Custom, Excise & Service Tax Tribunal
Shri Neeraj Jain vs Principal Commissioner, Customs, Acc ... on 5 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 1
CUSTOMS APPEAL NO. 50789 OF 2020
(Arising out of Order-in-Original No. 01/2020/UG/PR.COMM dated 09.01.2020 passed by
the Principal Commissioner of Customs (A), ACC Imports, New Delhi)
Shri Neeraj Jain .....Appellant
A-1/263, Sector-17,
Rohini,
Delhi - 110042
versus
Commissioner of Customs, .....Respondent
Air Cargo Complex (Import)
New Customs House,
New Delhi 110 037
WITH
CUSTOMS APPEAL NO. 50790 OF 2020
(Arising out of Order-in-Original No. 01/2020/UG/PR.COMM dated 09.01.2020 passed by
the Principal Commissioner of Customs, ACC Imports, New Delhi)
Shri Pankaj Jain .....Appellant
A-1/263, Sector-17,
Rohini,
Delhi - 110042
versus
Commissioner of Customs, .....Respondent
Air Cargo Complex (Import)
New Customs House,
New Delhi 110 037
APPEARANCE:
Shri J.M. Sharma and Ms. Pooja Aggarwal, Advocates for the Appellant
Shri C. Dhanasekharan, Special Counsel for the Respondent
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
Date of Hearing: 25.02.2025
Date of Decision: 05.08.2025
FINAL ORDER NO's. 51140-51141/2025
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JUSTICE DILIP GUPTA:
Customs Appeal No. 50789 of 2020 has been filed by Neeraj Jain
to assail that part of the order dated 09.01.2020 passed by the Principal
Commissioner of Customs, ACC Import, New Delhi 1 that imposes a penalty
of Rs. 7.50 lakhs upon him under section 112 of the Customs Act, 19622
and Rs. 10 lakhs under section 114AA of the Customs Act for acts of
omission and commission, including role played for facilitating the
diversion of the export bound gold jewellery to the domestic area.
2. Customs Appeal No. 50790 of 2020 has been filed by Pankaj Jain
to assail that part of the order dated 09.01.2020 passed by the Principal
Commissioner that imposes a penalty of Rs. 10 lakhs upon him under
section 112 of the Customs Act and Rs. 10 lakhs under section 114AA of
the Customs Act for acts of omission and commission, including role
played for facilitating the diversion of the export bound gold jewellery to
the domestic area.
3. M/s. Rishubh Cargo Care 3 is a proprietorship concern. Neeraj Jain is
the proprietor of the firm and Pankaj Jain is the manager of the firm. The
firm is engaged in providing services of preparation of documents for
export of gems and jewellery, packing list, invoice, Shipping Bills, export
declaration and documentation and registration for IEC.
4. The appellants claim that the documents prepared by the firm were
as per the information supplied by the exporter. The exporter, after
signing the documents, visited the customs office for appraisement of
jewellery items to be exported. Pankaj Jain used to remain present
alongwith the exporter at office of the Appraiser at Jhandewalan during
1. the Principal Commissioner
2. the Customs Act
3. the Firm
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the appraisement of jewellery so that if any amendment/addition was
required to be made in the documents prepared by the firm of the
appellant, the same could be done. The appellants further contend that
their role was limited to preparation of documents in the office as per
instructions given by the client and they assisted the client in
appraisement and forwarding formalities.
5. Based on some specific information, the Directorate of Revenue
Intelligence 4, Delhi Zonal Unit, intercepted two international passengers,
namely, Mukesh Kumar Sawalchand Bohra and Ranjit Kumar Hirachandji
Jain at the T-3 Terminal of IGI International Airport on the intervening
night of 27/28 October, 2015. These two international passengers were
supposed to be hand carrying the gold jewellery manufactured by the
appellant and these two passengers had tickets to go to Dubai and
Hongkong. It is alleged that after security and immigration clearance,
while they were waiting in the transit lounge, they handed over the gold
jewellery bags to two domestic passengers Jinesh Kumar Jain and Manoj
Vaishnav, who had tickets to go to Mumbai.
