TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 677
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.... levied upon the appellant in respect of the goods seized from three containers which were liable for confiscation as the appellant in collusion with Lokesh Garg and other persons willfully and intentionally involved himself in smuggling activities and attempted to import huge quantity to mis-declare/ undeclare/ concealed goods in the names of bogus/non-existing firms with an intention to evade payment of appropriate duty. 4 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 such paragraph numbers 73, 74 and 75 of the show cause notice are reproduced below: "Role of Shri Kamal Sehgal: 73. From the statement of Shri Lokesh Garg recorded under Section 108 of Customs Act, 1962 dated 09.03.2010, it appears that he knew Shri Lokesh Garg since 2006; that he used M/s Kamal Sehgal, M/s Jenita Cargo, M/s Continental Cargo and M/s Cargo Placement CHAs for the import in bogus firms and that the IEC of one M/s Krishna Enterprises has been provided to him by Shri Kamal, Sehgal, CHA which was also bogus though the same was not used till date. Further from the statement of Shri Lokes....
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....s not invested any money for these import." 74. Shri Kamal Sehgal in his statement dated 26.03.2010 that he has been handling the clearance work of the companies of Sh. Lokesh Garg since 2006 and visited China two times once in April 2009 and in September, 2009 alongwith Sh. Tejpal and Sh. Manish; that during his visit to China in September, 2009, Shri Lokesh Garg in his office in Guangzhou discussed the plan for door to door delivery in India from China; that he would get the container cleared from the ICD, TKD; that he agreed that the firms mentioned by him were bogus as they were all being controlled by Sh. Lokesh Garg to import his goods in firms which were not in his name and as such he was mis-using these IEC; that as stated above, M/s Ornam Overseas existed at the address given in IEC when his office staff went to collect authorization letter and import documents to their office; that none of the other addresses were verified by them, they knew that these firms actually belongs to Sh. Lokesh Garg who was their old client. 75. From the above it appears that Shri Kamal Sehgal meticulously planned to abet in the act of smuggling of foreign origin goods in coll....
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.... statements which were recorded under Section 108 of the Customs Act, 1962. ZZ. From the statements of Shri Kamal Sehgal discussed above it is clear that Kamal Sehgal was involved with the clearance of import consignments on the names of fictitious firms floated by Shri Lokesh Garg and as such was complicit with Shri Lokesh Garg in the illegal imports made by Lokesh Garg. Shri Kamal Sehgal has also admitted that he stopped the clearances of Shri Lokesh Garg after he felt that he (Lokesh) was planning to import mis-declared goods. Further, I see from the statement of Shri Manish Malhotra that Kamal Sehgal had gone to China and had enjoyed the hospitality of Lokesh Garg. Shri Manish Malhotra had also admitted that the hotel that they were put up in was an expensive hotel and that they had gone to office of Lokesh Garg in China. It is clear to me that Kamal Sehgal and Lokesh Garg enjoy good relations. On seeing the statement of Shri Krishan Kumar it is abundantly clear that Shri Kamal Sehgal was attending to and facilitating the clearances of the fictitious firm M/s D.P. Enterprises of Lokesh Garg even after claiming to have stopped clearances of Lokesh Garg since September 2....
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....ent 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. 12. 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 13. 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. 14. 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 ....
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....atement 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 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 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 sta....
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....ces 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 inq....
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....ess 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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....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 scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become r....
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....g 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) 22. 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 Act, on which the Learned ASG sought to rely. Statements, under....
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....ances 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 statements relied upon in the SCN are not relevant and hence also not admissible." (emphasis supplied) 24. A Division Bench of this Trib....