Custom, Excise & Service Tax Tribunal
Hitin Sachdeva vs Commissioner Of Customs - Chennai Ii ... on 19 March, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Customs Appeal No. 40724 of 2024
(Arising out of order-in-original No. 107255/2024 dated 11.06.2024 passed by the
Commissioner of Customs, Chennai).
Hitin Sachdeva ...Appellant
F-12/7, First Floor,
Model Town,
New Delhi-110009
VERSUS
Commissioner of Customs ...Respondent
Chennai-II (Import)
Customs House, No. 60, Rajaji Saiai,
Chennai-600001
WITH
C/40725/2024 C/40726/2024
C/40913/2024 C/40914/2024
APPEARANCE:
Shri Piyush Kumar, Advocate for the Appellant
Shri Sanjay Kakkar, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
DATE OF HEARING: 24.02.2026
DATE OF DECISION: 19.03.2026
FINAL ORDER NO._40396-40400/2026
JUSTICE DILIP GUPTA:
Customs Appeal No. 40724 of 2024 has been filed by Hitin
Sachdeva1 to assail the order dated 11.06.2024 passed by the
Commissioner of Customs, Chennai-II2. The order is in respect of the
1. the appellant
2. the Commissioner
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C/40724/2024 & 4 others
goods imported through Chennai Port, Nhava Sheva Port, Mumbai and
Kolkata Port and seeks to reject the declared value of the imported
goods in the Bills of Entry under rule 12 of the Customs Valuation
(Determination of Value of Imported Goods) Rules, 20073 and re-
determines the same under rule 9 of the said Rules. Accordingly, the
demand of duty short paid has been confirmed with interest and penalty
upon the appellant under sections 114A and 114AA of the Customs Act,
19624 by treating the appellant to be the beneficial owner. The goods
imported in the name of M/s. Mega Auto Industries, M/s. Majestic
Motors, M/s. Highline Enterprises and M/s. India Enterprises have also
been held liable to confiscation under section 111(m) of the Customs
Act but as the goods had been cleared, a redemption fine in lieu of
confiscation has been imposed upon the appellant under section 125 of
the Customs Act.
2. Customs Appeal No. 40725 of 2024 has been filed by Sandeep
Kumar Das to assail the order dated 11.06.2024 to the extent it
imposes penalty upon him as a partner of M/s. Highline Enterprises
under sections 114AA and 112(b)(ii) of the Customs Act.
3. Customs Appeal No. 40726 of 2024 has been filed by S.K.
Dhawan to assail that portion of the order dated 11.06.2024 passed by
the Commissioner that imposes penalty upon him as proprietor of M/s.
Dhawan Impex under sections 114AA and 112(b)(ii) of the Customs Act.
4. Customs Appeal No. 40913 of 2024 has been filed by
Harvinder Sachdeva to assail that portion of the order dated 11.06.2024
passed by the Commissioner that imposes penalty upon him as Director
3. the 2007 Valuation Rules
4. the Customs Act
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C/40724/2024 & 4 others
of M/s. Sino Diesel Automotive Co. Ltd. under sections 114AA and
112(b)(ii) of the Customs Act.
5. Customs Appeal No. 40914 of 2024 has been filed by Madhav
Sachdeva to assail that portion of the order dated 11.06.2024 passed by
the Commissioner that imposes penalty upon him as partner of M/s
Mega Auto Industries and M/s. India Enterprises under sections 114AA
and 112(b)(ii) of the Customs Act.
6. The case of the appellant is that when the appellant arrived at
Terminal T-3 of IGI Airport on 03.09.2021 at around 09:45 PM with
Bipin Jha, partner in M/s. Bird Automotive, the officers of the
Department of Revenue Intelligence5 took the appellant and Bipin Jha to
their office and took possession of their phones and laptop and locked
both of them in separate enclosures. Thereafter, the DRI officers
tortured the appellant, stripped him, physically beat him with a stick
and metal rod and deprived him of food and water. The appellant
further contends that the officers stopped beating him only when they
obtained his signature on a statement already prepared, typed and
stored in the computers of the department and also forced him to sign
some documents without permitting him to read the same. The
appellant was thereafter arrested on 04.09.2021 at 5:15 PM and
produced before the duty magistrate at his residence on 10:35 PM and,
thereafter, lodged in jail. The appellant also contends that when he
arrived at the jail, the doctor on duty examined him and finding marks
of beating, recorded in his report „multiple bruises over shoulder, thigh,
abdomen, hands due to physical assault‟. Next morning when the
appellant complained of immense pain, nausea and fever, the jail doctor
5. DRI
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C/40724/2024 & 4 others
recommended for examination at a government hospital. The appellant
was then taken to Deen Dayal Upadhyay Hospital on 06.09.2021 and
the doctors, after thorough examination, found several bruises over
right thigh right knee, left buttock, multiple bruises on right arm,
bruises over left shoulder and bruises over left flank which evidenced
physical assault and this was recorded in the medical examination
report.
7. The appellant further contends that on 13.09.2021, the officers
again brought a pre-typed statement to the Tihar Jail and asked the
appellant to sign on the same and when the appellant declined to sign
the officers threatened the appellant that if he did not sign on the typed
statement, they would arrest his father, mother and the younger
brother. According to the appellant, it is because of this psychological
pressure exerted upon him that he signed the statement, but on the
very next day i.e. 14.09.2021, the appellant filed a representation
before the Chief Metropolitan Magistrate Patiala House, New Delhi
retracting the statement. The appellant stated that the said statements
were extracted by the DRI officers by physically abusing and mentally
torturing the appellant. The appellant further stated that even after he
was enlarged on bail, he was forced to sign on dotted lines on the
statements already prepared on DRI computer on 23.11.2021 and
09.02.2022. The appellant again filed an application retracting the
statements and stated that the same were extracted by force. According
to the appellant the other co-appellants were also coerced into signing
statements.
8. A show cause notice dated 13.01.2023 was, thereafter, issued to
the appellant and six others, including the four co-appellants Sandeep
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C/40724/2024 & 4 others
Kumar Das, S.K. Dhawan, Harvinder Sachdeva and Madhav Sachdeva.
