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2021 (10) TMI 1411 - HC - CustomsSmuggling - 24 karat gold in the form of crude chain, paste etc. - contraband item - baggage rules - it is the stand of the petitioners that they never intended to cross the Customs barrier at the airport through green channel as averred by the respondent / Customs and they in fact, intended to declare the same, since before they crossed the DFMD they were intercepted, the chance was not given to them to make the declaration. Passengers numbering about 129 who are involved in this case had arrived in three consecutive days from various destinations through various flights - Can all these passengers cannot be put under one basket by drawal of one seizure mahazar. Prayers of remitting the matter back to the adjudicating authority by affording the opportunity of cross examination - principles of Natural Justice. HELD THAT - Here in the case in hand, whether any such attempt has been made by the Customs to comply with clause (a) of Section 138-B (1) is a question, where, there is no such attempt seems to have been made and no summons have been given to these two independent witnesses and even the mahazar drawn officer and the seizure officer who signed in the mahazar were not made present before the adjudicating officer or made available before the adjudicating officer for examination - In the absence of any such attempt being made by the respondent Customs to bring the person who made the statement, it cannot be stated that the contingency noted at clause (a) have been complied with in this case. Therefore, the relevancy or admissibility of the statement is questionable in this case. In the facts of the case, the entire case has been built up based on the single seizure mahazar, wherein, each and every aspect, according to the mahazar, was done only in the presence of the independent witnesses. They also claimed that, even after the seizure was completed the entire goods seized were kept in 5 boxes and in each of the boxes these independent witnesses signed and in every stage of search and seizure these independent witnesses were present. When that being so, the proprietary requires that, the adjudicating authority should have issued summons to these independent witnesses to corroborate the statements ie., the mahazar. Unless and until the basic fact of mahazar is corroborated by two independent witnesses, whether the veracity can be automatically admitted in favour of the Customs is yet another question for which this Court at this moment do not want to make any comment. However, for the limited purpose of giving the chance of cross examination to the petitioners atleast that attempt should have been made by the Customs to bring those independent witnesses during the adjudication proceedings and made them available for such examination / cross examination. As rightly opined by the Division Bench, there is no straitjacket formula on the principle as to whether the chance of cross examination is a must or not, as it depends upon the facts of each of the case. Moreover, insofar as the request of cross examination is concerned, it has not been specifically denied by giving any order in writing by the adjudicating authority. Had the adjudicating authority decided the issue as to whether chance of cross examination should be given to the petitioner or not as a preliminary issue and rendered a finding, giving an order to that effect, certainly the arguments advanced by the learned Counsel for the respondents can be accepted and an appeal can be filed. However, in the case in hand, that issue has not at all been considered and decided, but the adjudicating authority proceeded to complete the adjudication on whole merits of the case and passed a final order. Therefore, the arguments advanced by the learned Standing Counsel on the side of the respondent on this aspect is also not countenanced. Here in the case in hand, the contents of the show cause notice has already been discussed, where the contents recorded in the seizure mahazar has been reproduced in the show cause notice and that is the main basis for the Customs case to proceed for adjudication. In the mahazar as stated already, two independent witnesses have been shown and one Intelligence Officer of the DRI who has drawn the mahazar and another Intelligence Officer of the mahazar who is incharge of the whole seizure, atleast these four persons should have been made available for examination / cross examination when specifically this was asked by the noticees. This principle as has been indicated in Clause 14.9 of the Master Circular can be considered to be an apt direction in the given circumstances of the case. Here in the case in hand, the cross examination chance which is one of the integral facet of the natural justice principle since has been specifically denied, this Court feels that on that ground the impugned orders certainly get vitiated. In that view of the matter, for the limited purpose of remanding the matters for re-adjudication to the respondents Customs, this Court feels that the impugned orders can be interfered with - the matters are remitted back to the respondents for re-adjudication. While making readjudication, the observations as stated shall be borne in mind by the adjudicatory authority where fair opportunity of cross-examination to cross examine the witnesses, especially the two independent mahazar witnesses and two Intelligence Officers of DRI who are responsible for drawal of mahazar and the seizure of the goods atleast shall be made available to the petitioners for cross-examination. After giving such chance of crossexamination, it is open to the adjudicatory authority to complete the adjudication proceedings and pass orders on merits. Petition allowed by way of remand.
Issues Involved:
1. Legality of the search and seizure operation by the Directorate of Revenue Intelligence (DRI). 2. Violation of principles of natural justice due to denial of cross-examination. 3. Impact of the prior High Court judgment on the ongoing adjudication process. 4. Relevance and admissibility of statements under Section 108 of the Customs Act. 5. Applicability of the Master Circular issued by the Central Board of Excise and Customs. Detailed Analysis: 1. Legality of the Search and Seizure Operation by the Directorate of Revenue Intelligence (DRI): The petitioners argued that they were intercepted by the DRI officials before they could declare the gold they brought, thus denying them a chance to declare the goods. The DRI officials conducted a search and seized the goods based on a single seizure mahazar, which included 129 passengers arriving from various flights between 05.11.2019 and 07.11.2019. The petitioners contended that the seizure was not conducted in accordance with proper procedures, including the presence of independent witnesses and the recording of statements in front of a Magistrate. 2. Violation of Principles of Natural Justice Due to Denial of Cross-Examination: The petitioners claimed that the adjudication process violated principles of natural justice as they were denied the opportunity to cross-examine the independent mahazar witnesses and the DRI officials involved in the search and seizure. They argued that this denial rendered the entire adjudication process flawed. The court noted that cross-examination is a critical aspect of ensuring fairness in adjudication and that the denial of this opportunity could vitiate the proceedings. 3. Impact of the Prior High Court Judgment on the Ongoing Adjudication Process: The petitioners pointed out that a prior judgment by the High Court dated 28.04.2021 had observed that the adjudication proceedings could not continue for determining the guilt of the petitioners due to the non-availability of CCTV footage, which was crucial evidence. The respondents argued that this judgment was specific to two petitioners and not applicable to all 129 passengers. However, the court found that the Customs Department had acknowledged the relevance of the pending writ petitions in their show cause notices and should have awaited the final decision before proceeding with the adjudication. 4. Relevance and Admissibility of Statements Under Section 108 of the Customs Act: The respondents contended that the statements recorded under Section 108 of the Customs Act were voluntary and had not been retracted by the petitioners until the reply to the show cause notice. They argued that these statements were sufficient evidence and did not require corroboration through cross-examination. The court, however, emphasized that the statements alone were not enough and that the presence and testimony of independent witnesses were crucial for corroborating the seizure mahazar. 5. Applicability of the Master Circular Issued by the Central Board of Excise and Customs: The petitioners referred to a Master Circular dated 10.03.2017, which mandates that statements relied upon in adjudication proceedings should be established through cross-examination if requested by the noticee. The respondents argued that this circular was primarily for the administration of the Central Excise Act, but the court found that the principles outlined in the circular were applicable to the Customs Act as well. Conclusion: The court concluded that the denial of cross-examination and the failure to follow proper procedures during the search and seizure operation violated the principles of natural justice. It set aside the impugned orders and remanded the matters back to the respondents for re-adjudication, ensuring that the petitioners are given a fair opportunity to cross-examine the independent witnesses and DRI officials involved. The court also emphasized that the goods in question should not be disturbed or disposed of until the re-adjudication process is completed.
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