2023 (12) TMI 389 - HC - Customs

Relevancy of statements under Section 138B of Customs Act and cross-examination entitlement denied as not absolute

Relevancy of statements under Section 138B is limited to proving truth of facts in prosecutions and does not itself create an absolute right to ... Principles of natural justice - right to cross examination in adjudication proceedings - Relevancy of statements and scope of Section 138B of the Customs Act - Discretion of the adjudicating officer to accord weight to recorded statements and corroborative material - Availability of alternative remedy - appeal to CESTAT under Section 129A and pre deposit rule - Delay, laches and lack of bonafides in seeking relief after long inactionRelevancy of statements and scope of Section 138B of the Customs Act - Principles of natural justice - right to cross examination in adjudication proceedings - Section 138B does not create an absolute right to cross examination in adjudication proceedings; it deals with relevancy of statements and the adjudicating officer retains discretion to admit and weight such statements. - HELD THAT: - Section 138B addresses the relevancy of statements made and signed before Gazetted Customs officers and, on its plain language, pertains to proving facts in prosecutions and, insofar as sub section (2) provides, applies to proceedings under the Act in a manner similar to court proceedings. The provision, however, does not itself mandate a blanket right to cross examine every person whose statement is recorded. Clause (a) of sub section (1) envisages situations where the maker of a statement may be unavailable for cross examination (dead, cannot be found, incapable, or kept away), and clause (b) contemplates court admission in the interests of justice. Read as a whole, Section 138B confers relevancy but leaves the issue of reception and weight of such statements to the adjudicating authority. Consequently, a demand for cross examination must be tested against the facts of the case, including whether prejudice would result and the overall admissible material; it cannot be treated as an absolute legal entitlement in adjudication of a show cause notice. [Paras 16, 17, 18, 19]Rejection of the contention that Section 138B creates an absolute right to cross examination; adjudicating officer has discretion to admit and accord weight to recorded statements.Discretion of the adjudicating officer to accord weight to recorded statements and corroborative material - Principles of natural justice - right to cross examination in adjudication proceedings - Non grant of cross examination of three witnesses did not vitiate the adjudication where the adjudicating authority relied on extensive corroborative material and statements were not the sole basis for the order. - HELD THAT: - The adjudicating authority conducted a full hearing, considered voluminous material and formed an opinion after weighing statements alongside other direct and corroborative evidence (including panchanama and material recovered on search). The order in original runs into detailed reasons and is not founded solely on the three statements the petitioner sought to have cross examined. Given the holistic appraisal of evidence, the Court found no breach of natural justice warranting quashing of the order. The petitioner's belated request for cross examination (first raised some 17 years after the show cause notice) and the fact that notices were issued to those witnesses (who either submitted in writing or did not appear) further weakened the claim of prejudice. [Paras 8, 9, 10, 21, 23]The absence of cross examination of the three witnesses did not invalidate the adjudication; the order in original is not vitiated on that ground.Availability of alternative remedy - appeal to CESTAT under Section 129A and pre deposit rule - Delay, laches and lack of bonafides in seeking relief after long inaction - Extraordinary writ relief was refused where an efficacious statutory remedy by appeal to CESTAT existed and the petitioner sought relief after lengthy delay and apparent lack of bonafides. - HELD THAT: - The respondents pointed out, and the Court noted, that the petitioner had the statutory remedy of appeal under Section 129A to the CESTAT and that the writ appeared to be an attempt to avoid the mandatory pre deposit. The petitioner had delayed seeking cross examination until 2017 although the show cause notice dated from 2000, and had pursued settlement proceedings in the interim. The Court treated the late invocation of the natural justice plea as indicative of lack of bona fides and declined to exercise extraordinary writ jurisdiction to supplant the alternate statutory remedy in these circumstances. [Paras 2, 12, 20, 22, 24]Writ petition dismissed; petitioner relegated to statutory appellate remedy and relief denied on grounds of delay and lack of bona fides.Final Conclusion: The petition under Article 226 is dismissed. The Court held that Section 138B does not confer an absolute right to cross examine in adjudication proceedings, that the adjudicating authority legitimately relied on corroborative material such that failure to permit cross examination of three witnesses did not vitiate the order in original, and that extraordinary writ relief was not appropriate where an efficacious statutory appeal existed and the petitioner had unreasonably delayed and acted without bona fides. Issues involved:1. Breach of principles of natural justice.2. Availability of alternate statutory remedy.3. Relevancy of statements under Section 138B of the Customs Act.4. Delay in seeking cross-examination.Summary:1. Breach of principles of natural justice:The petitioner contended that the impugned order-in-original should be set aside due to a breach of principles of natural justice, as they were not provided an opportunity to cross-examine three witnesses whose statements were recorded during the investigation. The court noted that the petitioner had ample opportunity during the adjudication process, including representation by counsel and submission of detailed replies. The adjudicating officer extensively considered the facts and materials on record, including the petitioner's submissions.2. Availability of alternate statutory remedy:The respondents argued that the petitioner had an alternate statutory remedy of filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) under Section 129A of the Customs Act. The court observed that the petitioner chose to file the writ petition to avoid the mandatory pre-deposit required for the appeal. The court emphasized that the petitioner should have exhausted the statutory remedy before approaching the High Court.3. Relevancy of statements under Section 138B of the Customs Act:The petitioner argued that under Section 138B of the Customs Act, they should have been allowed to cross-examine the witnesses. The court clarified that Section 138B pertains to the relevancy of statements in prosecution for an offense under the Customs Act and does not per se provide for cross-examination. The court held that the provision does not create an absolute right to demand cross-examination and must be considered in the context of the adjudication proceedings.4. Delay in seeking cross-examination:The court noted that the show cause notice was issued in March 2000, and the request for cross-examination was made only in February 2017, after a delay of more than 17 years. The petitioner had also approached the Settlement Commission and the Supreme Court during this period. The court found the delay indicative of a lack of bona fides on the petitioner's part.Conclusion:The court dismissed the petition, finding no merit in the petitioner's contentions. The court held that the impugned order-in-original was not solely based on the statements of the three witnesses but was supported by various other direct evidences. The petitioner's plea was viewed as an attempt to avoid liability by raising hyper-technical issues. The court emphasized the need to exhaust statutory remedies before seeking judicial intervention.