TMI Blog2013 (5) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court and the said writ petition was disposed of on 08.12.2011 by directing the respondents to consider the petitioner's representation dated 14.11.2011. Thereafter, by a detailed order dated 13.01.2012, the respondents rejected the petitioner's claim for cross examination of the said persons named in the show cause notices. As there is no challenge to this order dated 13.01.2012, it has attained finality. But, only a consequential order passed alone was challenged wherein the confiscation of the prohibited goods was ordered and penalty of Rs. 30 lakhs on the 1st petitioner, Rs. 20 lakhs on the 2nd petitioner and Rs. 20 lakhs on proprietor of the supplier of Red Sanders. Immediately, without resorting to any further remedy, petitioners have rushed to this Court as if there is denial of an opportunity of cross examination.When the petitioners have not challenged the order dated 13.01.2012, on the question of denial of opportunity to cross examine the named persons, this Court cannot look into the matter as if there is violation of principles of natural justice. On the other hand, the order challenged being one which confiscated the prohibited goods and imposed penalty on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics, agarbattis and bakhoor and under licence dated 26.03.2003, the 1st petitioner firm imports sandalwood logs and roots from M/s. ADEP Impex, Tanzania, for manufacture of Sandalwood oil. It is stated that though under the licence dated 23.03.2004, petitioner firm was permitted to trade in Sandalwood, as it could not be done within the period allotted and therefore, it stood cancelled. The items imported like Aromatic Chemicals Herbs, Sandalwood, etc. are solely and exclusively used in the manufacture of perfumery spryas, bakhoor powder, bakhoor oil, Indian attars and sandalwood oil, which are duly exported. It is stated by the petitioner that every receipt of imported material into the manufacturing facility / factory situated at MEPZ is duly accounted for in the statutory records and accounts maintained at the Factory and subject to check and audit by the jurisdictional officers of Customs, Central Excise and the Development Commissioner and that every export of manufactured items are duly documented in the statutory record, register and books of accounts, which are also checked and cross verified in a strict manner by the aforesaid authorities. In fact, in connection with any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted for export under let-export order after affixation of the one time seal on the containers. While so, on the basis of information, the Directorate of Revenue Intelligence, Zonal Unit, Chennai, said to have intercepted the containers outside the MEPZ area in respect of Shipping Bill Nos: 8974 and 9099 and recovered there from 4.314 M.Ts. of Sandalwood, besides 39.580 M.Ts. of Red Sanders from the said consignments. It is the further case of the petitioners that the 2nd petitioner was not present at the time of stuffing of the export goods in the containers at the factory site and that the concerned Appraiser checks each and every box and package before affixing the seal on the lock of the container and once the container is sealed it is the property of the Government. Thus, according to the petitioners, the contention that the contraband was concealed in the export consignment and taken out in the guise of Indian Attars is unsustainable in law. (ii) Pursuant to the investigation, seizures were effected and statements were recorded from various persons including the 2nd petitioner. Subsequently, the 2nd petitioner was arrested and detained under the provisions of COFEPOSA Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Revenue Intelligence who issued the show cause notice to the petitioner and others. The Show Cause Notice dated 13.06.2005 was received from the Directorate of Revenue Intelligence by the Commissionerate and after completing formalities, it was taken up for adjudication in the normal run. On 05.09.2011, a personal hearing was offered to all the four noticees as well as for the counsel for the petitioners. The counter for the petitioner, vide letter dated 2.9.2011, sought for an adjournment of the case and Mr.Palanikumar, counsel for co-noticee Mr.Selvaraj, vide his letter dated 3.9.2011, requested for an adjournment and it was granted for both of them. Further three more personal hearings were given on 26.09.2011, 18.10.2011 and on 11.11.2011. Counsel for Mr.Selvaraj, co-noticee, submitted a letter on 20.09.2011 with judgements and requested for leniency and mercy while passing the order. Another adjournment sought for was also granted. The hearing notice sent to yet another co-noticee M/s.Chennai Essential Oils and Aromatics was returned undelivered and then the notice was placed on the notice board. 