2013 (5) TMI 350 - HC - Customs

Denial of Cross-Examination Rights Violates Natural Justice Under Sec. 9-D, Case Remitted for Fresh Hearing

The HC held that denial of the right to cross-examine witnesses whose statements were relied upon in the show-cause notice violated principles of natural ... Relevancy of statements under certain circumstances and admissibility without cross-examination (Section 138B of the Customs Act, 1962) - Right to cross-examination in quasi judicial proceedings - Natural justice - opportunity to confront and cross examine witnesses - Supply of evidence obtained post hearing and right to fair hearing - Judicial review of quasi judicial opinion on admissibility of statementsRelevancy of statements under certain circumstances and admissibility without cross-examination (Section 138B of the Customs Act, 1962) - Right to cross-examination in quasi judicial proceedings - Natural justice - opportunity to confront and cross examine witnesses - Whether the Tribunal and the Adjudicating Authority properly applied Section 138B of the Customs Act, 1962 before admitting and relying upon statements recorded during investigation without permitting cross examination, and whether denial of cross examination amounted to violation of principles of natural justice. - HELD THAT: - The court held that Section 138B (relevancy of statements under certain circumstances) is in substance identical to Section 9D of the Central Excise Act and permits reliance on statements without oral evidence only in specified exceptional situations (for example, when the maker is dead, cannot be found, is incapable of giving evidence, is kept out of the way by the adverse party, or attendance cannot be procured without unreasonable delay or expense). Before treating such statements as relevant, a quasi judicial authority must form an objective opinion based on sufficient material and should give the affected party an opportunity to make submissions; reasons for invoking the provision ought to be recorded and are amenable to judicial review. The Bench found that the authorities below did not examine Section 138B or apply the statutory test and reasoning required before denying cross examination. Consequently the matter required fresh consideration by the Tribunal in light of Section 138B and the precedents recognizing the value of cross examination in quasi judicial proceedings. [Paras 12, 13, 14, 15, 16]Issue not finally decided on merits; authorities below failed to apply Section 138B and therefore the matters are to be re examined by the Tribunal with directions to consider whether the statutory conditions for admitting statements without cross examination are satisfied and to record reasons after giving parties opportunity to be heard.Supply of evidence obtained post hearing and right to fair hearing - Natural justice - opportunity to confront and cross examine witnesses - Whether reliance by the Adjudicating Authority on reports and verifications received from Sri Lankan authorities after conclusion of the hearing (14.10.2004) without supplying those documents to the noticees and affording an opportunity to meet them deprived the appellants of a fair hearing. - HELD THAT: - The court noted that certain correspondence and verification from Sri Lankan authorities dated 20.07.2005, which purported to verify or demolish the noticees' contentions, were placed before the Adjudicating Authority after the hearing had concluded. The Bench observed that the Tribunal must consider the fact of non supply of such report and other documents obtained post hearing and determine whether reliance upon them without giving the noticees an opportunity to receive and respond to that material resulted in denial of fair hearing. In view of the failure of the authorities below to address these aspects, the court remitted the matter for fresh consideration so that the Tribunal can examine the consequences of non supply, permit parties to raise all available issues in law, and direct appropriate remedial steps if warranted. [Paras 8, 16]Issue remitted to the Tribunal for fresh consideration of whether documents received from Sri Lankan authorities after the hearing were lawfully relied upon without supply to the noticees, and for such further action as may be appropriate after affording parties opportunity to be heard.Final Conclusion: Impugned order of the Tribunal dated 15.03.2010 is set aside and the matters are remitted to the Tribunal for fresh consideration in light of the observations on Section 138B and the non supply of documents obtained from Sri Lankan authorities; parties are at liberty to raise all legal issues and to appear before the Tribunal on the date directed. ISSUES: Whether the denial of the right to cross-examine persons whose statements were relied upon in show-cause notices and adjudication proceedings constitutes a violation of the principles of natural justice.Whether statements referred to in the show-cause notices can be regarded as relevant evidence without satisfying the exceptions under Section 138B of the Customs Act, 1962.Whether reliance on an enquiry report obtained after the conclusion of the hearing, without supplying it to the appellants, violates the right to a fair hearing. RULINGS / HOLDINGS: The court held that the right to cross-examine witnesses whose statements are used against a noticee is a valuable right in quasi-judicial proceedings, but this right can be denied only under exceptional circumstances as stipulated in Section 138B of the Customs Act, 1962.Statements made and signed before a gazetted Customs officer are relevant for proving the truth of facts contained therein only when the conditions specified in Section 138B are met, such as when the person is dead, cannot be found, or cannot be produced without unreasonable delay or expense.The Tribunal failed to consider Section 138B and improperly dismissed the appellants' grievance regarding denial of cross-examination, thereby necessitating a fresh consideration of the matter.Reliance on a report obtained after the hearing without providing it to the appellants infringes the right to answer and meet the points raised, warranting reconsideration. RATIONALE: The court applied the legal framework under Section 138B of the Customs Act, 1962, which is identical in purpose and language to Section 9D of the Central Excise Act, 1944, as interpreted in prior precedent.It emphasized that the quasi-judicial authority must form an objective opinion based on sufficient material before treating such statements as relevant evidence without cross-examination, and must record reasons and provide opportunity to the noticee to make submissions.The court relied on established precedents affirming the right to cross-examination in adjudication proceedings unless exceptional statutory exceptions apply, thereby underscoring the protection of natural justice principles.The decision reflects no doctrinal shift but reiterates the necessity of adherence to procedural fairness and statutory safeguards in customs adjudication proceedings.