Custom, Excise & Service Tax Tribunal
P C Jain vs Kolkata-Port on 15 May, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
(1) Customs Appeal No.75564 of 2025
(Arising out of Order-in-Original No.Kol/Cus/Pr.Commr/Port/Adjn/03/2025 dated
21.01.2025 passed by Commissioner of Customs (Port), Kolkata)
P.C.Jain
(12/5, 1st Floor, Shakti Nagar, Delhi-110007)
Appellant
VERSUS
Commissioner of Customs (Port), Kolkata
(15/1, Strand Road, Kolkata-700001)
Respondent
WITH
(2) Customs Appeal No.75569 of 2025
M/s Bhagawati Enterprise Vs. Commissioner of Customs (Port), Kolkata
(3) Customs Appeal No.75570 of 2025
M/s Sovitec International Vs. Commissioner of Customs (Port), Kolkata
(4) Customs Appeal No.75571 of 2025
M/s Cosmic Enterprises Vs. Commissioner of Customs (Port), Kolkata
(5) Customs Appeal No.75572 of 2025
M/s Jain Prints Vs. Commissioner of Customs (Port), Kolkata
(6) Customs Appeal No.75573 of 2025
Dharam Pal Jain Vs. Commissioner of Customs (Port), Kolkata
(7) Customs Appeal No.75574 of 2025
M/s Jain Impex Vs. Commissioner of Customs (Port), Kolkata
[All arising out of Order-in-Original No.Kol/Cus/Pr.Commr/Port/Adjn/03/2025 dated
21.01.2025 passed by Commissioner of Customs (Port), Kolkata]
APPERANCE :
Dr.G.K.Sarkar, Mrs.Malabika Sarkar,Shri Prashant Srivastava, all Advocates
& Mr.A.K.Sinha, Consultant for the Appellants
Mr.Subrata Debnath, Authorized Representatives for the Respondent
CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.76319-76325/2025
DATE OF HEARING : 28 APRIL 2025
DATE OF PRONOUNCEMENT : 15 MAY 2025
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Customs Appeal Nos.75564 & 75569-75574 of 2025
Per Ashok Jindal :
The appellants are in appeals against the impugned order. As all
the appeals are arising out of the same impugned order, therefore, all
are disposed off by a common order.
2. The facts of the cases are that an investigation was initiated
by DRI, DZU on the basis of intelligence that the appellants have
been engaged in evasion of Customs duty by way of doing
undervaluation and violating conditions of Notification No.25/1999
- CUS dated 28.02.1999 as amended by Notification No.09/2004
dated 08.01.2004 in respect of goods imported in various
firms/companies created in the name of his relatives, employees
and business partners and being controlled/managed by the
Appellant No.(1). Name of said firms are as below :
(i) TirupatiOverseas
(ii) NeelKanthEnterprises
(iii) SaraswatiEnterprises
(iv) BhagwatiEnterprises
(v) M/sJainImpex
(vi) M/sCosmicEnterprises
(vii) M/sRadheTradelinks
(viii) M/sSovitecInternational
(ix) M/sJainPrints
(x) M/sEvershineIndustries
(xi) M/sEmmKay Associates
(xii) M/sPragatiEnterprises
2.1 It is pertinent to mention here that M/s Jain Impex is
proprietorship firm of the Appellant No.(1) himself. M/s Cosmic
Enterprises, M/s Jain Prints, and M/s Sovitec International are
also Proprietorship/partnership firms of family members
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Customs Appeal Nos.75564 & 75569-75574 of 2025
(son/nephew) of Appellant No.(1).
2.2 Searches were conducted by DRI Officers at the premises of
Appellant on 01.08.2007 and various other premises. During
searches at premises of Appellant CPU, several note books/diary,
files containing import documents pertaining to some of the above
firms, blank cheque pertaining to some of the above firms etc. were
resumed by the departmental officers for further investigation. As
per the department, certain documents were retrieved from said
CPU and e-mail account of son of Appellant No.(1).
2.3 During investigation, statements of Appellant (Sh. P. C.
Jain), his son Gaurav Jain, Proprietor/Partners of other firms
alleged to be controlled/managed by the Appellant No.(1).
persons concerned to the firms to whom goods have been shown
to have sold by the above-mentioned firms, transporters, CHAs
were also recorded. On the basis of said statements, it has bee
alleged that all the activities of the firms mentioned above were
being controlled/managed by the Appellant No.(1) and all the
other persons had nothing to do with the import except following
instructions given by Appellant No.(1). The proprietors/partners
of abovementioned firms, inter alia, stated that they were being
paid certain remuneration on monthly basis.
2.4 The investigation culminated into issuance of show cause
notice on 13.09.2010 by the Additional Director General, DRI,
DZU demanding differential duty along with interest jointly and
severally by the Appellant No.(1) and proprietors/partners of
abovementioned firms and proposing penalties. Demand in
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Customs Appeal Nos.75564 & 75569-75574 of 2025
respect of firms mentioned at (i) to (v) has been raised on the
ground of undervaluation as well as violation of condition of
Notification No. 25/1999 28.02.1999.
2.5 Total quantum of duty demanded on the aforesaid count
in respect of said five firms is Rs.6,31,30,016/- Further, demand
in respect of rest of seven firms has been raised on the ground of
undervaluation only and the quantum of duty alleged to have
been evaded in respect of these firms is Rs.5,94,12,263/-. Thus,
total demand proposed in the show cause notice is to the tune of
Rs.12,25,42,279/- along with interest and proposition of penalty
from respective firms jointly and severally with the Appellant
No.(1).
2.6 The show cause notice has been adjudicated vide Order-
in-original No.KOL/CUS/Pr.COMMR/4/ADJM/03/25 dated
21.01.2025 by holding the Appellant No.(1) liable for duty along
with interest and penalty under Section 114A of the Customs Act
in respect of all the firms holding him to be actual owner of goods
imported in all the firms. All the firms have been imposed with
penalty under Section 112(a) and 112(b) of the Customs Act.
Further, certain other individuals have also been imposed with
personal penalty.
2.7 Aggrieved from the said order, the appellants are in
appeal before us.
3. The ld.Counsel for the appellants submits as under :
(i) The allegation of violation of condition of Notification
No. 25/1999 has been made on the basis of visits/searches
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Customs Appeal Nos.75564 & 75569-75574 of 2025
conducted by the DRI Officers at premises of concerned firms
availing the said benefit wherein, as per the department, it was
found that no manufacturing activities were going on, neither
were there any plant and machinery to manufacture the required
goods by using imported goods.
(ii) The allegation of customs duty evasion on account of
undervaluation has been made on the basis of certain entries
found in the notebook/diary resumed from premises of Appellant
which were explained by him during recording of his statements
by DRI during investigation. It is pertinent to mention that the
entire demand has been raised and confirmed on the basis of
entries alleged to have been mentioned in the diary/note book
resumed from the premises of Appellant in relation to only eleven
bills of entry. The same have been made applicable to all the Bills
of Entries pertaining to all the firms without any independent
corroboration with respective Bills of Entry.
(iii) There has not been found any parallel invoice either at
the premises during search, neither, has there been found any
parallel invoice in the CPU or emails retrieved by the department.
There has also not been procured/found any incriminating
document from any shipping line or CHA. There has also not been
made any overseas inquiry. There is also no documentary
evidence found with respect to alleged remittances of the amount
alleged to have been remitted through hawala over and above the
declared value before customs. The only basis for making such
allegation is statement of Appellant, wherein, he has been forced
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Customs Appeal Nos.75564 & 75569-75574 of 2025
to make incriminating statements against him. It is pertinent to
mention that total seventeen statements of Appellant have been
recorded starting from the date of search i.e. 01.08.2007 to
22.02.2010.
(iv) It is pertinent to mention that the Appellant No.(1)
and his son Gaurav Jain were taken by DRI on 01.08.2007 and
kept in the DRI office continuously for two days by serving
sommons in hand in the DRI office and making entry in the
register of DRI showing that the appellant was released on 1st of
August and he came back again on 2nd of August in response to
summons served for said date. But the fact is that the appellant
and his son, both were released in the morning of 3 rd of August
after recording statements in captivity of DRI officers for two days
as per wishes of DRI officers. Therefore, after coming from there,
the appellant and his son wrote a combined letter and dispatched
the same through post on 03.08.2007 addressed to the Deputy
Director, DRI retracting their statements. Subsequently, they
could not master courage to make any Further retraction.
Statements of other persons have not been retracted.
(v) During investigation, certain goods were also seized.
Provisional release of said goods were allowed to the Appellant on
fulfilment of conditions for such release.
(vi) The allegation of payment of amount through hawala
over and above the value declared before customs have been also
made on the basis of statement of appellant and statement of Sh.
D. P. Jain (brother in-law of Appellant No.(1)). It has been alleged
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Customs Appeal Nos.75564 & 75569-75574 of 2025
that Sh. D. P. Jain has been exporting granite block to China
through his firm without claiming duty drawback and other export
benefits but undervalued the export invoice on the request of his
Chinese buyers in order to save customs duty likely to incur by
his buyers in China. It has been further alleged that differential
amount in relation to his exports to his Chinese buyers were
being paid to the suppliers of Appellant (Sh. P. C. Jain) towards
differential amount in respect of imports made by the Appellant
No.(1) in different firms and equivalent payment in Indian
currency used to be made by the Appellant No.(1) to Sh. D. P.
Jain here in India. It is pertinent to mention that neither any
documentary evidence regarding remittance of differential
amount in respect of imported goods has been adduced by the
department in the SCN, nor have there been any discussion of
any such evidence in the Impugned Order. All the allegations are
based on statements.
(vii) The show cause notice was issued without RUDs.
So request to provide RUDs were made vide letter dated
07.10.2010. Several reminder requests were also made by the
Appellant No.(1). However, without providing documents, hearing
notices were issued to the Appellant No.(1) in January, 2012.
(viii) The Appellant No.(1) along with his son Gaurav
Jain and nephew Sh. Rajesh Jain approached the Hon'ble High
Court of Calcutta vide Writ Petition Nos.7242 of 2013, 7278 of
2013 and 7279 of 2013, wherein, the Hon'ble High Court vide
Order dated 13.06.2013 disposed of the Petitions with a direction
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Customs Appeal Nos.75564 & 75569-75574 of 2025
to the Department to supply all the RUDs within eight weeks. It
was further directed that once all the documents are received by
the Appellant to their satisfaction in terms of whatever has been
referred to in the show cause notice, it will, then be open to the
Appellant to file a comprehensive reply within a period of eight
weeks thereafter. The Hon'ble High Court also held that in case
the Appellant desire for some additional documents, they should
also be supplied to them and once the reply is received, the
adjudication proceedings will commence and proceed in
accordance with law. In the intervening period and till the
adjudication proceedings commences, the authorities were
directed not to subject the petitioners to any form of coercion.
(ix) In spite of above direction of the Hon'ble High Court to
provide RUDs in eight weeks, the same were provided to the
appellant in 2019, that too, were not complete. The appellant
informed the aforesaid fact vide his letter dated 14.01.2019 and
also submitted during the course of hearing conducted on
24.01.2019 vide interim reply.
(x) In view of subsequent developments due to Cannon
India judgement, the case of the appellant was transferred to call
book under the provisions of Section 28(9)(A)(c) and the same
was taken out from the call book on 13.09.2022 and hearing was
fixed subsequently but without providing required relied upon
documents which were remained to be provided earlier.
(xi) Subsequently, DRI again forwarded RUDs to the
Adjudicating Authority and informed that RUD-29 and 50 could
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Customs Appeal Nos.75564 & 75569-75574 of 2025
not be traced and therefore they requested to adjudicate the
matter on the basis of available RUDs.
(xii) The documents mentioned against RUD-29 are
documents pertaining to imports and obtained by DRI from
Central Excise Department on 30.08.2007, 24.09.2007 and
05.11.2008. Further, RUD-50 is mentioned as documents
resumed as per Sl. No. 2 of Annexure 'A' to the panchnama dated
01.08.2007 drawn at the residential premises of Sh. P. C. Jain,
which is files containing import and local sale documents. It is,
thus, evident that the aforesaid documents are very vital and
appears to have direct bearing on the allegation of duty evasion
on account of violation of condition of Notification No.25/1999 as
well as in respect of the allegation of undervaluation and other
allegations made on the basis of entries in diary resumed from
premises of Appellant No.(1).
(xiii) The appellant, in response to subsequent hearing
notices issued by the Adjudicating Authority, inter alia, submitted
that they are unable to prepare defence reply without having
aforesaid RUDs and also that not providing the same is clear
violation of Hon'ble High Court's directions. However, the personal
hearing was further fixed on 25.09.2024 with an intimation that
the case shall be adjudicated on the basis of RUDs which were
already provided to the appellant. The appellant, in response,
vide letter dated 21.09.2024, inter alia, requesting for documents
as earlier sought, also requested for cross-examination of persons
whose statements have been relied upon in the show cause notice
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Customs Appeal Nos.75564 & 75569-75574 of 2025
to make allegation against them so that they could get chance to
bring out the truth.
(xiv) However, the adjudication order has been
passed without allowing cross-examination and without giving
requested RUDs by observing that the appellant herein is just
attempting delaying tactics. It has been stated in the adjudication
order that cognizance will be not be taken of those RUDs which
have not been provided. It is pertinent to mention here that the
learned Adjudicating Authority, observed that the Appellant vide
his letter dated 30.09.2024, apart from RUDs 29, 42 and 50, also
requested for certain more RUDs which were not requested earlier
and it showed that the appellant was just trying to delay the
proceeding. The aforesaid observation is also contrary to facts on
record in as much as the Appellant had requested all those RUDs
vide his earlier letter dated 26.07.2023.
(xv) The ld.Counsel for the appellants, further
submits that the adjudication order has been passed ex-parte
after around fourteen years from the Issuance of show cause
notice without providing certain vital relied upon documents in
spite of there being clear direction by the Hon'ble High Court of
Calcutta vide Order dated 13.06.2013 to provide all the relied
upon documents and to commence with the adjudication
proceedings thereafter. Thus, the Adjudicating Authority
exceeded his authority by passing adjudication order in clear
violation of direction of the Hon'ble High Court.
(xvi) He also submits that the adjudication order is
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Customs Appeal Nos.75564 & 75569-75574 of 2025
time barred. The adjudication order is vitiated in terms of
provisions of Section 28 (9) of the Customs Act, 1962 due to
delayed adjudication. Section 28 (9) of the Customs Act during
the relevant period (ie, prior to amendment vide Finance Act
2018 w.e.f. 29.03.2018) provided that the proper officer shall
determine the amount of duty and pass the order within one year
from the date of notice in case of notice issued under Section 28
(4) where it is possible to do so. In the present case, SCN was
issued on 13.09.2010 however, the Adjudication Order has been
passed on 21.01.2025 i.e after more than fourteen years which is
extraordinarily delayed.
(xvii) The Hon'ble High Court of Delhi in case of
Swatch Group India Pvt. Ltd Vs. Union of India reported in 2023
(386) ELT 356 (Del.) where a show cause notice dated
14.02.2018 read with corrigendam dated 28.02.2018 was not
adjudicated within stipulated time of one year as provided under
unamended Section 28 of the Customs and was challenged in
2021 before the Delhi High Court, quashed the SCN by holding
that, "The mention of the words, "where it is not possible to do
so", in our opinion, does not enable the Department to defer the
determination of the notices for an indeterminate period of time.