The show cause notice proposed to reject the declared value and re-
determine the same for the following reasons:
"40. Grounds for Rejection of Declared Value
and Re-determination of Value
40.1 From the evidences on record as discussed
above, it appears that Sh. Hitin Sachdeva and Sh.
Harvinder Sachdeva are the beneficial owners of the
goods imported by using IECs of M/s Mega Auto
Industries, M/s Majestic Motors, M/s Highline
Enterprises, M/s Bird Automotive, M/s India Enterprises
and M/s Dhawan Impex and has imported the said
goods by grossly mis- declaring the value with the
intent to evade payment of duties of customs. Sh.
Hitin Sachdeva in his voluntary statement dated
03-04.09.2021 and dated 13.09.2021 admitted
the undervaluation and gave an elaborate
description of the modus operandi adopted by
him for misuse of the IECs to import, clear and
dispose of the goods by resorting to mis-
declaration and undervaluation. Further, Sh. Hitin
Sachdeva, in his statement recorded before DRI
admitted that the values declared before the
Customs were not the correct transaction value
and he used to declare approximately 50% of the
actual value of the imported goods and used to
send the balance amount through hawala and
non-banking channels. Sh. Hitin Sachdeva also
admitted that M/s Mega Auto Industries, M/s
Majestic Motors, M/s Highline Enterprises, M/s
Bird Automotive, M/s India Enterpriscs and M/s
Dhawan Impex were proxy/dummy IECS, which
were actually owned/ controlled by himself. All
the alleged Partners/ proprietors of the said firms
also admitted that the respective firms/IECs were
created and controlled by Hitin Sachdeva.
40.2 Whereas the Bills of Entry mentioned supra
were filed for home consumption under Section 46 of
the Customs Act, 1962 by way of mis-declaration, as
the goods under the said Bills of Entry filed by M/s
6
C/40724/2024 & 4 others
Mega Auto Industries, M/s Majestic Motors, M/s
Highline Enterprises, M/s Bird Automotive, M/s India
Enterprises and M/s Dhawan Impex were found mis-
declared with respect to the value of the goods. In the
instant case, the value of goods declared in the
import invoices and respective Bills of Entry did
not match with actual values of the imported
goods as per the actual/ original invoices issued
by the supplier of the goods. Therefore, the
import invoices submitted before Customs cannot
be considered for assessment of the subject
goods to the duty. Further, Hitin Sachdeva
admitted to gross undervaluation of the imported
goods in his voluntary statements tendered
before DRI officers under the Customs Act, 1962.
Even the statement of his customer and own
employee clearly indicates that the goods were
grossly undervalued. Further, from the evidences
discussed above, it is evident that Sh. Hitin
Sachdeva submitted fraudulent or manipulated
documents/invoices for clearance of the imported
goods. Therefore, the value declared in the
subject Bills of Entry cannot be accepted as true
transaction "value under the provisions of Section
14 of the Customs Act, 1962 read with the provisions
of the Customs Valuation (Determination of Value of
imported Goods) Rules, 2007 (hereinafter referred as
"CVR, 2007") and the same is liable to be rejected
in terms of Rule 12 of the CVR, 2007 and needs to
be re-determined.
xxxxxxxxxx
40.9 Since the beneficial owner Hitin Sachdeva
admitted that the goods were undervalued and
the correct transaction value was not disclosed to
the Customs, the declared value of the imported
goods did not appear to be fair and genuine and
appears liable to be rejected as provided under
Rule 12 of the CVR, 2007. Further, during
investigation, the actual transaction value of the
identical goods, imported in past consignments in the
name of various other dummy/proxy IECs owned/
controlled by Hitin Sachdeva were submitted by him as
7
C/40724/2024 & 4 others
received by him on email from the overseas supplier.
Therefore, the value of the imported goods have been
re-determined under Rule 9 of CVR, 2007, read with
Section 14 of the Customs Act, 1962, in accordance
with the actual transaction value of the imported goods,
found during investigation by DRI and detailed in
Annexure-A. In the invoices submitted before Customs,
the invoice term is CIF and the currency is USD.
Therefore, unit value (CIF) of the identical goods found
in actual invoices has been denominated in 'USD' as
well. Further, Hitin Sachdeva, in his statement
recorded before DRI admitted that he never
declared the correct transaction value of the
imported goods before Customs and used to
declare approximately 50% of the actual value of
the imported goods and used to send the balance
amount through Hawala channels. On perusal of
Table-IV, V and VI, it is evident that the values
declared before Customs are close to 50% of the
actual re-determined transaction value. This lends
further credence to the fairness and robustness of the
methodology adapted in re-determining the values
detailed in Annexure-A."
(emphasis supplied)
9. The show cause notice, thereafter dealt with role of the other co-
appellants and noted that for their acts of omission and commission in
rendering the goods liable to confiscation, penalty under section 112 of
the Customs Act was liable to be imposed on them.
10. The appellant and the other co-appellant filed detailed replies to
the show cause notice and denied the allegations made therein. The
appellant described the circumstances under which the statements were
recorded under section 108 of the Customs Act and contended that no
reliance can be placed on the same as they were obtained by coercion
and has also been retracted. The appellant also pointed out the
statements of other persons recorded under section 108 of the Customs
8
C/40724/2024 & 4 others
Act could not be relied upon. The relevant portion of the reply submitted
by the appellant is reproduced below:
"2.2 Noticee submits that DRI initiated present
investigation on 03.09.2021 and arrived at Noticee's
residence in the morning, whereat on being asked,
Noticee's parents duly informed that he was out on a
business trip and was scheduled to arrive in the late
evening of 03.09.2021. The officers thereafter
intercepted Noticee at Terminal T-3 of IGI Airport
when he arrived around 9:45 PM per Vistara
Flight No. UK-992 from Pune along with Shri Bipin
Jha, Noticee's partner in M/s Bird Automotive.
The officers per force took Noticee and Bipin Jha
to their office in CGO Complex, Lodhi Road, New
Delhi and after reaching the close confines of the
office, locked both of them in separate enclosures
to instil fear and to create psychological pressure.
Thereafter, they mercilessly tortured Noticee,
stripped him, physically beat him with stick and
metal rod, deprived him of food/water and did
not even permit him to attend nature's call. The
officers stopped beating only after obtaining
Noticee's signature on statement which was
already prepared, typed and stored on DRI's
computer.