6. A show cause notice dated 29.11.2017 was issued, amongst others,
to Neeraj Jain and Pankaj Jain. The thrust of the allegations made against
the appellants is contained in paragraph 28 of the show cause notice
which is reproduced below:
"28. *****
(iv) Shri Pankaj Jain and Shri Neeraj Jain of M/s
Rishabh Cargo, CHA used to facilitate the cartel in
preparation of export documents, shipping bills etc.
Shri Pankaj Jain at times was authorized by the
exporters including M/s Nikkamal Jewellers for
collection of original detention receipts etc. from the
4. DRI
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officer of Appraiser, Jewellery complex, Jhandewalan,
New Delhi. Shri Pankaj jain and Shri Neeraj Jain are
liable for imposition of penalty upon each of them
under Section 112 and 114AA of the Customs Act,
1962."
7. The show cause notice, therefore, called upon Neeraj Jain and
Pankaj Jain to "show cause to the Commissioner of Customs, Air Cargo
Complex (Import), New Delhi as to why penalty should not be imposed
upon each of them under sections 112 and 114AA of the Customs Act for
their acts of omission and commission, as brought out herein".
8. The appellants filed a reply to the show cause notice and denied the
allegation made therein. The main contention raised by the appellants in
their reply was that the work assigned to them was confined to depositing
the consignment for inspection at Customs Appraisal Office at
Jhandewalan and then transporting the same consignment with the
escorting customs officers to the IGI Airport T-3 and obtaining the original
detention receipt. In the reply Pankak Jain stated:
"***** It is submitted that I was provided with
signed documents of the exporter/authorized
signatory by the staff of the Firm/Exporter. I was
also provided with an authority letter from the firms
to deposit the consignment and obtain the original
Detention Receipt on their behalf. It is submitted
that I received the following documents only from
the staff of Mr. Sanjeev Jain and Mr. Vipul Jain of
M/s Ambika Udyog and Prem Jewellers & Nikkamal
Jewellers namely :-
1. Packing List
2. Invoice
3. Shipping Bill
4. EDF Form
The authority letter was duly signed by the
representatives of firm in their competent capacity.
Subsequently, all the goods were sealed in a tin box.
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The goods brought by the representative of the
exporting party were labelled with their signatures
on a sheet of paper which was stuck on the tin box.
This sheet/sticker was also stamped and signed by
the customs appraisal officer and exporting party.
Lastly, the tin box was wrapped in white cloth. This
procedure is the general procedure followed every
time at the Customs Appraisal Officer. Further, the
name and address of the shipper and consignee
were duly mentioned on the box. The details of
passenger like name, passport number who is
carrying the goods were also mentioned on the box.
This box was sealed by a designated customs seal. It
is submitted that all the documents were signed by
the customs appraisal officer. All the information
regarding the goods quantity, quality and value were
mentioned in the documents.
The Customs Appraisal Officer provided me a
request letter for issuance of onetime entry
pass to me and the escorting officer for
entering the premises of the Airport for the
purposes of depositing the consignment. I had
absolutely no knowledge about the intention of the
firm and its partners. My job was limited to
depositing the consignment at Customs
Appraisal Office for inspection and take the
same to the Airport for the purposes of export.
I was accompanied by the customs officer to
the airport.
On reaching the Airport we approached the Deputy
Commissioner of Customs for his permission to store
the goods at the CWC Storehouse. Subsequently
the detention receipts were prepared by the
Competent Officer. It was duly signed by him
and the signature of the customs escort officer
was also taken on the DR. Copies of the DR
were made for the respective/concerned
passengers/staff of the exporting firm. I
followed the instructions and handed over all
export related documents and Detention
Receipts to the exporter. The DR along with
other export documents were handed over to
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respective / concerned passengers /
representatives of the firm who were suppose
to carry the consignment for export.
It is submitted that the responsibility of the
undersigned is over at this stage. My primary
formality is to hand over the DR and export
documents for the hand carriage of goods to
the exporter/passenger. I had no knowledge
about the alleged scam and absolutely no
involvement in the alleged duty evasion. I had
no knowledge that the documents prepared at
the customs appraisal office in Jhandewalan
have been used for the alleged conspiracy of
duty evasion. Further, I am a law abiding citizen
with high respect for the rules and regulations of all
the authorities. I have never fathomed breaking the
law for any mora/immoral purpose.
