TaxTMI 
TaxTMI 
2026 (10) TMI 580
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....ame of M/s Sri Vinayaka Enterprises, Bangalore, of which the Appellant is the proprietor, declaring various items of motorcycle body parts as spare parts of motorcycle under Chapter Heading 8714 9900 at a declared value of US$ 1,312, the Adjudicating Authority reclassified both consignments under CTH 8711 50 00 by invoking Rule 2(a) of the General Rules for the Interpretation of the Import Tariff, rejected the declared value under Rule 10A of the Customs Valuation Rules, 1988 and redetermined it under Rule 8 at Rs. 4,37,938/- for the goods imported at Tuticorin and Rs. 2,75,000/- for the goods imported at Chennai, confirmed differential duty of Rs. 6,33,716/- and Rs. 4,01,917/- respectively along with interest, ordered confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962 with redemption fine, and imposed penalties under Section 114AA. 2. Relevant facts, as gleaned from the appeal records, are that the Directorate of Revenue Intelligence, acting upon intelligence that the Appellant was evading customs duty by dismantling superbikes and importing them through different ports under borrowed Importer Exporter Codes, commenced investigation. In the course of that in....
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....dmissions under Section 108, upon the statements of Jayakanth and Venkatesh as corroboration, and upon the valuation and joint inspection reports of the Association, the Authority confirmed the reclassification, the revaluation and the differential duty, directed that the duty on the Tuticorin consignment be paid jointly and severally by the Appellant and Jayakanth, ordered confiscation with redemption fine, and imposed penalties upon the Appellant under Section 114AA. No penalty was imposed upon the Appellant under Sections 112(a) or 114A, though proposed. 5. Shri Satish Sundar, learned Counsel for the Appellant, argued at length. The two importing entities are legally distinct, he urged, and no nexus between them is established except through the statements recorded during investigation. There is no material showing how parts cleared at two different ports could have been physically brought together and assembled into one motorcycle. Uncorroborated statements and an unverified valuation report cannot form the basis of a finding that there was a single conspiratorial import. Rule 2(a) of the General Rules for Interpretation cannot be invoked to treat goods imported under separa....
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....sence of a foreign registration number plate upon the Chennai consignment attracted the Licensing Note to Chapter 87 governing second hand vehicles. Rejection of the declared value under Rule 10A was warranted, the invoices being admittedly solicited. Joint and several recovery of duty, and the penalties under Section 114AA, were correctly ordered, the Appellant having used a borrowed Importer Exporter Code to conceal the true nature of the import. Reliance was placed upon Commissioner of Customs, New Delhi v. Phoenix International, 2007 (9) T.M.I. 275 (S.C.). 8. The appeal was heard on 30 April 2026. Written submissions in rejoinder were thereafter filed on behalf of the Appellant, in which it was contended that Phoenix International is distinguishable upon its facts, and reliance was placed upon the decision of a coordinate Bench of this Tribunal in Final Order Nos. 40569 to 40572 of 2026 dated 4 May 2026 in Subash Iyappan and others v. Commissioner of Customs, Chennai, to contend that Rule 2(a) of the GRI was inapplicable. We have taken those submissions on record and have considered them. 9. We have heard the rival submissions at length and have carefully perused the mate....
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....e the imports had taken place over twenty two months in ninety four lots in containers holding different parts sourced from different countries, the Hon'ble Supreme Court held that Rule 2(a) would apply only if all the components intended to make the final product were presented at the same time for customs clearance. The Apex Court reiterated the settled position that goods are to be assessed in the form in which they are imported and presented to customs, and not on the basis of the finished goods manufactured after subjecting them to some process following import. We have no quarrel whatsoever with that principle, namely that classification normally follows the goods as presented and is not to be built upon an artificial aggregation across consignments. It is that principle which stood reiterated by the coordinate Bench of this Tribunal in Subash Iyappan. 13. The present case, however, rests upon materially different facts. There are only two consignments. They were imported within four days of each other, albeit at two different Custom House stations. They originated from the same overseas supplier, M/s Mezzo International, Singapore. One contained the engine and the chassis....
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....quently brought together by the Department. It is a case of two consignments originating from the same supplier which, upon physical examination, were found to constitute one motorcycle with matching manufacturer's markings, neither consignment being of any use whatsoever without the other. We have arrived at that conclusion upon those facts alone, and we come presently to the reasons which have led us to leave the statements recorded under Section 108 entirely out of account. 16. There remains the submission of the learned Counsel that the failure to adhere to the procedure prescribed by Section 138B of the Act vitiates the evidentiary value of the statements recorded under Section 108. On a query from the Bench, learned Counsel fairly conceded that no request for cross examination of any person was made at any stage before the Adjudicating Authority, that none of the statements was retracted, and that the voluntariness of the Appellant's own statements dated 10 January 2007 and 29 January 2007 was not impugned, whether in the reply to the show cause notice or in the adjudication proceedings or before us in the grounds of appeal. It is nonetheless common ground that the procedu....
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....sition with Section 138B lies, as we shall show, not in denying admissibility but in identifying with precision what it is that Section 138B withholds. 18. The error in the submission, and equally in the manner in which the Adjudicating Authority approached the matter, lies in treating admissibility and relevancy as one and the same thing. They are not. More often than not the two expressions are used as synonyms, but their legal implications are distinct and different, as the Apex Court explained at paragraph 6 of Ram Bihari Yadav v. State of Bihar, (1998) 4 S.C.C. 517, a passage this Tribunal has noticed in Geetham Steels. Facts which are relevant may not be admissible, communications between spouses during marriage or between an advocate and his client being the illustrations the Apex Court gave. Facts which are admissible may equally be irrelevant, the illustration there being questions permitted in cross examination to test veracity or impeach credit. The probative value of evidence, the Apex Court added, is the weight to be given to it, which has to be judged having regard to the facts and circumstances of each case. Admissibility therefore asks whether the law permits thi....
