. Sachin Soni claims that he is engaged in trading of imported furniture and parts thereof in the domestic market. He further claims that he purchased the furniture locally from the importers against proper bills on payment of applicable taxes but duty has been confirmed against him in respect of the goods imported and cleared by different importers holding him to be the beneficial owner in terms of section 2(26) of the Customs Act that was amended w.e.f March 31, 2017. 5. It transpires that during the proceedings before the Principal Commissioner, Sa....
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....y the appellants in their replies. The relevant portion of the order covering this aspect is reproduced below : "11.2 From the discussions above, I find that the whole modus operandi for undervaluation and duty evasion is evident from the revelations made in the statements dated 19.12.2016 of Shri Sachin Soni of M/s Balaji Office Systems and statements of Shri Rajiv Shewaramani, Shri Hemendra Rai, Shri Praveen Chand Kaushik @ Rinku, Shri Mayank Dang and Shri Rakesh Dang. It is evident that the import of goods i.e. furniture/furniture parts from China, were done by Shri Sachin Soni, and the orders were placed by him under various proxy/fake firms, as they did not have IEC to import. The actual invoices i.e. GLLs were received by them on the email of the firm, and Shri Sachin Soni was making payments to Shri Rajiv Shewaramani according to these actual invoices (GLL). He also knew that the goods were being imported through the firms provided by CHAs, known to Mr. Rajiv Shewaramani and he opted to go for package amount offered by Shri Rajiv Shewaramani, for receiving goods at his door step." (emphasis supplied) 7. Section 108 of the Customs Act deals with power to summon....
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....stances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of subsection (2) of section 138B of the Customs Act, the provisions of subsection (1) of the Customs Act shall apply to any proceedings under the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as an evidence and an opportunity of cross-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for ....
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....he Writ Petitioners that the demand had been confirmed in flagrant violation of the mandatory provisions of section 9D of the Central Excise Act. The High Court held that if none of the circumstances contemplated by clause (a) of section 9D(1) exist, then clause (b) of section 9D(1) comes into operation and this provides for two steps to be followed. The first is that the person who made the statement has to be examined as a witness before the adjudicating authority. In the second stage, the adjudicating authority has to form an opinion, having regard to the circumstances 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 t....
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....The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/ investigation, by the gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness 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 Sectio....
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.... is said to have admitted clandestine removal of goods. The contention of the appellants 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 sub-sections (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....
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....x Appellate Tribunal committed illegality in placing reliance upon the statement of Director 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) 13. 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 v....
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....r 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 Central Excise Act. ***** 16. Therefore, the 35 st....
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....the proviso to section 27 of the Indian Evidence Act by the learned authorized representatives appearing for the department is misconceived in view of the specific provisions contained in section 138B of the Customs Act. 20. In view of the aforesaid discussions, it has to be held that the statements of persons recorded under section 108 of the Customs Act could not have been relied upon by the Principal Commissioner for rejecting the transaction value and re-determining the same. 21. Sachin Soni could have made a request for cross-examination of only such persons whose statements had been recorded by the Principal Commissioner, and such statements were admitted in evidence. The issue, however, that arises for consideration and which has been considered is whether the statements made under section 108 of the Customs Act could have been considered relevant as the procedure contemplated under section 138B of the Customs Act had not been followed. Section 138C of the Customs Act 22. The issue relating to section 138C of the Customs Act needs to be now examined. This section is reproduced below : "Section 138C - Admissibility of micro films, facsimile copies of docu....
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....egularly performed by computers, whether- (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations 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 ....
