TaxTMI 
TaxTMI 
2026 (5) TMI 780
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....2008, Customs Appeal No. 53 of 2008 and Customs Appeal No. 54 of 2008 respectively and has re-determined the value. Accordingly, differential duty has been directed to be recovered with interest and penalty. Customs Appeal No. 50 of 2008 has been filed by Raj Kumar Anand, Managing Director of Baba Leather for setting aside the penalty imposed upon him under section 112(a) and (b) of the Customs Act, 1962 [the Customs Act] 2. It transpires from the records that searches were conducted by the officers of the Directorate of Revenue Intelligence [the DRI] in the office, residence and godown premises of M/s Baba Leather and individuals involved. Details of the premises are as follows: (i) Office premises of M/s Baba Leather Impex Pvt. Ltd. at 5328/67, Hardhian Singh Road, Karol Bagh, New Delhi; (ii) Residential premises of Raj Kumar Anand, at 49/21, East Patel Nagar, New Delhi; (iii) Godown premises of M/s Baba Leather Impex Pvt. Ltd. at 5954/3, Hardhian Singh Road, Karol Bagh, New Delhi; (iv) Godown premises of M/s Baba Leather Impex Pvt. Ltd. at 498, Guru Harkishan Nagar, New Delhi; (v) Godown premises of M/s Baba Leather Impex Pvt. Ltd.....
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....examined in each case and were issued Out of Charge after due satisfaction that the goods were as per declaration and duty payable on the goods was duly discharged by respective importer; and (iv) The appellants also sought cross-examination of various persons, whose statements were relied against the appellant and the Panch Witnesses to elicit true and correct facts. 6. The Commissioner, however, confirmed the demands proposed in the show cause notice. The Commissioner framed three issues for consideration, namely, (i) Whether the value declared in the Bills of Entry was the correct transaction value or not, and whether it was liable to be rejected in terms of rule 10 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 [the 1988 Valuation Rules]; (ii) Whether the value of the imported goods was required to be re-determined in terms of rules 5 and 6 of the 1988 Valuation Rules; and (iii) Whether the goods were liable to confiscation under sections 111(d) and 111(m) of the Customs Act. 7. In respect of the first issue, namely whether the transaction value was liable to be rejected under rule 10, the Commissioner noted....
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....nt to sustain the charge of mis-declaration of value but the e-mail messages and other documents like commercial invoices and proforma invoices retrieved from the laptop computer of Raj Kumar Anand support the facts recorded in the statements of Raj Kumar Anand. 11. Regarding the plea of the appellants that the documents from the laptop were retrieved behind the back of Raj Kumar Anand and hence could not be relied upon, the Commissioner noted that the ownership of laptop computer was not in doubt as Raj Kumar Anand in his statement admitted it. The Commissioner also observed that at the time of personal hearing, the DRI officer categorically stated that they had made an offer to Raj Kumar Anand to be present at the time of retrieval of documents, but as neither Raj Kumar Anand nor his lawyer contradicted this statement at the time of personal hearing, the statement has to be taken as correct. The Commissioner also placed reliance on the panchnama dated 28.05.2005, which is said to have been signed by Raj Kumar Anand. Thereafter, the Commissioner recorded the following findings: "128. ***** In fact, a perusal of copies of Relied Upon Documents shows that Rajkumar Anand ....
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.... the following reasons: "138. In their written defence dated 18.7.2007, the noticee have also produced certain print outs and other information from various ports of imports to establish the value of contemporaneous imports of similar goods. However, they have not produced a copy of their request made under the RTI Act and, therefore, it is not clear what exactly was their query and what were the contents of the letter under which the information was sought. It is, therefore, possible that the information might have been requested in such a selective format which would suit the interest of the notice rather than bring out the entire truth of the matter. For example, the noticee might have asked for information in respect of only those Bills of Entry in which the value corresponds to his own declaration. This, however, would not tell us the complete truth. Any piece of information is relevant if it is known in what context it has been obtained, which is not the case here." 14. The Commissioner, thereafter placed reliance upon the statement of Raj Kumar Anand as also the e-mail messages exchanged between Raj Kumar Anand and his office and M/s Helen and others and the supp....
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....n of thickness of the product; (v) The rejection of transaction value under rule 10 of the 1988 Valuation Rules and its redetermination is barred in law. (vi) Out of the 404 Bills of Entry involved in the present appeal, in several of the Bills of Entry, the officer had rejected the declared value and reassessed it under rule 5/6 of the 1988 Valuation Rules. Thus, redetermination of the value again by the impugned order is illegal; (vii) The demand of differential duty is, therefore barred; and (viii) Penalties could not have been imposed on the importers and Raj Kumar Anand. 18. Shri Shiv Shankar, learned authorised representative appearing for the department, however, supported the impugned order and made the following submissions: (i) The involvement of Raj Kumar Anand in fraudulent import of PU leather cloth/fabrics through firms is confirmed from his statements made under section 108 of the Customs Act and email records from the laptop showing invoices, payment instructions and communication regarding misdeclaration of thickness; (ii) The request for cross-examination by the appellant was correctly rejected; (ii....
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....e the statements recorded under section 108 of the Customs Act cannot be considered as relevant if the procedure contemplated under section 138B is not followed. 23. 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. 24. 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, o....
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....-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for the purpose of proving the facts which they contain. 26. 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 containe....
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....(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 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)....
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....y 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 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 ha....
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....esent 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 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....
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....s 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 then was) held, in J & K Cigarettes Ltd. v. Collector of Central Excise [2009 (242) E.L.T. 189 (Del.)] that, by virtue of sub-section (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....
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....he 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) 31. Thus, the statements made by various persons under section 108 of the Customs Act could not have been relied upon by the Commissioner (Appeals) to record a finding that the appellant had smuggled 69 gold bars of foreign origin. 32. In this view of the matter, reliance on the statements of Raj Kumar Anand to support the plea of under valuation is not justified. 33. The next issue that arises for consideration is regarding the printouts retrieved from the laptop of Raj Kumar Anand. 34. The impugned order and the show cause notice mention that the laptop was recovered from the residential premises of Raj Kumar Anand though the panc....
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....n they were retrieved. The panchnamas do not also mention that the thickness of the PU leather fabric was physically measured. The samples were also not sent to any agency to ascertain the actual thickness of the goods and even the laboratory reports have not been relied upon in the show cause notice. In paragraph 133 of the impugned order, the Commissioner has merely referred to the goods at Kolkata which were found to have higher thickness than the goods involved in this appeal. 40. It needs to be noted that during the period of import from September 2001 to May 2005, all input consignments were given out of charge order only after physical examination. To substantiate that the appellants had correctly declared the description and thickness in the Bill of Entry, the appellants had obtained information under the Right to Information from the concerned ports, which ports furnished the information. From the said information it is clear that out of charge order was given after physical examination. This means that the proper officers who issued the order did not find any discrepancy in the description and/or through thickness, though in some cases, the officers had assessed the du....