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.... section (1) of Section 138B provides that a statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under the Act shall be relevant, for the purpose of proving the truth of the facts which it contains, in two situations and in two only. Clause (a) covers the case where the maker 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 is in the circumstances unreasonable. Clause (b) covers the case where the maker is examined as a witness in the case and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. Sub section (2) then provides that sub-section (1) shall, so far as may be, apply in relation to any proceeding under the Act other than a proceeding before a court, as it applies in relation to a proceeding before a court. It is sub-section (2) which carries the section into adjudication and substitutes the adjudicating authority for the court. That is the construction placed....
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....toms (Preventive), 2021 (10) T.M.I. 1411 (Mad.), holding that there is no inflexible rule and that the answer turns upon the factual matrix, the request in that case having been specific and repeated. What is not dispensable, however, is the examination in chief and the recorded opinion, for these are the only means by which an authority can perform the function the section assigns to it. That is the very reason why this Tribunal held in Geetham Steels that Section 9D(2), read with Section 9D(1)(b), leads to the inexorable conclusion that the adjudicating authority must itself conduct an examination in chief of the deponent, so as to determine the voluntary character of the statement, to test the truth of its contents, to ascertain whether the witness stands by it or has resiled, and only then to decide whether to act upon it. The requirement has been held to be mandatory, in Ambika International, and by the Principal Bench in Surya Wires Pvt. Ltd. v. Principal Commissioner, CGST, Raipur, 2025 (4) T.M.I. 441 (CESTAT, New Delhi) and failure to comply with it to was held to mean that no reliance can be placed upon the statement. The same obligation was restated by the Bench at Mumbai....
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....tement is admissible as a piece of evidence, the same has to conform to minimum judicial standards." Outside these two situations the statement remains upon the record as an admissible document, but it cannot be made the foundation of a finding. To hold otherwise would be to permit the incongruity we cautioned against in Geetham Steels, of a statement being used as evidence to prove itself, its contents being presumed relevant because the document is admissible, and the document being received because its contents are assumed to be relevant. 24. We turn to why the ascertainment of voluntariness is not a formality but the pivot upon which the whole edifice rests. The justification for receiving a Section 108 statement at all is statutory and it is narrow. Sub section (3) of Section 108 binds the person summoned to state the truth, and sub section (4) deems the enquiry to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code. The law receives the statement because the law has commanded its maker to speak truthfully and has attached penal consequences to his speaking falsely. Where the statement is procured by inducement, threat, coercion or p....
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....tatement of the noticee himself. Examination in chief before the adjudicating authority, the forming of an opinion upon admission in the interests of justice, and the tender of the deponent for cross examination, would all appear to presuppose a maker who is someone other than the person against whom the statement is to be used and it might be said that a party can neither be a witness against himself nor cross examine himself. We are unable to adopt that view. The premise upon such a distinction would have to rest is that the maker, being the person proceeded against, cannot be summoned and examined at all. That premise is unsound. A person who makes a statement under Section 108 is not an accused. When an enquiry is being conducted under Section 108 and a statement is given by the person against whom the enquiry is being held, it is not a statement made by a person accused of an offence, and the person giving it does not stand in the character of an accused. That was laid down by the Constitution Bench in Romesh Chandra Mehta v State of West Bengal, 1999 (110) ELT 324 (SC) and was followed in Percy Rustomji Basta v State of Maharashtra, 1983 (13) ELT 1443 (SC), and in Veera Ibrah....
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.... itself, namely the examination in chief and the recorded opinion. 27. The consequence is that the statements of the Appellant, of Jayakanth and of Venkatesh alike fail to acquire the character of substantive proof of the truth of their contents, and we exclude the whole of that material from consideration in arriving at our findings upon every issue in this appeal. The statements do not thereby vanish. They remain admissible documents upon the record, available to contradict their makers or to test credit should occasion arise. What they cannot do is be the basis for a finding. Nor can the want of the statutory procedure be supplied by the circumstance, upon which the Revenue laid emphasis, that none of the statements was retracted. Non retraction proves nothing by itself. It is not a substitute for the conditions of relevancy which the section prescribes, and it cannot convert a statement that has not been tested into proof of what it asserts. Its purpose is confined. It is one of the circumstances from which an adjudicating authority, had it embarked upon the enquiry which the section requires, might have concluded that a statement was voluntary and that its maker stood by it....
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....vancy of any statement. Excluding the statements altogether, as we have done, our conclusion remains the same. 30. We return to the first issue, and to an apparent difficulty which must be addressed rather than passed over. Sony India states the requirement of simultaneous presentation in terms which, read in isolation, would appear to foreclose any clubbing of consignments presented at different times and at different ports. Phoenix International, decided earlier, permits precisely such clubbing where the separation is shown to be contrived. The two decisions are not in conflict, because they answer different questions. Sony India answers the question how goods that have been presented are to be classified, and holds that the classifier must take them in the state in which they were in fact presented and must not construct a complete article out of what was not. Phoenix International answers the anterior question, namely what has in truth been presented, and holds that where the Department establishes that one composite import was split into separate consignments as a device to escape duty or a restriction, the true character of the transaction prevails over its formal division....
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....hereby enabled to assemble them here as a complete article though if they were assembled beyond the Customs Frontiers the importation of the assembled article into India is prohibited." 6.10 This decision when read with the decisions discussed above, we hold that the ultimate requirement for invoking Rule 2(a) of GRI is that the goods imported during the proximate time should include such number of parts as are sufficient to consider the goods as the complete article, as different from being mere parts." (emphasis supplied) 32. Mittal Impex is therefore of no assistance to the Appellant. The test which that decision formulates at paragraph 6.10 has two elements, namely that the goods be imported during a proximate time, and that they include such number of parts as are sufficient to constitute the complete article rather than mere parts. Both elements are satisfied upon the facts before us. The two Bills of Entry are separated by four days, which is proximity of the closest kind. The two consignments between them contained every part of the motorcycle, as the approved Chartered Engineers and the Association found upon examination. We are of the firm opinion that the ....