The legislature in its wisdom has provided a specific period for the
authority to discharge its functions. The indifference of the
concerned officer to complete the adjudication within the time
period as mandated, cannot be condoned to the detriment of the
assessee. Such indifference is not only detrimental to the interest
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Customs Appeal Nos.75564 & 75569-75574 of 2025
of the taxpayer but also to the exchequer."
(xviii) He also relied on the judgment of this Tribunal in
case of Kopertek Metals (P) Ltd. Vs. Commissioner of CGST
(West), New Delhi reported in (2025) 29 Centax 28 (Tri-Delhi),
wherein, the CESTAT, by following the judgment in case of
Swatch Group of Delhi High Court (supra), decided 209 appeals
by setting aside the adjudication orders passed beyond the period
stipulated in sub-section (11) of section 11A of the Central Excise
Act (which is pari materia to unamended Section 28 (9) of the
Customs Act).
(xix) He also submits that the Kolkata Bench of this
Tribunal also, in case of M/S Redtech Network India Pvt. Ltd Vs.
Commissioner of Service Tax, Kolkata, in a service tax matter, by
following the judgments of the Hon'ble Delhi High Court in Swatch
Group (supra) and the order of the Principal Bench of this Hon'ble
CESTAT, at New Delhi in case of Kopertek Metals (supra), while
considering the identically worded provisions of Section 11A of
the Centra Excise Act (pari materia to unamended Section 28 (9)
of the Customs Act), set aside the entire demand on account of
delayed passing of Adjudication Order.
(xx) He further submitted that it is pertinent to
mention here that the learned Adjudicating Authority had stated
that the case was transferred to Call Book under provision of
Section 28(9A) (c) in view of the Apex Court Judgement dated
09.03.2021 in the matter of M/s Canon India Pvt Ltd vs
Commissioner of Customs and all the Noticees were informed
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Customs Appeal Nos.75564 & 75569-75574 of 2025
accordingly. The aforesaid provisions came into existence vide
amendment under Section 28 done w.e.f. 29.03.2018, wherein, it
has been provided that SCN shall have to be adjudicated within
one year from the date of issue of the SCN, however, said period
of one year is extendable by another one year by an officer senior
in rank to the adjudicating authority and if the Adjudicating
Authority failed to determine the liability within such extended
period, the proceedings would be deemed to have been concluded
as if no notice has been issued.
(xxi) Further, he submitted that even if time is
counted from the date of amendment applying the new provisions
of Section 28 (9), then also, adjudication has been done beyond
the maximum time of two years prescribed in the provisions of
section 28 (9) even after time period of keeping the appellant's
case in call book is excluded. Amended provisions of Section 28
as well as unamended provisions of Section 28 of the Customs
Act has been discussed in detail in case of Vos Technologies India
Pvt. Ltd. VS. Principal Additional Director General reported in
(2024) 25 Centax 199 (Del.), wherein, it has been held in para 85
that, "the position which thus emerges from the aforesaid
discussion and a review of the legal precedents is that the
respondents are bound and obliged in law to endeavour to
conclude adjudication with due expedition. Matters which have
the potential of casting financial liabilities or penal consequences
cannot be kept pending for years and decades together. A statute
enabling an authority to conclude proceedings within a stipulated
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Customs Appeal Nos.75564 & 75569-75574 of 2025
period of time "where it is possible to do so" cannot be
countenanced as a license to keep matters unresolved for years.
The flexibility which the statute confers is not liable to be
construed as sanctioning lethargy or indolence." It further held, in
para, 86, ".... The inaction and the state of inertia which prevailed
thus leads us to the inevitable conclusion that the respondents
clearly failed to discharge their obligation within a reasonable
time. The issuance of innumerable notices would also not absolve
the respondents of their statutory obligation to proceed with
promptitude bearing in mind the overarching obligation of
ensuring that disputes are resolved in a timely manner and not
permitted to fester. Insofar as the assertion of the assessees'
seeking repeated adjournments or failing to cooperate in the
proceedings, it may only be noted that nothing prevented the
respondents from proceeding ex parte or refusing to reject such
requests if considered lacking in bona fides."
(xxii) He submitted that the Adjudication Order has
been passed by relying upon statements without complying with
statutory requirements of Section 138B of the Customs Act, 1962.
The entire liability of all the firms has been fastened on the
Appellant No.(1) mainly on the basis of statements of Appellant
No.(1) himself and other persons who have given incriminating
statements against the Appellant. Said statements have been
relied upon by the Adjudicating Authority without complying with
mandatory statutory requirements of examination-in-Chief and
cross-examination under Section 138B of the Customs Act, 1962
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Customs Appeal Nos.75564 & 75569-75574 of 2025
of persons.
(xxiii) He also submitted that it is settled position of
law that the statements can be relevant for proving the facts
stated therein only in accordance with Section 138B. If same has
not been followed, all the statements (including the statement of
Appellant) become irrelevant and cannot be relied upon.
(xxiv) In this regard, he relied on the decision of the
Principal Bench of this Tribunal in the case of M/S Sharp Mint Ltd.
Vs. Commissioner of Central Excise (Excise Appeal No. 2579 of
2010), wherein, vide Final Order No.58832-58833/2024 dated
16.10.2024, while discussing provisions of Section 9D of the
Central Excise Act, 1944 (pari materia to Section 138B of the
Customs Act, 1962), it has been held that statement made during
investigation/inquiry before a Central Excise officer cannot be
relied upon unless it is first admitted and for this the person who
made the statement has to be summoned and examined as
witness in adjudication proceeding and to be offered for cross
examination, failure to do so, would mean that the adjudicating
authority has relied upon an irrelevant material and therefore, the
order would be vitiated. Further, reliance is placed upon recent
order passed by this Tribunal in case of Surya Wires Pvt. Ltd. Vs.
Principal Commissioner, CGST (Excis Appeal No. 51148 of 2020-
Final Order Nos.50453-50454/2025 dated 01.04.2025].
(xxv) He also relies on the judgments in case of J.K.
Cigarettes Ltd. v. CCE. 2009 (242) E.LT. 189 (Del), G-Tech
Industries Vs. Union of India reported in 2016 (339) ELT 209
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Customs Appeal Nos.75564 & 75569-75574 of 2025
(P&H), Central Excise, Meerut-1 vs Parmarth Iron Pvt Ltd [ 2010
(260) E.L.T. 514 (All)], Andaman Timber Industries Vs.
Commissioner of C. Ex. Kolkata - II reported in 2015 (324) ELT
641 (SC).
(xxvi) He further submitted that the printouts taken
from CPU and printouts of E-mails, are not admissible as
evidences without complying with statutory provisions of Section
138C of the Customs Act, 1962 read with Section 65B of the
Evidence Act, 1872. As far as printouts taken from CPU and email
are concerned, it is a settled position of law that such printouts
are not admissible as evidence without complying with statutory
requirements of Section 65B of the Evidence Act read with
Section 138C of the Customs Act. DRI, in the instant case, seized
a CPU from the house of the appellant during the search
conducted on 01.08.2007. The CPU was examined and data was
retrieved vide panchnama dated 02.08.2007 but without
complying with Section 138C of the Customs Act read with
Section 65B of the Evidence Act. In the show cause notice it has
been stated that the CPU corroborates the fact that 25000 pieces
of VCD, 50,000 pieces of DVD remote and 28000 pieces of VCD
lens were purchased by the appellant vide Invoice No.
SG/724/06/2007 and the actual value of these goods was USD
85137.25. The retrieved documents from the CPU also appears to
indicates that 72,000 pieces of VCD pick up were purchased vide
Invoice No. 12233062007 and the actual value of the goods was
USD 143721.55. It also indicates that 28,000 pieces of DVD pick
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Customs Appeal Nos.75564 & 75569-75574 of 2025
up (ASA), 20,000 pieces of DVD pic up (OSCAR), 18,200 pieces of
DVD tray and 94,000 pieces of VCD tray were purchased by the
appellant vide Invoice No.12260/07/2007 dated 10.07.2007 and
the actual value of these goods was 155144.95. It has been
further stated that documents retrieved from the CPU and
document retrieved from the e-mail of Shri Gaurav Jain indicates
that the appellant sending money to various overseas supplier
through unofficial hawala channel.
(xxvii) He submitted that Section 138C of the Customs
Act, 1962, provides admissibility of computer printouts as an
evidence subject to conditions as provided under Section 138C
(2) and certification as provided under Section 138C (4). Section
138C deals with cases where any document is required to be
produced as an evidence in proceedings under the Customs Act
and the Rules framed thereunder. Such certificate should be
signed by a person occupying a responsible position in relation to
the operation of the device in question or the management of the
relevant activities. In such a case it shall be evidence of any
matter which is stated therein.
(xxviii) He further submitted that Section 138C
specifically mandates production of a certificate, (a) identifying
the documen containing the statement and describing the manner
in which it was produced; (b) giving such particulars of any device
involved in the production of that document as may be
appropriate for the purpose of showing that the document was
produced by a computer, and (c) dealing with any of the matters
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Customs Appeal Nos.75564 & 75569-75574 of 2025
to which the conditions mentioned in sub-section (2) relate. Thus,
the Customs Act, contains a specific provision that describes the
manner in which the admissibility of computer print outs will be
accepted as evidence in proceedings initiated under the Customs
Act.
(xxix) He submitted that the provisions of Section 138C
of the Customs Act, is pari materia to the provisions of section
65B of the Evidence Act. Therefore, reliance is placed upon the
judgment of the Hon'ble Supreme Court in case of Anwar P.V. vs.
P. K. Bashir and Others [2017 (352) be 416 (SC)), wherein, it has
been held that evidence relating to electronic record shall noted.
admitted in evidence unless the requirement of section 65B of the
Evidence Act is fulfilled.
(xxx) He further submitted that the aforesaid
judgment in Anvar P. V. (supra) has been further followed by the
Hon'ble Supreme Court in Arjun Panditrao Khotkar vs. Kailash
Kushanrao Gorantyal & other reported in AIR 2020 SC 4908.
Reliance in this regard, is also placed upon the order of Principal
Bench of Delhi CESTAT in the case of Trikoot Iron and Steel
Casting Ltd., vs. Additional Director General (Adjudication),
Directorate General of GST Intelligence, [2024 (10) TMI 672-
CESTAT-New Delhi). Reliance is also placed upon the case of Jeen
Bhavani International and Mahesh Chandra Sharma Vs.
Commissioner of Customs, Nhava Sheva III reported in 2022 (8)
TMI 237-CESTAT, Mumbai which has been upheld by the Hon'ble
Supreme Court vide order dated 27.02.2023. Further, reliance is
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Customs Appeal Nos.75564 & 75569-75574 of 2025
also placed upon the case of S.N. Agrotech Vs. Commissioner of
Customs, New Delhi reported in 2018 (361) ELT 761 (Tri-Del.).
(xxxi) He further submitted that the explanation given
in the statement of Appellant No.(1) with respect to diary cannot
be relied upon. As far as entries stated to have been explained
by the appellant in note book are concerned, same also cannot be
relied upon as initial statements of Appellant No.(1) recorded by
DRI officers have been retracted and he had been forced to make
huge payments towards alleged liability of all the firms and was
threatened to be arrested if he goes against the wishes of
officers. So, he or his son could not master courage to retract
subsequent statements. Such statements recorded under duress
and pressure cannot be relied upon to make allegations and
confirmed demand.
(xxxii) Further, he submitted that the Appellant No.(1),
being experienced in the trade with respect to items in respect of
which demand has been raised in the instant case, some
importers, at times, used to take advise from the Appellant
No.(1). The Appellant No.(1), with a view to get better price from
the suppliers, some time used to discuss about the prices with
respect to other firms as well who took advise from the Appellant
No.(1). The same cannot be inferred as if the Appellant No.(1)
has made imports in said firms. Moreover, Cosmic Enterprises
and Jain Prints are firms of family members of the Appellant
No.(1) itself and rest two firms belong to other independent
importers who took advice from the Appellant No.(1).
20
Customs Appeal Nos.75564 & 75569-75574 of 2025
(xxxiii) Further, he submitted that the Appellant No.(1)
has been made to state entries by putting two zeros against each
and every figures reflecting in the diary. For example, if an entry
is mentioned as 8000/-, the appellant has been made to state
that the same is actually 8,00,000/-. The aforesaid explanation,
the appellant has been made to state as per wishes of the
investigating officers which is not the actual figure. Further, the
said entries stated to have been explained by the appellant in
diaries/note book cannot be relied upon as initial statements of
Appellant No.(1) recorded by DRI officers have been retracted
and he had been forced to make huge payments towards alleged
liability of all the firms and was threatened to be arrested if he
goes against the wishes of officers. So, he could not master
courage to retract subsequent statements. If said explanation of
two zeros is removed, there is no case of the department. In any
case, statements (including the statements of the Appellant
No.(1)) relied upon by the Adjudicaring Authority in the instant
case, are not relevant because of non-fulfilment of statutory
requirements of Section 138B of the Customs Act as submitted
above.
(xxxiv) He further submitted that it is pertinent to
submit here that in famous case of Jain Hawala Diary (titled as
CBI Va V.C. Shukla & Others reported in (1998) 3 SCC 410, the
Hon'ble Supreme Court held that statement alone shall not be
sufficient evidence to charge any person with liability. Reliance is
also placed upon the case of Surya Wires Pvt. Ltd. Vs. Principal
21
Customs Appeal Nos.75564 & 75569-75574 of 2025
Commissioner, CGST [Excise Appeal No. 51148 of 2020-Final
Order Nos.50453-50454/2025 dated 01.04.2025], wherein, this
Tribunal, with respect to demand raised on the basis of
explanation given in statements regarding entries made in
incriminating documents resumed during search, held that, "the
adjudicating authority while recording the finding on loose papers
has placed reliance upon the statement of Harsh Agrawal made
during the inquiry/investigation under section 14D of the Customs
Act. The procedure contemplated under section 9D of the Central
Excise Act was not followed and, therefore, no reliance can be
placed on the statement of Harsh Agrawal in connection with
loose papers recovered from the factory premises of the
appellant".
(xxxv) In any case, he submitted that it is a settled
position of law that each import is an assessment by itself and if
there are a hundred imports at different transaction values, duty
on each import must be determined based on the transaction
value of that import. If the transaction value is higher in any one
case, that, by itself cannot form the basis for assessment of other
imports. Reliance is placed upon Principal Commissioner of
Customs Vs. Sachdev Overseas Fitness Pvt. Ltd. reported in
(2024) 14 Centax 123 (Tri-Hyd.). Further, reliance is also placed
upon the judgment of the Hon'ble Delhi High Court in the case of
in the case of Maldhari Sales Corporation vs UOI [2016 (334) ELT
418 (Del).
(xxxvi) He further submitted that the differential duty on
22
Customs Appeal Nos.75564 & 75569-75574 of 2025
account of alleged under valuation cannot be confirmed against
the Appellant No.(1) as he is not the importer of the goods.
