TaxTMI 
TaxTMI 
2026 (3) TMI 1095
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....irmed with interest and penalty upon the appellant under sections 114A and 114AA of the Customs Act, 1962 [the Customs Act] by treating the appellant to be the beneficial owner. The goods imported in the name of M/s. Mega Auto Industries, M/s. Majestic Motors, M/s. Highline Enterprises and M/s. India Enterprises have also been held liable to confiscation under section 111(m) of the Customs Act but as the goods had been cleared, a redemption fine in lieu of confiscation has been imposed upon the appellant under section 125 of the Customs Act. 2. Customs Appeal No. 40725 of 2024 has been filed by Sandeep Kumar Das to assail the order dated 11.06.2024 to the extent it imposes penalty upon him as a partner of M/s. Highline Enterprises under sections 114AA and 112(b)(ii) of the Customs Act. 3. Customs Appeal No. 40726 of 2024 has been filed by S.K. Dhawan to assail that portion of the order dated 11.06.2024 passed by the Commissioner that imposes penalty upon him as proprietor of M/s. Dhawan Impex under sections 114AA and 112(b)(ii) of the Customs Act. 4. Customs Appeal No. 40913 of 2024 has been filed by Harvinder Sachdeva to assail that portion of the order dated 11.06.2024 p....
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....rs threatened the appellant that if he did not sign on the typed statement, they would arrest his father, mother and the younger brother. According to the appellant, it is because of this psychological pressure exerted upon him that he signed the statement, but on the very next day i.e. 14.09.2021, the appellant filed a representation before the Chief Metropolitan Magistrate Patiala House, New Delhi retracting the statement. The appellant stated that the said statements were extracted by the DRI officers by physically abusing and mentally torturing the appellant. The appellant further stated that even after he was enlarged on bail, he was forced to sign on dotted lines on the statements already prepared on DRI computer on 23.11.2021 and 09.02.2022. The appellant again filed an application retracting the statements and stated that the same were extracted by force. According to the appellant the other co-appellants were also coerced into signing statements. 8. A show cause notice dated 13.01.2023 was, thereafter, issued to the appellant and six others, including the four co-appellants Sandeep Kumar Das, S.K. Dhawan, Harvinder Sachdeva and Madhav Sachdeva. The show cause notice pro....
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....duty. Further, Hitin Sachdeva admitted to gross undervaluation of the imported goods in his voluntary statements tendered before DRI officers under the Customs Act, 1962. Even the statement of his customer and own employee clearly indicates that the goods were grossly undervalued. Further, from the evidences discussed above, it is evident that Sh. Hitin Sachdeva submitted fraudulent or manipulated documents/invoices for clearance of the imported goods. Therefore, the value declared in the subject Bills of Entry cannot be accepted as true transaction "value under the provisions of Section 14 of the Customs Act, 1962 read with the provisions of the Customs Valuation (Determination of Value of imported Goods) Rules, 2007 (hereinafter referred as "CVR, 2007") and the same is liable to be rejected in terms of Rule 12 of the CVR, 2007 and needs to be re-determined. xxxxxxxxxx 40.9 Since the beneficial owner Hitin Sachdeva admitted that the goods were undervalued and the correct transaction value was not disclosed to the Customs, the declared value of the imported goods did not appear to be fair and genuine and appears liable to be rejected as provided under Rule 12 of t....
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.... on being asked, Noticee's parents duly informed that he was out on a business trip and was scheduled to arrive in the late evening of 03.09.2021. The officers thereafter intercepted Noticee at Terminal T-3 of IGI Airport when he arrived around 9:45 PM per Vistara Flight No. UK-992 from Pune along with Shri Bipin Jha, Noticee's partner in M/s Bird Automotive. The officers per force took Noticee and Bipin Jha to their office in CGO Complex, Lodhi Road, New Delhi and after reaching the close confines of the office, locked both of them in separate enclosures to instil fear and to create psychological pressure. Thereafter, they mercilessly tortured Noticee, stripped him, physically beat him with stick and metal rod, deprived him of food/water and did not even permit him to attend nature's call. The officers stopped beating only after obtaining Noticee's signature on statement which was already prepared, typed and stored on DRI's computer. 2.3 After procuring Noticee's signature on pretyped statement under physical abuse, beating and mental torture, the officers arrested him on 04.09.2021 at 5:15 PM; produced him before the Duty Magistrate at his residen....