It is submitted that I never made any false
declaration for the Authority letter issued to
me for the carriage of goods. I am not even
remotely involved in the alleged conspiracy of
duty evasion. I have worked in good faith with the
exporting firm. I had no knowledge about the
malafide intention of the firm and their
representatives. I have submitted all the documents
related to this transaction which were in my
possession to the competent authority and fully co-
operated in the investigation."
(emphasis supplied)
9. The Principal Commissioner did not accept the contentions and
recorded the following findings:
"79. I find that in the instant case penalty
under Section 112 and 114AA of the Customs,
Act, 1962 has been proposed to be imposed
upon M/s Nikkamal Jewellers, M/s Prem
Jewellers, M/s Ambika Vikas Udyog and M/s
Krishan Chander Ramesh Chander (P) Ltd. in
their capacity as exporters who summarily
failed in fulfilling their export obligation in
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terms of notification No. 50/2000-Cus. I also
find that similar penalties have also been
proposed against various persons who for the
acts of omission and commission on their part
as brought out in the SCN have rendered
themselves liable for penal action to be
initiated against them. These persons are
***** Pankaj Jain, Neeraj Jain *****. Sh.
Pankaj Jain and Sh. Neeraj Jain of M/s Rishabh
Cargo used to facilitate the cartel by preparing
the export documents and sometimes also
collecting the Detention Receipt etc. from the
office of the Customs Appraiser.
*****
81. ***** All these persons have themselves in their respective statements
made to the Customs have admitted to the roles played by them in defrauding the revenue. I also find that none of the concerned persons have retracted their statements at any point of time, which lead to a conclusion that they were engaged in carrying/dealing with the goods i.e. gold jewellery which they knew are liable for confiscation. In view of the above undisputed fact that penalty under the provisions of Section 112 of the Customs Act, 1962 becomes imposable on them.
82. I also find that so far as the penalties under Section 114AA are concerned, these are imposable if a person knowingly or intentionally makes, signs or uses or causes to be made, signed or used, in a declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purpose of the Customs Act. Accordingly, considering the facts of the case where the export bound gold jewellery has been tried to and has actually been diverted to the domestic area thereby blatantly misusing the documentation made for the purpose of custom clearance tantamount to making a false or incorrect statement which falls under the acts of omission and 8 C/50789/2020 & C/50790/2020 commission categorized under Section 114AA of the Customs Act, 1962. The roles played by each and every person in committing the fraud and misusing the beneficial provisions of Notification No. 57/2000-Cus, as detailed above, do not leave any doubt on the mala-fide intentions of the concerned persons that the same was being done with the sole motive of unjustly enriching themselves and therefore penalty under the given section is also impossible in the present case."
(emphasis supplied)
10. Shri J.M. Sharma, learned counsel for the appellants assisted by Ms. Pooja Aggarwal submitted that there is no evidence on record to suggest that the appellants facilitated the diversion of export bound jewellery for domestic use. In any case, penalties under sections 112 and 114AA of the Customs Act could not have been imposed upon the appellant as the show cause notice does not allege any fault in the documents prepared by appellants and the appellant also had no knowledge or reason to believe that the gold jewellery would be handed over by the international passengers to the domestic passengers. Learned counsel also submitted that the impugned order is based on statements made by various persons under section 108 of the Customs Act regarding the modus operandi, but these statements cannot be considered as relevant for the purpose of proving the facts since the procedure contemplated under section 138B of the Customs Act was not followed. In support of this contention learned counsel placed reliance upon a decision of the Tribunal in M/s. Drolia Electrosteel P. Ltd. vs. Commissioner, Customs, Central Excise & Service Tax, Raipur 5.
5. Excise Appeal No. 52612 of 2018 decided on 30.10.2023 9 C/50789/2020 & C/50790/2020
11. Shri C. Dhanasekharan, learned special counsel appearing for the department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. Learned special counsel submitted that the appellants facilitated the diversion of the export bound gold jewellery to the domestic area and they had a role in the preparation of the documents.
12. The submissions advanced by the learned counsel for the appellants and the learned special counsel appearing for the department have been considered.