Moreover, the duty demand cannot be confirmed against the
Appellant No.(1) in respect of all the firms as he is not the
importer. The demand has been raised for the period from 2005
to 2007. The term 'beneficial owner' was not in existence at the
relevant point of time. Concept of beneficial owner has come into
effect from 31.03.2017. Thus, in the instant case duty can not be
demanded from the Appellant No.(1) on the ground that he is
beneficial owner. Reliance in this regard is placed upon the case
of Commissioner of Customs, (import) Maharashtra vs
Maharashtra Eastern Grid Power Transmission Company Ltd[
(2023) 6 Centax115 (Tri-Mum)].
(xxxvii) The goods were imported by all different firms,
namely, M/s Saraswati Enterprises, M/s Cosmic Enterprises, M/s
Jain Prints, M/s Jain Impex, M/s Tirupati Overseas, M/s Neelkanth
Enterprises, M/s Radhey Trade Link, M/s Sovitec International,
M/s Evershine Industries. M/s Emm Kay Associates, M/s Pragati
Enterprises and M/s Bhagwati Enterprises who are separate and
independent 'legal entities/ persons'. All the aforesaid firms have
been granted IEC by the competent authority and respective
imports have been made under the same. It may be noted that
during the relevant period (2005-2006, 2006-2007 and 2007-
2008), Section 2(26) of the Customs Act, 1962 defined 'importer'
as 'in relation to any goods at any time between their importation
and the time when they are cleared for home consumption,
23
Customs Appeal Nos.75564 & 75569-75574 of 2025
includes any owner or any person holding himself out to be the
importer‖. Further, during the relevant period, Foreign Trade
Policy, defined importer as 'means a person who imports or
intend to import and holds an IEC number, unless otherwise
specifically exempted.
(xxxviii) He submitted that it has been held in various
pronouncements that only a person who has filed bill of entry
came be held as importer and the demand of differential duty
other than the said person who has filed bills of entry is not
sustainable. It is fact on record that the persons whose firms
have been alleged to have been controlled operated by the
Appellant No.(1), themselves applied for IEC. opened bank
accounts, did excise formality etc. and signed respective
documents. The manufacturers with buyers of imported goods
and suppliers of imported goods have been done through proper
banking channel. The fact is that said persons were being helped
by the Appellant No.(1) because of being in same trade and
having experience. The same cannot be attributed against the
Appellant No.(1) herein, Reliance is placed upon Nalin Z Mehta
va. Commissioner of Customs, Ahmedabad -2014 (303) ELT 267
(Tri. Ahmd.). Brij Mohan Sood v Commissioner of Customs,
Kandla[2007 (217) ELT 570(Tri- Ahd)). Chaudhary International
v. CC. Bombay - 1999 (109) ELT. 371, JB Trading Corporation v.
UOI-1990 (45) EL.T. 9 (Mad), Ashwin Doshi v. CCE, Goa-2004
(173) ELT. 488.
(xxxix) Further he submitted that the allegation of mis-
24
Customs Appeal Nos.75564 & 75569-75574 of 2025
use of Notification No.25/99-Cus is not sustainable and hence,
duty demand confirmed on the aforesaid count, is also not
sustainable. As far as violation of condition of Notification
No.25/99 is concerned, he submits that the same has been
alleged in respect of goods imported by following firms, namely,
M/s Infotech Industries. Delhi, M/s Tirupati Overseas, Delhi, M/s
Neelkanth Enterprises, Delhi, M/s Sarswati Enterprises, Delhi, M's
Bhagwati Enterprises, Delhi and M/s Jain Impex, Sirmour. It has
been alleged that the Appellant has intentionally obtained Central
Excise registration and managed to prepare bogus documents like
Sale bills, Central Excise return etc. to complete the official
formalities of Central Excise procedure to show the fake
manufacturing/assembling of CD Deck mechanism and remote
control (parts of VCD/DVD) at the factory premises in the above
stated firms and mis-utilised the benefits of Notification No.
25/1999-Cus. dated 28.02.1999. The aforesaid allegation is
mainly based on statements which are not relevant because of
non-compliance of Section 138B of the Customs Act.
(xxxx) Further, he submitted that it is pertinent to
mention that M/s Jain Impex vide letter dated 31.05.2006 to the
Assistant Commissioner of Central Excise had surrendered the
registration certificate issued under Customs (Import of Goods at
Concessional Rate of Duty for manufacture of Excisable Goods)
Rules, 1996 under Notification No.39/1996-Cus. (NT) dated
23.07.1996. The Sector Officer of Central Excise vide letter dated
24.06.2006 had acknowledged the receipt of the said letter and
25
Customs Appeal Nos.75564 & 75569-75574 of 2025
directed M/s Jain Impex to submit original registration certificate.
Subsequently, M/s Jain Impex vide letter dated 06.07.2006
submitted the original copy of registration certificate. Thus, it is
seen that M/s Jain Impex had surrendered its registration
certificates well before the DRI visited the premises or initiated
the investigation. The above fact conclusively proves that M/s Jain
Impex did not mis-use the exemption Notification No.25/1999
and have been manufacturing CD Deck mechanism and remote
control. The DRI in order to make a case, dictated the Appellant
and other co-noticees to write the statements in a way DRI
wanted.
(xxxxi) It may further be pertinent to note that DRI also
recorded statement of Mr. Surender Gupta, Prop. of M/s Excel
Trading Corp. Lajpat Rai Market who was buyer of M/s Bhagwati
Enterprises. Mr. Surender Gupta had stated that they have been
purchasing CD Deck mechanism and remote control from M/s
Bhagwati Enterprises. This also proves that the above said firms
have been manufacturing finished goods and the allegations of
mis-use of Customs Notification No.25/1999 is fabricated.
(xxxxii) The entire allegation has been made only on the
ground that during search on 1.8.2007 of the premises of the
manufacturers, no manufacturing facility was found in their
premises and based on the statements of the Appellant and co
notices recorded under duress. In this regard, it may be relevant
to note that the Appellant and other manufacturers had
surrendered their Registration and stopped manufacturing in
26
Customs Appeal Nos.75564 & 75569-75574 of 2025
2006 long before the present investigation has been initiated
which is evident from the following facts:
(1) M/s Sarswati Enterprises vide letter dated 19.06.2006
addressed to the Assistant Commissioner, Central Excise,
Division IV surrendered the Central Excise registration.
(ii) M/s Tirupati Overseas vide letter dated 20.09.2005
addressed to the Assistant Commissioner, Central Excise,
Division IV surrendered the Central Excise registration and
informed about closure of the factory w.e.f. 05.09.2005.
(iii) Neelkanth Enterprises vide letter dated 07.09.2006
addressed to the Superintendent of Central Excise, Range-
21 surrendered the Central Excise registration. Further, vide
letter dated 15.09.2006 addressed to the Assistant
Commissioner, Central Excise, Division-IV, they also
surrendered the registration.
(iv) Bhagwati Enterprises vide letter dated 17.07.2006
addressed to the Superintendent of Central Excise
surrendered the registration certificate.
It is pertinent to mention that searches were conducted in August
2007, however, the registrations, as evident, were surrendered
around two years ago. Thus, the allegation of having no
manufacturing at said premises at the time of search is erroneous
on the very face of it. It is further pertinent to mention here that
the impugned order has been passed without providing and
considering the RUDs - 29 which is related to the import and
27
Customs Appeal Nos.75564 & 75569-75574 of 2025
central excise documents/records obtained from various
jurisdictional Central Excise Authorities. Further, it may also be
noted that the Department had not returned Non RUDs in spite of
making requests. All the Non-RUDs pertain to documents relating
to manufacture, copies of Central Excise returns etc which are
important to establish that the firms had not misused the
exemption Notification No.25/99-Cus.
(xxxxiii) It is further submitted that the benefit of
Notification No. 25/99 is given subject to fulfilment of Customs
(Imports of Goods at Concessional Rate of Duty for Manufacture
of Excisable Goods) Rules,1996 framed vide Nonfiction No.36/96-
CUS (N.T.) dated 23.07.1996, wherein, provisions for application,
registration and monitoring by the jurisdictional excise authorities
have been provided. All the requirements of aforesaid provisions
have been complied with including filing of returns regularly with
the jurisdictional central excise authorities. In such a situation, no
demand can be raised on account of violation of Notification No.
25/99 on the basis of alleged diversion of material imported, that
too, based on statements which are not relevant and cannot be
relied upon.
(xxxxiv) He submitted that the demand confirmed on the
basis of allegation of under valuation is not sustainable. He
submits that it has been alleged that value of various
consignments of declared goods (i.e. parts of CD Deck
mechanism and remote control and DVD/CVD) imported by the
Appellant in various firms (alleged to have been
28
Customs Appeal Nos.75564 & 75569-75574 of 2025
controlled/managed by the Appellant) has been mis- declared.
(xxxxv) Again, he contended that the entire allegation of
under-valuation has been made on the basis of statements of the
Appellant and partners/owners of various firms as stated above
and on the basis of some of the noting in the diary and CPU
recovered from the residence of the Appellant. It has already
been explained above that neither said statements can be relied
upon, nor said documents retrieved from CPU and e-mail or
entries found in note book, can be relied upon. Moreover, as
stated above, Appellant retracted from his statements vide letter
dated 03.08.2007. It is settled position in law that statements
recorded under pressure and coercion have no evidentiary value
and retracted statements are not reliable evidence. The Appellant
in this regard relies upon the case of Mohtesham Mohd. Ismail vs
Spl Director, Enforcement Directorate [[2007 (220) ELT 3 (S.C.)],
Vinod Solanki vs UOI [2009 (233) ELT 157(SC)).
(xxxxvi) He further contended that without prejudice to
above, re-determination of value to confirm the duty in the
instant case. has been done arbitrarily and without following the
settled position of law regarding valuation. The goods imported in
the present case had CIF value which is evident from the invoices
and Bills of Lading itself. However, said value of the goods has
been considered as FOR to confirm differential duty and therefore,
duty has been demanded and confirmed by adding cost of freight
and insurance (by loading value (@21.15%) to convert it again to
CIF value, which is not permissible.
29
Customs Appeal Nos.75564 & 75569-75574 of 2025
(xxxxvii) Further, he submitted that the learned
Adjudicating Authority did not appreciate that value declared
before Customs in the instant case, has been discarded and re-
determined without considering contemporaneous imports. The
value of the goods taken in the SCN for redetermination is quite
higher than contemporaneous import of the said goods imported
at various ports. A statement has been prepared showing the
value of some of the imported items (as sample) declared by the
importers in the instant case vis-vis value redetermined by the
Department and contemporaneous import at Kolkata Port and the
same is annexed as Annexure-A-8 to the appeal paper book. It
would be evident from the plain scrutiny of enclosed statement,
that the declared value of the goods is very much close or same
to the contemporaneous import and therefore, confirmation of
demand alleging undervaluation in respect of subject goods, is
erroneous and arbitrary.
(xxxxviii) It is also submitted that there has not been
considered NIDB data, neither has there been done any market
inquiry. The value has been enhanced and differential duty has
been confirmed mainly by relying upon the statements of
Appellant No.(1) wherein he has been made to give incriminating
statements. Except the statements, there is nothing adduced to
corroborate enhancement of value and confirmation of demand of
differential duty. The statements of the Appellant No.(1) and co-
noticees were recorded under duress. In any event, the
statements of Appellant and co-noticees are contradictory to
30
Customs Appeal Nos.75564 & 75569-75574 of 2025
documentary evidence and it is settled law that documentary
evidence would prevail over the oral evidence. In the present
case, the documentary evidence in the form of contemporaneous
data support the case of the Appellant and hence, the allegation
of undervaluation is not sustainable.
(xxxxix) It is a settled position in law that transaction
value can be rejected only if there is evidence of
contemporaneous import at higher price. There is catena of case
law where the Hon'ble Apex Court and Tribunals holding that
allegation of undervaluation has to be supported by price of
contemporaneous imports. Reliance in this regard is placed on the
following decisions: Commissioner of Customs, Calcutta vs South
India Television (P) Ltd [2007 (214) ELT3(SC), Century Metal
Recycling Pvt Ltd vs UOI [2019 (367) ELT 3 (SC), Commissioner
of Customs, Vishakhapatnam vs Aggarwal Industries Ltd [2011
(272) ELT 641 (SC), Agarwal Metals and Alloys vs Commissioner
of Customs, Kandla [2021 (378) ELT 155 (Tri-Ahd)], Savaram D.
Patel vs Commissioner of Customs, Ahmedabad [2014 (312) ELT
193 (Tri-Ahd, Commissioner of Customs (Imports), Mumbai vs
Ganpati Overseas [2023 (10) TMI (364)].
(xxxxx) Further, he submitted that without prejudice to
the above, it is pertinent to mention that the Appellant No.(1) has
also stated about certain entries in note book/diary to be actual
sale price of imported goods. If the value redetermined by the
department is taken to be correct, the sale price calculated on the
basis of said value would be much higher than the actual sale
31
Customs Appeal Nos.75564 & 75569-75574 of 2025
price of the respective goods as has been stated by the Appellant
No.(1). No person who indulges in under-invoicing and runs the
risk of facing penal consequences all for making some extra
money, would sell the imported goods at less than half the cost of
import. This can be seen from following examples.
Item Sale Price determined Sale Price as on
with reference to record (in Rs)
value redetermined (in
Rs)
Pick up unit VCD 199.71 109
Pick up unit DVD 338.46 170
VCD Loader 66.01 29
DVD Loader 81.37 40
Pick up EYE 110.51 57.5
VCD Remote 78.79 17
DVD Remote 29.24 14
A chart has been enclosed with the Appeal paper book, whereunder
the selling price of the goods have been compared with refer to the
value redetermined in SCN and taking into account the landing cost
plus pofit megin and sale tax. From the said computation sheet, it
may be seen that selling price of the goods arrived at with reference
to the redetermined value is much higher than selling price/market
value which has been taken from the statement of the Appellant
No.(1).
(xxxxxi) It is also contended that the extended period of
limitation is not invocable. The demand has been confirmed by
invoking extended period of limited under Section 28 without
appreciating the fact that the Bills of Entry filed by the firms were
duly asessed by the proper officers. Various Bills of Entry were
examined and assessed by the proper officer and while assessing,
32
Customs Appeal Nos.75564 & 75569-75574 of 2025
even value was enhanced in respect of said Bills of Entry. Loading of
value in Bills of Entry shows that there was no suppression. The
value declared in respect of subject Bills of Entry in the instant case
are similar to the value assessed by proper officer after loading the
value. Therefore, the same cannot be questioned again by invoking
extended period.
(xxxxxii) It is pertinent to mention here that DRI in respect
of Bill of Entry No.3418191 and 318265 of Jain Prints and Bill Entry
No 824337 of Cosmic Enterprises and some of the Bills of Entry of
other firms had enhanced the declared quantity of goods. DRI has
enhanced the quantity of goods based on the statement of the
Appellant No.(1) and Gaurav Jain and based on the entry in diary.