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....the reasons already given, and ask whether the rejection can stand without. We hold that it can, and upon a ground that is independent of any statement. The goods here were declared as assorted spare parts of motorcycles falling under Chapter Heading 8714. Upon our finding on the first issue, which rests upon physical examination alone, the goods in truth imported were the dismantled parts of one previously registered Suzuki GSX 1300 R motorcycle, classifiable as a motorcycle under CTH 8711 50 00. The values of US$ 6,400, US$ 2,850 and US$ 1,312 were therefore declared for goods other than the goods imported, and cannot represent the transaction value of the article that was in fact presented for clearance. A price declared for a thing not imported furnishes no basis for assessment of the thing that was. That alone is reason to doubt the truth and accuracy of the declared value, and the rejection of the declared transaction value under Rule 10A of the Customs Valuation Rules, 1988 is accordingly sustained. We may add that this conclusion is consistent with Ganpati Overseas, where the Apex Court held that undervaluation has to be proved by evidence or information about comparable im....
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....e article is not idle. Where Parliament writes the importer and not an importer or any importer, it points to a single ascertained person, and the liability it creates is that person's liability and no one else's. This Bench said as much in Commissioner of Customs, Chennai v. Unik Traders, Final Order No. 40775 of 2025 dated 21 July 2025, holding that duty can be demanded only from a person liable to pay the duty as per law and that the question of demanding duty jointly or severally does not arise unless it can be shown that the goods have been imported jointly. The Principal Bench held to like effect in Rimjhim Ispat Ltd., where a demand confirmed jointly and severally against two legal entities was set aside because individual liability had not been segregated, and the Bench at Kolkata in Baba Baidyanath Trading Company held that there is no provision for a joint and several demand of duty, penalty or redemption fine from two separate importers. The goods here were not imported jointly. They were, upon our finding, one import made by one person. It follows that the direction in the impugned order that the duty upon the Tuticorin consignment be paid jointly and severally by the A....
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....t and is not concluded by the name entered in a Bill of Entry. The identification of the single person whom Section 28 contemplates must therefore be made upon the substance of the transaction. In Unik Traders this Bench pointed out that it does not matter if the importer entrusts the responsibility of paying duty to somebody else, the liability in law resting with the importer, and the same reasoning requires that where a Bill of Entry is filed in the name of a person who is not the owner, the owner is not displaced as the importer. 39. We find that the doctrine laid down in Calcutta Chromotype is directly on point. The Hon'ble Apex Court there approved the statement that the corporate veil may be lifted where a statute itself contemplates the lifting of the veil, or where entities are so inextricably connected as to be in reality part of one concern, adding that it is neither necessary nor desirable to enumerate the classes of case in which the course is permissible. Drawing upon McDowell and Company Ltd. v. Commercial Tax Officer, (1985) 3 SCC 230 : (1985) 154 ITR 148, the Apex Court went on to hold that tax planning may be legitimate provided it is within the framework of la....
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....n the Tuticorin consignment were, on these facts, of no conceivable value or use to M/s J.P. Connection and of value and use to the Appellant alone, who held the remainder of the very motorcycle to which they belonged. Regard being had to the common course of natural events and human conduct, and applying the principle underlying Section 114 of the Indian Evidence Act, the inference is irresistible that the Appellant was the owner of the Tuticorin goods and the real importer of both consignments, and that the name of M/s J.P. Connection was lent to the transaction and nothing more. The liability to pay duty upon the Tuticorin consignment accordingly falls upon the Appellant alone, as the importer within the meaning of Section 2(26) read with Section 28. We should add, lest it be thought that we are enlarging the Appellant's liability in his own appeal, that we are doing nothing of the kind. A demand made jointly and severally fastens the whole of the liability upon each person against whom it is made. The Appellant was therefore already answerable for the entirety of the duty upon the Tuticorin consignment, and confining the demand to him does not add a rupee to his burden. What ou....
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....truth the dismantled parts of one previously registered motorcycle, and that the splitting of that single article between two ports four days apart, one of the two consignments being entered in the name of a person with no interest in the goods, admits of no explanation consistent with innocence. Knowledge and intention are accordingly established by the conduct itself. That is a factual matrix which distinguishes the present case from TPV Technology India Ltd., where no such falsity was established. The ingredients of Section 114AA are made out. However, in the present circumstances, and having regard to the lapse of time, the penalties imposed under that section are reduced to Rs. 50,000/- each in respect of the import at Chennai and the import at Tuticorin. The fifth issue is answered against the Appellant, subject to that reduction. 44. In view of our aforesaid analysis and discussions, the impugned order stands modified in the above terms and the appeal is accordingly disposed of in the aforesaid terms, with consequential reliefs, in law, if any. (Order pronounced in open court on 6.10.2026) (AJAYAN T.V.) MEMBER (JUDICIAL) (M. AJIT KUMAR) MEMBER (TE....
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....devoid of merit and is rejected. Common Adjudicating Authority 47. The Appellant has also challenged the right of the Common Adjudicating Authority appointed vide CBIC Notification No. 21/2008-Cus, dated 05.03.2008, to club the two clearances for purpose of assessment. 47.1 In M/s. Kiran Global Chem Ltd. Vs Commissioner of Customs, W.P. No. 18660 of 2018, dated 26.07.2018, the Madras High Court rejected the challenge to the appointment of a Common Adjudicating Authority (CAA) as being without jurisdiction. Referring to Section 152(a) and Notification No. 60/2015-Customs (N.T.), the Court held that the powers of the Board under Sections 4 and 5 could validly be exercised by the Principal Director General, DRI, for appointing specified officers for adjudication. The Court further held that such arrangement did not constitute an impermissible delegation, but a valid exercise of the powers conferred under Sections 4 and 5, and dismissed the petition. Further, in M/s. Eskay Design Vs. Union of India & Ors., [2026-TIOL-890-HC-MAD-ST, dated 06.07.2026], the Madras High Court Division Bench upheld Notification No. 22/2014-Service Tax, holding, relying on National Building Construc....
