TaxTMI 
TaxTMI 
2026 (2) TMI 615
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....ent of M/s Glory Express Logistics Co. Ltd. of China which on inquiries was found to be non-existent. 2. Customs Appeal No. 58497 of 2013 has been filed by Vikas Chaudhary, who is the Director of the appellant, for assailing that portion of the order dated 31.03.2013 passed by the Commissioner that imposes a penalty of Rs. 25 lakhs on Vikas Chaudhary under section 112(a)(i) of the Customs Act on account of acts of omission and commission to the extent of providing delivery orders in respect of 26 containers to a person who was not the person to whom the cargo was destined. It has been held that the appellant was the nominated delivery agent of M/s Glory Express Logistics Co. Ltd. of China which on inquiries was found to be non-existent. 3. It would be useful to first examine the relevant portion of the show cause notice that relates to the allegations made against the appellant and paragraph numbers 78 and 79 of the show cause notice are reproduced below: "78. Shri Vikas Chaudhary of M/s Committed Logistics in his statements admitted that he was providing delivery orders to Shri Lokesh Garg in his various fictitious firms on behalf of his foreign agents for whom he w....
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....he was appointed as nominated agent in India. From the statement it is also evident that Shri Vikas Chaudhary gave delivery orders without taking sufficient documents and without knowing the real identity of the person to whom he was giving delivery orders and thus abetted in the smuggling of goods of foreign origin by Shri Lokesh Garg and others. e. Further, Shri Vikas Chaudhary on 24.08.2010 inter-alia stated that they did not have any agreement (written or otherwise) with Sh. Lokesh Garg or his companies, that they used to receive nomination from Chinese agent/counterpart and at the time of delivery Sh. Lokesh Garg or his staff used to give documents such as Bill of Lading or surrender message duly endorsed to them on the basis of which they used to get the delivery order from the concerned shipping lines and then handover the Delivery Orders to either Sh. Lokesh Garg or his staff; that regarding local charges i.e. DTHC (Destination Terminal Handling Charges we used to pay the concerned shipping lines and later received the payments from Sh. Lokesh Garg either by cheque or demand draft; f. In his subsequent statement dated 26.10.2010, Shri Vikas Chowdhary state....
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....es, M/s Raj International, M/s Sam International, M/s Davs Impex, M/s Fire on Logistics, M/s Kumar International to Shri Lokesh Garg as Lokesh Garg had requested their office to update about the movement of Cargo to him on the email address given by him as he claimed that all these 8 companies belonged to him. On being asked specific about the email message sent to Shri Lokesh Garg, dated December 17, 2009 (12:55PM) wherein the message was "Please find attached revised B/L copy" he stated that this message was sent to Shri Lokesh Garg, that this message was pertaining to status of movement of Container No. APZU3359800 and APZU3858585 under B/L No. APLU053113400 to Shri Lokesh Garg and the revised copy of B/L was provided by the agent M/s Great Eastern Logistics Co. China. h. Shri Vikas Chaudhary, Managing Director in M/s Committed Logistics Pvt. Ltd. in his reply to the SCN has categorically admitted that he had provided Delivery Orders in respect of 26 containers out of the 71 containers. I find from the records that Delivery Orders in respect of these 26 containers were issued in the name of bogus/non-existent/fictitious fairms such as M/s Jai Sales Organisation, M/s DP ....
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....contention, learned counsel placed reliance upon the decision of the Tribunal in M/s Surya Wires vs. Principal Commissioner, CGST, Raipur [Excise Appeal No. 51148 of 2020 decided on 01.04.2025] Learned counsel also submitted that even the impugned order notes that the show cause notice did not allege that Vikas Chaudhary had knowledge of misdeclaration in the containers yet a penalty has been imposed upon him under section 112(a)(i) of the Customs Act. In support of this, learned counsel placed reliance upon the decision of the Supreme Court in Shri Ram vs. The State of U.P. [Criminal Appeal No. 142 of 1973] and Amritlakshmi Machine Works vs. Commr. Of Cus. (Import), Mumbai [2016 (335) E.L.T. 225 (Bom.)] 7. Shri Mukesh Kumar Shukla, learned authorized representative appearing for the department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. 8. The submissions advanced by learned counsel for the appellant and learned authorized representative appearing for the department have been considered. The main two issue that arise for consideration in this appeal is whether the appellant abetted the doing or omission of a....
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....lant that he had knowledge of mis-declaration in the containers. Penalty under section 112(a)(i) could not have been imposed upon the appellant under the Customs Act. 12. The statement of witnesses are recorded under section 108 of the Customs Act and section 138B of the Customs Act deals with relevancy of statements under certain circumstances. 13. The statement of witnesses are recorded under section 14 of the Central Excise Act, 1944 [the Central Excise Act] and section 9D of the Central Excise Act deals with relevancy of these statements under certain circumstances. Customs Act 14. Section 108 of the Customs Act deals with power to summon persons to give evidence and produce 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. 15. 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....
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....b) when the person who made the statement is examined as a witness in the case before the court and the court 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." 18. It would be seen section 108 of the Customs Act and section 14 of the Central Excise 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 138B of the Customs Act or in section 9D of the Central Excise 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 cont....
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....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 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) an....
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....tements. 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 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, ....
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....statement of the Director of the Company who is said to have admitted clandestine removal of goods. The contention of the appellant 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 intere....
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....r as well as Customs, Excise and Service Tax 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) 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: ....
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....idently, 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 Central Excise....