DRI failed to appreciate the Appellant No.(1) and other importers
had imported exactly the same quantity which was declared in the
Bills of Entry and Invoice. During the relevant period, there was no
procedure for self-assessment. Customs at the port of import
examined the goods before granting 'out of charge' with reference to
quantity and quality of the goods declared in the invoice. By no
chance, Appellant No.(1) could import increased quantity of goods
escaping notice of Customs Authority. It is beyond comprehension as
to how it is possible to mis declare quantity of goods. DRI has
redetermined value with reference to the enhanced quantity which is
blatantly incorrect.
(xxxxxiii) He further submitted that the penalties imposed on
the Appellants are also not sustainable. The Appellant No.(1) not
being the importer can not be held liable to pay differential duty.
33
Customs Appeal Nos.75564 & 75569-75574 of 2025
Hence, imposition of penalty under 114A is not sustainable. It may
be noted that in the Twenty Seventh Report of the Standing
Committee of Finance, the legislative intention behind insertion of
Section 114AA was discussed. The Ministry of Finance has clarified
that the purpose is to punish those people who avail export benefits
without exporting anything. It is thus, submitted that section 114AA
has been introduced to counter serious frauds not every kind of
violations under Customs Act. In any case, when main demand is not
sustainable, there is no question of ancillary demands and penalties.
(xxxxxiv) Apart from above, it is also submitted that Article
265 of the Constitution provides that the tax is to be collected by
authority of law. But, the Appellant No.(1), even without there being
any confirmed demand against him, was forced to deposit a huge
amount of Rs.1,21,73,905/-. The said amount was further got
deposited by the DRI officers against liabilities of different firms and
the same has been appropriated by the learned Adjudicating
Authority towards the demand of duty for which appellants are not
liable in view of above submissions. Therefore, the Appellant No.(1)
deserves to be refunded with aforesaid amount made to be deposited
by him during investigation.
(xxxxxv) Finally, he prays that the impugned order be set aside
and the appeals be allowed.
4. The ld.A.R. for the Revenue, submits that in this case, the
investigation was conducted by the DRI and during the course of
investigation and intelligence, it was found that the Appellant No.(1)
34
Customs Appeal Nos.75564 & 75569-75574 of 2025
was the master-mind of the import in question. He reiterated that the
Appellant No.(1) had created the fictitious firms in the name of his
relatives and he imported the goods by availing Notification No.25/1999
- CUS dated 28.02.1999. He further submitted that during the course
of investigation, certain incriminating documents were recovered and
the statements were also recorded, which shows the Appellant No.(1) is
involved in undervaluation for importation of goods in question and on
the basis of the statements and documents recovered during the course
of investigation, the case has been made out by DRI. As the Appellants
were having malafide intention to fraud the Revenue, in that
circumstances, the duty is rightly demanded from the Appellant No.(1)
and penalties of the co-appellants have rightly been imposed by the
adjudicating authority.
5. Heard both the parties and considered the submissions.
6. We find that this case is based on the investigation conducted by
the DRI at the premises of the Appellant No.(1) on intelligence that the
appellants have been engaged in evasion of Customs duty by way of
doing undervaluation and violating conditions of Notification
No.25/1999 - CUS dated 28.02.1999 as amended by Notification
No.09/2004 dated 08.01.2004.
6.1 We further take note of the fact that in this case, during the
course of investigation, CPU, several note books/diary, files
containing import documents pertaining to the above firms, blank
cheque, were resumed from the Appellant No.(1) and certain
35
Customs Appeal Nos.75564 & 75569-75574 of 2025
documents were retrieved from the said CPU and e-mail account of
son of the Appellant No.(1).
6.2 Further, during the course of investigation, the statement of the
appellants were recorded and on the basis of these statements, a case
has been made out against the appellants of undervaluation of the
imported goods and to deny the Notification No.25/1999 - CUS dated
28.02.1999 as amended by Notification No.09/2004 dated
08.01.2004.
6.3 For better appreciation of facts to avail the benefit of the said
Notification, the Appellant No.(1) was required to follow the
procedure as laid down in Customs (Import of Goods at
Concessional Rate of Duty for Manufacture of Excisable Goods)
Rules, 1996, the relevant portion of the said Rules are incorporated
herein below :
"(2) These rules shall also apply even if the excisable goods in or
in relation to the manufacture of which the imported goods are
used are not chargeable to excise duty or are exempted from
whole of excise duty.
RULE 3. Registration. - (1) A manufacturer intending to avail of
the benefit of an exemption notification referred to in sub-rule (1)
of rule 2, shall obtain a registration from the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise] having jurisdiction over his factory.
(2) The registration shall contain particulars about the name and
address of the manufacturer, the excisable goods produced in his
factory, the nature and description of imported goods used in the
manufacture of such goods. (3) The [Assistant Commissioner of
Central Excise or Deputy Commissioner of Central Excise] shall
36
Customs Appeal Nos.75564 & 75569-75574 of 2025
issue a certificate to the manufacturer indicating the particulars
referred to in sub-rule (2).
RULE 4. Application by the manufacturer to obtain the benefit. -
(1) A manufacturer who has obtained a certificate referred to in
sub-rule (3) of rule 3 and intends to import any goods for use in
his factory at concessional rate of duty, shall make an application
to this effect to the [Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise] indicating the estimated
quantity and value of such goods to be imported, particulars of
the notification applicable on such import and the port of import.
[(1A) The manufacturer may, at his option, file the application
specified under sub-rule (1), either in respect of a particular
consignment, or indicating his estimated requirement of such
goods for a quarter.]
(2) The manufacturer shall also give undertaking on the
application that the imported goods shall be used for the intended
purpose.
(3) The application shall be countersigned by the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise] who shall certify therein that the manufacturer
is registered in his office and has executed [a bond to his
satisfaction] in respect of end use of the imported goods in the
manufacturer's factory and indicate the particulars of such
bond.
RULE 5. Procedure to be followed by [Assistant Commissioner
of Customs or Deputy Commissioner of Customs]. - (1) On the
basis of the application countersigned by the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise], the [Assistant Commissioner of Customs or
Deputy Commissioner of Customs] at the port of importation
shall allow the benefit of the exemption notification to the
importer.
[Provided that where the importer has filed the application in
37
Customs Appeal Nos.75564 & 75569-75574 of 2025
respect of his estimated requirement for a quarter, the said
[Assistant Commissioner of Customs or Deputy Commissioner
of Customs] shall debit in the said application, the quantity and
value of imports made under a particular consignment, also
indicating particulars of the bill of entry, before allowing the
benefit of the exemption notification to the importer.]
(2) The [Assistant Commissioner of Customs or Deputy
Commissioner of Customs] shall forward a copy of the bill of
entry containing the particulars of import, the amount of duty
paid and other relevant particulars to the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise.
RULE 6. Procedure to be followed by the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise]. - The [Assistant Commissioner of Central
Excise or Deputy Commissioner of Central Excise] shall
acknowledge the receipt of the intimation received from the
[Assistant Commissioner of Customs or Deputy Commissioner
of Customs].
RULE 7. Manufacturer to give information regarding receipt of
the imported goods and maintain records. - The manufacturer,
obtaining benefit in these rules, shall, -
(a) give information of the receipt of the imported goods in his
factory, within two days (excluding holidays, if any) of such
receipt, to the Superintendent of Central Excise having
jurisdiction over his factory; and
(b) maintain a simple account indicating the quantity and value
of goods imported, the quantity of imported goods consumed
for the intended purpose, and the quantity remaining in stock,
bill of entry wise and shall produce the said account as and
when required by the [Assistant Commissioner of Central
Excise or Deputy Commissioner of Central Excise.]
(c) submit a monthly return, in the format prescribed as
―Annexure‖ appended to thses rules, to the said Assistant
38
Customs Appeal Nos.75564 & 75569-75574 of 2025
Commissioner of Central Excise or Deputy Commissioner by
the tenth day of the following month.
RULE 8. Recovery of duty in certain case. - The [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise] shall ensure that the goods imported are used
by the manufacturer for the intended purpose and in case they
are not so used take action to recover [the amount equal to
the difference between the duty leviable on such goods but for
the exemption and that already paid, if any, at the time of
importation, alongwith interest, at the rate fixed by notification
issued under Section 28AB of the Customs Act, 1962, for the
period starting from the date of importation of the goods on
which the exemption was availed and ending with the date of
actual payment of the entire amount of the difference of duty
that he is liable to pay.]‖
As per the said Rules, to avail the benefit of the said Notification
No.25/1999 - CUS dated 28.02.1999 as amended by Notification
No.09/2004 dated 08.01.2004, the manufacturer shall obtain a
registration from the Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise having jurisdiction over his
factory, thereafter, shall make an application to take the benefit of
the said Notification to the [Assistant Commissioner of Central Excise
or Deputy Commissioner of Central Excise] indicating the estimated
quantity and value of such goods to be imported, particulars of the
notification applicable on such import and the port of import. The
said application shall be countersigned by the Assistant
Commissioner of Central Excise or Deputy Commissioner of Central
Excise who shall certify therein that the manufacturer is registered in
his office and has executed a bond to his satisfaction in respect of
39
Customs Appeal Nos.75564 & 75569-75574 of 2025
end use of the imported goods in the manufacturer's factory and
indicate the particulars of such bond. On the basis of the application
countersigned by the Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise, the Assistant Commissioner
of Customs or Deputy Commissioner of Customs at the port of
importation shall allow the benefit of the exemption notification to
the importer. Thereafter, the Assistant Commissioner of Customs or
Deputy Commissioner of Customs shall forward a copy of the bill of
entry containing the particulars of import, the amount of duty paid
and other relevant particulars to the Assistant Commissioner of
Central Excise or Deputy Commissioner of Central Excise.
Thereafter, The Assistant Commissioner of Central Excise or Deputy
Commissioner of Central Excise shall acknowledge the receipt of the
intimation received from the Assistant Commissioner of Customs or
Deputy Commissioner of Customs Thereafter, the
manufacturer/importer shall give information of the receipt of the
imported goods in his factory, within two days of such receipt, to the
Superintendent of Central Excise having jurisdiction over his factory
and maintain a simple account indicating the quantity and value of
goods imported, the quantity of imported goods consumed for the
intended purpose, and the quantity remaining in stock, bill of entry
wise and shall produce the said account as and when required by the
Assistant Commissioner of Central Excise or Deputy Commissioner of
Central Excise. The Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise shall ensure that the goods
imported are used by the manufacturer for the intended purpose and
40
Customs Appeal Nos.75564 & 75569-75574 of 2025
in case they are not so used take action to recover the amount of
differential duty leviable of such goods.
6.4 Admittedly, in this case, the Appellant No.(1) was registered
with the Central Excise department and followed the procedure as
laid down in Customs (Import of Goods at Concessional Rate of
Duty for Manufacture of Excisable Goods) Rules, 1996 and made
an application with the Assistant Commissioner or Deputy
Commissioner of Central Excise and the Assistant Commissioner or
Deputy Commissioner of Central Excise has forwarded the said
application to the Assistant Commissioner or Deputy Commissioner
of Customs, who allowed duty free and intimated the same to the
Assistant Commissioner or Deputy Commissioner of Central Excise to
endorse the receipt of the goods in the factory premises of the
Appellant No.(1) and the Appellant No.(1) used these goods in
manufacture of their final product, which has been cleared by them
and they were filing the Excise returns regularly. The same has
been admitted by the concern Assistant Commissioner or Deputy
Commissioner of Central Excise. In 2005/2006, all the appellants
have dis-continued the manufacturing process and surrendered their
registration to the Assistant Commissioner or Deputy Commissioner
of Central Excise, who accepted the surrender of the registration of
the appellant and issued Discharge Certificate to the appellant. The
investigations in this case have been started by the DRI in August,
2007. At that time, the appellants were not having manufacturing
facility, as they have surrendered the registration in 2005 or 2006
and discontinued manufacturing. The reason for denial of the
41
Customs Appeal Nos.75564 & 75569-75574 of 2025
Notification is that during the course of investigation, the appellants
were found non-existent. Therefore, it cannot be said that the
benefit of Notification No.25/1999 - CUS dated 28.02.1999 as
amended by Notification No.09/2004 dated 08.01.2004, can be
denied to the appellants merely on the basis that the appellants
were non-existent. Therefore, the allegation that the appellants
were having no manufacturing on the said premises at the time of
search, is not sustainable.
6.5 Further, as per the appellant, the RUD-29, which was not
supplied to the appellants, was related to import on the basis of
records obtained from the various jurisdictional Central Excise
Authorities. The said documents has not been placed on record by
the Revenue. The said documents could have established the case of
the appellants that whether they were not having any manufacturing
facilities during the impugned period or not ? and followed the
procedure as laid down in Customs (Import of Goods at
Concessional Rate of Duty for Manufacture of Excisable Goods)
Rules, 1996 or not ?
6.6 We further, take note of the facts that during the
impugned period, the appellants were filing their Excise returns,
which shows that the appellants were having manufacturing
facilities during the impugned period, therefore, the benefit of the
Notification No.25/1999-CUS dated 28.02.1999 as amended by
Notification No.09/2004 dated 08.01.2004, cannot be denied.
6.7 In that circumstances, the benefit of Notification
No.25/1999 - CUS dated 28.02.1999 as amended by Notification
No.09/2004 dated 08.01.2004 cannot be denied to the appellants.
Consequently, no demand of duty can be raised against the
Appellant No.(1) by denying the benefit of Notification No.25/1999
- CUS dated 28.02.1999 as amended by Notification No.09/2004
dated 08.01.2004.
42
Customs Appeal Nos.75564 & 75569-75574 of 2025
7. Another demand has been raised against the appellants
alleging under-valuation of imported goods by the appellants.
7.1 The said allegation has been made against the appellants on
the basis of various statements recorded during the course of
investigation and various prints out taken from the CPU and e-mail.
7.2 In that circumstances, the issue arises :-
(a) whether the statements recorded during the course of
investigation can be admissible in the absence of the following these
procedures as laid down under Section 138B (1)(b) of the Customs
Act, 1962, or not ?
The said issue has been examined by this Tribunal in the case of M/s
Sharp Mint Limited Vs. Commissioner of Central Excise vide Final
Order No.58832-58833/2024 dated 16.10.2024, wherein this
Tribunal has observed as under :
―14. It is seen that the appellant is engaged in the manufacture
and export of Menthol Crystal and Essential Oils, which are
exported by the appellant on payment of duty. For the
manufacture of the aforesaid goods, the appellant procures raw
material from Amarnath Industries in Jammu which took
benefit of the Notification dated 14.11.2002. Under this
Notification, the duty paid by Amarnath Industries in cash on
the raw materials cleared to the appellant was
refunded/granted as self credit to Amarnath Industries. It is on
the basis of the invoice issued by Amarnath Industries that
CENVAT credit was claimed by the appellant of the duty paid on
the raw materials purchased from Amarnath Industries.
15. Learned counsel for the appellant submitted that Amarnath
Industries has been granted refunds on the basis of orders
passed by the Jurisdictional Assistant Commissioner and these
orders were not challenged. The CENVAT credit could not have,
therefore, been denied to the appellant.
16. This submission advanced by the learned counsel for the
appellant deserves to be accepted in view of the decision of the
43
Customs Appeal Nos.75564 & 75569-75574 of 2025
Gauhati High Court in Commissioner of C. Ex., Shillong vs.