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....party in support of the case set up by it. It was further held that where the evidence was not in the line of the pleadings, the said evidence cannot be looked into or relied upon. 63. In Bachhaj Nahar Vs Nilima Mandal & Ors., AIR 2009 SC 1103, this court held that a case not specifically pleaded can be considered by the court unless the pleadings in substance contain the necessary averments to make out a particular case and issue has been framed on the point. In absence of pleadings, the court cannot make out a case not pleaded, suo motu." (emphasis added) 48.1 Hence, an issue which was neither raised by the Appellant in the Appeal Memorandum nor sought to be introduced by way of an amendment thereto could not properly have been examined or adjudicated upon in the final order. Consideration of such an issue, in the absence of any specific plea or ground having been raised in the appeal, also deprives the other side of a fair and effective opportunity to present its views and make submissions on a question of law of critical significance. 48.2 Further, I am, with utmost respect, unable to agree with the reasoning adopted by the learned Member (Judicial) on the exa....
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.... M/s. Phoenix International Ltd. and Phoenix Industries Ltd., to circumvent licence restrictions as a "complete fraud on the Import Policy," and held M/s. Phoenix International Ltd. to be the real importer of all the four items and, that in the circumstances, the Department was right in clubbing the four consignments for the purpose of assessment. 49.3 In the present case the evidence discloses that the two consignments arrived within four days of each other from the same overseas supplier. The Tuticorin consignment contained the engine and chassis, while the Chennai consignment contained substantially all the remaining components. The manufacturer's markings corresponded. Physical examination and inspection by the Automobile Association of Southern India established that the components constituted one identified Suzuki GSX 1300 R motorcycle. The foreign number plate recovered from the Chennai consignment furnished further corroboration. These circumstances form a cogent and continuous chain pointing to deliberate bifurcation of a single import. The transaction must accordingly be assessed as a whole. This is thus not a case of the department retrospectively aggregating genuinel....
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....g is in question, to the deposition of the gazetted officer before whom the statement was given, that being the mode of proving the recording. At the second stage the adjudicating authority must apply its mind and form an opinion, having regard to the circumstances of the case, whether the statement should be admitted in evidence in the interests of justice, and must record that opinion with reasons. The stage of relevance arises only after the statement has been so admitted. Thereafter, if the deposition is to the detriment of the noticee and the noticee asks for it, the witness must be offered for cross examination." (emphasis added) The examination-in-chief and the recorded opinion, were held indispensable for these are the only means by which an authority can perform the function the section assigns to it. In fact the opening line of the paragraph which states that the procedure is sequential, and each step is a condition of the next, makes the procedure mandatory. Failure to follow the mandatory steps, as per the order of the ld. Member (Judicial), renders the statement inadmissible and disentitles the adjudicating authority from relying upon it. The process of permittin....
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....e operate within their respective fields, with the specific provisions of the Customs Act governing matters expressly dealt with therein. 50.5 The Hon'ble Punjab and Haryana High Court, in Ambika International Vs Union of India [2018 (361) E.L.T. 90 (P&H)], after observing that Section138 of the Indian Evidence Act, 1872, prescribes the sequence of examination of witnesses, whereby examination-in-chief precedes cross-examination, which in turn precedes re-examination, interpreted Section 9D of the Central Excise Act, 1944, and laid down a two-stage procedure for admitting such statements in evidence before the adjudicating authority, namely: "i) the person who made the statement has to first be examined 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." 50.6 It is, however, pertinent to note that the judgment did not examine the expression "so far as may be" occurring in sub-section (2) of Section 9D, which extends the application of the provision to p....
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....idavit contains inadmissible statements, the accused can raise objections before the court, which will address them in accordance with law. The Hon'ble Court by relying on a large number of judgments held that reasoning, in the guise of interpretation it is not permissible. The relevant portions of the judgment are reproduced below: "22. We are completely unable to appreciate the submission. The plea for a literal interpretation of section 145(2) is based on the unfounded assumption that the language of the section clearly says that the person giving his evidence on affidavit, on being summoned at the instance of the accused must start his deposition in court with examination-in-chief. We find nothing in section 145(2) to suggest that. We may also make it clear that section 137 of the Evidence Act does not define "examine" to mean and include the three kinds of examination of a witness; it simply defines "examination-in- chief", "cross-examination" and "re-examination". What section 145(2) of the Act says is simply this. The court may, at its discretion, call a person giving his evidence on affidavit and examine him as to the facts contained therein. But if an application ....
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....he Act is to design a much simpler and swifter trial procedure departing from the elaborate and time consuming trial procedure of the Code. Hence, notwithstanding the apparent verbal similarity between section 145(2) of the Act and section 296(2) of the Code, it would be completely wrong to interpret the true scope and meaning of the one in the light of the other. Neither the legislative history of 296(2) nor any decision on that section can persuade us to hold that under section 145(2) of the Act, on being summoned at the instance of the accused the complainant or any of his witnesses should be first made to depose in examination-in-chief before cross-examination. 26. Mr. Ranjit Kumar next submitted that in giving evidence on affidavit, the deponent (the complainant or any of his witnesses) can introduce hearsay or irrelevant facts in evidence to which the accused could have objected if the deposition was made in court as examination-in-chief. Hence, the accused must have the right to call the complainant (or his witness giving evidence on affidavit) into the witness box for examination-in-chief so as to get the inadmissible parts in the affidavit excluded from his eviden....
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.... to interpret the statute in accordance with settled principles of statutory construction and cannot, under the guise of interpretation, introduce procedural requirements which the Legislature has not prescribed. The progression from the statutory expression "examined as a witness" in respect of "the person who made the statement", as considered in Ambika International, to a mandatory requirement of "examination-in-chief" of the maker and where necessary an examination of the gazetted officer also, represents a considerable enlargement of the statutory language, which is impermissible as stated in Mandvi Cooperative Bank (supra). The interpretation is also without reference to administrative realities discussed below. 50.10 The Hon'ble Supreme Court, in Federation of Hotel & Restaurant Association of India, etc. Vs Union of India and Ors., [(1989) 3 SCC 634], has observed that "wide latitude" does not mean "wild latitude". The principle is apposite here: while a provision may warrant a purposive or liberal interpretation, such interpretation cannot extend to supplying procedural requirements which the Legislature has not enacted. 50.11 The provision must therefore be construe....
