TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 676
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.... admitted that he had given documents received from Lokesh Garg and Manish Jalhotra to Krishan Kumar, a G-Card holder, to file the Bill of Entry without taking sufficient documents and without verifying the genuineness of the persons and the signatures of the IEC and thus was instrumental in abetment of smuggling goods of foreign origin by Lokesh Garg and others. 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 number 80 of the show cause notice is reproduced below: "80. Shri Sanjay Kumar, GM of M/s Cargo Placement & Shipping Agency in his statement dated 13.03.2010 recorded under Section 108 of Customs Act, 1962 admitted that he has given documents received from Sh. Lokesh Garg and Sh. Manish Jalhotra through Shri Kamal Sehgal to Shri Krishan Kumar G Card holder to file Bill of Entry without taken sufficient documents and without verifying the genuineness of the persons and also the genuineness of the IEC on the basis of which he asked his G Card holder person i.e. Shri Krishan Kumar to file the Bill of Entry and thus became instrumental in abetment of smuggling....
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.... after learning that the Customs are conducting their enquiries in this regard. The noticee even admits that after physical verification they learnt that the firm was non-existent at its given address. The noticee has also admitted that the amount of Rs.15,000/- received for filing these Bills of Entry were not deposited in the accounts of the company and were in fact lying with him. I also find that the noticee has admitted in his statement dated 24.02.2010, after seeing the check list of Bill of Entry No. 872912 dated 04.02.2010 bearing the signature of Shri Krishan Kumar (G Card Holder) that the same has been filed by him on behalf of his CHA company. All these acts of the noticee cast serious doubts on his conduct as a General Manager of a CHA company. The noticee filed the Bills of Entry without taking sufficient documents and without verifying the genuineness of the persons and also the genuineness of the IEC on the basis of which he asked his G Card holder person i.e. Shri Krishan Kumar to file the Bill of Entry and thus became instrumental in abetment of smuggling of goods of foreign origin by Shri Lokesh Garg and others as discussed above. I observe that his malafide is co....
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....d from the show cause notice that Shri Sanjay Kumar Singh was called upon to show cause as to why penalty should not be imposed upon him under Section 112 of the Customs Act, 1962. In view of my discussion and findings, I thereby find that Shri Sanjay Kumar Singh has rendered himself liable for penal action under Section 112 of Customs Act, 1962 for his acts of omission and commission in respect of abetting in the filing the bill of entry number 872912 dated 04.02.2010 in the name of non-existing/bogus firm i.e. M/s Jai Sales Organisation." (emphasis supplied) 6. Shri B.K. Singh, learned counsel for the appellant submitted that the order passed against the appellant is solely based on the statements made by the appellant under section 108 of the Customs Act and so the impugned order imposing penalty upon the appellant under section 112(a)(i) of the Customs Act should be set aside. In support of this 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 the appellant had no knowledge of the facts attribu....
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....ed in the act or omission to act, which has led the goods becoming liable for confiscation cannot be made liable unless some knowledge is attributed to them. Therefore, it is to cover such cases that Section 112(a) of the Act also includes a person who abets the act or omission to act which has rendered the goods liable to confiscation. Imposing penalty upon an abettor without any mens rea on his part would bring all business to a halt as even innocent facilitation provided by a person which has made possible the act or omission to act possible could result in imposing of penalty. To illustrate innocent transferee of a license which enabled the purchaser of the license to misuse the license could be imposed with penalty. This could never be the intent or objective of Section 112(a) of the Act." 12. In the instant case, there is no allegation that the appellant had knowledge that the documents submitted by Lokesh Garg and Manish Jalhotra were not genuine. Penalty under section 112(a)(i) could not have been imposed upon the appellant under the Customs Act. 13. The statement of witnesses are recorded under section 108 of the Customs Act and section 138B of the Customs Act deals ....
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....fficer is making for any of the purposes of the Central Excise Act. 18. Section 9D of the Central Excise Act deals with relevancy of statements under certain circumstances and it is reproduced below: "9D. Relevancy of statements under certain circumstances (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank 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 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-sectio....
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..... 20. It would now be appropriate to examine certain decisions interpretating section 138B of the Customs Act and section 9D of the Central Excise Act. 21. In Ambika International vs. Union of India [2018 (361) E.L.T. 90 (P&H)] decided on 17.06.2016, the Punjab and Haryana High Court examined the provisions of section 9D of the Central Excise Act. The show cause notices that had been issued primarily relied upon statements made under section 14 of the Central Excise Act. It was sought to be contended by the 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 judgme....
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....prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the subsection are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 24. 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 occasi....
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....e relevant for proving the truth of the contents thereof." (emphasis supplied) 22. The Punjab and Haryana High Court in Jindal Drugs that was decided on 21.06.2016 also held that unless and until one of the circumstances contemplated by clause (a) of section 138B(1) of the Customs Act applies, the adjudicating authority is bound to strictly follow the procedure contained in clause (b) of section 138B(1) of the Customs Act, before treating a statement recorded under section 108 of the Customs Act as relevant. 23. In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T. 961 (Chhattisgarh)] decided on 04.07.2018, the Chhattisgarh High Court also examined the provisions of section 9D of the Central Excise Act. The allegation against the appellant was regarding clandestine removal of goods without payment of duty and for this purpose reliance was placed on the 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 Ex....
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....regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer 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 sho....
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.... goods. The reliance, in the appeal before us, on various statements recorded during the course of investigation in the present case cannot, therefore, in our view, invalidate the decision, of the Learned Tribunal, to allow provisional release of the seized 25400.06 grams of gold jewellery, covered by Bill of Entry No. 107190, dated 20th April, 2019." (emphasis supplied) 25. In Drolia Electrosteel decided on 30.10.2023, a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs, observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. The relevant portions of the decision of the Tribunal are reproduced below: "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 adju....