Jellalpore Tea Estate18 , wherein it was held:
―14. Insofar as the present case is concerned, the prescription
of law required that the order of the Assistant Commissioner
passed on 29-4-2002 could be challenged only by resorting to
Section 35-E of the Act. The Revenue could not initiate
collateral proceedings to set aside the order dated 30-4-2002
by resorting to the enabling power under Section 11A of the
Act.
15. Consequently, we are of the opinion that : (i) Section 11A
of the Act is not applicable to the facts of the case since the
issue raised did not concern any approval, acceptance or
assessment relating to the rate of duty on or valuation of any
excisable goods. The issue raised by the assessee related to its
entitlement to the benefit of Notification No. 33/99-C.E., dated
8-7- 99, (ii) Even otherwise, the Revenue could not take
recourse to Section 11A of the Act when it had a statutory
remedy available to it to challenge the order dated 29-4-2002
passed by the Assistant Commissioner of Central Excise,
Silchar by resorting to the revisional power available under
Section 35-E of the Act.‖
17. Learned counsel for the appellant also submitted that once
duty paid by Amarnath Industries was accepted by the
department, the CENVAT credit of the same could not have
been denied to the appellant who is the recipient.
18. The payment of duty at the time of clearance of goods to
Amarnath Industries is not in dispute. The credit of the duty
paid, therefore, could not have been denied to the appellant.
This issue was examined by the Bombay High Court in Nestle
India. The issue that arose was that if excise duty is levied on
an assessee at place ―A‖ and Modvat credit is sought to be
availed at place ―B‖, is it open to the Authorities at place ―B‖ to
deny credit on the ground that no duty was payable at place
―A‖. This issue was answered by the Bombay High Court in the
44
Customs Appeal Nos.75564 & 75569-75574 of 2025
following manner:
―5. Mr. Ferreira, learned Assistant Solicitor General for the
appellant, submitted that the scheme of law is that if, excise
duty is collected, a person at subsequent place is entitled to
claim Modvat credit. According to Mr. Ferreira, learned
Assistant Solicitor General, this can be so if, duty is validly
collected at an earlier stage. In this case duty was not payable
at all at the place outside Goa, since no duty can be levied on
job work but only on manufacture and, therefore, the
respondents are not entitled to claim any Modvat credit.
Though this submission appears to be reasonable and in
accordance with law, we find it not possible to entertain this
submission in the facts of the present case since at no point of
time the Revenue questioned the applicability of the excise
duty at the place outside Goa. Those assessments have been
allowed to become final and the goods have been removed
from the jurisdiction of the Excise Officer at that place and
brought to Goa. Now, in Goa it will not be permissible to allow
the Revenue to raise the contention that the assessee in Goa
cannot claim Modvat credit in Goa because duty need not be
paid outside Goa.
6. As we have observed that the assessment is allowed to be
final, it would not be legal and proper to allow the Revenue to
raise the question on the basis of Modvat credit. Indeed, now
the payment of excise duty must be treated as valid, therefore,
the claim of Modvat credit must be treated as excise duty
validly paid.‖ (emphasis supplied)
19. The same view was taken by the Bombay High Court in
Commissioner of Central Excise, Pune-III vs. Ajinkya
Enterprises19 . It was held:
―10. Apart from the above, in the present case, the assessment
on decoiled HR/CR coils cleared from the factory of the
assessee on payment of duty has neither been reversed nor it
is held that the assessee is entitled to refund of duty paid at
45
Customs Appeal Nos.75564 & 75569-75574 of 2025
the time of clearing the decoiled HR/CR coils. In these
circumstances, the CESTAT following its decision in the case of
Ashok Enterprises - 2008 (221) E.L.T. 586 (T), Super Forgings
- 2007 (217) E.L.T. 559 (T), S.A.I.L. - 2007 (220) E.L.T. 520
(T) = 2009 (15) S.T.R. 640 (Tribunal), M.P. Telelinks Limited -
2004 (178) E.L.T. 167 (T) and a decision of the Gujarat High
Court in the case of CCE v. Creative Enterprises reported in
2009 (235) E.L.T. 785 (Guj.) has held that once the duty on
final products has been accepted by the department, CENVAT
credit availed need not be reversed even if the activity does
not amount to manufacture. Admittedly, similar view taken by
the Gujarat High Court in the case of Creative Enterprises has
been upheld by the Apex Court [see 2009 (243) E.L.T. A121]
by dismissing the SLP filed by the Revenue.‖ (emphasis
supplied)
20. In view of the aforesaid decisions, it has to be held that
CENVAT credit of the duty paid by Amarnath Industries could
not have been denied to the appellant.
21. Learned counsel for the appellant also submitted that the
statement of various persons like Employees/Directors of
Amarnath Industries and the appellant were relied upon though
they were inadmissible since they failed to comply with the
provisions of section 9D of the Central Excise Act and denial of
cross examination of the said persons has also vitiated the
order.
22. This submission advanced by learned counsel for the
appellant also deserves to be accepted.
23. The Allahabad High Court in Parmarth Iron examined this
issue in detail and on a perusal of section 9D of the Central
Excise Act observed:
―16. We, therefore, have no hesitation in holding, that there is
no requirement in the Act or Rules, nor do the principles of
natural justice and fair play require that the witnesses whose
statements were recorded and relied upon to issue the show
46
Customs Appeal Nos.75564 & 75569-75574 of 2025
cause notice, are liable to be examined at that stage. If the
Revenue choose not to examine any witnesses in adjudication,
their statements cannot be considered as evidence. However, if
the Revenue choose to rely on the statements, then in that
event, the persons whose statements are relied upon have to
be made available for cross-examination for the evidence or
statement to be considered.‖
24. The Punjab and Haryana High Court in Jindal Drugs also
observed as follows:
―9. 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.
10. 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) thereof would
extend to adjudication proceedings as well.
There can, therefore, be no doubt about the legal position that
the procedure prescribed in sub-section (1) of Section 9D is
required to be scrupulously followed, as much in adjudication
proceedings as in criminal proceedings relating to prosecution.
11. As already noticed hereinabove, subsection (1) of Section
9D sets out the circumstances in which a statement, made and
signed before a gazetted Central Excise Officer, shall be
relevant for the purpose of proving the truth of the facts
contained therein. If these circumstances are absent, the
statement, which has been made during inquiry/investigation,
before a Gazetted Central Excise Officer, cannot be treated as
relevant for the purpose of proving the facts contained therein.
47
Customs Appeal Nos.75564 & 75569-75574 of 2025
In other words, in the absence of the circumstances specified
in Section 9D(1), the truth of the facts contained in any
statement, recorded before a Gazetted Central Excise Officer,
has to be proved by evidence other than the statement itself.
The evidentiary value of the statement, insofar as proving the
truth of the contents thereof is concerned, is, therefore,
completely lost, unless and until the case falls within the
parameters of Section 9D(1).
12. The consequence would be that, in the absence of the
circumstances specified in Section 9D(1), if the adjudicating
authority relies on the statement, recorded during investigation
in Central Excise, as evidence of the truth of the facts
contained in the said statement, it has to be held that the
adjudicating authority has relied on irrelevant material. Such
reliance would, therefore, be vitiated in law and on facts.
xxxxxxxxxxx
19. Clearly, therefore, the stage of relevance, in adjudication
proceedings, of the statement, recorded before a Gazetted
Central Excise Officer during inquiry or investigation, would
arise only after the 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
48
Customs Appeal Nos.75564 & 75569-75574 of 2025
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.
xxxxxxxxxxx
22. 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)
25. The Commissioner found that since the departmental
officers had verified the facts which had been declared by the
appellant in the statutory records and the test reports also
indicated that the goods would be Crude Mint Oils, the
genuineness of test report conducted after receipt of the goods
from Amarnath Industries, cannot be doubted and so the
request for cross examination of departmental officers and
other persons should not be granted. The Commissioner also
observed that the case against the appellant is not only on the
basis of statements of employees of Amarnath Industries, but
also on circumstantial test reports and, therefore, denying the
right of cross examination would not be violative of principle of
natural justice.
26. These observations made by the Commissioner in the
impugned order are clearly contrary to the principles
enunciated by the Allahabad High Court in Parmarth Iron and
the Punjab and Haryana High Court in Jindal Drugs. In the first
instance, under section 9D of the Central Excise Act it is clear
that a statement made during investigation/enquiry before a
central excise officer cannot be relied upon unless it is first
admitted and for this the person who made the statement has
to be summoned and examined as a witness in adjudication
proceedings. Failure to do so would mean that the adjudicating
49
Customs Appeal Nos.75564 & 75569-75574 of 2025
authority has relied upon an irrelevant material and, therefore,
the order would be vitiated. The question of cross examination
would arise only after examination of the person who makes
statement before the central excise officer.
27. The Commissioner has placed reliance upon the statements
without following the procedure prescribed under section 9D of
the Central Excise Act. The order passed by the Commissioner
deserves to be set aside for this reason also.‖
6.9 Further, the Hon'ble Pubjab & Haryana High Court in the case of
G.Tech Industries Vs. Union of India reported in 2016 (339) ELT 209 (P
& H), has examined this issue and observed as under :
―4. In view of the fact that the case of the petitioner is
essentially premised on Section 9D of the Central Excise Act,
1944, it would be appropriate to reproduce the said provision, in
extenso, thus :
"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
50
Customs Appeal Nos.75564 & 75569-75574 of 2025
statement should be admitted in evidence in the interests of
justice.
(2) The provision 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.‖
5. 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.
6. 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.) = 2011 (22) S.T.R. 225 (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)
thereof would extend to adjudication proceedings as well.
7. There can, therefore, be no doubt about the legal position
that the procedure prescribed in sub-section (1) of Section 9D is
required to be scrupulously followed, as much in adjudication
proceedings as in criminal proceedings relating to prosecution.
8. As already noticed herein above, sub-section (1) of Section
9D sets out the circumstances in which a statement, made and
signed before a Gazetted Central Excise Officer, shall be relevant
for the purpose of proving the truth of the facts contained therein.
If these circumstances are absent, the statement, which has been
made during inquiry/investigation, before a Gazetted Central
Excise Officer, cannot be treated as relevant for the purpose of
proving the facts contained therein. In other words, in the
51
Customs Appeal Nos.75564 & 75569-75574 of 2025
absence of the circumstances specified in Section 9D(1), the truth
of the facts contained in any statement, recorded before a
Gazetted Central Excise Officer, has to be proved by evidence
other than the statement itself. The evidentiary value of the
statement, insofar as proving the truth of the contents thereof is
concerned, is, therefore, completely lost, unless and until the case
falls within the parameters of Section 9D(1).
9. The consequence would be that, in the absence of the
circumstances specified in Section 9D(1), if the adjudicating
authority relies on the statement, recorded during investigation in
Central Excise, as evidence of the truth of the facts contained in
the said statement, it has to be held that the adjudicating
authority has relied on irrelevant material. Such reliance would,
therefore, be vitiated in law and on facts.
10. Once the ambit of Section 9D(1) is thus recognized and
understood, one has to turn to the circumstances referred to in
the said sub-section, which are contained in clauses (a) and (b)
thereof.
11. Clause (a) of Section 9D(1) refers to the following
circumstances :
(i) when the person who made the statement is dead,
(ii) when the person who made the statement cannot be found,
(iii) when the person who made the statement is incapable of
giving evidence,
(iv) when the person who made the statement is kept out of the
way by the adverse party, and
(v) when the presence of the person who made the statement
cannot be obtained without unreasonable delay or expense.
52
Customs Appeal Nos.75564 & 75569-75574 of 2025
12. Once discretion, to be judicially exercised is, thus conferred,
by Section 9D, on the adjudicating authority, it is self-evident
inference that the decision flowing from the exercise of such
discretion, i.e., the order which would be passed, by the
adjudicating authority under Section 9D, if he chooses to invoke
clause (a) of sub-section (1) thereof, would be pregnable to
challenge. While the judgment of the Delhi High Court in J&K
Cigarettes Ltd. (supra) holds that the said challenge could be
ventilated in appeal, the petitioner has also invited attention to an
unreported short order of the Supreme Court in UOI and Another
v. GTC India and Others in SLP (C) No. 21831/1994, dated 3-1-
1995 [since reported in 1995 (75) E.L.T. A177 (S.C.)], wherein it
was held that the order passed by the adjudicating authority
under Section 9D of the Act could be challenged in writ
proceedings as well. Therefore, it is clear that the adjudicating
authority cannot invoke Section 9D(1)(a) of the Act without
passing a reasoned and speaking order in that regard, which is
amenable to challenge by the assessee, if aggrieved thereby.
13. 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.
53
Customs Appeal Nos.75564 & 75569-75574 of 2025
14. 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.
15. The rationale behind the above precaution contained in
clause (b) of Section 9D(1) is obvious. The statement, recorded
during inquiry/investigation, by the Gazetted Central Excise
officer, has every chance of having been recorded under coercion
or compulsion. It is a matter of common knowledge that, on many
occasions, the DRI/DGCEI resorts to compulsion in order to
extract confessional statements. It is obviously in order to
neutralize this possibility that, before admitting such a statement
in evidence, clause (b) of Section 9D(1) mandates that the
evidence of the witness has to be recorded before the
adjudicating authority, as, in such an atmosphere, there would be
no occasion for any trepidation on the part of the witness
concerned.
16. 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
54
Customs Appeal Nos.75564 & 75569-75574 of 2025
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.
17. 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.
18. 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.
19. 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.
55
Customs Appeal Nos.75564 & 75569-75574 of 2025
20. Reliance may also usefully be placed on Para 16 of the
judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron
Pvt Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally
expound the law thus :
―If the Revenue choose (sic chose?) not to examine any witnesses
in adjudication, their statements cannot be considered as
evidence.‖
21. That adjudicating authorities are bound by the general
principles of evidence, stands affirmed in the judgment of the
Supreme Court in C.C. v. Bussa Overseas Properties Ltd., 2007
(216) E.L.T. 659 (S.C.), which upheld the decision of the Tribunal
in Bussa Overseas Properties Ltd. v. C.C., 2001 (137) E.L.T. 637
(T).
22. It is clear, from a reading of the Order-in-Original dated 4-4-
2016 supra, that Respondents No. 2 has, in the said Orders-in-
Original, placed extensive reliance on the statements, recorded
during investigation under Section 14 of the Act. He has not
invoked clause (a) of sub-section (1) of Section 9D of the Act, by
holding that attendance of the makers of the said statements
could not be obtained for any of the reasons contemplated by the
said clause. That being so, it was not open to Respondent No. 2 to
rely on the said statements, without following the mandatory
procedure contemplated by clause (b) of the said sub-section. The
Orders-in-Original, dated 4-4-2016, having been passed in blatant
violation of the mandatory procedure prescribed by Section 9D of
the Act, it has to be held that said Orders-in-Original stand
vitiated thereby.
23. The said Order-in-Original, dated 4-4-2016, passed by
Respondent No. 2 is, therefore, clearly liable to be set aside.
