Cross-examination in customs adjudication is essential where adverse findings rest on third-party statements; denial vitiates the order.

In customs adjudication, reliance on statements recorded from third parties requires a fair opportunity to inspect those statements and cross-examine their makers when adverse findings depend on them. The Madras HC held that repeated requests for disclosure and cross-examination could not be denied where the adjudicating authority relied substantially on such material; the failure offended natural justice and went to the root of the proceedings. The impugned orders-in-original were therefore set aside.

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Issues: Whether the impugned orders-in-original were liable to be set aside for denial of an opportunity to cross-examine the persons whose statements were relied upon in the adjudication.

Analysis: The challenge arose from customs adjudication based substantially on statements of various persons and entities. The petitioners had repeatedly sought supply of those statements and an opportunity to cross-examine the makers, asserting that the entire case rested on such material. The refusal to permit cross-examination, despite specific requests and repeated directions, was found to be inconsistent with fair procedure, particularly where the adjudicating authority relied on those statements to record adverse findings. Since the orders were passed without affording that opportunity, the defect went to the root of the adjudication and offended principles of natural justice.

Conclusion: The denial of cross-examination vitiated the impugned orders, and the orders-in-original were set aside.

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