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TMI Blog2020 (5) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice should be adopted; and b) why differential customs duty have sought to be demanded from the 1st petitioner; c) penalty should not be imposed under section 112 and 114 AA of the Customs Act, 1962 on the 2ndpetitioner; 3. During the course of investigation which preceded the issue of the aforesaid show cause notice, the 1st petitioner had paid an amount of Rs. 45 lakhs as differential tax. The show cause notice seeks to appropriate the same towards the differential duty proposed in the aforesaid show cause notice. 4. The above show cause notice was issued by the 2nd respondent Directorate Of Revenue Intelligence after investigation. 5. During the course of the investigation, statements were recorded from the 2nd petitioner on 18.12.2013; 20.12.2013 and on 17.12.2014. A statement was also recorded from the proprietor of the 1stpetitioner on 20.12.2013. 6. Apart from the above two persons, statement of the Branch Manager of the petitioner's Custom House Agent Shri. C.D Palani on 7.11.2014 and from one Shri. K.Sundaramoorty, the Managing Partner of M/s.. Krishna Logistics Chennai, another Custom House Agent (CHA) were recorded on 25.11.2014 by the officers of the 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to delay the adjudication of the show cause notice and that the as demand proposed in the show cause notice was based on independent documents, contemporaneous imports and was not based on the opinion or statement of any persons or of the officers. 18. It is stated that only statements were recorded and comparable value of identical goods were shown to these persons and nothing more. It is therefore submitted that the petitioners were not entitled to cross examine any of the persons. 19. I have heard a senior counsel for the petitioner at length and learned counsel for the 1st respondent and the 2nd respondent. 20. The learned senior counsel for the petitioner was at pains to submit that the statements were obtained from the 3 named persons by the officers of the 2nd respondent under coercion and threat. The statement obtained were not voluntary in nature and therefore it is absolutely necessary that these persons be produced for cross-examination by the petitioner for the petitioner to prove their defence. 21. In this connection, reference was made to the following 3 judgements of the Honourable Supreme Court:- i. DK Basu versus State of West Bengal and Ashok K Johari v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cticable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee. (4) The time, place of arrest and venue of custody of an arrestee must be notified by the police where the next friend or relative of the arrestee lives outside the district or town through the Legal Aid Organisation in the District and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest. (5) The person arrested must be made aware of this right to have someone informed of his arrest or detention as soon as he is put under arrest or is detained. (6) An entry must be made in the diary at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. (7) The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any present on his/her body, must be recorded at that time. The "Inspection Memo" m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them." 26. On the other hand, the learned counsel for the 1st respondent relied upon the following decisions:- i. Collector of Customs Madras Vs. Kotumal Bhirumal Pihlajani & Ors AIR 1967 Mad 263(FB) ii.Percy Rustomji Basta V. State of Maharastra 1971(1) SCC 847; iii. Asst. Controller of Customs, New Delhi Vs. Kedar Nath - Crl.Appeal No.14 of 1969; iv. K.I.Pavunny V. Asst. Collector, Central Excist Collectorate, Cochin (1997) 3 SCC 721; v. Naresh J. Sukhawani Vs. Union of India - 1995 Supp(4) SCC 663 vi. Asst. Collector of Central Excise, Rajamundry Vs. Duncan Agro Industries Ltd - (2000) 7 SCC 53 -.; vii. Commissioner of Customs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid Act. 32. The culmination of the investigation may not only result in issuance of a show cause notice under section 28 to demand customs duty short paid or short levied but also for confiscation, fine, penalty under Section 124 of the Customs Act, 1962. 33. Depending upon the gravity of the offence committed by a person, a criminal prosecution are initiated. 34. Though it was submitted that the statements recorded from the petitioners were retracted, I do not find any material on record. 35. Neither the petitioner nor the respondents have filed any of the statements of the persons recorded under Section 108 of the Customs Act, 1982 nor the letter of retraction. 36. Since the primary purpose of obtaining statement under Section 108 of the Customs Act, 1962 was for investigation and not for obtaining confessional statements/admission of liability, the respondents were asked to find out whether they could proceed with the show cause proceedings based on evidence gathered without placing primary reliance on the statements recorded from any of the three persons. Learned counsel for the 1st respondent has filed a copy of letter dated 7.1.2020 received by him. 37. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act.] (2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (3)All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance under this section. (4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860). 45. Section 108 of the Customs Act, 1962 gives power to a gazetted an Officer of Customs to summon any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to initiate proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc. By virtue of authority of law, the officer exercising the powers under the Act is an authority within the meaning of Section 24 of the Evidence Act. a. Though the authority/officer on suspecting a person of having committed the crime under the Act can record his statement, such a person perforce is not a person accused under the Act. b. He becomes accused of the offence under the Act only when a complaint is laid by the competent Customs Officer in the Court of competent jurisdiction or Magistrate to take cognizance of the offence and summons are issued. Thereafter, he becomes a person accused of the offence. c. A statement recorded or given by the person suspected of having committed an offence during the inquiry under Section 108 of the Act or during confiscation proceedings is not a person accused of the offence within the meaning of Section 24 of the Evidence Act. d. Though the Customs Officer is an authority within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in which case, persons may be arrayed as "accused" and the persons whose statements are relied upon may be shown in the list of witnesses. 57. In K.Ipavunny Vs. Assistant Collector (HQ), Central Excise Collectorate, referred to supra , it was held that a conviction also can be based on the statements recorded under Section 108 of the Customs Act, 1962. However, Practice and Prudence require the court to examine the evidence produced by the prosecution to find out whether any other facts and circumstances which corroborate the retracted confessions. 58. Confirmation of demand solely based on statements recorded under Section 108 of the Customs Act, 1962 would require cross-examination by the petitioner. 59. At the same time, if such statements are merely intended for corroboration of independent evidence, the cross-examination need not be allowed. 60. Therefore, it is for the 1st respondent to decide whether the statements recorded are to be solely relied for confirming the proposed demand or are relied for mere corroboration of independent evidence gathered during investigation. 61. In the case of former, mandatorily such statements would require cross-examination and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination of the officers of the 2nd respondent. 70. As indicated above, adjudication proceedings under the Customs Act, 1962 cannot solely be based on the inculpatory statements of witnesses and noticee alone. Such statements can be only used for corroborating the case which the Department proposes to establish before the quasi-judicial authorities. 71. The department is bound to prove the case based on balance of probabilities as per well-recognised principle of law in the case of departmental adjudications. 72. It is therefore made clear that in case primary reliance is to be placed on the statements of the 2 employees of the 2 CHA's for passing adjudication order, the 1st respondent shall issue suitable summons for cross examination by the petitioner before passing such order. 73. In the light of the above discussions, I find no merits in the present writ petition. I therefore, dismiss the above writ petitions with the following observation:- i. The 1st respondent is directed to complete the adjudication proceedings within a period of 9 months from date of receipt of this order since the dispute pertains to import made by the petitioner between 2010 and 2013; ii. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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