24. In view of the above facts and circumstances, the impugned
Order-in-Original dated 4-4-2016 passed by respondent No. 2
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Customs Appeal Nos.75564 & 75569-75574 of 2025
stands set aside. Resultantly, the show cause notice issued to the
petitioner is remanded to respondent No. 2 for adjudication de
novo by following the procedure contemplated by Section 9D of
the Act and the law laid down by various judicial Authorities in
this regard including the principles of natural justice in the
following manner :-
(i) In the event that the Revenue intends to rely on any of the
statements, recorded under Section 14 of the Act and referred to
in the show cause notices issued to Ambika and Jay Ambey, it
would be incumbent on the Revenue to apply to Respondent No. 2
to summon the makers of the said statements, so that the
Revenue would examine them in chief before the adjudicating
authority, i.e., before Respondent No. 2.
(ii) A copy of the said record of examination-in-chief, by the
Revenue, of the makers of any of the statements on which the
Revenue chooses to rely, would have to be made available to the
assessee, i.e., to Ambika and Jay Ambey in this case.
(iii) Statements recorded during investigation, under Section 14
of the Act, whose makers are not examination-in-chief before the
adjudicating authority, i.e., before Respondent No. 2, would have
to be eschewed from evidence, and it would not be permissible for
Respondent No. 2 to rely on the said evidence while adjudicating
the matter. Neither, needless to say, would be open to the
Revenue to rely on the said statements to support the case
sought to be made out in the show cause notice.
(iv) Once examination-in-chief, of the makers of the statements,
on whom the Revenue seeks to rely in adjudication proceedings,
takes place, and a copy thereof is made available to the assessee,
it would be open to the assessee to seek permission to cross-
examine the persons who have made the said statements, should
it choose to do so. In case any such request is made by the
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Customs Appeal Nos.75564 & 75569-75574 of 2025
assessee, it would be incumbent on the adjudicating authority,
i.e., on Respondent No. 2 to allow the said request, as it is trite
and well-settled position in law that statements recorded behind
the back of an assessee cannot be relied upon, in adjudication
proceedings, without allowing the assessee an opportunity to test
the said evidence by cross-examining the makers of the said
statements. If at all authority is required for this proposition,
reference may be made to the decisions of the Hon'ble Supreme
Court in Arya Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25
(S.C.) and Swadeshi Polytex v. Collector, 2000 (122) E.L.T. 641
(S.C.).‖
7.3 Further, the Hon'ble Allahabad High Court has also examined this
issue whether the statements recorded during the course of
investigation is admissible or not ? in the case of Commissioner of
Central Excise, Meerut I Vs. Parmarth Iron Private Limited reported in
2010 (260) ELT 514 (All.), the Hon'ble High Court has observed as
under :
"15. The question, however, before us is, does the respondent
have a right to call upon the appellants to make available the
witnesses for cross-examination even before they being examined
or their statements relied upon by the Department in proceedings
in adjudication. None of the judgments cited above were on the
issue of making available the witnesses for cross-examination in
order to reply to a show cause notice. Those judgments as
already explained were in the course of adjudicating proceedings.
Is, therefore, an assessee entitled to cross examine the witnesses
at the stage of filing a reply to the show cause notice? A show
cause notice is issued on the basis of uncontested material
available before the Assessing Authority, who based thereon, has
arrived at a prima facie finding whether a show cause notice
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Customs Appeal Nos.75564 & 75569-75574 of 2025
ought to be issued or not. The material, thus, which has to be
considered is, untested and uncorroborated. A party is called upon
to reply to the said show cause notice in order to enable the
Revenue to know the stand of the assessee, in the context of the
material produced as to whether the proceedings should be
further proceeded with. It is an opportunity to the party being
proceeded against to disclose any material that the party may
have to rebut the prima facie opinion. Even if, the assessee fails
to reply to the show cause notice, that does not amount to an
‗admission' of the contents of the show cause notice in the
absence of any statutory provision and it is always open to an
assessee to cross-examine the witnesses whose statements are
relied upon or sought to be examined on behalf of the Revenue.
At the stage of show cause notice, there is no adjudication. It is
only a step in the process of adjudication. The show cause notice
by itself is not an order of assessment. The order of assessment
will be passed only after considering the evidence and the
material, which is placed before the quasi judicial
authority/tribunal. Therefore, as the show cause notice is based
on prima facie material and constitutes a prima facie opinion, that
does not result into an order of adjudication. The question,
therefore, of an assessee being entitled to cross-examination,
even before the adjudication has commenced, in our opinion,
surely would not arise. It is only after the adjudication
proceedings have commenced pursuant to the show cause notice
and if the Revenue seeks to rely upon the statements or
documents, then the principles of natural justice would require in
the absence of any statutory provision, that the person whose
statement was recorded is made available for cross-examination
to test the veracity of the statement.
16. We, therefore, have no hesitation in holding, that there is no
requirement in the Act or Rules, nor do the principles of natural
justice and fair play require that the witnesses whose statements
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Customs Appeal Nos.75564 & 75569-75574 of 2025
were recorded and relied upon to issue the show cause notice, are
liable to be examined at that stage. If the Revenue choose not to
examine any witnesses in adjudication, their statements cannot
be considered as evidence. However, if the Revenue choose to
rely on the statements, then in that event, the persons whose
statements are relied upon have to be made available for cross-
examination for the evidence or statement to be considered.
17. We are, therefore, clearly of the opinion that there is no
right, procedurally or substantively or in compliance with natural
justice and fair play, to make available the witnesses whose
statements were recorded, for cross-examination before the reply
to the show cause notice is filed and before adjudication
commences. The exercise of cross-examination commences only
after the proceedings for adjudication have commenced.
Having said so, in our opinion, the first question is answered
accordingly.‖
We take note of the fact that the provisions of Section 9D of the Central
Excise Act, 1944 and Section 138B of the Customs Act,1962, are pari
materia.
7.4 In terms of Section 138B(1)(b) of the Customs Act, 1962, the
relevant portion is that 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. In
this case, no such procedure has been followed that the statement
which has been relied upon by the adjudicating authority were not
examined In-Chief and when the witness has not been examined,
therefore, the question of making an opinion of the admissibility of the
said statement as an evidence, does not arise. Consequently, the
statement recorded during the course of investigation cannot be relied
upon without following the procedure laid down under Section
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Customs Appeal Nos.75564 & 75569-75574 of 2025
138B(1)(b) of the Customs Act, 1962 as held by the judicial
pronouncements cited above. In view of this, we hold that the
statement recorded during the course of investigation cannot be relied
upon to allege under-valuation against the appellants.
7.5 We further take note of the facts that whether the printouts taken
from CPU and the printouts of E-mail, are admissible evidences in the
absence of complying with the provisions of Section 138C of the
Customs Act, 1962 is pari materia to Section 36B of the Central Excise
Act, 1944.
7.6 The said issue has been examined by this Tribunal in the case of
Trikoot Iron & Steel Casting Limited Vs. Additional Director General
(Adjn.), Director General of GST Intelligence (Adjudication Cell) vide
Final Order No.58546/2024 dated 09.09.2024, wherein this Tribunal has
observed as under :
―15. To examine the issues that have been raised, it would be
necessary to first examine section 36B of the Central Excise Act.
It is reproduced:
―Section 36B- Admissibility of micro films, facsimile copies of
documents and computer print outs as documents and as
evidence.
(1) Notwithstanding anything contained in any other law for the
time being in force,-
(a) a microfilm of a document or the reproduction of the image or
images embodied in such microfilm (whether enlarged or not); or
(b) a facsimile copy of a documents; or
(c) a statement contained in a document and included in a printed
material produced by a computer (hereinafter referred to as a
―computer printout‖).
(2) The conditions referred to in sub-section (1) in respect of a
computer printout shall be the following namely:-
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Customs Appeal Nos.75564 & 75569-75574 of 2025
(a) the computer printout containing the statement was produced
by the computer during the period over which the computer was
used regularly to store or process information for the purposes of
any activities regularly carried on over that period by the person
having lawful control over the use of the computer,
(b) during the said period, there was regularly supplied to the
computer in the ordinary course of the said activities, information
of the kind contained in the statement or of the kind from which
the information so contained is derived;
(c) throughout the material part of the said period, the computer
was operating properly or, if not, then any respect in which it was
not operating properly or was out of operation during that part of
that period was not such as to affect the production of the
document or the accuracy of the contents; and
(d) the information contained in the statement reproduces or is
derived from information supplied to the computer in the ordinary
course of the said activities.
(3) Where over any period, the function of storing or processing
information for the purposes of any activities regularly carried on
over that period as mentioned in clause (a) of sub-section (2) was
regularly performed by computers, whether -
(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that
period; or
(c) by different combinations of computers operating in
succession over that period; or
(c) in any other manner involving the successive operation over
that period, in whatever order, of one or more computers and one
or more combination of computers,
all the computers used for that purpose during that period shall
be treated for the purposes of this section as constituting a single
computer; and references in this section to a computer shall be
construed accordingly.
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(4) In any proceedings under this Act and the rules made
thereunder where it is desired to give a statement in evidence by
virtue of this section, a certificate doing any of the following
things, that is to say, -
(a) identifying the document containing the statement and
describing the manner in which it was produced;
(b) giving such particulars of any device involved in the
production of that document as may be appropriate for the
purpose of showing that the document was produced by a
computer,
(c) dealing with any of the matters to which the conditions
mentioned in sub-section (2) relate,
and purporting to be signed by a person occupying a responsible
official position in relation to the operation of the relevant device
or the management of the relevant activities (whichever is
appropriate) shall be evidence of any matter stated in the
certificate; and for the purposes of this sub-section it shall be
sufficient for a matter to be stated to be to the best of the
knowledge and belief of the person stating it.
(5) For the purposes of this section, -
(a) Information shall be taken to be supplied to a computer if it is
supplied thereto in any appropriate form and whether it is so
supplied directly or (with or without human intervention) by
means of any appropriate equipment;
(b) whether in the course of activities carried on by any official,
information is supplied with a view to its being stored or
processed for the purposes of those activities by a computer
operated otherwise than in the course of those activities, that
information, if duly supplied to that computer, shall be taken to
be supplied to it in the course of those activities;
(c) a document shall be taken to have been produced by a
computer whether it was produced by it directly or (with or
without human intervention) by means of any appropriate
equipment.
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Customs Appeal Nos.75564 & 75569-75574 of 2025
Explanation - For the purposes of this section,-
(a) "computer" means any device that receives, stores and
processes data, applying stipulated processes to the information
and supplying results of these processes; and
(b) any reference to information being derived from other
information shall be a reference to its being derived therefrom by
calculation, comparison or any other process.‖
16. Section 3 of the Evidence Act defines
―document‖ as follows: ―Document. -- ―Document‖ means any
matter expressed or described upon any substance by means of
letter, figures or marks, or by more than one of those means,
intended to be used, or which may be used, for the purpose of
recording that matter.‖
17. ―Evidence‖ in section 3 of the Evidence Act is defined as
follows:
―Evidence.‖ -- ―Evidence‖ means and includes -- (1) all
statements which the Court permits or requires to be made before
it by witnesses, in relation to matters of fact under inquiry; Such
statements are called oral evidence;
(2) all documents including electronic records produced for
the inspection of the Court; such documents are called
documentary evidence.‖
18. Section 36B of the Central Excise Act deals with cases where
any document is required to be produced as an evidence in
proceedings under the Central Excise Act and the Rules framed
thereunder. Such certificate should be signed by a person
occupying a responsible position in relation to the operation of the
device in question or the management of the relevant activities.
In such a case it shall be evidence of any matter which is stated
therein. It specifically mandates production of a certificate:
(i) identifying the document containing the statement and
describing the manner in which it was produced;
(ii) giving such particulars of any device involved in the
production of that document as may be appropriate for the
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purpose of showing that the document was produced by a
computer, (iii) dealing with any of the matters to which the
conditions mentioned in sub-section (2) relate.
19. The Central Excise Act contains a specific provision that
describes the manner in which the admissibility of computer print
outs will be accepted as evidence in proceedings initiated under
the Central Excise Act.
20. In respect of section 65B of the Evidence Act, which is pari
materia to the provisions of section 36B of the Central Excise Act,
it would be relevant to refer to the observations made by the
Supreme Court in Anvar P. V. The Supreme Court, held that
evidence relating to electronic record shall not be admitted in
evidence unless the requirement of section 65B of the Evidence
Act is fulfilled. The relevant paragraphs of the said judgment are
reproduced: ―
―13. Any documentary evidence by way of an electronic record
under the Evidence Act, in view of Sections 59 and 65A, can be
proved only in accordance with the procedure prescribed under
Section 65B. Section 65B deals with the admissibility of the
electronic record. The purpose of these provisions is to sanctify
secondary evidence in electronic form, generated by a computer.
It may be noted that the Section starts with a non obstante
clause. Thus, notwithstanding anything contained in the Evidence
Act, any information contained in an electronic record which is
printed on a paper, stored, recorded or copied in optical or
magnetic media produced by a computer shall be deemed to be a
document only if the conditions mentioned under sub-section (2)
are satisfied, without further proof or production of the original.
The very admissibility of such a document, i.e., electronic record
which is called as computer output, depends on the satisfaction of
the four conditions under Section 65B(2). Following are the
specified conditions under Section 65B(2) of the Evidence Act:
(i) The electronic record containing the information should have
been produced by the computer during the period over which the
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Customs Appeal Nos.75564 & 75569-75574 of 2025
same was regularly used to store or process information for the
purpose of any activity regularly carried on over that period by
the person having lawful control over the use of that computer;
(ii) The information of the kind contained in electronic record or of
the kind from which the information is derived was regularly fed
into the computer in the ordinary course of the said activity;
(iii) During the material part of the said period, the computer was
operating properly and that even if it was not operating properly
for some time, the break or breaks had not affected either the
record or the accuracy of its contents; and
(iv) The information contained in the record should be a
reproduction or derivation from the information fed into the
computer in the ordinary course of the said activity.
14. Under Section 65B(4) of the Evidence Act, if it is desired to
give a statement in any proceedings pertaining to an electronic
record, it is permissible provided the following conditions are
satisfied:
(a) There must be a certificate which identifies the electronic
record containing the statement;
(b) The certificate must describe the manner in which the
electronic record was produced; (c) The certificate must furnish
the particulars of the device involved in the production of that
record;
(d) The certificate must deal with the applicable conditions
mentioned under Section 65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a
responsible official position in relation to the operation of the
relevant device.
15. It is further clarified that the person need only to state in the
certificate that the same is to the best of his knowledge and
belief. Most importantly, such a certificate must accompany the
electronic record like computer printout, Compact Disc (CD),
Video Compact Disc (VCD), pen drive, etc., pertaining to which a
statement is sought to be given in evidence, when the same is
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Customs Appeal Nos.75564 & 75569-75574 of 2025
produced in evidence. All these safeguards are taken to ensure
the source and authenticity, which are the two hallmarks
pertaining to electronic record sought to be used as evidence.
Electronic records being more susceptible to tampering,
alteration, transposition, excision, etc. without such safeguards,
the whole trial based on proof of electronic records can lead to
travesty of justice.
16. Only if the electronic record is duly produced in terms of
Section 65B of the Evidence Act, the question would arise as to
the genuineness thereof and in that situation, resort can be made
to Section 45A - opinion of examiner of electronic evidence.