2.3 After procuring Noticee's signature on pre-
typed statement under physical abuse, beating
and mental torture, the officers arrested him on
04.09.2021 at 5:15 PM; produced him before the
Duty Magistrate at his residence at 10:35 PM; and
thereafter lodged him in Jail No. 7, Tihar Jail after
midnight. On arrival at the jail, Doctor on duty
examined Noticee and finding marks of beating
recorded in his report "multiple bruises over
shoulder, thigh, abdomen, hands due to physical
assault". Next morning when Noticee complained
of immense pain, nausea and fever, Jail Doctor
recommended for examination at a Government
hospital and accordingly, Noticee was taken to
Deen Dayal Upadhyay Hospital on 06.09.2021,
whereat the Doctors, after thorough examination,
9
C/40724/2024 & 4 others
found several marks of beating namely bruise
over right thigh, bruise over right knee, bruise
over left buttock, multiple bruises on right arm,
bruise over left shoulder, bruise over left flank
evidencing history of physical assault and
recorded the same in their medical examination
report. Copies of aforesaid Report dated
05.09.2021 relating to medical examination at
Tihar Jail and Report dated 06.09.2021 issued by
Medical Officer at DDU Hospital are enclosed for
Hon'ble Commissioner's kind perusal marked as
Annexure-3 (colly.), which clearly depict that Noticee
was mercilessly beaten at DRI office and the statement
pressed into service as voluntary statement was in fact
involuntary prepared and pre-typed by DRI officers,
whereupon Noticee's signatures were obtained under
acute physical and mental torture.
2.4 On 13.09.2021, the officers again appeared
in Tihar Jail for Noticee's interrogation and along
with them brought a pre-typed statement and
asked Noticee to sign on the same. When Noticee
declined to sign on the same, the officers
threatened Noticee that if he did not sign on the
typed statement, they would arrest Noticee's
Father, Mother and younger Brother in the
present case, thus under immense psychological
pressure, Noticee signed on the typed statement.
On the very next day i.e. 14.09.2021, Noticee filed
a representation before the Hon'ble CMM, Patiala
House Courts, New Delhi retracting the statement
and stating that the same were extracted by the
DRI officers under physical abuse and mental
torture. A copy of Noticee's retraction letter addressed
to Hon'ble CMM, Patiala House Courts, New Delhi is
enclosed for Hon'ble Commissioner's kind perusal
marked as Annexure-4.
xxxxxxxxxxx
5.2 During the course of interrogation, on
being asked, Noticee provided details and
password of his e-mail and thereafter using their
wi-fi connection, DRI officers sent e-mails to
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C/40724/2024 & 4 others
various IDs found in Noticee's e-mail database,
called them telephonically and threatened them
to prepare and forward documents as desired by
them. In compliance to their directions and
buckling under the threats issued by them, some
of them prepared documents as directed by them
and e-mailed the same to Noticee's e-mail
address. Noticee submits that all the documents
annexed with the Show Cause Notice as RUD- 26
and RUD-27 had arrived on 04.09.2021 at 11:25
AM and 1:16 PM when Noticee was in DRI custody
and the laptop was in the possession of DRI
officers.
5.3 Noticee urges the Hon'ble Commissioner's
to peruse the aforesaid documents to appreciate
that all the e-mails which are now being alleged
as voluntarily furnished by Noticee, had arrived in
Noticee's e-mail inbox when he was in DRI's
custody and his laptop was in the possession of
Investigating Officer and further requests Hon'ble
Commissioner to verify the fact that the
contextual mails had arrived in Noticee's inbox
through DRI's Wi-Fi network/IP address. All the
aforesaid purported Invoices retrieved from inbox
of Noticee's e-mail address had arrived in
Noticee's inbox, e-mail was logged in not on
Noticee's laptop but on the Desktop installed in
DRI office connected through DRI's internet wi-fi
connection and therefore, Noticee prays Hon'ble
Commissioner to cause impartial inquiry into the
arrival of purported Invoices in Noticee's inbox at
1:16 PM on 04.09.2021 when Noticee was in
DRI's custody through DRI's IP address using
DRI's internet connection and on DRI's desktop
for conscionable adjudication of present Show
Cause Notice.
xxxxxxxxxx
6.4 Moreover, qua the 44 purported actual invoices
pressed into service by DRI to buttress the charge of
under invoicing, Noticee further submits that in 14
cases, description of goods mentioned in the purported
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C/40724/2024 & 4 others
actual invoices and description of goods mentioned in
the Commercial Invoice filed with the Bs/E are
different, which clearly depicts that the so-called actual
invoices are not relatable to impugned imports and
hence, cannot be relied to sustain the charge of under
invoicing. Noticee has since compiled the aforesaid
mismatch cases in the Chart along with copies of
aforesaid purported actual invoices/Commercial Invoice
for Hon‟ble Commissioner‟s kind perusal marked as
Annexure-7 (colly)."
xxxxxxxxxxx
6.7 The case of DRI is the the purported Invoices
arrived in Noticee‟s inbox on 04.09.2021 were sent by
the overseas supplier and depicted actual value,
whereas in 27 imports when the overseas supplier
dispatched the goods, clearly mentioned the value on
Bills of lading. These Bills of Lading are overseas
supplier‟s documents and issued at the time of dispatch
of consignments and therefore, values mentioned on
Bills of Lading being the same as those mentioned in
the Commercial Invoices filed with the Bs/E, allegation
of under invoicing on the basis of purported actual
invoices inadmissible in evidence, is ex-facie unlawful.
Details of consignments wherein overseas supplier had
indicated transaction value in the Bills of Lading are
tabulated in the Chart and the copies of such Bills of
Lading are enclosed as Annesure-10 (colly.) for Hon‟ble
Commissioner‟s kind perusal."
