Custom, Excise & Service Tax Tribunal
Sanjay Kumar Singh vs -New Delhi(Icd Tkd) on 12 February, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO. I
CUSTOMS APPEAL No. 58059 of 2013
(Arising out of Order-in-Original No. 09/2013 dated 31.03.2013 passed by the
Commissioner of Customs, ICD, Tughlakabad, New Delhi)
Sanjay Kumar Singh ....Appellant
187-C,Gali Arya Samaj Mandir,
Rani Ka Bagh, Amritsar-143001
Punjab
Versus
Commissioner of Customs ....Respondent
ICD, Tughalkabad
NEW DELHI
APPEARANCE:
Shri B.K. Singh and Ms. Vandana Singh, advocates for the appellant
Shri Mukesh Kumar Shukla, authorised representative of the department
CORAM : HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing : 06.01. 2026
Date of Decision : 12.02.2026
FINAL ORDER NO. 50264/2026
JUSTICE DILIP GUPTA :
This appeal has been filed by Sanjay Kumar Singh 1 to assail
that portion of the order dated 31.03.2013 passed by the
Commissioner ICD, TKD, New Delhi2 that imposes a penalty of Rs. 10
lakhs on the appellant under section 112(a)(i) of the Customs Act,
19623 for acts of omission and commission in abetting in the filing of
Bill of Entry dated 04.02.2010 in the name of M/s Jay Sales
Organisation, which is said to be a non-existing/ bogus firm.
1. the appellant
2. the Commissioner
3. the Customs Act
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2. The appellant is a General Manager of M/s Cargo Placement &
Shipping Agency. It is stated that the appellant in his statement
made on 13.03.2010 under section 108 of the Customs Act admitted
that he had given documents received from Lokesh Garg and Manish
Jalhotra to Krishan Kumar, a G-Card holder, to file the Bill of Entry
without taking sufficient documents and without verifying the
genuineness of the persons and the signatures of the IEC and thus
was instrumental in abetment of smuggling goods of foreign origin by
Lokesh Garg and others.
3. It would be useful to first examine the relevant portion of the
show cause notice that relates to the allegations made against the
appellant and paragraph number 80 of the show cause notice is
reproduced below:
"80. Shri Sanjay Kumar, GM of M/s Cargo
Placement & Shipping Agency in his
statement dated 13.03.2010 recorded under
Section 108 of Customs Act, 1962 admitted
that he has given documents received from
Sh. Lokesh Garg and Sh. Manish Jalhotra
through Shri Kamal Sehgal to Shri Krishan
Kumar G Card holder to file Bill of Entry
without taken sufficient documents and
without verifying the genuineness of the
persons and also the genuineness of the IEC
on the basis of which he asked his G Card
holder person i.e. Shri Krishan Kumar to file
the Bill of Entry and thus became
instrumental in abetment of smuggling of
goods of foreign origin by Shri Lokesh Garg
and others as discussed above. Further his
malafide appears to be corroborated with the fact
that in spite of being CHA company having EDI
facility to file the Bill of Entry from his office
through the EDI login provided to him, he asked
Shri Krishan Kumar to file the Bill of Entry from
CMC to avoid detection by the Customs as well as
from his company's own management system.
Thus he knowingly with the help of Shri Krishan
Kumar appears to be abetted in the smuggling of
goods of foreign origin rendering himself of penal
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action under Section 112 of Customs Act, 1962.
Shri Sanjay Kumar also failed to exercise due
diligence to ascertain the correctness of any
information which he imparted to the importer as
above. Thus it appears that the act of Shri Sanjay
Kumar as discussed above render M/s Cargo
Placement and Shipping Agency liable for
suspension of his CHA License in terms of
Regulation 20 of Customs House Agents-Licensing
Regulations, 2004."
(emphasis supplied)
4. A perusal of the show cause notice indicates that allegations
have been made against the appellant on the basis of the statement
made by the appellant on 13.03.2010 under section 108 of the
Customs Act and from the said statement an inference has been
drawn that the appellant had abetted the smuggling of goods of
foreign origin.
