2023 (6) TMI 597 - AT - Customs

Appellant's Right to Cross-Examination Upheld: Remand for Fair Hearing

The Adjudicating Authority found that the Appellant was not given a fair opportunity to defend the case due to the denial of cross-examination of a ... Violation of principles of natural justice - Confiscation - gold bar weighing 1 kg - Department has not adduced proper evidence towards Delivery of the Gold - non-allowing of cross-examination of Sri Siddhart Mehta, Authorized Signatory and Accountant of JJ House - HELD THAT:- It is seen that the Appellant has not been given proper opportunity to defend his case. They were not allowed to cross-examine the crucial witness i. e. Mr. Siddharth Mehta, Accountant and Signatory of M/s J. J. House Pvt. Ltd. Whose recorded statement is relied upon to place emphasis that the gold was delivered to the Appellant only on 18/11/2017. It is seen that even the statement of Mr. Sripada Barik was retracted by him. In such circumstances, it is felt that the matter is required to be re-visited at the Adjudication level. The matter is being remanded to the Adjudicating Authority for the limited purpose to consider the following:- (i) The Appellant’s should be given an opportunity to cross-examine Shri Siddhartha Mehta, Manager of J. J. House Pvt. Ltd. (ii) The Appellant should be given the details of delivery of goods by Brinks India to the Appellant No.2 after the invoice was prepared by J. J. House Pvt. Ltd. on 17/11/2017 from Brink India’s Records. Appeal allowed by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether the Adjudicating Authority violated principles of natural justice by refusing to permit cross-examination of a crucial witness whose recorded statement was relied upon to determine the date of delivery of imported gold. 2. Whether the Department adduced sufficient and admissible evidence to establish that the subject gold bar was delivered to the appellant after the date shown on the appellant's invoice (i.e., whether possession/delivery on 17/11/2017 as claimed by the appellant is rebutted by contemporaneous records). 3. Whether the record before the Authority justified confirmation of confiscation under Section 111(b) & (d) and imposition of penalty under Section 112(b) given the evidentiary gaps and retraction of employee statements. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Natural justice and right to cross-examination Legal framework: Principles of natural justice require that a person against whom findings adverse to his interest are proposed must be given a fair opportunity to test the evidence, including the right to confront and cross-examine witnesses whose statements are relied upon. Precedent Treatment: No earlier judicial precedents were invoked or applied in the judgment to alter the established principle; the Tribunal applied the settled requirement of giving an opportunity for cross-examination where a recorded statement is a material basis for adjudication. Interpretation and reasoning: The Tribunal found that the recorded statement of the authorized signatory/accountant of the supplier was pivotal to the Department's case on the timing of delivery. The appellants requested cross-examination of that witness which was not allowed by the Adjudicating Authority. Given that the statement was a critical piece of evidence and that another material witness (employee carrying goods) had retracted his earlier statement, denying cross-examination deprived the appellants of a proper opportunity to meet the case against them. Ratio vs. Obiter: Ratio - where an adjudicatory decision rests materially on a recorded statement, the affected party must be afforded an opportunity to cross-examine that witness before adverse conclusions are drawn. Obiter - none on this point. Conclusion: The Tribunal held that the failure to permit cross-examination of the crucial witness vitiated the proceedings and warranted remand for fresh adjudication with an opportunity for cross-examination consistent with natural justice. Issue 2 - Sufficiency and nature of documentary evidence on delivery date (Brinks records and supplier registers) Legal framework: Determination of ownership/possession and timing of delivery in customs/penal proceedings depends on admissible contemporaneous documentary records (delivery receipts, carrier records, supplier registers) and credible testimony. The burden on the Department to establish confiscation grounds is to be met by cogent evidence. Precedent Treatment: No specific precedents were relied upon or distinguished; the Tribunal directed reliance on primary records (carrier/Brinks records and supplier registers) for factual determination. Interpretation and reasoning: The Department relied on the supplier's recorded statement and internal registers and asserted Brinks delivery to the supplier late on 17/11/2017 and to the appellant only on 18/11/2017. The appellant produced an invoice dated and signed on 17/11/2017. The Tribunal observed that the Department had not produced or furnished Brinks' delivery records to the appellants for scrutiny, and thus the factual dispute regarding timing of physical delivery could not reliably be resolved on the existing record. The retraction by the employee who was carrying the goods further undermined certainty. Ratio vs. Obiter: Ratio - where carrier/delivery records are central to the question of possession, those records must be placed before the affected party and examined; absence of such disclosure prevents a fair adjudication. Obiter - none on this point. Conclusion: The Tribunal directed that the Adjudicating Authority obtain and furnish details of delivery by the carrier (Brinks) and permit cross-examination on those records before reaching a conclusion on the date of delivery and consequent legal consequences. Issue 3 - Justification for confirming confiscation under Section 111(b) & (d) and penalty under Section 112(b) Legal framework: Confiscation and penalties under Sections 111(b) & (d) and 112(b) require proof of contravention/misdeclaration or possession of goods in a manner attracting the penal provisions; adjudication must be founded on reliable evidence and fair procedure. Precedent Treatment: The Tribunal did not overrule or distinguish precedent authorities on the substantive reach of Sections 111/112; the focus was procedural-whether the record sufficed to sustain such punitive measures. Interpretation and reasoning: Given the critical factual dispute about when the appellant came into possession of the gold bar and the procedural denial of cross-examination on the supplier's statement, the Tribunal found it inappropriate to sustain confiscation and penalty without rehearing. The retraction by the carrier/employee and lack of carrier records in the appellant's hands meant the adjudicating findings were not insulated from reasonable doubt. Ratio vs. Obiter: Ratio - confirmation of confiscation and penalties that rest on contested factual findings cannot be sustained where procedural fairness (including opportunity to test material witness statements and carrier records) is denied. Obiter - none on the substantive applicability of the statutory provisions beyond procedural prerequisites. Conclusion: The Tribunal remanded the matter for limited rehearing at the adjudication stage to allow cross-examination, production of carrier records, and reconsideration of confiscation and penalty in light of those proceedings. Orders and ancillary directions (connected to the issues above) - The matter is remitted to the Adjudicating Authority for limited purposes: (i) permit cross-examination of the supplier's manager/accountant whose recorded statement was relied upon; and (ii) furnish and consider Brinks (carrier) delivery details showing movement/delivery after the supplier's invoice. - The Adjudicating Authority is to follow principles of natural justice, reconsider the matter on the complete record, and pass a suitable order within four months. - The Department is directed not to dispose of the seized/confiscated goods pending finalization of the remanded proceedings.