(emphasis supplied)
11. The Commissioner, however, rejected the declared value of the
goods declared by the appellant in the Bills of Entry and re-determined
the same and demanded differential duty. The relevant portion of the
order rejecting the declared value under rule 12 of the 2007 Valuation
Rules is reproduced below:
"62.1 As seen from the various evidences
adduced by the investigating agency, it is a case
of undervaluation designed in an ingenius way. I
12
C/40724/2024 & 4 others
find that, multiple dummy/proxy IEC firms as detailed
in below table, all owned/controlled by Shri Hitin
Sachdeva and Shri Harvinder Sachdeva were engaged
in import of automobile parts of SORL Brand and they
used to grossly under-value the imports of automobile
spare parts of SORL brand viz. Power Steering Pump,
Clutch servo, slack adjusters etc. from China. The said
goods were imported through Chennai Port (INMAAI),
Kolkata Port (INCCUI) and Nhava Sheva Port (INNSAI).
All the dummy/proxy IECs used to supply all such
imported SORL brand Auto parts to only one firm i.e.
M/s. Sino Diesel Automotive Private Limited (earlier
Known as M/s. Diesel Garage) whose director is Shri
Harvinder Sachdeva. M/s. Sino Diesel used to supply
the SORL brand auto parts mainly power steering
pumps, clutch servo, slack adjusters etc. domestically
to different retailers/wholesalers and end customers.
62.2 Further, based on comparison of value of
the Actual invoices for year 2020 and 2021,
issued by the supplier of the goods, i.e., M/s Ruili
Group Ruian Auto Parts Co. Ltd. and M/s Zhejiang
New SORL Auto Pats Co. Ltd., as received by Shri
Hitin Sachdeva on his e-mail ID
([email protected]), from the supplier e-
mail ID ([email protected]), in relation to imports
made by above mentioned firms vis-à-vis values
mentioned in the fabricated invoices submitted
before Customs, I find that gross under-valuation
to the tune of approximately 50% has been
resorted by Shri Hitin Sachdeva, in relation to
imports in various dummy/ proxy IECs controlled
by him by way of submitting fabricated invoices
before the Customs. Also, Shri Hitin Sachdeva in
his voluntary statement admitted that the
import/ commercial invoices submitted before
Customs for assessment of duty were actually
generated by him on his laptop using excel
software and the above mentioned actual/
original invoices issued by the supplier of the
goods (SORL group, China) were never submitted
before Customs. Therefore, it is evident that the
actual original invoices issued by the supplier of
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C/40724/2024 & 4 others
goods were not submitted before Customs and
forged/ fabricated invoices shown to be issued in
the name of various proxy/dummy IEC firms,
under investigation, were submitted by Shri Hitin
Sachdeva wherein the value of the goods were
under-valued by approx. 50% A comparison of
value declared before customs based on the
forged/fabricated invoices with the
actual/original invoices is illustrated below to
understand the undervaluation:
xxxxxxxxxx
62.9 From the evidences on record as discussed
above, it is quite evident that Shri Hitin Sachdeva
and Shri Harvinder Sachdeva are the beneficial
owners of the goods imported by using IECs of
M/s Mega Auto Industries, M/s Majestic Motors,
M/s Highline Enterprises, M/s Bird Automotive,
M/s India Enterprises and M/s Dhawan Impex
and has imported the said goods by grossly mis-
declaring the value with the intent to evade
payment of duties of customs. Shri Hitin Sachdeva
in his voluntary statement dated 03-04.09.2021
and dated 13.09.2021 admitted the
undervaluation and gave an elaborate description
of the modus operandi adopted by him for misuse
of the IECS to import, clear and dispose of the
goods by resorting to mis-declaration and
undervaluation. Further, Shri Hitin Sachdeva, in
his statement recorded before DRI admitted that
the values declared before the Customs were not
the correct transaction value and he used to
declare approximately 50% of the actual value of
the imported goods and used to send the balance
amount through hawala and non-banking
channels. Shri Hitin Sachdeva also admitted that
M/s Mega Auto Industries, M/s Majestic Motors,
M/s Highline Enterprises, M/s Bird Automotive,
M/s India Enterprises and M/s Dhawan Impex
were proxy/dummy IECs, which were actually
owned/ controlled by him. All the alleged
Partners/ proprietors of the said firms also
14
C/40724/2024 & 4 others
admitted that the respective firms/IECs were
created and controlled by Hitin Sachdeva.
62.10 Whereas the Bills of Entry mentioned supra
were filed for home consumption under Section 46 of
the Customs Act, 1962 by way of mis-declaration, as
the goods under the said Bills of Entry filed by M/s
Mega Auto Industries, M/s Majestic Motors, M/s
Highline Enterprises, M/s Bird Automotive, M/s India
Enterprises and M/s Dhawan Impex were found mis-
declared with respect to the value of the goods. In the
instant case, the value of goods declared in the import
invoices and respective Bills of Entry did not match with
actual values of the imported goods asper the actual/
original invoices issued by the supplier of the goods.
Therefore, the import invoices submitted before
Customs cannot be considered for assessment of the
subject goods to the duty. Further, Hitin Sachdeva
admitted to gross undervaluation of the imported
goods in his voluntary statements tendered
before DRI officers under the Customs Act, 1962.
Even the statement of his customer and own
employee clearly indicates that the goods were
grossly undervalued. Further, from the evidences
discussed above, it is evident that Shri Hitin
Sachdeva submitted fraudulent or manipulated
documents/invoices for clearance of the imported
goods. Therefore, the value declared in the
subject Bills of Entry cannot be accepted as true
transaction value under the provisions of Section
14 of the Customs Act, 1962 read with the
provisions of the Customs Valuation
(Determination of Value of imported Goods)
Rules, 2007 (hereinafter referred as "CVR, 2007")
and the same is liable to be rejected in terms of
Rule 12 of the CVR, 2007 and needs to be re-
determined."
(emphasis supplied)
12. The value was determined under rule 9 of the 2007 Valuation
Rules and the relevant paragraphs is reproduced below:
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"62.22 I find that during investigation, the evidences
of actual value of the goods imported from 2020
onwards, were recovered which is admittedly the
correct and true transaction value and therefore, the
said value has been taken as FOB transaction value of
the goods imported under the respective bills of entry,
in terms of the Section 14 of the Customs Act, 1962
read with Rule 9 of the CVR, 2007. The rates/value of
similar imported goods prior to 2020 declared in the
other bills of entry (for which direct evidence is not
available) procured from the same supplier are in
concurrence with the rate/value declared in the bills of
entry in respect of which direct evidences of
undervaluation have been found. Hence, for the
purpose of calculation of Customs duty, the value of the
goods in respect of direct evidence of actual price paid
or payable are not available, has been calculated as per
the rate of similar imported goods available in the
recovered documents and data containing the actual
transaction value.
