2013 (5) TMI 350 - HC - Customs

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

Basudev Garg, Arun Gupta, Anil Goel Versus Commissioner of Customs

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 ... Denial of the right to cross-examine witnesses, whose statements have been referred to in the show-cause notice - Non-supply of the enquiry report conducted after the conclusion of hearing by the Srilankan authorities - allegation against the appellants that they have imported Ball Bearings of Chinese origin but showed by as from Srilanka in order to evade anti-dumping duty - Held that:- There can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd. [2000 (7) TMI 85 - SC ORDER] and Laxman Exports Limited [2002 (4) TMI 66 - SC ORDER]. Apart from this, the decision of this court in J & K Cigarettes Ltd.[2009 (8) TMI 64 - DELHI HIGH COURT], wherein held that before arriving at the opinion, the authority would give opportunity to the affected party to make submissions - affected party can challenge the invocation of provisions of Sec. 9-D of the Act in a particular case by filing statutory appeal, which provides for judicial review clinches the issue in favour of the appellant. Thus set aside the impugned order and remit the matters to the Tribunal for a fresh consideration. 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.