5. The Commissioner has dealt with the matter of the appellant in
paragraph number 165(l&m) of the order and the relevant portion of
the order is reproduced below:
"367(l). I have carefully gone through the
statements and the evidences on records
and discussed in the show cause notice and
the addendum. I find that there is admission
on part of the noticee that they had filed the
Bills of Entry of M/s D.P. Enterprises through Shri
Krishan Kumar, the G card holder of the CHA
company M/s Cargo Placement and Shipping
Agency. This fact is corroborated from the
statements of Shri Krishan Kumar the G-card
holder. It is also an admitted fact on record that
these Bills of Entry were not filed online through
EDI but at the CMC centre at ICD, TKD, New
Delhi. The noticee bas also admitted that
they had not conducted the verification of
the existence of M/s D.P.Enterprises for
whom they were filing the Bills of Entry. The
noticee in fact admits to having physically
verified the premises of M/s D.P.Enterprises
only after learning that the Customs are
conducting their enquiries in this regard. The
noticee even admits that after physical
verification they learnt that the firm was non-
existent at its given address. The noticee has also
admitted that the amount of Rs.15,000/- received
for filing these Bills of Entry were not deposited in
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the accounts of the company and were in fact
lying with him. I also find that the noticee has
admitted in his statement dated 24.02.2010,
after seeing the check list of Bill of Entry No.
872912 dated 04.02.2010 bearing the signature
of Shri Krishan Kumar (G Card Holder) that the
same has been filed by him on behalf of his CHA
company. All these acts of the noticee cast
serious doubts on his conduct as a General
Manager of a CHA company. The noticee filed the
Bills of Entry without taking sufficient documents
and without verifying the genuineness of the
persons and also the genuineness of the IEC on
the basis of which he asked his G Card holder
person i.e. Shri Krishan Kumar to file the Bill of
Entry and thus became instrumental in abetment
of smuggling of goods of foreign origin by Shri
Lokesh Garg and others as discussed above. I
observe that his malafide is corroborated with the
fact that in spite of being CHA company having
EDI facility to file the Bill of Entry from his office
through the EDI login provided to him, he asked
Shri Krishan Kumar to file the Bill of Entry from
CMC to avoid detection by the Customs as well as
from his company's own management system.
Shri C.P.Sajeevan, Partner of M/s Cargo
Placement & Shipping Agencies vide his reply
dated 23.02.2011 also admitted that as soon as
the information was received he flew to Delhi
ascertain the ground reality and upon checking
with his office records and other staff, Mr. Sanjay
Singh and Mr. Krishan Kumar was confronted with
the documents and they admitted that they had
filed some bill of entries without his consent and
against the written company procedures and
policies; that the said clearance were neither
reflected in their office record nor his other staff
including the accounts section were aware of such
dealing; that Mr. Sanjay Singh and Mr. Kishan
Kumar had committed criminal breach of trust,
they had not only cheated the Customs
department but also cheated the company by
working against the company policies for their
personal benefits for which his services were
terminated. I find that the noticee is placing
reliance on his statements to assert that he
did not instruct Shri Krishan Kumar to file
the documents of M/s Jai Sales Organisation
but only of M/s D.P.Enterprises. However, I
find that Shri Krishan Kumar in his
statements recorded under section 108 of
the Customs Act, 1962 admitted to have
filing the documents of M/s Jai Sales
Organisation at the
behest/instruction/orders of the notice. Shri
Krishan Kumar has also confessed that he
was asked to file the Bills of Entry of these
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two companies and the noticee had
threatened him (Krishan Kumar) that he
would lose his job if he did not do so. It is not
the prerogative of the noticee to hold his
statements as correct and that tendered by some
other person to be wrong particularly when both
the persons have tendered their respective
statements under section 108 of the Customs Act,
1962. I also observe that Shri C.P.Sajeevan,
Partner of M/s Cargo Placement & Shipping
Agencies has informed that due to illegitimate
conduct going against the established work
procedure, noticee Shri Sanjay Kumar Singh has
also been dismissed from service. This also
proves complicity of the noticee.
m. I find from the show cause notice that Shri
Sanjay Kumar Singh was called upon to show
cause as to why penalty should not be imposed
upon him under Section 112 of the Customs Act,
1962. In view of my discussion and findings, I
thereby find that Shri Sanjay Kumar Singh has
rendered himself liable for penal action under
Section 112 of Customs Act, 1962 for his acts of
omission and commission in respect of abetting in
the filing the bill of entry number 872912 dated
04.02.2010 in the name of non-existing/bogus
firm i.e. M/s Jai Sales Organisation."
(emphasis supplied)
6. Shri B.K. Singh, learned counsel for the appellant submitted
that the order passed against the appellant is solely based on the
statements made by the appellant under section 108 of the Customs
Act and so the impugned order imposing penalty upon the appellant
under section 112(a)(i) of the Customs Act should be set aside. In
support of this contention, learned counsel placed reliance upon the
decision of the Tribunal in M/s Surya Wires vs. Principal
Commissioner, CGST, Raipur4. Learned counsel also submitted
that the appellant had no knowledge of the facts attributed against
him and, therefore, penalty under section 112(a)(i) of the Customs
Act, could not have been imposed upon him. In support of this,
learned counsel placed reliance upon the decision of the Supreme
4. Excise Appeal No. 51148 of 2020 decided on 01.04.2025
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Court in Shri Ram vs. The State of U.P.5 and Amritlakshmi
Machine Works vs. Commr. Of Cus. (Import), Mumbai6
7. Shri Mukesh Kumar Shukla, learned authorized representative
appearing for the department, however, supported the impugned
order and submitted that it does not call for any interference in this
appeal.