62.23 In continuation of the above I also find that
during investigation, parallel/ actual invoices of
identical goods imported by Hitin Sachdeva in past
through different proxy/dummy IECs, all controlled by
him directly were submitted by him for the year 2020
and 2021. In the said actual invoices, actual transaction
value of identical goods was found and it was noticed
that the said value was much higher than the values
declared before Customs at the time of import of
subject consignments. As the actual invoices reflecting
the correct transaction value of the goods, pertained to
year 2020 and 2021, the Wholsesale Price Indices
(WPI) released by the office of the Economic Adviser,
Department for Promotion of Industry and Internal
Trade https://eaindustry.nic.in/download_data_1112.
asp) for the subject goods, were taken into
consideration to arrive at the contemporaneous value of
the identical goods for year 2018 and 2019. Therefore,
on the basis of actual/parallel invoices of identical
goods and in terms of Rule 9 of the CVR, 2007,
valuation of the subject goods has been done."
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13. The contention of the appellant regarding retraction of the
statements was not accepted by the Commissioner holding that it was
an afterthought. A finding was also recorded by the Commissioner that
the statements recorded under section 108 of the Customs Act are valid
evidence. The relevant paragraph of the order is reproduced below:
"63.4 Therefore, it is clear that the retraction of
the statements is an afterthought to save
themselves from the clutches of the law. Further,
Shri Hitin Sachdeva in his voluntary statement dated
23.11.2021 once again validated his statement
recorded on 03-04.09.2021. Also, the statements
given under Section 108 of the Customs Act, 1962
is valid evidence as held in several judgments."
(emphasis supplied)
14. The appellant was treated as the beneficial owner under section
2(3A) of the Customs Act as he was found to be the mastermind
involved in mis-declaration and under valuation of the imported parts
through several dummy/proxy forms controlled by him.
15. Shri Piyush Kumar, learned counsel for the appellant assisted by
Ms. Reena Rawat and Ms. Shikha Sapra made the following
submissions:
(i) The Commissioner committed an error in rejecting the
value of the goods under rule 12 of the 2007 Valuation
Rules as the finding is based on inadmissible evidence;
(ii) The charge of undervaluation is based primarily upon
the statements of the appellant recorded on
03/04.09.2021 and 13.09.2021. Not only were these
statements typed by the DRI Officers on which the
signatures of the appellant were obtained by coercion,
but even otherwise the statements recorded under
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section 108 of the Customs Act cannot be considered as
relevant if the procedure contemplated under section
138B of the Customs Act is not followed.
(iii) The fact that statements of the appellant were recorded
under duress is apparent from the fact that the medical
officer on duty in the Tihar Jail in his report mentioned
about marks of beating on the body of the appellant
and even the hospital where the appellant was sent for
examination by the jail authorities also found visible
marks of beating;
(iv) The Commissioner also confirmed under valuation on
the basis of e-mail dated 04.09.2021 and its
attachments retrieved from the inbox of the e-mail of
the appellant. The said e-mail had arrived on
04.09.2021 at 11:25 AM and 01:16 PM when the
appellant was in DRI custody and his laptop and phone
were in the possession of DRI Officers and the laptop
was also connected to internet through the Wi-Fi
network IP address of the DRI. The said e-mails cannot
be construed as information supplied to the computer
in the ordinary course of activities as contemplated
under section 138C(2)(d) of the Customs Act. The
certificate produced by the department cannot be
construed as a valid certificate;
(v) The purported actual invoices, on the basis of which
that Commissioner has re-determined the assessable
value, are not relatable to impugned consignments.
Firstly, the same are in the name of Diesel Garage and
not in the name of importers who had imported the
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consignments under corresponding Bills of Lading and
Bills of Entry. Secondly, in many cases, the goods
mentioned in the purported actual invoices do not
match with the description of the goods imported under
the corresponding Bill of Entry. Thirdly, the invoice
number and date mentioned in the purported actual
invoices are also different from the number and dates
of invoices furnished by respective importers before
customs and fourthly, all the purported actual invoices
are neither signed nor stamped;
(vi) The purported price list which has been heavily relied
upon is a pdf file of some excel sheets printed on plain
paper and not on supplier‟s letterhead and is not signed
or stamped by the issuer. The said document does not
have any of the attributes of a price list and, therefore,
cannot be admitted in evidence as price list of the
supplier. Even otherwise, re-determination of value on
the basis of price list is unlawful, being contrary to the
law propounded by Courts;
(vii) The re-determination of the value under rule 9 of the
2007 Valuation Rules is contrary to the provisions of
the 2007 Valuation Rules;
(viii) The re-determination of value on the basis of wholesale
price inbox is impermissible;
(ix) As the value of the imported goods could not be
rejected nor determined, the demand of differential
duty is bad in law;
(x) The appellant cannot be treated as the beneficial
owner;
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(xi) The imported goods were not liable to confiscation; and
(xii) Penalties upon the appellant and co-appellants could
not have been imposed under various provisions of the
Customs Act as the goods were not liable to
confiscation.
16. Shri Sanjay Kakkar, learned authorized representative appearing
for the department, however, supported the impugned order and made
the following submissions:
(i) The appellant is the beneficial owner in terms of section
2(3A) of the Customs Act and, accordingly, is the
importer under section 2(26) of the Customs Act. This
is apparent from the statements of the appellant
recorded under section 108 of the Customs Act;
(ii) The Commissioner did not commit any illegality in
placing reliance upon the statements made under
section 108 of the Customs Act;
(iii) The demand of cross examination by the appellant was
correctly refused by the Commissioner;
(iv) The department had produced a certificate
contemplated under section 138(c) of the Customs Act
regarding the excel sheets and, therefore, the
contention of the appellant that they are not admissible
under section 138(c) of the Customs Act is incorrect;
(v) The value of the goods was correctly rejected under
rule 12 of the 2007 Valuation Rules and also correctly
re-determined under rule 9 of the 2007 Valuation
Rules;
20
C/40724/2024 & 4 others
(vi) The Commissioner was justified in re-determining the
value on the basis of wholesale price index; and
(vii) Penalties have been correctly imposed on the appellant
and the co-appellants.