13. It is seen that certain manufacturer of gold jewellery had availed benefit of a Scheme called "Export Against Supply by Nominated Agencies"
as contained in the Notification. Prior to 15.05.2015, the nominated agency, in terms of the Notification was allowed to import gold without payment of duty after executing a bond with the Assistant Commissioner of Customs. The gold imported by the nominated agency was then required to be exported in the form of jewellery or articles either by the nominated agency itself or through any other exporter.
14. The relevant portion of the Notification, as it stood prior to 15.05.2015, is reproduced below:
"Notification: 57/2000-Cus. dated 08-May-2000 ***** ***** the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts silver, gold and platinum, falling under heading Nos. 71.06, 71.08 and 71.10 respectively of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, -
(a) ***** 10 C/50789/2020 & C/50790/2020
(b) under the Scheme for 'Export Against Supply by Nominated Agencies' as referred to in Paragraph 8.22 of the Export and Import Policy, read with relevant provisions of Chapter 8 of the Handbook of Procedures, Volume I, from the whole of the duty of customs leviable thereon, which is specified in the said First Schedule and from the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act:
Provided that ***** ***** Provided further that in the case of import of gold/silver/platinum under the scheme for 'Export Against Supply by Nominated Agencies', the importer executes a bond in such form and for such sum as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs undertaking to export, either by itself or through other exporters gold/silver/platinum jewellery or articles, as the case may be, including studded articles having gold/silver/platinum content equivalent to the imported gold/silver/platinum within a period of 120 days from the date of issue of gold/silver/platinum to the exporters, or such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs, on sufficient cause being shown may allow, and binding himself to pay on demand duty on quality of gold/silver/platinum representing the difference between the quantity issued and that contained in the exported jewellery or articles: *****"
(emphasis supplied)
15. The second proviso to the opening paragraph of the Notification was deleted by Notification No. 33/2015-Cus dated 15.05.2015 and the relevant portion is reproduced below: 11
C/50789/2020 & C/50790/2020 "Notification No. 33/2015-Cus dated 15.05.2015 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notification of the Government of India in the Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said Table, namely :-
Serial Notification Amendments
number number
and date
(1) (2) (3)
***** ***** *****
5. 57/2000- In the said notification,-
Customs,
(I) in the opening
dated the
paragraph
8th May,
2000, G.S.R. (i) in clause (a), for
413 (E), the word, letter
dated the and figures
8th May, "paragraph
2000 4A.14", the word,
letter and figures
"paragraph 4.46"
shall be
substituted;
(ii) in clause (b), for
the word, letter
and figures
"paragraph 4A.9",
the word, letter
and figures
"paragraph 4.41"
shall be
substituted;
(iii) the second
proviso shall be
omitted;
(emphasis supplied)
16. It would be seen that prior to 15.05.2015, in terms of the second proviso to the Notification, the importer had to in case of import of gold under the "Export Against Supply by Nominated Agencies" Scheme, 12 C/50789/2020 & C/50790/2020 execute a bond in such form and for such sum as may be specified by the Assistant Commissioner undertaking to export, either by itself or through other exporters, within a period of 120 days from the date of issue of gold to the exporters and bind himself to pay on demand duty on the quantity of gold representing the difference between the quantity issued and that contained in the exported jewellery. However, the said second proviso to the opening paragraph of the Notification was omitted by the subsequent Notification dated 15.05.2015.
17. The imposition of penalty upon Neeraj Jain and Pankaj Jain, as can be seen from paragraph 81 of the impugned order reproduced above, is for the reason that they had in their respective statements made to the customs authorities under section 108 of the Customs Act admitted the roles played by them in defrauding the revenue and none of them had retracted the statement. It has, therefore, been concluded that these two persons were engaged in dealing with gold jewellery, which they knew was liable to confiscation.
18. This finding is based on the statements made by Neeraj Jain and Pankaj Jain made under section 108 of the Customs Act. These statements could not have been considered as relevant since the procedure contemplated under section 138B of the Customs Act had not been followed.