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....e challenge of the appellants to the constitutional validity of section 9-D of the Excise Act. 50.13 It is pertinent to note that the judgment neither refers to the procedure prescribed under Section 138 of the Evidence Act nor directs that examination-in-chief of the maker be undertaken as a safeguard to his rights. The Court held that, before forming the requisite opinion, the adjudicating authority must afford the affected party an opportunity to make submissions on the material available on the basis of which such opinion is proposed to be formed. As per my view, this requirement of natural justice, is adequately met in departmental adjudication proceedings, through: (i) Issuance of a Show Cause Notice setting out the material proposed to be relied upon. Allowing for a written response and special requests, like cross-examination if any. (ii) Followed by an opportunity of personal hearing to the noticees to make their submissions, in person or through their authorised representative, and to raise requests if any. (iii) Culminating in the issue of a reasoned finding as part of an Order-in-Original. (iv) Such order is, in turn, amenable to t....
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..... (iii) Difference between Customs adjudication and criminal prosecution (iv) Principles of Natural Justice and the test of prejudice (v) Section 138B - Statutory Provision (vi) Applicability of Sections 137 and 138 of the erstwhile Indian Evidence Act; Legislation by Reference or Incorporation and Casus Omissus (vii) Judicial Interpretation Must Adhere to the Statutory Text (viii) Voluntary nature of a statement (ix) Difference between Section 164 of the Code of Criminal Procedure and Section 108 of the Customs Act (x) Judgments of Non-Jurisdictional High Courts (xi) Judgments of the Madras High Court (xii) Established Practice - cursus curiae est lex curiae (xiii) Judicial Discipline (xiv) Judgments of the Supreme Court No plea of prejudice 51. In the present dispute, it is admitted by the appellant that they did not seek cross-examination of the persons who gave their statements. There was consequently no refusal by the Original Authority and no denial of an opportunity of cross-examination that had been invoked. No statement was retracted, and no specific plea of th....
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....racted, is an admission and binds the petitioner. It held as under: "3. It is true that the petitioner had confessed that he purchased the gold and had brought it. He admitted that he purchased the gold and converted it as a kara. In this situation, bringing the gold without permission of the authority is in contravention of the Customs Duty Act and also FERA. When the petitioner seeks for cross-examination of the witnesses who have said that the recovery was made from the petitioner, necessarily an opportunity requires to be given for the cross- examination of the witnesses as regards the place at which recovery was made. Since the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel, perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the witnesses is not violative of principle of natural justice. It is contended that the petitioner had retracted within six days from the confession. Therefore, he is entitled to cross-examine the panch witnesses before the auth....
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....oms Act, 1962 has not been retracted or challenged on the ground of coercion, threat, inducement or lack of voluntariness. In such circumstances, and in the absence of any specific challenge to its voluntariness, the mere fact that the maker has not been subjected to examination-in-chief cannot, by itself, furnish a basis to doubt its voluntary character and not be considered as substantive evidence. 52.6 In M/s. Tasha Gold Pvt Ltd Vs The Principal Commissioner of Customs, (Adjudication) - New Delhi [2026 (9) TMI 1052 - CESTAT NEW DELHI / FINAL ORDER NO's. 51451-51461/2026, DATED: 15.09.2026], a Coordinate Bench of this Tribunal it its recent judgment, held: "29. The issue of Section 108 confessions again returned to the Supreme Court in case of Amad Noormamad Bakali Vs State of Gujarat, in Criminal Appeal No. 1232-1237 of 2012. Vide judgment dated 23.02.2026 Supreme Court reiterated that confession to Customs officer is admissible as evidence. The Supreme Court reaffirmed one of the most contested principles in Indian evidence law. Placing reliance on K.I. Pavunny Vs Assistant Collector (HQ), Central Excise Collectorate, Cochin (1997), the Court held that statements re....
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....rt in the Assistant Collector of Customs, Calcutta Vs Sitaram Agarwala and Another AIR 1966 SC 955 considered the scheme of Sea Customs Act, 1878 as contained in Section 167. . . . This is what the Court had to declare in regard to the aforesaid penalties : "Then comes Ch. XVI dealing with offenses and penalties. Offence enumerated in Ch. XVI are of two kinds; first there are contraventions of the Act and rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by them. These may be compendiously called customs offences. Besides these there are criminal offences which are dealt with by Magistrates and which result in conviction and sentence of imprisonment and/or fine. These two kinds of offences have been created to ensure that no fraud is committed in the matter of payment of duty and also to ensure that there is no smuggling of goods, without payment of duty or in defiance of any prohibition or restriction imposed under Ch. IV of the Act." Thus, this Court has held that there are custom offences and criminal offences. The criminal offences were dealt with by the Magistrate which may culminate in conviction and imposition of....
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....an form the sole basis for conviction. In the case of a retracted confession, the first enquiry is whether it was voluntary and truthful. If the circumstances raise a reasonable doubt as to voluntariness, the statement cannot be acted upon unless its voluntary character is established. Once voluntariness is established, the further question is whether the statement is true and reliable. The Supreme Court also held that there is no absolute bar against relying upon a retracted confession, though corroboration from other evidence may, as a matter of prudence, be sought. 53.3 The Hon'ble Delhi Court in M/s. Vallabh Textiles Vs. Addl. Commr., Central Tax GST, Delhi East & Ors. [2025 : DHC : 2559: DB], held that proceedings under a show cause notice cannot be converted into mini-trials and that cross-examination is not an unfettered right. 53.4 In M/s. Williamson Magor and Company Ltd Vs The Assistant Collector of Central Excise Prosecution, Madras [2019 (11) TMI 1846 - Madras High Court], the Hon'ble Madras High Court while dealing with a Criminal Appeal, observed that statements recorded under Sections 164 and 161(3) Cr.P.C. do not ordinarily constitute substantive evidence. The....