17. The submissions advanced by the learned counsel for the
appellant and the learned authorised representative appearing for the
department have been considered.
18. A perusal of the order passed by the Commissioner shows that the
finding regarding rejection of the transaction value indicated in the Bills
of Entry has been rejected for the following reasons:
(i) The statements of the appellant recorded under
section 108 of the Customs Act on 03/04.09.2021
and 13.09.2021;
(ii) The statements of co-noticee‟s/witnesses recorded
under section 108 of the Customs Act during the
course of investigation; and
(iii) The e-mail dated 04.09.2021 and its attachments
retrieved from the inbox of the e-mail of the
appellant.
19. The first issue that arises for consideration is regarding the
manner in which the statements of the appellant were recorded on
03/04.09.2021 and 13.09.2021 under section 108 of the Customs Act.
20. In the reply to the show cause notice, the appellant had in very
clear terms described the manner in which the statements were
recorded. The appellant stated that after he arrived at Delhi on
03.09.2021 at 9:45 PM by Vistara Flight with Bipin Jha, both he and
Bipin Jha were taken to the office by the DRI Officers and confined and
locked in separate enclosures. Thereafter, they "mercilessly tortured
21
C/40724/2024 & 4 others
Noticee, stripped him, physically beat him with stick and metal rod,
deprived him of food/water and did not even permit him to attend
nature's call". The appellant further stated that the officers stopped
beating only after they obtained his signature on the statement which
they had already prepared, typed and stored in the DRI computer. The
appellant was thereafter arrested on 04.09.2021 at 5:15 PM and
produced before the Duty Magistrate and thereafter lodged in Tihar Jail
after midnight. On arrival at the jail, the doctor on duty examined the
appellant and finding marks of beating recorded in his report "multiple
bruises over shoulder, thigh, abdomen, hands due to physical assault".
Next morning when the appellant complained of immense pain, nausea
and fever the Jail Doctor recommended for examination at a
Government hospital. The appellant was taken to Deen Dayal Upadhyay
Hospital on 06.09.2021, and the doctors after examination, recorded in
the medical examination report that the appellant had bruises over right
thigh, bruises over right knee, bruises over left buttock, multiple bruises
on right arm, bruises over left shoulder, bruises over left flank which
evidenced history of physical assault.
21. It is, therefore, clear that the contention of the appellant that he
was mercilessly beaten by the DRI officers is supported by the medical
report of the Jail doctor and the report submitted by the doctor of Deen
Dayal Upadhyay Hospital.
22. The appellant also contended that on 13.09.2021 when the DRI
officers again interrogated the appellant in Tihar Jail, he was forced to
sign a pre-typed statement as he was threatened that his mother and
younger brother would be arrested. The very next day on 14.09.2021,
the appellant filed a representation before the Chief Metropolitan
22
C/40724/2024 & 4 others
Magistrate Patiala House, New Delhi retracting the statement and
stating that the same was extracted by the DRI officers under physical
abuse and mental torture. The retraction statement dated 14.09.2021
of the appellant submitted to the Chief Metropolitan Magistrate is
reproduced below:
"I am Hitin Sachdeva S/o Harvinder Sachdeva aged 31
years, presently under judicial custody at Ward no.-5,
Jail No.-7, of Tihar Jail. I am one of the partner in
Highline Enterprises Enterprises, M/s MEGA Auto
Industries & M/s Bird Automotive. I was arrested by
DRI officials on 04.09.2021. During interrogation,
I was mercilessly beaten with wooden rods and
threatened of dire consequences by DRI officials
at DRI office in New Delhi. My signatures were
forcefully taken on a pre-typed statement which
was not read over to me. I wish to humbly submit
that it is not my statement and my signatures
were obtained on it under threat and pressure. I
hereby wish to retract my statement given on
04/9/2021 and I do not own any of its contents.
My request for retraction be humbly please be
allowed. My medical examination was later done
on 06/09/2021.
Moreover, the DRI officials had visited Tihar Jail
no. 7 (no. 7) on 13/09/2021 to take my
statement. But I wish to bring to your notice that
again the statement was again pre-typed in DRI
laptop and I was again pressurized and
threatened to worse conditions again if I did not
sign the pre-typed statement. They threatened
me to worse conditions to me and my family. I
wish to please retract my statement again on
13/09/2021 as I do not own any of its contents.
My request for retraction may please be allowed
Lastly, I would request you sir your honour that my and
my family's statements should be taken infront of a
magistrate in court as I was physically and mentally
tortured by DRI officials. I am very scared by the
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C/40724/2024 & 4 others
DRI officials and would humbly request you to
kindly, grant the same that my and my family's
statements are to be done in court infront of a
magistrate, and we are not called at DRI office.
I humbly request for the acceptance of this request as I
am mentally disturbed and scared because of my past
incidences with the DRI officials."
(emphasis supplied)
23. The Commissioner has not considered the facts stated by the
appellant in the reply to the show cause notice regarding the manner in
which the statements were recorded on 03/04.09.2021 and 13.09.2021.
In view of the medical reports submitted by the jail doctor and the
doctor at the Deen Dayal Upadhyay Hospital, the contention of the
appellant deserves to be accepted.
24. Regarding the retraction statement dated 14.09.2021, the
Commissioner has disregarded the same for the reason that the
retraction statement was an afterthought to save himself from the
clutches of law. The retraction was made before the Chief Metropolitan
Magistrate on 14.09.2021 immediately after it was made on
13.09.2021. The retraction could not have been ignored merely by
stating that it was an afterthought, more particularly when the facts
stated by the appellant regarding the manner of obtaining the
statements on 03/04.09.2021 had also been stated in this retraction
statement. The statements made by the appellant on 03/04.2021 and
13.09.2021, therefore, cannot be considered as relevant.
