2025 (8) TMI 106 - HC - Customs

No Natural Justice Violation; Liability Under Section 112(a) Requires Clear Knowledge of Misdeclaration

The HC held that there was no violation of natural justice as the petitioner was given multiple opportunities for personal hearing and the request for ... Violation of principles of natural justice - procedural irregularity - failure on the part of the adjudicating authority to afford the petitioner with an opportunity to cross-examine the co-noticees and the failure on the part of the adjudicating authority to make out a case within the meaning of Section 112(a) of the said Act against the petitioner - HELD THAT:- It is found that the petitioner had duly responded to the show cause notice by response letter dated 2nd May, 2024. The request for cross-examination was made 5 months thereafter, by a communication in writing dated 21st October, 2024. No reason as to why the petitioner intended to cross-examine the co-noticees had been disclosed. The petitioner had not participated in the proceeding apart from filing the response and issuing the letters. Having regard thereto, it is found that the authorities did not commit any irregularity in refusing the petitioner to cross-examine the co-noticees. In fact, the adjudicating authority vide its order dated 29th/30th May 2024 had categorically noted that the petitioner had made a request for cross-examination without giving any suitable reason as to why he required such cross-examination, and had accordingly refused the same. It is also noticed that repeated opportunity of personal hearing was afforded to the petitioner. First of such opportunity of personal hearing was afforded on 29th October 2024, second opportunity of personal hearing was afforded on 19th November 2024, third opportunity was afforded on 20th January 2025 and the fourth opportunity of personal hearing was afforded on 19th May 2025. But on none of the aforesaid occasions the petitioner chose to appear. In fact, the petitioner did not participate in the proceeding. Having regard thereto, there has been no failure of justice on the ground of violation of principle of natural justice. Admittedly, in this case it is found that although, diverse materials have been considered, there appears to be no finding by the adjudicating officer so as to implicate the petitioner of having involved with the notice and knowledge that the goods in question had been mis-declared. It is true that the adjudicating authority had returned the finding that the petitioner played an instrumental role in abetting smuggling. However, mere use of the word abetment or abetting smuggling, would not suffice unless a clear finding implicating the petitioner to have committed the act of omission or commission with the knowledge of the goods being mis-declared is rendered. Unless the petitioner is implicated as having knowledge of the misdeclaration, the above section cannot apply. The direction of holding the petitioner liable under section 112(a) of the said Act is perverse and is not sustainable. Accordingly the order to that extent is interfered with - Petition dipsosed off. ISSUES: Whether the adjudicating authority violated principles of natural justice by not providing opportunity to cross-examine co-noticees during adjudication under Section 124 of the Customs Act, 1962.Whether the adjudicating authority correctly applied the requirements of Section 112(a) of the Customs Act, 1962 in holding the petitioner liable for abetment of improper importation of goods.Whether the adjudicating order was sustainable in the absence of a reasoned finding that the petitioner had knowingly been involved in the mis-declaration of goods. RULINGS / HOLDINGS: On the issue of cross-examination, the court held that the adjudicating authority did not commit any irregularity in refusing the petitioner's belated request for cross-examination, as no suitable reason was provided and the petitioner did not participate in hearings despite multiple opportunities; thus, there was no violation of the principles of natural justice.Regarding liability under Section 112(a), the court ruled that mere use of the term 'abetment' is insufficient without a clear finding that the petitioner 'committed the act of omission or commission with the knowledge of the goods being mis-declared'; the adjudicating authority's order holding the petitioner liable under Section 112(a) was 'perverse and not sustainable.'The court set aside the penalty imposed on the petitioner and remanded the matter to the adjudicating authority for a fresh decision based on the existing record, directing that the petitioner be heard afresh and an appropriate order be passed in accordance with law. RATIONALE: The court applied the legal framework under the Customs Act, 1962, specifically Sections 110, 111, 112(a), and 124, and the principles of natural justice requiring fair hearing and opportunity for cross-examination.The interpretation of 'abetment' was guided by Section 107 of the Indian Penal Code, 1860, as incorporated by Section 3(1) of the General Clauses Act, 1897, requiring 'intentional aiding' and 'active complicity' for establishing abetment.The court relied on precedent from the Delhi High Court and Supreme Court emphasizing that 'mere facilitation without knowledge would not amount to abetting an offence' and that 'intentional aiding' is the 'gist of the offence of abetment.'The court noted the absence of any finding by the adjudicating authority that the petitioner had 'knowledge of the misdeclaration,' which is essential to sustain a penalty under Section 112(a).The court recognized that the petitioner's failure to participate in hearings and the late request for cross-examination did not amount to denial of a fair opportunity, thus no breach of natural justice occurred.