Statements Recorded During Customs Probe Cannot Be Relied Upon Without Examining Witness Before Authority: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Delhi has recently set aside penalties of Rs 25 lakh each imposed on Committed Logistics Pvt. Ltd. and its Director Vikas Chaudhary, holding that statements recorded by customs officers cannot be treated as relevant evidence unless the mandatory procedure under the law is followed.

A coram of President Justice Dilip Gupta, and Member P.V. Subba Rao held that the penalties were imposed solely on the basis of statements recorded under Section 108 of the Customs Act without complying with Section 138B.

Section 138B requires that before such a statement can be relied upon, the person who made it must first be examined as a witness before the adjudicating authority, and the authority must form an opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Only thereafter can the question of cross-examination arise.

“A statement made under section 108 of the Customs Act cannot be considered as relevant as the procedure contemplated under section 138B of the Customs Act was not followed,” the Tribunal held.

The Commissioner of Customs, ICD Tughlakabad, had imposed penalties under Section 112(a) of the Customs Act on the allegation that the company issued delivery orders for 26 containers to persons other than the actual consignees. The goods, valued at ₹49.31 crore, were found to be grossly misdeclared and were seized.

The appeals before the Tribunal specifically concerned penalties imposed under Section 112(a)(i).

The department alleged that the company and its director abetted smuggling by issuing delivery orders to fictitious firms allegedly linked to one Lokesh Garg.

The Tribunal noted that the show cause notice did not allege that Vikas Chaudhary had knowledge of misdeclaration in the containers.

Relying on the Supreme Court's decision in Shri Ram vs The State of U.P., the Tribunal quoted the judgment, which states: “It is not enough that an act on the part of the alleged abettor happens to facilitate the commission of the crime. Intentional aiding and therefore active complicity is the gist of the offence of abetment…”

It also referred to the Bombay High Court's ruling in Amritlakshmi Machine Works vs Commissioner of Customs (Import), Mumbai, which held that mere facilitation without knowledge would not amount to abetment.

“In the instant case, there is no allegation against the appellant that he had knowledge of mis-declaration in the containers,” the Tribunal recorded.

Since the penalties were imposed only on the basis of statements recorded under Section 108 and the procedure contemplated under Section 138B was not followed, the Tribunal held that such statements could not be treated as relevant evidence.

Holding that the knowledge necessary for abetment was not established and that the statutory procedure for admitting the statements into evidence had not been complied with, the tribunal set aside the impugned order insofar as it imposed penalties on the company and its director and allowed both appeals.

For Appellant: Advocate Prashant Shrivastava

For Department: Advocate Mukesh Kumar Shukla