25. A perusal of the statement of the appellant made on
03/04.09.2021 shows that it contains in Table 1 list of firms "said to
have been created by the appellant for importing auto parts from
China". A perusal of this Table shows that is contains the name of the
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C/40724/2024 & 4 others
importer, the IEC code which runs into as many as ten digits the
registered address of each of the forms and the IEC date. It is difficult
to believe that all these data could have been stated by the appellant in
his statement on his own. This apart, Table B contains comparison of
the actual invoices with import invoice submitted to customs. It
mentions fifteen original invoices with numbers, original invoices date,
corresponding fake invoices numbers prepared by the appellant, import
value as per the original invoice and import value as per the fake
invoice. It is also difficult to believe that these figures could have been
mentioned by the appellant on his own.
26. Even otherwise, a statement recorded under section 108 of the
Customs Act cannot be considered as relevant if the procedure
contemplated under section 138B of the Customs Act is not followed.
Without examining the provisions of section 138B of the Customs Act,
the Commissioner has merely stated that the statements recorded
under section 108 of the Customs Act are valid.
27. In M/s Surya Wires Pvt. Ltd. vs. Principal Commissioner,
CGST, Raipur6, a Division Bench of this Tribunal examined the
provisions of section 108 and 138B of the Customs Act as also the
provisions of section 9D and 14 of the Central Excise Act, 1944, which
are similar to the provisions of section 108 and 138B of the Customs
Act, and the observations of the Bench are:
"28. It, therefore, transpires from the aforesaid
decisions that both section 9D(1)(b) of 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
6. Excise Appeal No. 51148 of 2020 decided on 01.04.2025
25
C/40724/2024 & 4 others
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 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)
28. In Ambika International vs. Union of India7 decided on
17.06.2016, the Punjab and Haryana High Court examined the
provisions of section 9D of the Central Excise Act. The show cause
notices that had been issued primarily relied upon statements made
under section 14 of the Central Excise Act. It was sought to be
contended by the Writ Petitioners that the demand had been confirmed
in flagrant violation of the mandatory provisions of section 9D of the
Central Excise Act. The High Court held that if none of the
circumstances contemplated by clause (a) of section 9D(1) exist, then
7. 2018 (361) E.L.T. 90 (P&H)
26
C/40724/2024 & 4 others
clause (b) of section 9D(1) comes into operation and this provides for
two steps to be followed. The first is that the person who made the
statement has to be examined as a witness before the adjudicating
authority. In the second stage, the adjudicating authority has to form an
opinion, having regard to the circumstances of the case, whether the
statement should be admitted in evidence in the interests of justice. The
judgment further holds that in adjudication proceedings, the stage of
relevance of a statement recorded before Officers would arise only after
the statement is admitted in evidence by the adjudicating authority in
accordance with the procedure contemplated in section 9D(1)(b) of the
Central Excise Act. The judgment also highlights the reason why such an
elaborative procedure has been provided in section 9D(1) of the Central
Excise Act. It notes that a statement recorded during
inquiry/investigation by an Officer of the department has a possibility of
having been recorded under coercion or compulsion and it is in order to
neutralize this possibility that the statement of the witness has to be
recorded before the adjudicating authority. The relevant portions of the
judgment are reproduced below:
"15. A plain reading of sub-section (1) of
Section 9D of the Act makes it clear that clauses
(a) and (b) of the said sub-section set out the
circumstances in which a statement, made and
signed by a person before the Central Excise
Officer of a gazetted rank, during the course of
inquiry or proceeding under the Act, shall be
relevant, for the purpose of proving the truth of
the facts contained therein.
16. Section 9D of the Act came in from detailed
consideration and examination, by the Delhi High Court,
in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189
(Del.). Para 12 of the said decision clearly holds that by
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C/40724/2024 & 4 others
virtue of sub-section (2) of Section 9D, the provisions of
sub-section (1) thereof would extend to adjudication
proceedings as well.
*****
22. 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 adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause
(a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory.
24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/ investigation, by the gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the 28 C/40724/2024 & 4 others 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 adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned.
25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice.
26. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross- examination, and cross-examination has to precede re- examination.
27. It is only, therefore, -
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C/40724/2024 & 4 others
(i) after the person whose statement
has already been recorded before a
gazetted Central Excise Officer is
examined as a witness before the
adjudicating authority, and
(ii) the adjudicating authority arrives
at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise.
28. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof."
(emphasis supplied)
29. In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur8 decided on 04.07.2018, the Chhattisgarh High Court also examined the provisions of section 9D of the Central Excise Act. The allegation against the appellants was regarding clandestine removal of goods without payment of duty and for this purpose reliance was placed on the statement of the Director of the Company who is said to have admitted clandestine removal of goods. The contention of the appellants before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of sub-
8. 2018 (362) E.L.T. 961 (Chhattisgarh) 30 C/40724/2024 & 4 others sections (1) and (2) of section 9D of the Central Excise Act, and after placing reliance on the judgment of the Punjab and Haryana High Court in Ambika International, the Chhattisgarh High Court held:
"9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice.
9.4 The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain admissions recorded during investigation which may have been obtained under the police power of the Investigating authorities by coercion or undue influence.
9.5 ***** The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of 31 C/40724/2024 & 4 others evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the statement is treated relevant and admissible under the law, the person is not only required to be present in the proceedings before the adjudicating authority but the adjudicating authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana."
(emphasis supplied) 32 C/40724/2024 & 4 others
30. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd.9 decided on 01.06.2020, the Delhi High Court examined the provisions of sections 108 and 138B of the Customs Act.
The department placed reliance upon the statements recorded under section 108 of the Customs Act. The Delhi High Court held that the procedure contemplated under section 138B(1)(b) has to be followed before the statements recorded under section 108 of the Customs Act can be considered as relevant. The relevant paragraphs of the judgment of the Delhi High Court are reproduced below:
"76. We are not persuaded to change our view, on the basis of the various statements, recorded under Section 108 of the Act, on which the Learned ASG sought to rely. Statements, under Section 108 of the Act, we may note, though admissible in evidence, acquire relevance only when they are, in fact, admitted in evidence, by the adjudicating authority and, if the affected assessee so chooses, tested by cross- examination. We may, in this context, reproduce, for ready reference, Section 138B of the Act, thus:***** A Division Bench of this Court has, speaking through A.K. Sikri, J. (as he then was) held, in J & K Cigarettes Ltd. v. Collector of Central Excise [2009 (242) E.L.T. 189 (Del.)] that, by virtue of sub-section (2), Section 138B(1) of the Act would apply, with as much force, to adjudication proceedings, as to criminal proceedings.