17. The Evidence Act does not contemplate or permit the proof of
an electronic record by oral evidence if requirements under
Section 65B of the Evidence Act are not complied with, as the law
now stands in India.
xxxxxxxxxxx
22. xxxxxxxxxxx. Section 63 and 65 have no application in the
case of secondary evidence by way of electronic record; the same
is wholly governed by Section 65A and 65B. to that extent, the
statement of law on admissibility of secondary evidence pertaining
to electronic record, as stated by this court in Navjot Sandhu case
(supra), does not laydown the correct legal position. It requires to
be overruled and we do so. An electronic record by way of
secondary evidence shall not be admitted in evidence unless the
requirements under Section 65B are satisfied. Thus, in the case of
CD, VCD, chip, etc., the same shall be accompanied by the
certificate in terms of Section 65B obtained at the time of taking
the document, without which, the secondary evidence pertaining
to that electronic record, is inadmissible.
xxxxxxxxxxxxx
24. The situation would have been different had the appellant
adduced primary evidence, by making available in evidence, the
CDs used for announcement and songs. Had those CDs used for
objectionable songs or announcements been duly got seized
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Customs Appeal Nos.75564 & 75569-75574 of 2025
through the police or Election Commission and had the same been
used as primary evidence, the High Court could have played the
same in court to see whether the allegations were true. That is
not the situation in this case. The speeches, songs and
announcements were recorded using other instruments and by
feeding them into a computer, CDs were made therefrom which
were produced in court, without due certification. Those CDs
cannot be admitted in evidence since the mandatory requirements
of Section 65B of the Evidence Act are not satisfied. It is clarified
that notwithstanding what we have stated herein in the preceding
paragraphs on the secondary evidence on electronic record with
reference to Sections 59, 65A and 65B of the Evidence Act, if an
electronic record as such is used as primary evidence under
Section 62 of the Evidence Act, the same is admissible in
evidence, without compliance of the conditions in Section 65B of
the Evidence Act.‖ (emphasis supplied)
21. The aforesaid judgment of Supreme Court in Anvar P. V. was
followed by the Supreme Court in Arjun Panditrao Khotkar vs.
Kailash Kushanrao Gorantyal & others 5 , though with a slight
modification. The Supreme Court held that if the original device is
not produced, then electronic record can be produced in
accordance with section 65B (1) of the Evidence Act together with
the requisite certificate under section 65B (4). The relevant
portions of the judgment of the Supreme Court are reproduced
below: ―
18. Sections 65A and 65B occur in Chapter V of the Evidence Act
which is entitled ―Of Documentary Evidence‖. Section 61 of the
Evidence Act deals with the proof of contents of documents, and
states that the contents of documents may be proved either by
primary or by secondary evidence. Section 62 of the Evidence Act
defines primary evidence as meaning the document itself
produced for the inspection of the court. Section 63 of the
Evidence Act speaks of the kind or types of secondary evidence by
which documents may be proved. Section 64 of the Evidence Act
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Customs Appeal Nos.75564 & 75569-75574 of 2025
then enacts that documents must be proved by primary evidence
except in the circumstances hereinafter mentioned. Section 65 of
the Evidence Act is important, and states that secondary evidence
may be given of ―the existence, condition or contents of a
document in the following cases...‖.
19. Section 65 differentiates between existence, condition and
contents of a document. Whereas ―existence‖ goes to
―admissibility‖ of a document, ―contents‖ of a document are to be
proved after a document becomes admissible in evidence. Section
65A speaks of ―contents‖ of electronic records being proved in
accordance with the provisions of Section 65B. Section 65B
speaks of ―admissibility‖ of electronic records which deals with
―existence‖ and ―contents‖ of electronic records being proved
once admissible into evidence. With these prefatory observations
let us have a closer look at Sections 65A and 65B.
20. It will first be noticed that the subject matter of Sections 65A
and 65B of the Evidence Act is proof of information contained in
electronic records. The marginal note to Section 65A indicates
that ―special provisions‖ as to evidence relating to electronic
records are laid down in this provision. The marginal note to
Section 65B then refers to ―admissibility of electronic records‖.
21. Section 65B(1) opens with a non-obstante clause, and makes
it clear that any information that is contained in an electronic
record which is printed on a paper, stored, recorded or copied in
optical or magnetic media produced by a computer shall be
deemed to be a document, and shall be admissible in any
proceedings without further proof of production of the original, as
evidence of the contents of the original or of any facts stated
therein of which direct evidence would be admissible. The
deeming fiction is for the reason that ―document‖ as defined by
Section 3 of the Evidence Act does not include electronic records.
22. Section 65B(2) then refers to the conditions that must be
satisfied in respect of a computer output, and states that the test
for being included in conditions 65B(2(a)) to 65(2(d)) is that the
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Customs Appeal Nos.75564 & 75569-75574 of 2025
computer be regularly used to store or process information for
purposes of activities regularly carried on in the period in
question. The conditions mentioned in subsections 2(a) to 2(d)
must be satisfied cumulatively.
23. Under Sub-section (4), a certificate is to be produced that
identifies the electronic record containing the statement and
describes the manner in which it is produced, or gives particulars
of the device involved in the production of the electronic record to
show that the electronic record was produced by a computer, by
either a person occupying a responsible official position in relation
to the operation of the relevant device; or a person who is in the
management of ―relevant activities‖ - whichever is appropriate.
What is also of importance is that it shall be sufficient for such
matter to be stated to the ―best of the knowledge and belief of
the person stating it‖. Here, ―doing any of the following things...‖
must be read as doing all of the following things, it being well
settled that the expression ―any‖ can mean ―all‖ given the
context. xxxxxxx.
xxxxxxxxxx
30. Coming back to Section 65B of the Indian Evidence Act,
subsection (1) needs to be analysed. The sub-section begins with
a nonobstante clause, and then goes on to mention information
contained in an electronic record produced by a computer, which
is, by a deeming fiction, then made a ―document‖. This deeming
fiction only takes effect if the further conditions mentioned in the
Section are satisfied in relation to both the information and the
computer in question; and if such conditions are met, the
―document‖ shall then be admissible in any proceedings. The
words ―...without further proof or production of the original...‖
make it clear that once the deeming fiction is given effect by the
fulfilment of the conditions mentioned in the Section, the
―deemed document‖ now becomes admissible in evidence without
further proof or production of the original as evidence of any
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Customs Appeal Nos.75564 & 75569-75574 of 2025
contents of the original, or of any fact stated therein of which
direct evidence would be admissible.
31. The non-obstante clause in sub-section (1) makes it clear that
when it comes to information contained in an electronic record,
admissibility and proof thereof must follow the drill of Section
65B, which is a special provision in this behalf - Sections 62 to 65
being irrelevant for this purpose. However, Section 65B(1) clearly
differentiates between the ―original‖ document - which would be
the original ―electronic record‖ contained in the ―computer‖ in
which the original information is first stored - and the computer
output containing such information, which then may be treated as
evidence of the contents of the ―original‖ document. All this
necessarily shows that Section 65B differentiates between the
original information contained in the ―computer‖ itself and copies
made therefrom - the former being primary evidence, and the
latter being secondary evidence.
32. Quite obviously, the requisite certificate in sub-section (4) is
unnecessary if the original document itself is produced. This can
be done by the owner of a laptop computer, a computer tablet or
even a mobile phone, by stepping into the witness box and
proving that the concerned device, on which the original
information is first stored, is owned and/or operated by him. In
cases where ―the computer‖, as defined, happens to be a part of
a ―computer system‖ or ―computer network‖ (as defined in the
Information Technology Act, 2000) and it becomes impossible to
physically bring such network or system to the Court, then the
only means of proving information contained in such electronic
record can be in accordance with Section 65B(1), together with
the requisite certificate under Section 65B(4). This being the case,
it is necessary to clarify what is contained in the last sentence in
paragraph 24 of Anvar P.V. (supra) which reads as ―...if an
electronic record as such is used as primary evidence under
Section 62 of the Evidence Act...‖. This may more appropriately be
read without the words ―under Section 62 of the Evidence Act,...‖.
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Customs Appeal Nos.75564 & 75569-75574 of 2025
With this minor clarification, the law stated in paragraph 24 of
Anvar P.V. (supra) does not need to be revisited.
xxxxxxxxxxxx
72. The reference is thus answered by stating that:
(a) Anvar P.V. (supra), as clarified by us hereinabove, is the law
declared by this Court on Section 65B of the Evidence Act. The
judgment in Tomaso Bruno (supra), being per incuriam, does not
lay down the law correctly. Also, the judgment in SLP (Crl.) No.
9431 of 2011 reported as Shafhi Mohammad (supra) and the
judgment dated 03.04.2018 reported as (2018) 5 SCC 311, do
not lay down the law correctly and are therefore overruled.
(b) The clarification referred to above is that the required
certificate under Section 65B (4) is unnecessary if the original
document itself is produced. This can be done by the owner of a
laptop computer, computer tablet or even a mobile phone, by
stepping into the witness box and proving that the concerned
device, on which the original information is first stored, is owned
and/or operated by him. In cases where the "computer" happens
to be a part of a "computer system" or "computer network" and it
becomes impossible to physically bring such system or network to
the Court, then the only means of providing information contained
in such electronic record can be in accordance with Section
65B(1), together with the requisite certificate under Section
65B(4). The last sentence in Anvar P.V. (supra) which reads as
―.. if an electronic record as such is used as primary evidence
under Section 62 of the Evidence Act...‖ is thus clarified; it is to be
read without the words ―under Section 62 of the Evidence Act,...‖
With this clarification, the law stated in paragraph 24 of Anvar
P.V. (supra) does not need to revisited.
(c) The general directions issued in paragraph 62 (supra) shall
hereafter be followed by courts that deal with electronic evidence,
to ensure their preservation, and production of certificate at the
appropriate stage. These directions shall apply in all proceedings,
till rules and directions under Section 67C of the Information
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Customs Appeal Nos.75564 & 75569-75574 of 2025
Technology Act and data retention conditions are formulated for
compliance by telecom and internet service providers.
(d) Appropriate rules and directions should be framed in exercise
of the Information Technology Act, by exercising powers such as
in Section 67C, and also framing suitable rules for the retention of
data involved in trial of offences, their segregation, rules of chain
of custody, stamping and record maintenance, for the entire
duration of trials and appeals, and also in regard to preservation
of the meta data to avoid corruption. Likewise, appropriate rules
for preservation, retrieval and production of electronic record,
should be framed as indicated earlier, after considering the report
of the Committee constituted by the Chief Justice's Conference in
April, 2016.‖ (emphasis supplied)
22. It transpires from the aforesaid two judgments of the
Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that:
(i) Any documentary evidence by way of an electronic record
under the Evidence Act can be proved only in accordance with the
procedure prescribed under section 65B of the Evidence Act. The
purpose of this provision is to sanctify secondary evidence in
electronic form generated by a computer;
(ii) Any information contained in an electronic record which is
printed on a paper, stored, recorded or copied in optical or
magnetic media produced by a computer shall be deemed to be a
document only if the conditions mentioned under sub-section (2)
of section 65 of the Evidence Act are satisfied, without further
proof or production of the original;
(iii) In view of the provisions of section 65(4) of the Evidence
Act, a certificate must accompany the electronic record like
computer printout, compact disc, video compact disc or pen drive,
pertaining to which a statement is sought to be given in evidence,
when the same is produced in evidence;
(iv) Only if the electronic record is duly produced in terms of
section 65B of the Evidence Act, that the question of its
genuineness would arise. The Evidence Act does not contemplate
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Customs Appeal Nos.75564 & 75569-75574 of 2025
or permit the proof of an electronic record by oral evidence if the
requirements of section 65B of the Evidence Act is not complied
with;
(v) An electronic record by way of secondary evidence shall not be
admitted in evidence unless the the requirements of section 65B
of the Evidence Act has satisfied; and
(vi) This would not apply in a case where the appellant adduces
primary evidence by making available in evidence the electronic
records.
23. A Bench of the Tribunal in Agarvanshi Aluminium Ltd. vs.
Commissioner of Customs (I), Nhava Sheva6 , where the issue
was with respect to section 36B of the Central Excise Act, also
observed: ―
―12. ...... it is clear that for admissibility of computer printout
there are certain conditions have been imposed in the said
section. Admittedly condition 4C of the said section has not been
complied with and in the case of Premier Instruments & Controls
(supra) this Tribunal relied on the case of International Computer
Ribbon Corporation - 2004 (165) E.L.T. 186 (Tri.-Chennai)
wherein this Tribunal has held that "computer printout were relied
on by the Adjudicating Authority for recording a finding of
clandestine manufacture and clearance of excisable goods. It was
found by the Tribunal that printouts were neither authenticated
nor recovered under Mahazar... The Tribunal rejected the
printouts... Nothing contained in the printout generated by the PC
can be admitted as evidence." In this case also, we find that the
parallel situation as to the decision of Premier Instruments &
Controls (supra).
13. Therefore, the printout generated from the PC seized cannot
be admitted into evidence for nonfulfillment of statutory condition
of Section 36B of the Central Excise Act, 1944.‖ (emphasis
supplied)
24. In Popular Paints and Chemicals vs. Commissioner of Central
Excise and Customs, Raipur7 , the Tribunal observed: ―
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Customs Appeal Nos.75564 & 75569-75574 of 2025
―15.2. Thus, it has been clearly laid down by the Supreme Court
that the computer printout can be admitted in evidence only if the
same are produced in accordance with the provisions of Section
65B (2) of the Evidence Act. A certificate is also required to
accompany the said of computer printouts as prescribed under
section 65B(4) of Evidence Act. It has been clearly laid down in
para 15 of this judgment that all the safeguards as prescribed in
Section 65B (2) & (4), to ensure the source and authenticity,
which are the two hallmarks pertaining to electronic record sought
to be used as evidence. Electronic records being more susceptible
to tempering, alteration, transposition, excision etc without such
safeguards, the whole trial based on proof of electronic records
can lead to travesty of justice. We may add here that the
provisions of Section 65B of Indian Evidence Act and Section 36B
of Central Excise Act are pari materia.