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....ama dated 23.11.2016 drawn at AC-55, Tagore Garden, New Delhi P-1 Shri Neeraj Bhatia, S/o Shri J.L. Bhatia, Age-47 R/o AD/81, Tagore Garden, New Delhi P-2 Shri Satbir, S/o Shri Mahendra Singh, Age-28 years R/o H.No. 41, Gupta Enclave, Vikas Nagar, Delhi We the above named panchas on being called upon by the officers of Directorate of Revenue Intelligence, Delhi Zonal Unit, B-3&4, 6th Floor, Pt. Deendayal Bhawan, CGO Complex, Lodhi Road, New Delhi presented ourselves the premise located at AC-55, Tagore Garden, New Delhi on 23.11.2016 at 08:30 a.m. The officers of DRI informed we the panchas that they intend to search the premise located at AC-55, Tagore Garden, New Delhi in connection with an enquiry in imports and they showed search authorization dated 23.11.2016 issued by competent authority on which we the panchas have put our dated signature is taken of having seen the same. The officers of DRI requested we the panchas to witness the search proceedings on which we readily agreed. Thereafter we the panchas along with DRI officers proceeded to the said premise and upon ringing the bell one person who introduced himself as Shri Rakesh Soni appeared at th....
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....530 IMEI- 352084071204455 (xi) 1 Mobile i phone 7 IMEI- 359154070734969 (emphasis supplied) 26. The second Panchnama dated December 27, 2016 is reproduced below: "PANCHNAMA DATED 27.12.2016 Name of Panchas: 1. Shri Neeraj Kumar, S/o Shri Shivraj, Age-26 years, Pushp Vihar, New Delhi 2. Shri Lalit Kumar, S/o Shri Murari Lal, Age-28 years, I-342, Sewa Nagar, New Delhi-3 On being called upon by the Officers of Directorate of Revenue Intelligence, Delhi Zonal Unit, B-3 & B-4, 9th Floor, Pt. Deendayal Antyodaya Bhawan, CGO Complex, Lodhi Road, New Delhi-110 003 (hereinafter referred to as DRI), we the above named Panchas, willingly presented ourselves to witness the Forensic examination of laptops, in the office of the DRI on 27.12.2016. The DRI Officers informed us that they are investigating a case of undervaluation in imports of furniture items from China. The DRI Officers informed us that one Laptop of Sony make bearing Model No. PGC-71312L & Serial No. 275284303038837 and another laptop of Lenovo make bearing Model No. G40-70 & Serial No. YBO7995340 were resumed from the premises situated at AC-55, Tagore ....
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.... copied in the same external hard disk. The extracted data was copied in another 1 TB WD Elements External Hard Drive, also, having S.No. WX61AA664RU4, to be used as working copy. The 1 TB WD Elements External Hard Drive having Sl. No. WX81AA61V5DV was then kept in an envelope and sealed with paper slip. The proceedings of this Panchnama was started at 1150 HRS on 27.12.16 and concluded at 1930 HRS on the same day i.e. 27.12.2016 in a peaceful and cordial manner and without causing any damage or harm to the said laptops. The contents of this Panchnama were read over to us in vernacular and we the Panchas appended our dated signatures on the Panchnama in token of its correctness." (emphasis supplied) 27. It would be seen from the first Panchnama dated November 23, 2016 that during the search proceedings, the Officers of DRI resumed the documents and electronic devices found relevant to the investigation. These have been mentioned in Annexure-A to the Panchnama. It refers to, among others, one Lenovo Laptop and one Sony Laptop. 28. The second Panchnama dated December 27, 2016 mentions that DRI Officers had resumed one Laptop of Sony make and one Laptop Lenovo make t....
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....gence vs Suresh Kumar and Co. Impex Pvt. Ltd. & Ors. [Civil Appeal Nos. 11339-11342 of 2018 decided on August 20, 2025] has held : "43. Keeping the aforesaid in mind, we are of the view and, more particularly, considering the Record of Proceedings duly signed by the respondents, including the various statements of the respondents recorded under Section 108 of the Act, 1962, that there was due compliance of Section 138C(4) of the Act, 1962. When we say due compliance, the same should not mean that a particular certificate stricto senso in accordance with Section 138C(4) must necessarily be on record. The various documents on record in the form of record of proceedings and the statements recorded under Section 108 of the Act, 1962 could be said to be due compliance of Section 138C(4) of the Act, 1962. 44. It is pertinent to note at this stage that at no point of time the statements recorded under Section 108 of the Act, 1962 came to be retracted. 45. Even while giving reply to the show cause notice, the contents of such statements recorded under Section 108 of the Act, 1962 were not disputed. This, of course, would be relevant only insofar as determining wh....