TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 404
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....artner in M/s. Pulak Ornaments LLP, is said to have placed an order of 69kg gold bars with the appellant with a condition that the payments would be made within one or two days. Ajay Kumar and Mohammad Nisar Mew took delivery of the gold bars on 20.03.2021 and while they were returning to Indore by car, the officers of Directorate Revenue Intelligence [the DRI] intercepted the car at Indore and seized the gold bars. Statements of Ajay Kumar, Mohammad Nisar Mew and Gourav Jain were recorded on 21.03.2021. Search was also conducted at the premises of the appellant on 21.03.2021 and purchase and sale invoices, pen drives and digital video recorder were seized. Statement of the appellant was also recorded. 3. The appellant, in his statement made on 30.04.2021, in response to question numbers 22, 23 and 24 stated that the gold bars supplied to Gourav Jain under cover of invoice dated 20.03.2021 were purchased from M/s. Ariplutus Metals Pvt. Ltd. This fact was also stated by the appellant in the letter dated 29.05.2021 addressed to the investigating authority stating that it had sold the gold bars in question to M/s. Pulak Ornaments LLP under the Invoice dated 20.03.2021. It was furth....
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.... Mitul Kumar Patel was concerned in carrying, keeping, concealing, selling or purchasing the said Gold which is a prohibited item as the conditions of import under Customs Act, 1962 were not fulfilled, he is liable for penalty under Section 112 (b)(i) of the Customs Act, 1962. v) It appears that M/s. S.R. & Co. has prepared backdated fabricated fictitious sales bill in the name of M/s. Pulak Ornaments LLP and Shri Gourav Jain produced the fabricated fictitious sales bills before the Hon'ble Court in order to legitimize the possession of the smuggled Gold which shows his malafide intention that even after interception he intentionally attempted to hoodwink the DRI. Therefore, it appears that Shri Mitul Kumar Patel is liable for penalty under Section 114AA of the Customs Act, 1962." (emphasis supplied) 6. The appellant filed a detail reply to the show cause notice and denied the allegation. 7. The Additional Commissioner by order dated 09.09.2022 confirmed the penalties imposed upon the appellant. 8. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals). This appeal was dismissed by order dated 11.03.2023 and the relevant portion ....
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....g authority, in this regard, I have already discussed in proceeding para that adjudicating authority was correct in rejecting the Appellants plea on this aspect. As per section 123 of the Customs Act, 1962, burden to prove that the seized gold was not smuggled gold lies with the person from whose possession the gold was seized. It is established that Appellants had submitted fictitious/fabricated back dated invoices in order to show these illicit transactions as legal and the burden of proof cannot be discharged by raising fictitious / fabricated back dated invoices after seizure of gold. I find that contrary to the committal statement of the Appellants, independent witnesses and documentary evidences and all the Appellants had formed a cartel of smuggling of foreign origin gold and all had miserably failed to prove the impugned seized gold was not smuggled." (emphasis supplied) 9. Shri Somesh Jain, learned counsel for the appellant made the following submissions: (i) The order is based on the statements made by various persons under section 108 of the Customs Act but as the procedure contemplated in section 138B of the Customs Act was not followed, the statements ar....
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.... documents. It provides that any Gazetted Officer of customs shall have the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under the Customs Act. 16. Section 138B of the Customs Act deals with relevancy of statements under certain circumstances and it is reproduced below: "138B. Relevancy of statements under certain circumstances. (1) A statement made and signed by a person before any Gazetted Officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court an....
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....which they contain. 18. In the case of M/s Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur [Excise Appeal No. 51148 of 2020 decided on 01.04.2025] a Division Bench of this Tribunal examined the provisions of section 108 and 138B of the Customs Act as also the provisions of section 9D and 14 of the Central Excise Act, 1944, which are similar to the provisions of section 108 and 138B of the Customs Act, and the observations are: "28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of the Central Excise Act and section 138B(1)(b) of the Customs Act contemplate that when the provisions of clause (a) of these 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-exam....
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....nt 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 inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 16. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of subsection (1) thereof would extend to adjudication proceedings as well. ***** 22. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operatio....
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....he 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. 26. 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. 27. It is only, therefore, - (i) after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness be....
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....refore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain admissions recorded during investigation which may have been obtained under the police power of the Investigating authorities by coercion or undue influence. 9.5 ***** The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the statement is treated rel....
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....basis of the various statements, recorded under Section 108 of the Act, on which the Learned ASG sought to rely. Statements, under Section 108 of the Act, we may note, though admissible in evidence, acquire relevance only when they are, in fact, admitted in evidence, by the adjudicating authority and, if the affected assessee so chooses, tested by cross-examination. We may, in this context, reproduce, for ready reference, Section 138B of the Act, thus:***** A Division Bench of this Court has, speaking through A.K. Sikri, J. (as he then was) held, in J & K Cigarettes Ltd. v. Collector of Central Excise [2009 (242) E.L.T. 189 (Del.)] that, by virtue of subsection (2), Section 138B(1) of the Act would apply, with as much force, to adjudication proceedings, as to criminal proceedings. ***** We express our respectful concurrence with the above elucidation of the law which, in our view, directly flows from Section 138B(1) of the Act - or, for that matter, Section 9D of the Central Excise Act, 1944. 77. The framers of the law having, thus, subjected statements, recorded under Section 108 of the Act, to such a searching and detailed procedure, before the....
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....e Act. ***** 16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible." (emphasis supplied) 23. The Commissioner (Appeals) also rejected the documents produced by M/s. S.R. & Co. for showing legitimate sale of 69 gold bars to M/s. Pulak Ornaments LLP and documents to show purchase of 69 gold bars by the appellant from M/s. Ariplutus Metals Pvt. Ltd. for the reason that if these documents existed they would have been shown to the authorities at the relevant time and not later. From this, the Commissioner (Appeals) concluded that at the time of seizure of gold bars, the said invoices were not in existence and the same were generated by the appellant after the seizure of the gold bars. 24. It needs to be noted that invoices produced for purchase of gold bars at later stage are permissible in law and mere non-production of invoices at the time of search does not by itself render the documents invalid or fabricated. In this connection, reliance can be placed upon the decision of the Tribunal in Shri Balwant Raj Soni vs. Commissioner of Customs (Preventive), Patna [Customs Appeal No. 75414 of 2022 decided on 18.05.2023 (Tri.....
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....rthought. He submitted that apart from the fact that Shri Awadesh Kumar Thakur produced the sale voucher of M/s. Shree Jewellers at the time of interception which was not taken note of by the Customs, there is no requirement to accompany the gold biscuits of foreign origin with the legal covering documents at all times. He submits that no rule of law requires that the transportation of the gold biscuits should always be under the cover of the documents showing legal acquisition and possession of the same. As such, the rejection of the documents produced by the appellants on the ground that the same being an after-thought, is not justified. ***** 13. In the case of Sri Samir Kumar Roy & Others v. C.C. (Prev.) West Bengal, Calcutta - decided by the Tribunal in Order No. A-475-478/Kolkata/2001, dated 47-2001 [2001 (135) E.L.T. 1036 (T)], the Tribunal has considered the effect of liberalised policy as regards the import and dealing in gold and thereafter, concluded that onus as placed under Section 123 was discharged when the appellants produced the sale/purchase vouchers showing the sale of the goods from the gold dealer who has admitted having sold the same. In the ....