8. The submissions advanced by learned counsel for the appellant
and learned authorized representative appearing for the department
have been considered.
9. The two main issues that arise for consideration in this appeal
are whether the appellant abetted the doing or omission of an act
resulting in imposition of penalty under section 112(a)(i) of the
Customs Act and whether the Commissioner committed an error in
solely placing reliance upon the statements made by the appellant
and Pramod under section 108 of the Customs Act for the purpose of
imposing penalties upon the appellant.
10. Penalty under section 112(a)(i) of the Customs Act can be
imposed for the reason that the appellant abetted the doing or
omission of an act. The Supreme Court in Shri Ram observed:
"6. It is not enough that an act on the part of the
alleged abettor happens to facilitate the
commission of the crime. Intentional aiding and
therefore active complicity is the gist of the
offence of abetment under the third paragraph of
Section 107."
11. This decision of the Supreme Court was followed by the
Bombay High Court in Amritlakshmi Machine Works and the
relevant paragraph is reproduced below:
5. Criminal Appeal No. 142 of 1973
6. 2016 (335) E.L.T. 225 (Bom.)
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"25. Mere facilitation without knowledge would
not amount to abetting an offence. Parliament has
specifically included abetment in Section 112(a)
of the Act, to include acts done with knowledge,
otherwise the first portion thereof "Any person -
(a) who in relation to any goods does or omits to
do any act ...." would cover acts done or omitted
to be done on account of instigation and/or
encouragement without knowledge. However, the
first portion of Section 112(a) of the Act is only to
make person of first degree in relation to the act
or omission strictly liable. Persons who are not
directly involved in the act or omission to act,
which has led the goods becoming liable for
confiscation cannot be made liable unless some
knowledge is attributed to them. Therefore, it is
to cover such cases that Section 112(a) of the Act
also includes a person who abets the act or
omission to act which has rendered the goods
liable to confiscation. Imposing penalty upon an
abettor without any mens rea on his part would
bring all business to a halt as even innocent
facilitation provided by a person which has made
possible the act or omission to act possible could
result in imposing of penalty. To illustrate
innocent transferee of a license which enabled the
purchaser of the license to misuse the license
could be imposed with penalty. This could never
be the intent or objective of Section 112(a) of the
Act."
12. In the instant case, there is no allegation that the appellant
had knowledge that the documents submitted by Lokesh Garg and
Manish Jalhotra were not genuine. Penalty under section 112(a)(i)
could not have been imposed upon the appellant under the Customs
Act.
13. The statement of witnesses are recorded under section 108 of
the Customs Act and section 138B of the Customs Act deals with
relevancy of statements under certain circumstances.
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14. The statement of witnesses are recorded under section 14 of
the Central Excise Act, 19447 and section 9D of the Central Excise Act
deals with relevancy of these statements under certain
circumstances.
Customs Act
15. Section 108 of the Customs Act deals with power to summon
persons to give evidence and produce documents. It provides that
any Gazetted Officer of customs shall have the power to summon any
person whose attendance he considers necessary either to give
evidence or to produce a document or any other thing in any inquiry
which such officer is making under the Customs Act.
16. Section 138B of the Customs Act deals with relevancy of
statements under certain circumstances and it is reproduced below:
"138B. Relevancy of statements under
certain circumstances.
(1) A statement made and signed by a person
before any Gazetted Officer of customs during the
course of any inquiry or proceeding under this Act
shall be relevant, for the purpose of proving, in
any prosecution for an offence under this Act, the
truth of the facts which it contains, --
(a) when the person who made the
statement is dead or cannot be found, or is
incapable of giving evidence, or is kept out
of the way by the adverse party, or whose
presence cannot be obtained without an
amount of delay or expense which, under
the circumstances of the case, the court
considers unreasonable; or
(b) when the person who made the
statement is examined as a witness in the
case before the court and the court is of
opinion that, having regard to the
circumstances of the case, the statement
should be admitted in evidence in the
interests of justice.
7. the Central Excise Act
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(2) The provisions of sub-section (1) shall, so far
as may be, apply in relation to any proceeding
under this Act, other than a proceeding before a
court, as they apply in relation to a proceeding
before a court."