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.... details and password of his e-mail and thereafter using their wi-fi connection, DRI officers sent e-mails to various IDs found in Noticee's e-mail database, called them telephonically and threatened them to prepare and forward documents as desired by them. In compliance to their directions and buckling under the threats issued by them, some of them prepared documents as directed by them and e-mailed the same to Noticee's e-mail address. Noticee submits that all the documents annexed with the Show Cause Notice as RUD- 26 and RUD-27 had arrived on 04.09.2021 at 11:25 AM and 1:16 PM when Noticee was in DRI custody and the laptop was in the possession of DRI officers. 5.3 Noticee urges the Hon'ble Commissioner's to peruse the aforesaid documents to appreciate that all the e-mails which are now being alleged as voluntarily furnished by Noticee, had arrived in Noticee's e-mail inbox when he was in DRI's custody and his laptop was in the possession of Investigating Officer and further requests Hon'ble Commissioner to verify the fact that the contextual mails had arrived in Noticee's inbox through DRI's Wi-Fi network/IP address. All the aforesaid p....
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.... re-determined the same and demanded differential duty. The relevant portion of the order rejecting the declared value under rule 12 of the 2007 Valuation Rules is reproduced below: "62.1 As seen from the various evidences adduced by the investigating agency, it is a case of undervaluation designed in an ingenious way. I find that, multiple dummy/proxy IEC firms as detailed in below table, all owned/controlled by Shri Hitin Sachdeva and Shri Harvinder Sachdeva were engaged in import of automobile parts of SORL Brand and they used to grossly under-value the imports of automobile spare parts of SORL brand viz. Power Steering Pump, Clutch servo, slack adjusters etc. from China. The said goods were imported through Chennai Port (INMAAI), Kolkata Port (INCCUI) and Nhava Sheva Port (INNSAI). All the dummy/proxy IECs used to supply all such imported SORL brand Auto parts to only one firm i.e. M/s. Sino Diesel Automotive Private Limited (earlier Known as M/s. Diesel Garage) whose director is Shri Harvinder Sachdeva. M/s. Sino Diesel used to supply the SORL brand auto parts mainly power steering pumps, clutch servo, slack adjusters etc. domestically to different retailers/wholesale....
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....on and undervaluation. Further, Shri Hitin Sachdeva, in his statement recorded before DRI admitted that the values declared before the Customs were not the correct transaction value and he used to declare approximately 50% of the actual value of the imported goods and used to send the balance amount through hawala and non-banking channels. Shri Hitin Sachdeva also admitted that M/s Mega Auto Industries, M/s Majestic Motors, M/s Highline Enterprises, M/s Bird Automotive, M/s India Enterprises and M/s Dhawan Impex were proxy/dummy IECs, which were actually owned/ controlled by him. All the alleged Partners/ proprietors of the said firms also admitted that the respective firms/IECs were created and controlled by Hitin Sachdeva. 62.10 Whereas the Bills of Entry mentioned supra were filed for home consumption under Section 46 of the Customs Act, 1962 by way of mis-declaration, as the goods under the said Bills of Entry filed by M/s Mega Auto Industries, M/s Majestic Motors, M/s Highline Enterprises, M/s Bird Automotive, M/s India Enterprises and M/s Dhawan Impex were found mis-declared with respect to the value of the goods. In the instant case, the value of goods declared in t....
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.... that during investigation, parallel/ actual invoices of identical goods imported by Hitin Sachdeva in past through different proxy/dummy IECs, all controlled by him directly were submitted by him for the year 2020 and 2021. In the said actual invoices, actual transaction value of identical goods was found and it was noticed that the said value was much higher than the values declared before Customs at the time of import of subject consignments. As the actual invoices reflecting the correct transaction value of the goods, pertained to year 2020 and 2021, the Wholesale Price Indices (WPI) released by the office of the Economic Adviser, Department for Promotion of Industry and Internal Trade https://eaindustry.nic.in/download_data_1112. asp) for the subject goods, were taken into consideration to arrive at the contemporaneous value of the identical goods for year 2018 and 2019. Therefore, on the basis of actual/parallel invoices of identical goods and in terms of Rule 9 of the CVR, 2007, valuation of the subject goods has been done." 13. The contention of the appellant regarding retraction of the statements was not accepted by the Commissioner holding that it was an afterthought. ....
