Delhi High Court holds statements under Section 108 binding, dismisses challenge to valuation of seized cigarettes

A bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul heard an appeal under Section 130 of the Customs Act in which the appellant challenged the valuation placed on seized foreign-origin cigarettes and the concomitant confiscation and penalty orders. The appeal arose from concurrent findings of seizure, confiscation and penalties imposed after recovery of a large consignment of contraband cigarettes.

The Court dismissed the appeal for lack of any substantial question of law, affirmed the order-in-original and the appellate orders, and held that the statements recorded under Section 108 of the Customs Act were binding. The bench noted that the show cause notice had specified the market value adopted for assessment and that the burden therefore shifted to the appellant to demonstrate that the valuation was incorrect. The Court, in its reasoning, observed: “The statement recorded under Section 108 of the Customs Act of the appellant so also the other witnesses, at no point of time, was retracted and the same has a binding effect in law. Once such statements are not retracted and by virtue of statutory fiction, are rightly so accepted by the authorities for the seizure and confiscation. Therefore, in our opinion, no fault can be noticed in the same.” The bench further relied on precedents dealing with the effect of Section 108 and Section 123 and on authorities addressing the right to cross-examine witnesses recorded under statutory provisions.

Background:
The Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit, acted on specific intelligence on the night of 20/21 December 2018, placed a godown under surveillance and intercepted a light commercial vehicle during unloading. A Punchnama dated 21 December 2018 recorded recovery of 183 cartons containing 25,01,200 sticks of foreign-origin cigarettes from the vehicle and the godown. The appellant was detained and his statement was recorded under Section 108. A show cause notice dated 7 June 2019 alleged contravention of multiple provisions of the Customs Act and allied statutes and stated that the market value of the seized goods was Rs.3,50,16,800/-. The Joint Commissioner of Customs (Preventive) ordered absolute confiscation under Section 111(d) and penalties under Section 112 (including Rs.25 lakh on the present appellant) by order dated 20 November 2019. The Commissioner (Appeals) dismissed the appeal on 10 March 2023, and the CESTAT dismissed the subsequent appeal on 5 June 2025.

Before the High Court the appellant contended that valuation (adopting Rs.14 per cigarette stick) lacked legal basis, that the valuation method was not disclosed or supported by documentary material, and that he was denied the opportunity to cross-examine witnesses relied upon by the authorities. The respondent relied on the statements recorded under Section 108, the detailed show cause notice and the market survey basis for valuation, and argued that the appellant failed to discharge the burden to rebut the valuation. The High Court examined the order-in-original, the appellate orders and the statutory provisions, applied relevant Supreme Court precedents on the effect of Section 108 and the non-absolute nature of the right to cross-examine, and concluded that no question of law arose for interference. The appeal therefore lacked merit and was dismissed; pending applications were disposed of.

Case No.: CUSAA 7/2026 & CM APPL. 7007/2026
Case Title: Hira Singh v. Commissioner of Customs (Preventive), New Customs House, New Delhi
Appearances:
For the Petitioner(s): Mr. Rahul Raheja, Mr. Gaurav Prakash and Mr. Rohit Raheja, Advocates
For the Respondent(s): Mr. Gibran Naushad, Senior Standing Counsel with Mr. Suraj Shekhar Singh and Mr. Harsh Singhal, Advocates