19. In M/s. Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur 6, the Tribunal examined the provisions of sections 108 and 138B of the Customs Act as also the provisions of sections 14 and 9D of the Central Excise Act, 1944 and observed as follows:
6. Excise Appeal No. 51148 of 2020 decided on 01.04.2025 13 C/50789/2020 & C/50790/2020 "21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such 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, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as an evidence and an opportunity 14 C/50789/2020 & C/50790/2020 of cross-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."
(emphasis supplied)
20. After examining various judgments of the High Courts and the Tribunal, the Tribunal observed as follows:
"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 contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under 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 15 C/50789/2020 & C/50790/2020 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)
21. The same view was taken by this Bench in Drolia Electrosteel. The Tribunal, while examining the provisions of section 9D of the Central Excise Act, held:
"13. Of the above, the 35 statements of various persons recorded under the Central Excise Act will be relevant to the proceedings only as per section 9D which lays down the procedure to be followed to make them relevant and the exceptions to such procedure. *****
14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1). There is no assertion by either side that the circumstances indicated in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances 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 16 C/50789/2020 & C/50790/2020 (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. The relevant extracts are as follows:
"13. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub- section, which are contained in clauses (a) and
(b) thereof.
14. Clause (a) of Section 9D(1) refers to the following circumstances :
(i) when the person who made the statement is dead,
(ii) when the person who made the statement cannot be found,
(iii) when the person who made the statement is incapable of giving evidence,
(iv) when the person who made the statement is kept out of the way by the adverse party, and (v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense.
15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is selfevident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of subsection (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 2183/1994, dated 3-1-1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby.
17C/50789/2020 & C/50790/2020
16. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause
(b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz.
(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 person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and
17. 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.
18. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned.
19. 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 18 C/50789/2020 & C/50790/2020 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.
20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross- examination has to precede re-examination".
16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible."
(emphasis supplied)
22. In view of the aforesaid decisions of the Tribunal, it has to be held that the statements made under section 108 of the Customs Act, on which reliance has been placed by the Principal Commissioner, could not have been considered as relevant.
23. In this view of the matter, penalties could not have been imposed upon Neeraj Jain and Pankaj Jain under section 112(m) of the Customs Act.
19C/50789/2020 & C/50790/2020
24. Penalty has also been imposed upon Neeraj Jain and Pankaj Jain under section 114AA of the Customs Act. This section provides for penalty for use of false and incorrect material. It has not been pointed out which statements were made by Neeraj Jain and Pankaj Jain knowingly or intentionally or they had made any declaration or statement which was found to be incorrect in any material particular.
25. It is seen that penalty under section 114AA of the Customs Act has been imposed on a finding that the 'appellant's acts of omission and commission, for preparing the customs documents for the purpose of diverting the export bound gold jewellery towards domestic area with sole motive to unjustly enrich themselves and also the other members of the syndicate". There is no evidence on record to support that the purpose of preparing the documents for export was for diversion of the goods to the domestic tariff area. No fault has been found in the documents prepared by the appellants in respect of purity and weight of the gold jewellery. The handing of the export jewellery was committed in a highly secured airport area under customs control. Handing over the detention receipt to the international passengers carrying the gold jewellery to be exported, was also in compliance of the procedure of export. There is no evidence that may support the finding in the impugned order that the appellant instructed the passengers or knew or had reasons to believe that the gold jewellery would be handed over by the international passengers to the domestic passengers. Thus, the imposition of the penalties upon Neeraj Jain and Pankaj Jain under section 114AA is not justified.
26. Penalty has been imposed upon the appellants under section 114AA of the Customs Act after mis-using the beneficial provisions of the Notification. The period involved is after 15.05.2015 when the second 20 C/50789/2020 & C/50790/2020 proviso to the opening paragraph of the Notification was omitted by the Notification dated 15.05.2015. It cannot, therefore, be said that the appellant had violated the conditions set out in the Notification.
27. Such being the position, the order dated 09.01.2020 passed by the Principal Commissioner confirming the penalties upon Neeraj Jain and Pankaj Jain under section 112 of the Customs Act and section 114AA of the Customs Act deserves to be set aside and is set aside. Customs Appeal No. 50789 of 2020 and Customs Appeal No. 50790 of 2020 are, accordingly, allowed.
(Order pronounced on 05.08.2025) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Shreya