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....case on the basis of a degree of probability rather than the criminal standard of proof beyond reasonable doubt". 53.7 In Amba Lal Vs Union of India [AIR 1961 SC 264], concerning proceedings under the Sea Customs Act and Land Customs Act, the Supreme Court observed that the Evidence Act and the Code of Criminal Procedure do not apply unless expressly made applicable by the statute. At the same time, the Court emphasised that fundamental principles of criminal jurisprudence and natural justice continue to govern such proceedings. 53.8 The Madras High Court in M/s. Jet Unipex & Another Vs Commissioner of Customs, Chennai-III, [2020 (373) E.L.T. 649 (Mad.)], considered the nature of Section 108 proceedings and the applicability of the Evidence Act. The Court relied upon Supreme Court authorities including Percy Rustomji Vs State of Maharashtra and K.I. Pavunny Vs Assistant Collector (HQ), Central Excise Collectorate, and held that Section 24 of the Evidence Act is not applicable to statements recorded under Section 108, since a Customs officer conducting such an inquiry is not a police officer and the person whose statement is recorded is not an accused at that stage. 53.9 He....
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....le Madras High Court'. Section 138B - Statutory Provision 55. Section 138B of the Act, prescribes the circumstances in which a signed statement made before a Gazetted Officer of Customs is relevant to prove the truth of its contents. The section is reproduced below for ease of reference. "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, 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 i....
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....ied in a manner appropriate to the nature of a Customs adjudication, which is quasi-judicial proceeding and not a trial. Further the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973, to subject it to the rigour of examination under section 137 and 138 of the Evidence Act. It has been held to be admissible evidence in a catena of Constitutional Court judgments, some of which have been cited above. As held in Duncan Agro Industries Ltd. (supra), there was no tinge of inadmissibility in evidence recorded under section 108 of the Act. 55.4 In Dr. Pratap Singh and Another Vs Director of Enforcement, FERA [AIR 1985 SC 989], the Supreme Court, while considering Section 37(2) of FERA, held that the expression "so far as may be" means "to the extent possible". In Geetham Steels (supra), relied upon in the order of the ld. Member (Judicial) to interpret the meaning of the judgment has been interpreted to support the view that S.9D (2), casts an obligation on the adjudicating authority to generally follow the provisions of S.9D (1), to the extent possible, as it would apply to a proceeding before a Court. Thus, t....
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....dinarily permissive and cannot be treated as "must" without regard to the statutory context. Referring to T. Baba Prasad Vs Andhra Bank, 2011 SCC OnLine AP 276, the Court held that Regulation 10, which empowered the competent authority to order common disciplinary proceedings, was facilitative rather than obligatory. It conferred discretion on the authority and did not create a corresponding right in the employee to insist upon a joint proceeding. 55.7 The same interpretative approach was reflected in M/s. BLA Infrastructure Private Limited Vs State of Jharkhand & Ors., [W.P.(T) No. 6527 of 2024, dated 30.01.2024], with reference to Muskan Enterprises. Thus, the controlling consideration is not the isolated use of the expressions "may" or "shall", but the text, context, statutory scheme, legislative purpose and consequences of adopting either construction and read thus it will not render the word "shall" otiose in section 138B. 55.8 Further section 138B(1)(b) requires that the maker "is examined as a witness in the case" and that the statement is admitted in evidence "in the interests of justice". 55.9 As stated by the Apex Court in Zahira Habibulla H. Sheikh Vs State of G....
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....to fully subscribe to the narrow construction adopted of the term "shall", as, in my considered view, it does not adequately give effect to the settled principles governing the interpretation of statutory provisions and must be understood as 'to the extent possible'. It can be examined from another angle as below. Applicability of Sections 137 and 138 of the erstwhile Indian Evidence Act; Legislation by Reference or Incorporation and Casus Omissus 56. Section 137 of the erstwhile Indian Evidence Act defines examination-in-chief, cross-examination and re-examination, while Section 138 prescribes their sequential order. The same scheme is substantially reflected in Sections 140 to 142 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA), effective from 01.07.2024. Examination-in-chief enables the party calling the witness to place the relevant testimony on record. Cross-examination affords the adverse party an opportunity to test its veracity, credibility and probative value and re-examination permits clarification of matters arising in cross-examination, subject to the control of the Court. Questions of relevancy and admissibility remain for judicial determination. 56.1 In Dwarka....
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..... 56.6 These judgments are entitled to due consideration and carry considerable persuasive value. However, they pertain to the Central Excise Act and even if the section is pari materia to section 138B of the Customs Act, interpretation must harmonise text with context. For example as stated in Associated Cement Companies Ltd. v. Commissioner of Customs [(2001) 4 SCC 593], while Section 28 of the Customs Act is stated to be in pari materia with Section 11A of the Central Excise Act, they materially differ. The phrase 'with intent to evade payment of duty' present in the proviso to Section 11A is absent in Section 28(1) and its proviso. In Mandvi Cooperative Bank (supra) the Hon'ble supreme Court held that notwithstanding the apparent verbal similarity between section 145(2) of the NIA and section 296(2) of the Code of Criminal Procedure, it would be completely wrong to interpret the true scope and meaning of the one in the light of the other. A statute must be read as a whole-ex visceribus actus-and in light of its object and purpose, ensuring that no clause or word is construed in isolation. By evaluating each provision within the scheme and setting of the entire enactm....
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....espect, for the reasons stated in paragraphs 50.7 and 55.11 above, Section 138B does not expressly incorporate the entire procedure under Sections 137 and 138 of the Evidence Act. It therefore does not warrant mechanically importing the court procedure or imposing an inflexible requirement of examination-in-chief in adjudication proceedings. The adjudicating authority must, however, independently apply its mind, record the requisite satisfaction before admitting or relying upon the statement, and observe natural justice, including, where warranted, affording a meaningful opportunity of cross-examination when sought by the noticee. The procedure of a criminal trial cannot, therefore, be transposed wholesale to departmental adjudication, which operates under a distinct statutory framework and standard of proof. Judicial Interpretation Must Adhere to the Statutory Text 57. It is equally settled that statutory interpretation must proceed from the words employed by the Legislature. A Court cannot, under the guise of interpretation, add words, conditions or requirements that the Legislature has omitted. The same has already been referred to in Mandvi Cooperative Bank (supra) at par....