4. It is further stated in the counter that the second personal hearing was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvaraj used to send his persons Mr.Dhanapal and Mr.Yuvaraj, who would stuff the red sanders at the factory of the petitioner. By that time, all employees of the petitioner would not know as they used to go outside the factory; that as per the latest guidelines, regular examination by the customs is not required for the import and export cargo for the units situated at MEPZ. Another named witness, Mr.Dhanapal and Mr.Yuvaraj are the employees of the supplier. They gave a voluntary statement under Section 108 of the Customs Act admitting that they would stuff red-sanders and place them at the back side of the cargo and in the front side declared goods of agarbathi, etc. would be loaded. Beyond that they did not depose. Even otherwise, it is submitted that the cross examination is redundant. Detailing all these aspects, the adjudicating authority passed a reasoned order and rejected their request for cross examination. That rejection order had attained finality. Therefore, the plea that the impugned order suffers from the vice of violation of principles of natural justice is not correct and legally maintainable. 5. According to the respondent, the essence of the writ petition is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and that denial of such an opportunity would amount to violation of the principles of natural justice and on this sole ground, the impugned order is liable to be quashed. In support of his contentions, he relied on the following decisions :- I. 1991 (56) E.L.T. 29 (Bom.)- G.T.C. Industries Ltd., vs. Union of India :- 3. The order appears a travesty of the principles of natural justice. It may be that for good ground the 3rd respondent might have found reason to deny the petitioners the cross-examination of all or some of the 30 witnesses. But it did not and could not follow that the petitioners were to be denied the right to lead oral and documentary evidence in support of their case and a personal hearing in that behalf. There can be no question but that the impugned order must be set aside for breach of the principles of natural justice." II. 2002 (143) E.L.T. 21 (S.C.)- Lakshman Exports Ltd., vs. Collector of Central Excise : "2. There was a difference of opinion between two Members of the Tribunal and the matter was referred to the President. The difference of opinion arose because of the findings of the Vice President of the Tribunal that the principles of natural j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Proceedings. Consequently, he could not be subjected to a cross-examination. Question thus arises, can the evidence of this witness be accepted as gospel truth to condemn the appellants herein ? It is to be seen from the records that the appellants herein had produced a letter dated 22nd June, 1987 written by M/s.Universal Agencies of which above mentioned Shri Sunny P. Kunnath was a partner wherein it was specifically stated that the appellant Shalimar Rubber Industries had not purchased carbon black recovered by the 62 of the 82 invoices. The Collector in the course of his order rejected this letter preferring to rely on the alleged oral statement made by said Shri Kunnath to the Inspector. While discussing this point the Collector observed "moreover", this letter was dated 22nd June, 1987 and addressed to M/s.Shalimar Rubber Industries, Perumbavoor, almost two months after the recovery of the invoices on 13.04.1984. This confirmation, I have no hesitation to state, is tailormade to the request of M/s.Shalimar Rubber Industries." We find it extremely difficult to accept this explanation of the Collector to reject the letter written by M/s.Universal Agencies. If the Collector ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles of natural justice. [See 2002(143) E.L.T 21 (S.C.); 2001 (136) E.L.T. 9 (Bom.,); 2002 (141) E.L.T. 24 (A.P.); 2000 (86) DLT 1 (DB) and 1978 (2) E.L.T.(J 502) (Delhi)]. 46. Thus affected person must be given fair opportunity not only to answer the case against him but to adduce positive evidence in support of his own case together with right to contradict all adverse allegations, if necessary, by permitting him to cross-examine the witnesses of the opponent. " V. 2011 (263) E.L.T. 481 (S.C.) Automotive Tyre Manufacturers Asson. vs. Designated Authority : " 58. It is thus, well settled that unless a statutory provision, either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the Court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences which obviously cover infraction of property, personal rights and material deprivations for the party affected. The principle holds good irrespective of whether the power co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been collected by the predecessor of the DA; he had allowed the interested parties and/or their representatives to present the relevant information before him in terms of Rule 6(6) but the final findings in the form of an order were recorded by the successor DA, who had no occasion to hear the appellants herein. In our opinion, the final order passed by the new DA offends the basic principle of natural justice. Thus, the impugned notification having been issued on the basis of the final findings of the DA, who failed to follow the principles of natural justice, cannot be sustained. It is quashed accordingly." 9. Refuting the above submissions, the learned Senior Central Government Standing counsel appearing for the respondents placed reliance on the following decisions and submitted that wherever the opportunity of cross examination is an empty formality, the denial of such an opportunity cannot be held to be fatal to the case of the respondents : 1. 