***** We express our respectful concurrence with the above elucidation of the law which, in our view, directly flows from Section 138B(1) of the Act - or, for that matter, Section 9D of the Central Excise Act, 1944.
9. 2021 (375) E.L.T. 545 (Del.) 33 C/40724/2024 & 4 others
77. The framers of the law having, thus, subjected statements, recorded under Section 108 of the Act, to such a searching and detailed procedure, before they are treated as relevant in adjudication proceedings, we are of the firm view that such statements, which are yet to suffer such processual filtering, cannot be used, straightaway, to oppose a request for provisional release of seized goods. The reliance, in the appeal before us, on various statements recorded during the course of investigation in the present case cannot, therefore, in our view, invalidate the decision, of the Learned Tribunal, to allow provisional release of the seized 25400.06 grams of gold jewellery, covered by Bill of Entry No. 107190, dated 20th April, 2019."
(emphasis supplied)
31. In M/s. Drolia Electrosteel P. Ltd. vs. Commissioner, Customs, Central Excise & Service Tax, Raipur 10 decided on 30.10.2023, a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs Pvt.
Ltd. vs. Union Of India11, observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. The relevant portions of the decision of the Tribunal are reproduced below:
"14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses
(a) and (b) of subsection (1). There is no assertion by either side that 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
10. Excise Appeal No. 52612 of 2018 decided on 30.10.2023
11. 2016 (340) E.L.T. 67 (P & H) 34 C/40724/2024 & 4 others 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 (P&H)] that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under Central Excise Act. *****
16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible."
(emphasis supplied)
32. For the same reasons, the statement of the co-noticees/ other witnesses tendered under section 108 of the Customs Act could not have been relied upon.
33. Thus, the statements made by the appellant and other persons under section 108 of the Customs Act could not have been relied upon by the Commissioner to reject the transaction value.
34. The Commissioner has rejected the transaction value mentioned in the Bills of Entry also for the reason that the appellant had admitted under valuation in the statements recorded under section 108 of the Customs Act. The rejection of the transaction value for this reason cannot, for the reasons stated above, be sustained.
35C/40724/2024 & 4 others
35. The Commissioner has also treated the appellant to be the beneficial owner under section 2(3A) of the Customs Act on the basis of the statements made by the appellant under section 108 of the Customs Act. This finding of the Commissioner cannot be sustained as statements made under section 108 of the Customs Act cannot be considered as relevant.
36. The rejection of the transaction value is also based on the e-mail dated 04.09.2021 and its attachment retrieved from the inbox of the e-
mail of the appellant.
37. It needs to be noted that the appellant had in his reply had clearly stated that during the course of investigation on 04.09.2021, the appellant had provided password of his e-mail and, thereafter, the DRI Officers, using their wi-fi connection sent e-mails to various IDs found in the appellants e-mail database, called them telephonically and threatened them to prepare and forward documents as desired by them and it is in compliance of the said instructions that some of them prepared documents as directed by the DRI Officers and e-mailed them to the e-mail address of the appellant on 04.09.2021. The appellant also stated that the relied upon document numbers 26 and 27 to the show cause notice had arrived on 04.09.2021 at 11:25 AM and 01:16 PM when the appellant was in the custody of DRI and the laptop was in the possession of DRI Officers. The appellant also requested the Commissioner to verify that the contextual mails had arrived in appellant inbox through the Wi-Fi network/IP address of the DRI. In fact, the appellant also stated all the aforesaid purported Invoices retrieved from inbox of the appellant e-mail address had arrived not on the appellants laptop, but on the Desktop installed in DRI officers 36 C/40724/2024 & 4 others connected through DRI internet Wi-Fi connection and, therefore, the appellant requested the Commissioner to cause an impartial inquiry regarding the arrival of purported invoices in the appellants inbox when the appellant was in DRI custody.
38. It is not in dispute that the said e-mails are not of any date prior to the date of import of the goods and are said to have been received on the e-mail address of the appellant on 04.09.2021. There appears to be no good reason as to why those e-mails would have been sent on 04.09.2021 when the import had already taken place earlier. The Commissioner has not dealt with the reply of the appellant and has blindly relied upon the invoices attached and considered them as parallel invoices.
39. The rejection of the transaction value under rule 12 of the 2007 Valuation Rules on the basis of the e-mail said to have been received by the appellant on 04.09.2021 is, therefore, not sustainable.
40. Once the rejection of the transaction value under rule 12 of the 2007 Valuation Rules cannot be sustained, the issue relating the contention of the appellant regarding wrongful re-determination of the value is not required to be examined.
41. In any case, the re-determination of the value is based on the basis of parallel invoices said to have been sent to the e-mail address of the appellant on 04.09.2021 and on the basis of the price list also sent by the e-mail on 04.09.2021. As observed earlier, e-mails received by the appellant on 04.09.2021 cannot be relied upon. This apart, the purported price list, which has been heavily relied upon by the Commissioner for re-determination of the value is a PDF file of some excel sheets printed on a plain paper and not on the letterhead of the 37 C/40724/2024 & 4 others supplier nor is it signed or stamped by the issuer. The said document cannot be termed as a price list.
42. Thus, for all the reasons stated above, the transaction value of the imported goods cannot be rejected under rule 12 of the 2007 Valuation Rules. Subsequently, they could not have been re-determined under rule 9 of the 2007 Valuation Rules. The demand of differential duty with interest and penalty would also, therefore, have to be set aside.
43. Customs Appeals filed by Sandeep Kumar Das, S.K. Dhawan, Harvinder Sachdeva and Madhav Sachdeva imposing penalty upon them under sections 114AA and 112(b)(ii) of the Customs Act, therefore, cannot also be sustained. They are, accordingly, set aside.
44. Resultantly, the impugned order dated 11.06.2024 passed by the Commissioner is set aside and the Customs Appeal No‟s. 40724 of 2024, 40725 of 2024, 40726 of 2024, 40913 of 2024 and 40914 of 2024 are allowed.
(Order Pronounced on 19.03.2026) (JUSTICE DILIP GUPTA) PRESIDENT (VASA SESHAGIRI RAO) MEMBER (TECHNICAL) Jyoti