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....nable manner which is bona fide and in good faith. The decision taken is amenable to appellate scrutiny in accordance with established legal principles, to examine whether the decision-making process suffers from illegality, procedural impropriety, or perversity. The section must accordingly be construed in accordance with its text, structure and purpose, without supplying words that the Legislature has chosen not to enact. 57.3 As discussed in paragraph 50.13 above, the procedures being followed by the department were found complaint with the conclusions of the Hon'ble High Court in J.K. Cigarettes, founded on a plain reading of Section 138B and summarised therein. Voluntary nature of a statement 58. Although Section 24 of the Indian Evidence Act, which was prevalent at the relevant time, [Section 22 of the BSA] is not directly applicable to Customs adjudication, it indicates the underlying principle that the confession to lose its voluntary character, must appear to the Court to have been made by an accused person to a person in authority, by reason of any inducement, threat or promise proceeding from such person in authority and having reference to the charge against th....
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....llectorate, Cochin, (1997) 3 SCC 721, the Court held that the burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh Vs State of Punjab [AIR 1952 SC 214, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. 58.5 In Avadh Kishore Das Vs Ram Gopal & Ors. [AIR (1979) SC 86], the Apex Court held that it is true that evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong, but they do raise an estoppel and shift the burden of proof on to the person making them or his representative-in-interest. Unless shown or explained to be wrong, they are an efficacious proof of the facts admitted. Difference ....
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.... and a decision taken which is subject to the 'test of reasonableness'. The requirement of examining the maker as a witness under the procedural law of evidence in a trial and the requirement of satisfying oneself as to the voluntary character of a Section 108 statement in a departmental proceeding are, therefore, separate matters and should not be conflated. 59. In M/s. Geetham Steels (supra), authored for the Coordinate Bench by my learned brother Shri Ajayan T.V., Member (Judicial) - and referred to in his order above - the facts of the case concerns allegations of clandestine manufacture and clearance of M.S. ingots by the appellant without payment of Central Excise duty. Based on intelligence, DGCEI conducted searches at the appellant's factory and office, as well as the premises of its Managing Director, former accountant and certain scrap dealers, resulting in seizure of incriminating records, electronic devices, bank records and other documents. Statements were also recorded from the persons concerned which primarily came to be relied on as evidence. The Department alleged that these materials, including the statements, evidenced unaccounted clearances and irregular avai....
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....here violation of natural justice is alleged on account of denial of cross-examination in proceedings under the CA 1962 or similar legislation, the question of prejudice caused by such denial has to be examined. In the absence of prejudice, no relief can be granted. In that case, although penalties were substantially based on statements recorded under Section 108 implicating the petitioners in smuggling, the Court found that denial of cross-examination of the persons who had implicated them had caused no prejudice. 61. The Andhra Pradesh High Court, in Shalini Steels Pvt. Ltd. Vs Commissioner of Customs & Central Excise, Hyderabad [2011 (269) E.L.T. 485 (A.P.)], held that cross-examination of a witness whose statement is relied upon by the adjudicating authority is a facet of natural justice. At the same time, the Court emphasised that the applicability and extent of natural justice depend upon the facts and circumstances of each case and that violation of natural justice must be considered with reference to the prejudice caused thereby. It held: "9. Cross-examination of a witness, on whose statement reliance is placed by the adjudicating authority, is no doubt a facet ....
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....Industries Vs Commissioner of Central Excise, Kolkata-II, [(2015) 62 taxmann.com 3 (S.C.)], it is only where the statement of a witness has been recorded and such statement is proposed to be relied upon against the assessee that, upon a request made by the assessee, the adjudicating authority is bound to afford an opportunity of cross-examination. Judgments of the Madras High Court 64. In M/s. Veetrag Enterprises Vs Commissioner of Customs, the Hon'ble Madras High Court, [2015 (330) E.L.T. 74 (Mad.)], the Madras High Court dealt with a challenge to adjudication proceedings in which the Customs authorities had relied upon statements of eight persons in relation to allegations of misdeclaration and undervaluation. The petitioners had repeatedly sought an opportunity to cross-examine the persons whose statements were relied upon. The adjudicating authority, however, rejected the request for cross-examination only while passing the final adjudication order. The High Court set aside the adjudication order on the ground of breach of natural justice. It held that the request for cross-examination ought to have been considered and decided by a reasoned order before the adjudication w....
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.... Act. It further observed that, in adjudication proceedings, the liability of a noticee may be established on the touchstone of preponderance of probabilities and that a retracted admission does not, by that fact alone, cease to be relevant or incapable of being relied upon. The Court also observed that the right of cross-examination is not absolute in every case, particularly where the request is found to be merely strategic and the material on record otherwise provides corroboration. It is pertinent to note that, compliance with the procedural requirements contemplated under Section 138 of the Indian Evidence Act, was not referred to. 64.4 In J. Ibrahim Vs Special Director, Enforcement Directorate [2001 (127) E.L.T. 38 (Mad.)], the petitioner sought permission to cross-examine witnesses in adjudication proceedings. The Hon'ble Madras High Court held that where the governing statute prescribes a particular procedure, the adjudicating authority cannot depart from it to permit cross-examination contrary to the applicable statutory scheme, and found no infirmity in rejection of the request. 64.5 In Rajkumar Gowthaman Vs Joint Commissioner of Customs (Preventive), Tiruchirappall....
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....ciples of natural justice should be held to be an indefeasible right. But the assessee must still make out a case for cross examination. It will not be "Ask, and it shall be given". The assessee seeking cross-examination ought to give specific reasons why cross-examination is needed in a particular situation and that too of specific witnesses. A blanket request to cross-examine all persons whose statements have been recorded by the department, cannot be sustained [vide 2025 (4) TMI 1154, Vallabh Textiles v. Addl. Commissioner, Central Tax (GST)]. 9. Applying the above principle, the petitioners may not have a case for cross-examining the author of the report containing the data recovered from the electronic devices of the assessees. This is because, the assessees had nowhere questioned the veracity of the data retrieved from the systems maintained by them. It is seen that the retrieval took place very much in their presence. The assessees themselves duly certified the process of retrieval. While the retriever who was only a technical person might not have been competent to describe the nature of the data retrieved from the systems as "actual sales data", that may not reall....