1983 (13) E.L.T. 1486 (S.C.) - Kanungo and Co. vs. Collector of Customs, Calcutta and others "12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an opportunity to the appellant to be heard before his prayer to dispense with the deposit of the penalty is rejected, violates and contravenes the principles of natural justice. In that connection, several judgments of this Court have been referred. It need not be pointed out that under different situations and conditions the requirement of compliance of the principle of natural justice (varies). The courts cannot insist that under all circumstances and under different statutory provisions personal hearing have to be afforded to the persons concerned. If this principle affording personal hearing is extended whenever statutory authorities are vested with the power to exercise discretion in connection with statutory appeals, it shall lead to chaotic conditions. Many statutory appeals and applications are disposed of by the competent authorities who have been vested with powers to dispose of the same. Such authorities which shall be deemed to be quasi-judicial authorities are expected to apply their judicial mind over the grievances made by the appellants or applicants concerned, but it cannot be held that before dismissing such appeals or applications in all events the quasi-jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid that the statutory requirement is that before an appeal is entertained, the amount of penalty has to be deposited by the appellant; an order dispensing with such deposit shall amount to an exception to the said requirement of deposit. In this background, it is difficult to hold that if the Appellate authority has rejected the prayer of the appellant to dispense with the deposit unconditionally or has dispensed with such deposit subject to some conditions without hearing the appellant, on perusal of the petition filed on behalf of the appellant for the said purpose, the order itself is vitiated and liable to be quashed being violative of principles of natural justice. 6. .... ..... ....... 7. In the present case on the application filed by the respondent, a direction was given to deposit only 25% of the amount of the penalty which had been imposed against the said respondent. According to us, the Appellate authority passed a reasonable order which should not have been held to be invalid by the High Court merely on the ground that before passing the said order the respondent was not given oral hearing, which amounted to violation of the principles of natural justice." 4. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions issued by the High Court to the Collector to summon Shri. Sailo, Liantilinga and Lachungunga for necessary examination and to afford an opportunity tot he GTC to cross-examine them are set aside. But the order of the High Court setting aside the order of the Collector is sustained on the ground that the Collector had erred in placing reliance on the submissions of Shri. Sailo. The direction issued by the High Court that the proceedings shall be taken by the officer other than the one who had made the adjudication order shall also stand set aside. Otherwise also this direction has become infructuous with the passage of time. The incumbent Collector is directed to decide the matter afresh on the basis of any other material obtained and also placed on record for the purpose duly granting reasonable opportunity to GTC to produce evidence in rebuttal. " 6. 2006 (194) E.L.T. 290 (Tri. Delhi) - Jagdish Shanker Trivedi vs. Commissioner of Customs, Kanpur. " 8. We may also, recall here, the decision of the Supreme Court in Jethmal Pithaji vs. Assistant Collector of Customs, Bombay, reported in 1983 (13) E.L.T. 1524 (S.C.) A.I.R. 1974 SC 699 in which the Supreme Court held in paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic effort such co-noticees by each one refusing to be cross-examined by resorting to Article 20 (3) of the Constitution and simultaneously claiming cross-examination of the other co-noticees. We, therefore, hold that the appellants, including the appellant Ashish Kumar Chaurasia were not entitled to claim cross-examination as a matter of right. The appellant Ashish Kumar Chaurasia had, in fact, cross-examined two official witnesses and at the end, he had only sought for time for further hearing. The cross-examination made by the appellant, Ashish Kumar Chaurasia of two officers, A.K.Chaturvedi and Simon has been set out in the impugned order and it is recorded that, 'various dates of personal hearing was given one after the other but neither Ashish Kumar Chaurasia nor his advocate turned up". It is clear from the record that the appellants had been give adequate opportunity of being heard in the matter pursuant to the show cause notice issued under Section 124 of the said Act, and there has not been any violation of the principles of natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he last week of August. This would not clearly amount of denial of natural justice. 27. Therefore, the case does not rest on the statement of the appellant alone, but it receives strength from the statement recorded from Smt. Mariam Beevi and Ramraj and we do not see the denial of opportunity to cross-examine these two persons had in any way resulted in violation of principles of natural justice. The two cases referred to by the learned counsel for the appellant can be distinguished on facts. 