2016 (3) TMI 432 - HC - Customs

Court orders cross-examination in customs case, stresses witness rights

The Court set aside the Deputy Commissioner's order denying cross-examination by the Commissioner of Customs, directing the appearance of the individuals ... Right of cross-examination in quasi-judicial/adjudication proceedings - Relevancy of statements under Section 138B of the Customs Act, 1962 - Scope of admissibility of statements recorded by gazetted customs officers in non court proceedings - Prejudice caused by denial of opportunity to cross-examine - Judicial review of exercise of power under Section 138BRight of cross-examination in quasi-judicial/adjudication proceedings - Relevancy of statements under Section 138B of the Customs Act, 1962 - Prejudice caused by denial of opportunity to cross-examine - Whether the adjudicating authority was justified in denying the petitioner an opportunity to cross-examine two persons whose statements were relied upon in the adjudication proceedings. - HELD THAT: - The Court examined Section 138B, which renders statements made and signed before a gazetted customs officer relevant in certain circumstances, and noted its parity with Section 9D of the Central Excise Act as interpreted by this Court. Prior decisions establish that when a statement is used against a noticee in quasi judicial proceedings, the noticee ordinarily is entitled to cross examine the maker of the statement unless the statutory exceptions (e.g., death, unavailability, incapacity or unreasonable delay/expense to procure presence) are established. Such exceptions must be objectively formed on sufficient material and reasons recorded. In the present case the Department relied substantially on the statements of the partners of the importer. The adjudicating authority's order declining cross examination did not demonstrate that any exception under Section 138B was made out, nor did it indicate any prejudice to the Department from permitting cross examination. Denial of the right in these circumstances was therefore contrary to the law as explained in the authorities relied upon by the Court. [Paras 13, 14, 15, 16, 17]The order refusing the petitioner the opportunity to cross examine the two persons relied upon by the Department is set aside.Scope of admissibility of statements recorded by gazetted customs officers in non court proceedings - Judicial review of exercise of power under Section 138B - What remedial directions should follow where a denial of cross examination is held contrary to law. - HELD THAT: - Having set aside the impugned refusal, the Court directed the adjudicating authority to provide the opportunity for cross examination forthwith. The Court specified a concrete timetable: the AA must fix a date within two weeks for the appearance of the persons for cross examination; the petitioner must complete cross examination within one week thereafter and without seeking adjournments; and the time for completing adjudication is extended by two months from the conclusion of cross examination. These directions implement judicial review by remanding the matter for compliance with the requirement of opportunity to test adverse statements in accordance with Section 138B and established precedents. [Paras 18, 19]The matter is remitted to the adjudicating authority with directions to allow cross examination on the prescribed timeline and to complete adjudication within the extended period.Final Conclusion: The High Court set aside the adjudicating authority's refusal to permit cross examination of two persons whose statements were relied upon; directed the authority to fix dates for their cross examination within two weeks and for completion within a further week, extended the adjudication period by two months from the conclusion of cross examination, and disposed of the writ petition accordingly. Issues:- Denial of cross-examination by the Commissioner of CustomsDetailed Analysis:Issue: Denial of cross-examination by the Commissioner of CustomsThe case involved a challenge to an order passed by the Deputy Commissioner (Adjudication) ICD Import Thuglakabad, where the Petitioner's request for cross-examination of two individuals was declined. These individuals had provided statements relied upon in proceedings against the Petitioner. The Deputy Commissioner relied on a decision by CESTAT stating that denying the right to cross-examine witnesses does not violate natural justice principles. The Petitioner sought cross-examination based on Section 138 B of the Customs Act, citing relevant case laws like Flevel International v. Commissioner of Central Excise and others. The Court considered the legal position under Section 138 B and Section 9D of the Central Excise Act, emphasizing the right to cross-examine witnesses. It noted that the denial of cross-examination could prejudice the Petitioner. The Court set aside the Deputy Commissioner's order and directed the appearance of the individuals for cross-examination within two weeks. The Petitioner was instructed to conclude cross-examination within one week, and the adjudication proceedings were extended by two months from the cross-examination's conclusion.This detailed analysis provides a comprehensive overview of the judgment, focusing on the denial of cross-examination by the Commissioner of Customs and the legal principles governing the right to cross-examine witnesses in adjudication proceedings.