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.... arising under the Customs law and under other economic-offence statutes empowering officers to summon and examine persons as witnesses, has adopted a contextual approach to the issue of cross-examination, while consistently applying the fundamental principles of natural justice and not sections 137 and 138 of the Evidence Act. The Court has considered, inter alia, the evidentiary role and significance of the statement relied upon, the availability of independent corroborative material, the specific grounds and circumstances in which cross-examination is sought, and the nature and extent of prejudice, if any, occasioned by denial of such an opportunity. They do not import the complete machinery of Section 138 of the Evidence Act into Section 138B. Significantly, none of these decisions treats even examination-in-chief of the maker and if required the gazetted officer by the adjudicating authority as an independent or indispensable stage for determining the relevancy or admissibility of a statement in departmental adjudication under Section 138B of the Customs Act. The decisions deal with the fairness and evidentiary value of reliance upon statements and, where appropriate, the cons....
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....ement and if required the gazetted officer, is an indispensable requirement under Section 138B, and there being no express reference or incorporation of Sections 137 and 138 of the Evidence Act in the Customs Act, and considering the principles of law as enumerated by Constitutional Courts and discussed above I am, with utmost respect, unable to hold that such procedure must displace the past practice and invariably be followed in departmental adjudication, unless such departure is required by the statutory text or binding authority. 66.1 This Bench of the Tribunal is, bound to follow and give effect to the law laid down by the jurisdictional High Court. The legal position has also been recognised by ld. Brother, Shri Ajayan T.V., Member (Judicial) in his order in A.R.A.S. Appliances Pvt. Ltd. Vs Commissioner of GST & Central Excise, Interim Order No. 06/2026, dated 10.08.2026, [JURISDICTIONAL HIGH COURT DECISION SQUARELY BINDS THIS BENCH OF THE TRIBUNAL - paras 35 to 43]. Since the law on the matter is well settled the passage is not being extracted here. Hence, the decisions of the jurisdictional High Court, as stated above, are binding on this Bench of the Tribunal, and judic....
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....orities to be produced for examination or cross-examination. At the same time, the Court independently examined the material relied upon and found the evidence insufficient. The decision therefore demonstrates that the question of cross-examination itself, is not governed by an inflexible procedural rule but by the nature and sufficiency of the material relied upon. 67.2 In Surjeet Singh Chhabra (supra), the Hon'ble Supreme Court considered a confession made before Customs officers which was subsequently retracted. The Court held that the confession constituted an admission binding upon the maker and that non-examination of the panch witnesses did not, in the facts of that case, constitute a violation of natural justice. Again, the Court did not import any separate statutory procedure governing examination of witnesses. The evidentiary value of the statement and the fairness of the adjudication were examined within the Customs legal framework. 67.3 Similarly, in Gulam Hussain Shaikh Chougule Vs S. Reynolds, Superintendent of Customs, Marmagoa [(2002) 1 SCC 155 / 2001 (134) E.L.T. 3 (S.C.)], and IVRCL Infrastructure & Projects Ltd. Vs Commissioner of Customs, Chennai [2015 (31....
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....T. 25 (S.C.), involved specific requests for cross-examination which had been denied. The Supreme Court found procedural deficiencies in the circumstances of those cases and directed appropriate corrective action. These decisions recognise the importance of cross-examination where the circumstances require it. They do not, however, prescribe examination-in-chief as an additional statutory stage under the relevant adjudicatory scheme. 67.6 In Andaman Timber Industries (supra), the assessee had specifically disputed the truthfulness of the statements relied upon and sought cross-examination to test the testimony. The denial of that opportunity, in the circumstances of that case, was held to constitute a serious violation of natural justice. The decision is therefore authority for the proposition that, where adverse statements constitute material evidence and their credibility is specifically put in issue, denial of a meaningful opportunity to test them may cause prejudice. It does not, however, hold that the procedure prescribed under Sections 137 and 138 of the Evidence Act stands incorporated into Section 138B. 67.7 The same approach is evident in M/s. Telestar Travels Pvt. L....
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....of criminal prosecution. Relying upon K.I. Pavunny, the Court recognised the object of Section 108 as enabling Customs authorities to collect relevant information and evidence and accepted voluntary statements under Section 108 as substantive evidence for confirming the guilt, particularly where corroborated by subsequent discoveries and recoveries. The Court found no perversity or legal infirmity in the concurrent findings of guilt: "21. Placing reliance on judgment of this Court in K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin5, the High Court held that the object of Section 108 of the Customs Act, 1962 is to empower Customs authorities to collect relevant information and evidence relating to contraventions of the Act, and that such statements, if found to be voluntary, are substantive pieces of evidence capable of being relied upon in support of the prosecution case. 22. The High Court further noted that the appellants had failed to establish any material to demonstrate that the statements under Section 108 of the Customs Act, 1962 were obtained under coercion, inducement, or threat, and in the absence of such proof, the statemen....
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....actment. The Supreme Court judgments relied upon above do not make such an extension. They determine the admissibility, reliability or evidentiary weight of the material relied upon, within the statutory framework applicable to the proceedings and according to the requirements of the principles of natural justice. Conspectus of the Discussion 68. The following points emerge from the foregoing discussion: A. Section 138B is a specific statutory mechanism governing the use of statements for proving the truth of their contents. Section 138B(2) extends it, "so far as may be," to departmental proceedings. The requirements applicable to criminal prosecution cannot, therefore, be mechanically transposed to adjudication. The procedural requirements must principally be gathered from the Customs Act, having regard to its self-contained scheme and the absence of any express or necessary incorporation of the Evidence Act. B. Section 138B does not expressly prescribe the sequential procedure of examination-in-chief, cross-examination and re-examination under Sections 137 and 138 of the Evidence Act. Nor can examination-in-chief of every maker of a Section 108 statement be treated as....