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....internet through the Wi-Fi network IP address of the DRI. The said e-mails cannot be construed as information supplied to the computer in the ordinary course of activities as contemplated under section 138C(2)(d) of the Customs Act. The certificate produced by the department cannot be construed as a valid certificate; (v) The purported actual invoices, on the basis of which that Commissioner has re-determined the assessable value, are not relatable to impugned consignments. Firstly, the same are in the name of Diesel Garage and not in the name of importers who had imported the consignments under corresponding Bills of Lading and Bills of Entry. Secondly, in many cases, the goods mentioned in the purported actual invoices do not match with the description of the goods imported under the corresponding Bill of Entry. Thirdly, the invoice number and date mentioned in the purported actual invoices are also different from the number and dates of invoices furnished by respective importers before customs and fourthly, all the purported actual invoices are neither signed nor stamped; (vi) The purported price list which has been heavily relied upon is a pdf file of some exc....
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....ppellant and the co-appellants. 17. The submissions advanced by the learned counsel for the appellant and the learned authorised representative appearing for the department have been considered. 18. A perusal of the order passed by the Commissioner shows that the finding regarding rejection of the transaction value indicated in the Bills of Entry has been rejected for the following reasons: (i) The statements of the appellant recorded under section 108 of the Customs Act on 03/04.09.2021 and 13.09.2021; (ii) The statements of co-noticee's/witnesses recorded under section 108 of the Customs Act during the course of investigation; and (iii) The e-mail dated 04.09.2021 and its attachments retrieved from the inbox of the e-mail of the appellant. 19. The first issue that arises for consideration is regarding the manner in which the statements of the appellant were recorded on 03/04.09.2021 and 13.09.2021 under section 108 of the Customs Act. 20. In the reply to the show cause notice, the appellant had in very clear terms described the manner in which the statements were recorded. The appellant stated that after he arrived at Delhi on 03.09.2021 at ....
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....t Ward no.-5, Jail No.-7, of Tihar Jail. I am one of the partner in Highline Enterprises Enterprises, M/s MEGA Auto Industries & M/s Bird Automotive. I was arrested by DRI officials on 04.09.2021. During interrogation, I was mercilessly beaten with wooden rods and threatened of dire consequences by DRI officials at DRI office in New Delhi. My signatures were forcefully taken on a pre-typed statement which was not read over to me. I wish to humbly submit that it is not my statement and my signatures were obtained on it under threat and pressure. I hereby wish to retract my statement given on 04/9/2021 and I do not own any of its contents. My request for retraction be humbly please be allowed. My medical examination was later done on 06/09/2021. Moreover, the DRI officials had visited Tihar Jail no. 7 (no. 7) on 13/09/2021 to take my statement. But I wish to bring to your notice that again the statement was again pre-typed in DRI laptop and I was again pressurized and threatened to worse conditions again if I did not sign the pre-typed statement. They threatened me to worse conditions to me and my family. I wish to please retract my statement again on 13/09/2021 as I do not ....
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....s with numbers, original invoices date, corresponding fake invoices numbers prepared by the appellant, import value as per the original invoice and import value as per the fake invoice. It is also difficult to believe that these figures could have been mentioned by the appellant on his own. 26. Even otherwise, a statement recorded under section 108 of the Customs Act cannot be considered as relevant if the procedure contemplated under section 138B of the Customs Act is not followed. Without examining the provisions of section 138B of the Customs Act, the Commissioner has merely stated that the statements recorded under section 108 of the Customs Act are valid. 27. In 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 of the Bench are: "28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of....
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....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) 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 ....
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....vidence 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, 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 su....
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.... 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 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 bee....
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....nal 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 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 t....
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....ances 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) 32. For the same reasons, the statement of the co-noticees/ other witnesses tendered under section 108 of the Customs Act could not have been relied upon. 33. Thus, the statements made by the appellant and other persons under section 108 of the Customs Act....
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....DRI custody. 38. It is not in dispute that the said e-mails are not of any date prior to the date of import of the goods and are said to have been received on the e-mail address of the appellant on 04.09.2021. There appears to be no good reason as to why those e-mails would have been sent on 04.09.2021 when the import had already taken place earlier. The Commissioner has not dealt with the reply of the appellant and has blindly relied upon the invoices attached and considered them as parallel invoices. 39. The rejection of the transaction value under rule 12 of the 2007 Valuation Rules on the basis of the e-mail said to have been received by the appellant on 04.09.2021 is, therefore, not sustainable. 40. Once the rejection of the transaction value under rule 12 of the 2007 Valuation Rules cannot be sustained, the issue relating the contention of the appellant regarding wrongful re-determination of the value is not required to be examined. 41. In any case, the re-determination of the value is based on the basis of parallel invoices said to have been sent to the e-mail address of the appellant on 04.09.2021 and on the basis of the price list also sent by the e-mail on 04.....