Central Excise Act
17. Section 14 of the Central Excise Act deals with power to
summon persons to give evidence and produce documents in
inquiries under the Central Excise Act. Any Central Excise Officer duly
empowered by the Central Government in this behalf has the power
to summon any person whose attendance he considers necessary
either to give evidence or to produce a document in any inquiry which
such Officer is making for any of the purposes of the Central Excise
Act.
18. Section 9D of the Central Excise Act deals with relevancy of
statements under certain circumstances and it is reproduced below:
"9D. Relevancy of statements under certain
circumstances
(1) A statement made and signed by a person
before any Central Excise Officer of a gazetted
rank during the course of any inquiry or
proceeding under this Act shall be relevant, for
the purpose of proving, in any prosecution for an
offence under this Act, the truth of the facts which
it contains,--
(a) when the person who made the
statement is dead or cannot be found, or is
incapable of giving evidence, or is kept out
of the way by the adverse party, or whose
presence cannot be obtained without an
amount of delay or expense which, under
the circumstances of the case, the court
considers unreasonable; or
(b) when the person who made the
statement is examined as a witness in the
case before the court and the court is of
opinion that, having regard to the
circumstances of the case, the statement
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should be admitted in evidence in the
interests of justice.
(2) The provisions of sub-section (1) shall, so far
as may be, apply in relation to any proceeding
under this Act, other than a proceeding before a
court, as they apply in relation to a proceeding
before a court."
19. It would be seen section 108 of the Customs Act and section 14
of the Central Excise 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 138B of the Customs Act or in section 9D of the Central
Excise 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
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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 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.
20. It would now be appropriate to examine certain decisions
interpretating section 138B of the Customs Act and section 9D of the
Central Excise Act.
21. In Ambika International vs. Union of India8 decided on
17.06.2016, the Punjab and Haryana High Court examined the
provisions of section 9D of the Central Excise Act. The show cause
notices that had been issued primarily relied upon statements made
under section 14 of the Central Excise Act. It was sought to be
contended by the Writ Petitioners that the demand had been
confirmed in flagrant violation of the mandatory provisions of section
9D of the Central Excise Act. The High Court held that if none of the
circumstances contemplated by clause (a) of section 9D(1) exist,
then clause (b) of section 9D(1) comes into operation and this
provides for two steps to be followed. The first is that the person who
made the statement has to be examined as a witness before the
8. 2018 (361) E.L.T. 90 (P&H)
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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 virtue of sub-section (2) of
Section 9D, the provisions of sub-section (1)
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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 DRI/DGCEI resorts 14 C/58059/2013 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 15 C/58059/2013 precede cross-examination, and cross- examination has to precede re-examination.
27. It is only, therefore, -
(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)
22. The Punjab and Haryana High Court in Jindal Drugs that was decided on 21.06.2016 also held that unless and until one of the circumstances contemplated by clause (a) of section 138B(1) of the Customs Act applies, the adjudicating authority is bound to strictly follow the procedure contained in clause (b) of section 138B(1) of the Customs Act, before treating a statement recorded under section 108 of the Customs Act as relevant.
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23. In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur9 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 appellant 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 appellant before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of sub-sections (1) and (2) of section 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
9. 2018 (362) E.L.T. 961 (Chhattisgarh) 17 C/58059/2013 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 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 18 C/58059/2013 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)
24. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd.10 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,
10. 2021 (375) E.L.T. 545 (Del.) 19 C/58059/2013 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.
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) 20 C/58059/2013
25. In Drolia Electrosteel 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, 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 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. ***** 21 C/58059/2013
16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible."
(emphasis supplied)
26. A Division Bench of this Tribunal in Surya Wires after examining the aforesaid decisions of the High Court held that the statements made under section 108 of the Customs Act during the course of an inquiry under the Customs Act 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.
27. It, therefore, transpires from the aforesaid decisions that both section 138B(1)(b) of the Customs Act and section 9D(1)(b) of the Central Excise 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 138B(1)(b) of the Customs Act and section 9D of the Central Excise 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 108 of the Customs Act or under section 14D of the Central Excise Act. The Courts have also explained the rationale 22 C/58059/2013 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.
28. As seen from the show cause notice and the order impugned, penalty upon the appellant has been imposed only on the basis of the statement made by the appellant under section 108 of the Customs Act. A statement made under section 108 of the Customs Act cannot be considered as relevant as the procedure contemplated under section 138B of the Customs Act was not followed.
29. Thus, for all the reasons stated above, the impugned order dated 31.03.2013 passed by the Commissioner insofar as it imposes penalty upon the appellant under section 112(a)(i) of the Customs Act cannot be sustained and is set aside and appeal is allowed.
(Order pronounced on 12.02.2026) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shenaj