30. Therefore, these two decisions do not support to the case of the appellant. Therefore, we do not agree that the principles of natural justice has been violated by not allowing the appellant to cross-examine these two persons. " 10. A microscopic and panoramic view of the case would reveal that the petitioner, which is a partnership firm, is an 100% Exported Oriented Unit functioning from the Madras Export Processing Zone, (in short referred as MEPZ) Kadaperi, Tambaram, Chennai, and engaged in import of duty free raw material i.e. aromatic chemicals, from France, Dubai, Singapore and Japan, processes and manufactures perfumes, attars, bakhoor powder and sandalwood oil and exports the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respectively. The Registers will have details of Shipping Bills / Bill of Entry and other relevant details pertaining to the goods and transportation thereof. With regard to entry of raw materials for export companies or the goods sent for job work by Export Companies, "passed-in" and "passed-out" stamp will be affixed on the documents accompanying the goods. 11. While so, the petitioner filed Shipping Bill Nos: 8974 and 9099 dated 10.12.2004 and 15.12.2004 respectively, for shipment of Indian attars (bakhoor incense) weighing 130,000 kgs. each for export of the same to M/s. Sherzam Trading Enterprises, Singapore. The goods were stuffed into the container and sealed with one time seal affixed by the Appraiser of Customs, attached to the Office of the Deputy Commissioner of Customs, MEPZ, Tambaram, Chennai. In respect of Shipping Bill No: 8974 dated 10.12.2004, the connected export documents have been duly filed with the said office, which has permitted for export under let-export order after affixation of the one time seal on the containers. While so, on the basis of information, the Directorate of Revenue Intelligence, (hereinafter referred to as D.R.I.), Zonal Unit, Chennai, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 dated 18.01.2012. Questioning the same, the petitioners raised a point that denial of the right to cross examination of the witnesses whose statements are sought to be relied upon in any proceeding would result in penal and civil consequences is a very fundamental theory and therefore, such a right cannot be denied. 15. Rejecting the above claim, at the first instance the Assistant Commissioner of Customs, Air Commissionerate, Meenambakkam, Chennai 600 027, filed a very cryptic counter affidavit without answering any querry raised by the petitioner. Later on they filed an additional Counter affidavit by the Deputy Commissioner of Customs (Legal), Air Cargo Complex, Meenambakkam, Chennai 600 027, stating that in this case smuggling was unearthed by the Directorate of Revenue Intelligence who issued the show cause notice to the petitioner and others. The Show Cause Notice dated 13.06.2005 was received from the Directorate of Revenue Intelligence by the Commissionerate and after completing formalities, it was taken up for adjudication on 05.09.2011. On 05.09.2011, a personal hearing was offered to all the four noticees as well as for the counsel for the petitioners. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. As regards the denial of right of cross examination of the four persons named in the show cause notices, the respondents contended that the role played by the said four persons do not in any way relate to the act of smuggling perpetrated by the petitioner. To that effect it is submitted that Mr. Raghu is a driver of the trailer, who says that he brought the vehicle inside MEPZ, left it there and then, he was asked to wait outside and that after putting the customs seal, he was asked to take the vehicle outside the MEPZ. Mr.Mohammed Nizam is the manager of the petitioner and his own uncle is the partner of the petitioner-firm. He says that Mr.Selvaraj used to send his persons Mr.Dhanapal and Mr.Yuvaraj, who would stuff the red sanders at the factory of the petitioner. By that time, all employees of the petitioner would not know as they used to go outside the factory; that as per the latest guidelines, regular examination by the customs is not required for the import and export cargo for the units situated at MEPZ. Another named witness, Mr.Dhanapal and Mr.Yuvaraj are the employees of the supplier. They gave a voluntary statement under Section 108 of the Customs Act admitting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged the order dated 13.01.2012, wherein the petitioners' claim for cross-examination of the four persons named in the show cause notices has been rejected. Now, the consequential order confiscating the goods and imposing penalty on the individuals alone is questioned. 18. As regards the question of confiscation of prohibited goods and imposition of penalty on individuals involved in dealing with prohibited goods are all matters on merits, which has to be adjudicated by the petitioners before the appropriate forum, which is effectively available. When the petitioners have not challenged the order dated 13.01.2012, on the question of denial of opportunity to cross examine the named persons, this Court cannot look into the matter as if there is violation of principles of natural justice. On the other hand, the order challenged being one which confiscated the prohibited goods and imposed penalty on the individual for their respective act, is an issue to be looked into by the appropriate appellate authority namely the CESTAT and without availing such a remedy, the petitioners have rushed to this Court. 19. It is true that our system of jurisprudence is based on adversarial mech ..... X X X X Extracts X X X X X X X X Extracts X X X X
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