2020 (11) TMI 361 - HC - Customs

Court dismisses Writ Petition due to lack of demonstrated prejudice, advises appeal under Customs Act.

Mr. Mohammed Muzzamil and Another Versus The Central Board of Indirect Taxes and Customs CBIC and Another

The court dismissed the Writ Petition at the admission stage, advising the petitioners to pursue an appeal under Section 129A of the Customs Act, 1962. ... Smuggling - imported cigarettes - opportunity to cross-examine the person whose statements were recorded, not provided - main contention of the petitioners is that there has been a violation of principles of natural justice by the 2nd respondent by relying on the statements made under Sections 108 of the Customs Act, 1962 without permitting the petitioners to cross-examine them - levy of penalty u/s 112(a)(i)/112(b)(i) also under Section 114AA of the Customs Act, 1962 - HELD THAT:- There is no doubt that where a plea of violation of principles of natural justice by denying a party an opportunity to cross examine witnesses is raised in proceedings under the Customs Act,1962 or similar legislation, the question of prejudice suffered to such party by such denial has to be gone into. If there is no prejudice caused by such denial, no relief can be granted to him. Having perused the impugned order passed by the 2nd respondent, prima facie, it appears to us that the basis for levying penalty against the petitioners were their statements recorded under Section 108 of the Customs Act, 1962, wherein certain confessions appear to have been made by them implicating themselves in the smuggling of cigarettes, which was subject matter of enquiry - no prejudice has been caused to the petitioners by the action of the 2nd respondent in denying an opportunity to them to cross-examine the other persons who had implicated them in the said act of smuggling. This Writ Petition is dismissed at the admission stage as not maintainable, giving liberty to the petitioner to avail the alternative remedy of Appeal under Section 129A of the Customs Act, 1962. Issues Involved:1. Whether it is always incumbent on the part of an adjudicating authority under the Customs Act, 1962 to give an opportunity to cross-examine persons whose statements had been recorded under Section 108 of the said Act.2. Are there any exceptions to the said ruleRs.Issue-wise Detailed Analysis:1. Requirement of Cross-Examination under the Customs Act, 1962Petitioners' Contention:- The petitioners argued that the entire allegations against them were based on statements made by individuals under Section 108 of the Customs Act, 1962. They had specifically requested cross-examination of these individuals on 02.03.2017 and 07.10.2019, but the adjudicating authority passed the final order without giving them this opportunity. They claimed this amounted to a violation of principles of natural justice.Respondents' Contention:- The respondents contended that the impugned order was not solely based on third-party statements. It included admissions/confessions by the petitioners themselves, indicating their involvement in smuggling. Therefore, the petitioners did not suffer any prejudice due to the denial of cross-examination. The respondents also pointed out that the petitioners had received a show-cause notice, were given a personal hearing, and had made further submissions.Court's Discussion:- The court examined the nature of the enquiry under the Customs Act, 1962. It referred to the Constitution Bench of the Supreme Court in Ramesh Chandra Mehta, which held that Customs Officers are primarily concerned with detecting smuggling and enforcing duties, and their statements under Sections 107 and 108 are not considered accusations of an offense.- The court reviewed several Supreme Court decisions cited by both parties. In Andaman Timber Industries, the Supreme Court held that denying cross-examination of witnesses whose statements were the basis of an impugned order was a serious flaw and amounted to a violation of natural justice. However, in Surjeet Singh Chhabra, the Supreme Court held that if a petitioner had confessed to an offense, the denial of cross-examination was not a violation of natural justice.- The court concluded that the necessity of cross-examination depends on whether the denial caused prejudice to the affected party. If there is no prejudice, no relief can be granted.2. Exceptions to the Rule of Cross-ExaminationCourt's Analysis:- The court noted that in cases where there is a confession, as in Surjeet Singh Chhabra, the denial of cross-examination is justified, and no prejudice can be pleaded by the party. This was reiterated in M/s. Telestar Travels Pvt. Ltd., where the Supreme Court held that cross-examination is unnecessary if it would make no material difference and no prejudice is caused.- The court observed that the impugned order against the petitioners was based on their statements under Section 108 of the Customs Act, 1962, which included confessions implicating themselves in smuggling. Therefore, no prejudice was caused by denying cross-examination of other individuals who had implicated them.- The court also noted that the petitioners were given a show-cause notice, responded to it, and were given personal hearings, ensuring compliance with other principles of natural justice.Conclusion:- The court dismissed the Writ Petition at the admission stage, stating it was not maintainable and advised the petitioners to avail the alternative remedy of appeal under Section 129A of the Customs Act, 1962. The court clarified that its observations were only for the purpose of disposing of the Writ Petition and should not influence the Appellate Authority's decision if an appeal is preferred. No order as to costs was made, and any pending miscellaneous petitions were closed.