Court Nullifies Duty and Penalty Imposed Under EPCG Scheme Due to Denial of Cross-Examination Rights.

The court allowed the writ petitions, setting aside the impugned order imposing differential duty and penalty under the EPCG Scheme due to a violation of natural justice principles. The petitioners were denied the right to cross-examine witnesses, leading to the remittance of the matter to the first respondent. The court emphasized that the petitioners must be given the opportunity to cross-examine the witnesses whose statements were relied upon. The decision to facilitate cross-examination of co-noticees was left to the petitioners. The writ petitions were allowed without costs, and connected miscellaneous petitions were closed.

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Issues:
1. Maintainability of writ petitions challenging differential duty and penalty imposed under EPCG Scheme.
2. Violation of principles of natural justice regarding the request for cross-examination of witnesses.
3. Application of previous judgments related to cross-examination of co-noticees.
4. Denial of basic right to cross-examine witnesses leading to setting aside of the impugned order.

Issue 1:
The petitioner company imported capital goods under the EPCG Scheme and fulfilled obligations, but faced a show cause notice alleging fraudulent misrepresentation. The first respondent imposed differential duty and penalty, leading to the writ petitions challenging the same. The respondents argued that the writ petitions were not maintainable, citing the need to exhaust alternative appeal remedies. However, the court considered the maintainability issue in light of the violation of natural justice principles.

Issue 2:
The petitioner requested cross-examination of witnesses, which was rejected, leading to a claim of a breach of natural justice. The court held that if principles of natural justice are violated, a Writ Court can entertain a petition under Article 226 of the Constitution of India, irrespective of the availability of alternative remedies. The court distinguished the cited decision and allowed the writ petitions due to the violation of natural justice principles.

Issue 3:
The standing counsel referred to a previous order related to cross-examination of co-noticees, which was deemed inapplicable to the current case. The petitioners' request for cross-examination was specific to certain named individuals, whose statements were relied upon by the adjudicating authority. The court emphasized the need for the department to provide an opportunity for cross-examination of witnesses if their evidence is relied upon, as established in a recent Supreme Court decision.

Issue 4:
Due to the denial of the petitioners' right to cross-examine witnesses, the court set aside the impugned order imposing differential duty and penalty. The writ petitions were allowed, and the matter was remitted to the first respondent for affording the petitioners the opportunity to cross-examine the witnesses whose statements were relied upon. The court clarified that the petitioners cannot demand the facilitation of cross-examination of co-noticees, leaving that decision to the petitioners themselves. The writ petitions were allowed with no costs, and connected miscellaneous petitions were closed.

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