2019 (6) TMI 977 - HC - Customs

Denial of right to cross-examine witnesses violates natural justice; Order quashed. Fresh proceeding ordered.

The court held that the adjudicating authority's denial of the right to cross-examine witnesses violated principles of natural justice, rendering the ... Right to cross-examination in quasi-judicial/adjudication proceedings - Applicability of principles of natural justice to adjudication under the Customs Act, 1962 - Relevancy of statements under Section 138B of the Customs Act, 1962 - Distinction between statements recorded under Section 108 and evidence admissible after cross-examination - Obligation to afford opportunity of hearing under Section 122A of the Customs Act, 1962 - Effect of denial of cross-examination - order vitiated as nullityRight to cross-examination in quasi-judicial/adjudication proceedings - Applicability of principles of natural justice to adjudication under the Customs Act, 1962 - Obligation to afford opportunity of hearing under Section 122A of the Customs Act, 1962 - Effect of denial of cross-examination - order vitiated as nullity - Denial of the petitioner's request to cross-examine prosecution witnesses in the adjudication proceeding vitiated the order-in-original for breach of principles of natural justice. - HELD THAT: - Section 122A mandates that adjudicating authorities give opportunity of hearing and import the principles of natural justice into adjudication under the Customs Act, 1962. The right to cross-examine a natural person who is produced as a witness by the prosecution is part of those principles and cannot be denied lightly; Supreme Court precedents (including New India Assurance and Lakshman Exports) recognise cross-examination as an indefeasible component of natural justice in quasi judicial proceedings. The adjudicating authority here disallowed cross-examination merely by treating adjudicatory evidence as different from criminal evidence and by relying on circumstantial corroboration, without identifying any statutory or fact specific exception. Where a contesting party adduces evidence through natural persons, the opposite party is entitled to cross-examine; denial of that opportunity, particularly where the adjudicating authority nonetheless relies upon such statements, amounts to a breach of natural justice and renders the order unsustainable. [Paras 18, 21, 28, 29, 30]Impugned order in original quashed for denial of right to cross examination; adjudicating authority directed to afford reasonable opportunity for cross examination and proceed afresh in accordance with law.Relevancy of statements under Section 138B of the Customs Act, 1962 - Distinction between statements recorded under Section 108 and evidence admissible after cross-examination - Statements recorded under Section 108 are not automatically admissible as evidence in adjudication proceedings without cross-examination unless conditions in Section 138B(1) are satisfied; the adjudicating authority must record findings if it treats such statements as relevant without cross examination. - HELD THAT: - Section 108 enables recording of statements during enquiries, and Section 138B creates limited exceptions to the general rule that relevance and admissibility require opportunity for cross examination. Section 138B(1) lists specific circumstances (death, inability to be found, incapacity, kept away, unreasonable delay/expense, or examination and judicial admission in interests of justice) where a signed statement may be treated as relevant without cross examination; subsection (2) extends the same to proceedings other than before a court, as far as may be. Thus, while Section 138B preserves relevancy in defined scenarios, it does not displace the general evidentiary norm that statements by natural persons must ordinarily be tested by cross examination. If an adjudicating authority relies on Section 108 statements without permitting cross examination, it must expressly find that one of the Section 138B(1) conditions is satisfied; absence of such a finding means the authority has improperly acted on untested statements. [Paras 14, 15, 16, 27, 28]Section 138B exceptions are limited and must be expressly found to apply before a statement under Section 108 is treated as admissible without cross examination; lack of such findings rendered the reliance on those statements unsustainable in this case.Final Conclusion: The writ petition is allowed: the order in original dated September 6, 2018 is quashed for breach of natural justice. The adjudicating authority is permitted to proceed afresh on the show cause notice, affording the petitioner reasonable opportunity to cross examine the prosecution witnesses sought to be examined, subject to the limited exceptions in Section 138B of the Customs Act, 1962, and to conclude the adjudication expeditiously. Issues Involved:1. Breach of principles of natural justice.2. Right to cross-examine witnesses under the Customs Act, 1962.3. Relevance and admissibility of statements made under Section 108 of the Customs Act, 1962.4. Applicability of Section 138B of the Customs Act, 1962 to adjudication proceedings.Detailed Analysis:Breach of Principles of Natural Justice:The petitioner challenged the order-in-original dated September 6, 2018, on the grounds of a breach of principles of natural justice. The petitioner argued that the adjudicating authority denied the right to cross-examine prosecution witnesses, which is a fundamental aspect of natural justice. The court noted that principles of natural justice are integral to adjudication proceedings under the Customs Act, 1962, as per Section 122A, which mandates an opportunity of being heard.Right to Cross-Examine Witnesses:The petitioner contended that the adjudicating authority's refusal to allow cross-examination of witnesses who made statements under Section 108 of the Customs Act, 1962, was erroneous. The petitioner cited Section 138B, which stipulates that statements made by witnesses are relevant without cross-examination only under specific conditions. The court emphasized that cross-examination is essential for the admissibility of evidence, and the right to cross-examine is part of the principles of natural justice.Relevance and Admissibility of Statements:The court examined the relevance and admissibility of statements made under Section 108 of the Customs Act, 1962. It held that such statements are distinct from those recorded by police officers under the Code of Criminal Procedure and are admissible in evidence. However, for these statements to be considered relevant in adjudication proceedings, the conditions under Section 138B must be met. The court found that the adjudicating authority did not establish that any of the conditions under Section 138B(1) were fulfilled, rendering the statements inadmissible without cross-examination.Applicability of Section 138B:The court clarified that Section 138B of the Customs Act, 1962, applies to both adjudication proceedings and prosecutions. It provides exceptions to the general rule of evidence, allowing statements to be relevant without cross-examination under specific circumstances. The court noted that the adjudicating authority failed to justify the denial of cross-examination based on these exceptions.Conclusion:The court concluded that the adjudicating authority's refusal to allow cross-examination violated the principles of natural justice, rendering the order-in-original null and void. The court quashed the impugned order and directed the adjudicating authority to proceed afresh, allowing reasonable opportunity for cross-examination of witnesses as requested by the petitioner, subject to the provisions of Section 138B of the Customs Act, 1962. The court emphasized the importance of adhering to natural justice principles in adjudication proceedings and the right to cross-examine as an indefeasible right.