15.3 It is evident from the appeal that the investigation officers
while seizing has failed to take safeguards as mandated under
section 36B of Central Excise Act. Further the cloning process of
the hard-disks and retrieval of the data is admissible for want of
cross examination of, Sh. Vipul Saxena, who has done cloning of
the data from the computer system. We, therefore, hold that the
computer printouts cannot held to admissible evidence in terms of
Section 36B (2) & (4) of the Central Excise Act in the case at
hand.‖ (emphasis supplied)
25. In Global Extrusion Private Limited and Ors. vs. Commissioner
of Central Excise & ST, Rajkot 8 , the Tribunal observed: ―
―19. Ongoing through the aforesaid provisions, we find that
Section 36B(2) provides the conditions in respect of computer
printouts. In the present matter the computer was not shown to
have been used regularly to store or process information for the
purposes of any activities regularly carried on by the appellants. It
was also not shown that information of the kind contained in the
computer printout was regularly supplied by the appellant to the
computer in the ordinary course of activities. Again, it was not
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Customs Appeal Nos.75564 & 75569-75574 of 2025
shown that, during the relevant period, the computer was
operating in the above manner properly. The above provision also
casts a burden on that party, who wants to rely on the computer
printout, to show that the information contained in the printout
had been supplied to the computer in the ordinary course of
business of the company. We find that none of these conditions
was satisfied by the Revenue in this case. In the present case, the
data was not stored in the computer but the officers had taken
the printout from the Hard Disk drive by connecting to the
computer. The officers had not obtained any certificate as
required under Section36B of the said Act. It is also noted that
none of the conditions under Section 36B (2) of the Act, 1944 was
observed. In such situation, it is difficult to accept the printout as
an evidence to support the allegations of the revenue. It is noted
that the requirement of certificate under Section 36B (4) is also to
substantiate the veracity of truth in the operation of electronic
media. We also agree with the contention of the appellants that at
the time of sealing and de-sealing of the external data storage
device as well as the time of obtaining printouts therefrom, a
certificate should have been obtained as per the provision of
Section36B of the Act. No such certificate has been brought on
record without which the evidentiary value of these printout get
vitiated. As no certificate from the responsible person of the
Appellants was obtained by the department, the credibility of the
computer printout gets vitiated.‖ (emphasis supplied).
26. The aforesaid decisions of the Tribunal, which are in the
context of the provisions of section 36B of the Central Excise Act,
hold that a printout generated from the personal computer that
has been seized cannot be admitted in evidence unless the
statutory conditions laid down in section 36B of the Central Excise
Act are complied with. The decisions also hold that if the data is
not stored in the computer but officers take out a printout from
the hard disk drive by connecting it to the computer, then a
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Customs Appeal Nos.75564 & 75569-75574 of 2025
certificate under section 36B of the Central Excise Act is
mandatory.
27. The contentions advanced by learned counsel for the appellant
and the learned authorized representative appearing for the
department have to be examined in the light of the aforesaid
observations.
28. What transpires from the two Panchnamas dated 04.07.2013
and 15.07.2013 is:-
(i) The officers found that Vaibhav Goel ―removed a hard disc
from his kitchen and tried to throw it away‖;
(ii) During the search, the officers found ―three computer
monitors installed in a room on the first floor of rear side of the
house above the dog house in which some documents and seven
pen-drives were also found‖;
(iii) However, no CPU was found in the said room. On being
asked, Mohit Vaish, Accountant informed that there is ―one
desktop computer connected with the CPU, which is installed in
the kitchen of the said premises and these monitors are working
as extension of the computer in the kitchen and connected
through cable‖;
(iv) On searching the kitchen, the officers recovered ―Computer
(CPU, Monitor, Keyboard and Mouse) which was switched on and
CPU was found without cover and without having any hard disc‖;
(v) The officers conducted a thorough search of the entire
residential premises and found ―one of the hard disc hidden in a
corner lying near the dog house‖;
(vi) The officers also found two hard discs from the cupboard of
the kitchen;
(vii) The officers asked Vaibhav Goel to connect the hard disc
found in the corner near dog house with the CPU installed in the
kitchen;
(viii) On the direction of Vaibhav Goel, Mohit Vaish started the
CPU after connecting the said hard disc;
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Customs Appeal Nos.75564 & 75569-75574 of 2025
(ix) On being asked by the officers to take the printouts of data
captured in the software, Vaibhav Goel informed that being a MS
Dos based software, ―printout cannot be taken without configuring
printer Canon LBP 2900B (available in the residence) with site key
and license key‖.
(x) On being asked how these keys can be taken, Vaibhav Goel
stated that he would have to talk to an expert and on direction of
Vaibhav Goel, Mohit Vaish spoke to one Dua, who on mobile
informed after some time that site key is 'EIGIDADEJTBO' and
license key is 'HJHTVOGSVQ'.
(xi) Mohit Vaish configured the printer and started taking
printouts of sale, purchase and cash data, which is stated to
contain both accounted and unaccounted transaction;
(xii) Some printouts from one of the pen drive Toshiba 4GB that
was recovered were also taken after connecting the same with the
CPU;
(xiii) Since the whole process of taking of printouts of the data in
the CPU and the pen-drive was taking time and printing stated
mal-functioning, the officers discontinued the process of taking
printout and seized the three Hard disks and seven pen drives
properly. Details of the seized hard discs and pen drives were
mentioned in Annexure-A to the Panchanama;
(xiv) Subsequently, on 15.07.2013 another Panchnama was
drawn. The Panchnama records that the hard drive mentioned at
serial no. 1 was attached with the CPU and printers resumed from
the residence of Vaibhav Goel on 04.07.2013 and printouts of the
data stored in the hard drive and Toshiba 4GB pen drive were
taken;
(xv) The other hard drives and pen drives did not contain any
relevant data and so printouts were not taken.
29. It is not in dispute that the hard disk from which the printouts
were subsequently taken was not found installed in the CPU. The
Panchnama drawn on 04.07.2013 records that the officers found
that Vaibhav Goel had removed a hard disc from his kitchen and
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Customs Appeal Nos.75564 & 75569-75574 of 2025
had tried to throw it away. The panchnama does not mention that
any officer had seen Vaibhav Goel actually remove the hard disc
from the CPU. It only records that Vaibhav Goel had removed a
hard disc from the kitchen and had tried to throw it away. At a
different place, the panchnama records that the officers
conducted a thorough search of the entire residential premises
and found one hard disc hidden in a corner lying near the dog
house. What needs to be noticed is that if Vaibhav Goel had
thrown the hard disk, it would not have been found hidden in a
corner of a room near the dog house. The seven pen drives were
also recovered from a room on the first floor of the rear side of
the house. In the said room three computer monitor were also
installed without a CPU. The officers were informed that one
desktop computer connected with the CPU is installed in the
kitchen and these monitors are working as extension of the
computer in the kitchen and were connected through a cable.
Ultimately the officers recovered CPU, Monitor, Keyboard and
Mouse in the room, but the CPU was found without cover and
hard disk. The Panchnama does not record that Vaibhav Goel was
seen removing the hard disk from the CPU and indeed it would
not have been possible for Vaibhav Goel to remove this hard disk
from the CPU in the presence of all the officers and throw it away.
There is nothing on the record to link the hard disk to the CPU,
nor is there anything to link that the hard disc and the pen drive
stored information contained in the computer.
30. A hard disk is a rigid magnetic disk that stores data. A pen
drive is a data storage device that includes flash memory with an
integrated USB interface.
31. The printouts, which are the sole basis for holding that the
appellant had indulged in clandestine removal, were taken both
on 04.07.2013 and on 15.07.2013 by placing the recovered hard
disc and pen drive in the CPU.
32. It is, therefore, clear that the CPU did not contain the hard
disk. The hard disk was in fact picked up from the corner of the
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Customs Appeal Nos.75564 & 75569-75574 of 2025
room. No attempt was made by the department to admit the hard
disk and the pen drive in evidence. The required certificate under
section 36B (4) of the Central Excise Act was also not produced.
Thus, no reliance can be placed on the printouts, in view of the
two judgments of the Supreme Court in Anvar P. V. and Arjun
Panditrao Khotkar and the three decisions of the Tribunal in
Agarvanshi Aluminium, Popular Paints and Chemicals and Global
Extrusion.
33. The adjudicating authority, on its own, examined the oral
evidence on the points required to be stated in the certificate.
This is not permissible in law. The confirmation of demand is
based only on the printouts taken after connecting the hard disk
and the pen drive to the computer.
34. It is, therefore, not possible to accept the contention
advanced by the learned authorized representative appearing for
the department that panchnama itself should be treated as a
certificate or that the adjudicating authority was justified in itself
examining whether the conditions set out in section 36B (4) of the
Central Excise Act had been satisfied.‖
Admittedly, the printouts taken from CPU and the printouts of E-mails
have not been examined in terms of the procedure laid down under
Section 138C of the Customs Act, 1962,therefore, the said documents
are not admissible to allege the undervaluation against the appellants.
7.7 We further take note of the facts that the charge of
undervaluation is based only on the basis of some documents recovered
during the course of investigation and the statements made by the
appellants. The transaction value can be rejected, if there is an
evidence of contemporaneous import on higher price. The said issue
has been examined by the Hon'ble Apex Court in the case of
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Customs Appeal Nos.75564 & 75569-75574 of 2025
Commissioner of Customs, Calcutta Vs. South India Television (P)
Limited reported in 2007 (214) ELT 3 (S.C.), wherein the Hon'ble Apex
Court has observed as under :
―5. We also quote hereinbelow Rule 4 of the Customs Valuation
(Determination of Price of Imported Goods) Rules, 1988, as it
stood at the relevant time :
―4. Transaction value. - (1) The transaction value of imported
goods shall be the price actually paid or payable for the goods
when sold for export to India, adjusted in accordance with the
provisions of Rule 9 of these rules.
(2) The transaction value of imported goods under sub-rule (1)
above shall be accepted :
Provided that --
(a) there are no restrictions as to the disposition or use of the
goods by the buyer other than restrictions which --
(i) are imposed or required by law or by the public authorities
in India; or
(ii) limit the geographical area in which the goods may be
resold; or
(iii) do not substantially affect the value of the goods;
(b) the sale or price is not subject to same condition or
consideration for which a value cannot be determined in respect
of the goods being valued;
(c) no part of the proceeds of any subsequent resale, disposal
or use of the goods by the buyer will accrue directly or indirectly
to the seller, unless an appropriate adjustment can be made in
accordance with the provisions of Rule 9 of these rules; and
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Customs Appeal Nos.75564 & 75569-75574 of 2025
(d) the buyer and seller are not related, or where the buyer and
seller are related, that transaction value is acceptable for customs
purposes under the provisions of sub-rule (3) below.
(3) (a) Where the buyer and seller are related, the transaction
value shall be accepted provided that the examination of the
circumstances of the sale of the imported goods indicate that the
relationship did not influence the price. -
(b) In a sale between related persons, the transaction value
shall be accepted, whenever the importer demonstrates that the
declared value of the goods being valued, closely approximates to
one of the following values ascertained at or about the same time
-
(i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India;
(ii) the deductive value for identical goods or similar goods;
(iii) the computed value for identical goods or similar goods.
Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 9 of these rules and cost incurred by the seller in sales in which he and the buyer are not related;
(c) substitute values shall not be established under the provisions of clause (b) of this sub-rule.‖
6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), ―value‖ is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods.
82Customs Appeal Nos.75564 & 75569-75574 of 2025 The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word ―value‖ is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the Bill of Entry is the value referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the 83 Customs Appeal Nos.75564 & 75569-75574 of 2025 Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of ―deemed value‖. Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of 84 Customs Appeal Nos.75564 & 75569-75574 of 2025 contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determining the price at which goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion.
7. Applying the above tests to the facts of the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One such letter is dated 19-9-1996. In the present case, the importer has alleged that the original declarations were with the Department. That certain portions of the originals were not shown to the importer despite the importer calling upon the adjudicating authority to do so. Further, by way of Interlocutory Application No. 4 in the present civil appeal, an application was moved by the importer calling upon the Department to produce the original declaration in the Court. No reply has been filed to the said I.A. till date. In the circumstances, we are of the view that the Department had erred in rejecting the invoice submitted by the importer herein as incorrect. Further, the Department received 85 Customs Appeal Nos.75564 & 75569-75574 of 2025 from the Hong Kong supplier a Fax message dated 22-7-1996. That was produced before the Commissioner. In that message, he had explained that the manufacturer of the impugned goods was getting export rebates and, therefore, it is possible that the manufacturer had over-invoiced the price in order to claim more rebate. The goods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal.
8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs Valuation Rules refers to the transaction value. Utilization of the word ‗the' as definite article indicated that what should be accepted as the transaction value for the purpose of assessment under the Customs Act is the price actually paid by the importer for the particular transaction, unless it is unacceptable for the reasons set out in Rule 4(2). In the said judgment, it has been further held that, the word ‗payable' in Rule 4(1) also refers to the ―transaction value‖ and payability in respect of the transaction envisaged a situation where payment of price stood deferred. Therefore, this decision of the Supreme 86 Customs Appeal Nos.75564 & 75569-75574 of 2025 Court directs the Revenue to decide the validity of the particular value instead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule
4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules.
7.8 Admittedly, no NIDB date has been relied upon and no marketing enquiry has been conducted to enhance the value of the imported goods. In the absence of these evidences, the charge of undervaluation is not sustainable.
7.9 We further find that in this case, the contemporaneous value declared by the independent buyers is available and for better appreciation of facts, the same are extracted herein below :
87Customs Appeal Nos.75564 & 75569-75574 of 2025 88 Customs Appeal Nos.75564 & 75569-75574 of 2025 In the absence of reliance of contemporaneous value declared by the independent buyers, which is much lower than the value declared by the appellants, the charge of undervaluation, is not sustainable. 7.10 We also find that in this case, the Appellant No.(1) approached to the Hon'ble Calcutta High Court on the ground that the relied upon documents have not been supplied to the Appellant No.(1). Through W.P.7242 (W) of 2013, the Hon'ble High Court vide Order dated 13.06.2013, disposed off the said Writ Petition with the following directions :
―Consequently, this Writ Petition is disposed of with a direction upon the Respondent Authorities to supply all those documents indicated in Paragraph 25 of the Show-Cause Notice to the Petitioners within a period of eight weeks.
Once all the documents are received by the Petitioners to their satisfaction in terms of whatever has been referred to in the Show- Cause Notice, it will then be open to the Petitioners to file a comprehensive reply within a period of eight weeks thereafter. In case, the Petitioners desire for some additional documents, they should also be supplied to them. Once the reply is received, the adjudication proceedings will commence and proceed in accordance with law.
In the intervening period and till the adjudication proceedings commences, the Petitioners shall not be subjected to any form of coercion.
Subject to an application for certified copy being made and proof in support thereof being produced, let a plain photocopy of this Order, duly countersigned by the Assistant Registrar (Court), be handed over to the learned Counsel for the parties, on usual undertaking.‖ 89 Customs Appeal Nos.75564 & 75569-75574 of 2025 In spite of direction of the Hon'ble Calcutta High Court, the relied upon document has not been provided to the Appellant No.(1) with the observation that the same are not traceable. In that circumstances, we hold that whole of the adjudication proceedings are not sustainable in the absence of following the principles of natural justice. On this account also, the impugned order is not sustainable.
8. As the duty has been demanded from the Appellant No.(1) on account of undervaluation and denial of benefit of Notification No.25/1999-CUS dated 28.02.1999 as amended by Notification No.09/2004 dated 08.01.2004, are not sustainable, therefore, whole of the demand of duty confirmed by way of impugned order is set aside.
9. As the demand of duty is not sustainable, consequently, no penalty can be imposed on the appellants.
10. We further take note of the facts that during the course of investigation, an amount of Rs.1,21,73,905/- was paid by the Appellant No.(1), the same is to be refunded to the Appellant No.(1) within 60 days from the date of receipt of this order.
11. In these terms, the appeals are disposed off.
(Pronounced in the open court on 15.05.2025)
(Ashok Jindal)
Member (Judicial)
(K.Anpazhakan)
mm Member (Technical)