Competing expert reports and denied cross-examination meant the adverse classification and fiscal consequences could not be sustained.

Competing chartered engineer opinions on imported goods required the authorities to explain why the later adverse report was preferred; because no adequate reason was recorded, the doubtful third report could not justify reclassification, duty demand, confiscation, or penalties. The denial of cross-examination of the expert whose opinion was relied upon also breached natural justice, and an order based on untested evidence could not stand. The impugned order was set aside and the appeals were allowed.

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Issues: (i) Whether the third chartered engineer's report could be relied upon to alter the classification of the imported goods and sustain the duty demand, confiscation, and penalties. (ii) Whether denial of cross-examination of the expert whose report was relied upon vitiated the adjudication.

Issue (i): Whether the third chartered engineer's report could be relied upon to alter the classification of the imported goods and sustain the duty demand, confiscation, and penalties.

Analysis: The imported goods were examined by different chartered engineers who gave divergent opinions. The authorities did not record any reason for preferring the later report over the earlier favourable reports. The report relied upon for reclassification was found to be doubtful and was not treated as reliable expert evidence under Section 45 of the Indian Evidence Act, 1872. In a situation where two views were possible, the favourable view was required to be adopted.

Conclusion: The third report could not be relied upon for reclassification or for confirming the demand, confiscation, and penalties.

Issue (ii): Whether denial of cross-examination of the expert whose report was relied upon vitiated the adjudication.

Analysis: The assessee had sought cross-examination of the expert, but the request was rejected. Since the impugned action was based on that expert opinion, denial of cross-examination amounted to breach of natural justice. An order founded on such untested evidence could not be sustained. The rejection of cross-examination was also inconsistent with the safeguards implicit in Section 124 of the Customs Act, 1962.

Conclusion: Denial of cross-examination vitiated the adjudication.

Final Conclusion: The impugned order was set aside and the appeals were allowed, leaving the assessee relieved of the duty demand, confiscation, and penalties.

Ratio Decidendi: Where competing expert opinions exist and the relied-upon expert evidence is not subjected to cross-examination, the adverse classification and consequential fiscal demand cannot be sustained.

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