TaxTMI 
TaxTMI 
2026 (3) TMI 1755
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....s recorded under section 108 of the Customs Act. Subsequently, a show cause notice was issued to the appellant alleging violation of the provisions of regulations 10 (d), (e), (m), and (q) and regulation 13 (12) of the Customs Brokers Licensing Regulations, 2018 [the 2018 Regulations]. An Enquiry Officer was appointed who submitted his inquiry report. The contention of the appellant that the statements recorded under section 108 of the Customs Act, 1962 [the Act] cannot be considered as relevant as the procedure contemplated under section 138B of the Customs Act had not been followed was not accepted by the Enquiry officer for the reason that it was required to be followed only when the proceedings were under the Customs Act and not under the 2018 Regulations. The Enquiry officer thereafter, on the basis of the statements of various persons recorded under section 108 of the Customs Act, concluded that the appellant has violated the aforesaid provisions of the 2018 Regulations. 3. The Commissioner did not accept the finding recorded by the Enquiry Officer that the provisions of section 138B of the Customs Act were not required to be followed. However, the Commissioner noticed tha....
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....ccepted since there was no cooperation/ rebuttal/challenge from the person (Pankaj Kumar) who is named in the said statements. This scenario is squarely covered in sub-section (1) read with clause (a) of the above section". (emphasis supplied) 4. Shri Devesh Tripathi, learned counsel appearing for the appellant submitted that the Commissioner was not justified in holding that in view of the provisions of section 138 (1) (a) it was not necessary to examine Naresh Dholiya. Learned counsel submitted that it was necessary for the Commissioner to examine all the persons whose statements had been recorded under section 108 of the Customs Act and after having formed an opinion that the statements have to admitted in evidence should have provided an opportunity for cross-examination of these persons. 5. Shri Shiv Shankar, learned authorized representative appearing for the department has, however, supported the impugned order and submitted that the Commissioner was justified in not calling persons whose statements had been recorded under section 108 of the Customs Act, in view of the provision of section 138 (1) (a) of the Customs Act. 6. In order to appreciate the submission a....
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....ered. The Commissioner has made observations only with regard to Naresh Dholiya and in this connection has stated that Naresh Dholiya had stated that Pankaj Kumar, Export Executive of the appellant had helped him in concealing diamonds and the concealing material was kept in the office of the Customs Brokers. In view of this, the Commissioner has concluded that to re-examine the statement made by Naresh Dholiya, the presence of Pankaj Kumar would be required as the main allegation is that he assisted in packing the diamonds. However Pankaj Kumar had been skipping the summons by the investigating agency. The Commissioner has, therefore, concluded that in such circumstances, he had no option but to accept the statement of Naresh Dholiya. 9. The Commissioner was not justified in holding that it was not necessary to examine Naresh Dholiya because it is only Pankaj Kumar who could contradict his statement. Such an exception is not carved out under section 138B (1) (a) of the Customs Act. It was absolutely necessary for the Commissioner to have summoned Naresh Dholiya and if after forming an opinion that the statement should be admitted in evidence, permit the appellant to cross-exami....
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....section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/ investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence." (emphasis supplied) 14. In Ambika International versus 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....
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....d as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 23. There is no justification for jettisoning this procedure, statutorily 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 sub-section 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/....
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....if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." (emphasis supplied) 15. In Hi Tech Abrasives Ltd. versus 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 appellants 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 appellants 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 9....
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....ence 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 show cause notice was not recorded nor formation of an opinion that it requires to b....
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....uring 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) 17. In M/s. Drolia Electrosteel P. Ltd. versus Commissioner, Customs, Central Excise & Service Tax, Raipur [Excise Appeal No. 52612 of 2018 decided on 30.10.2023] 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 Pvt. Ltd. versus Union Of India [2016 (340) E.L.T. 67 (P & H)], 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 ....