TMI Blog2013 (9) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... r allegation to the effect that Foreign Exchange was acquired for bringing into India the goods of - (i) specific value; and (ii) specific description, but what was brought into India were goods of different value and different quality and hence there was mis-utilisation of foreign exchange and consequent breach of Sections 8(3) and 8(4) of FERA - when the authorities under FERA while issuing notice solely relied upon the investigation carried out by the customs authorities then in such circumstances the authorities under FERA should not have taken a stand contrary to what was taken by the customs - The rational of this Rule was the need for consistency, certainty and predictability in the administration of justice. The manner in which the customs authorities were expected to follow the decision of the licensing authorities in the matter of issuance of license, the custom authority's decision in the matter of classification and valuation are also final vis-a-vis FERA authorities, more particularly, when the custom authorities were the statutory authorities empowered to decide the issue of classification and valuation of goods at the time of import as well as export. Validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants were justified in making a request to cross-examine those officers, who had expressed the opinion quite contrary to the one on which the custom authorities had relied upon - We fail to understand what prejudice could have been caused to the department if at all such permission would have been granted - On the other hand, the prejudice seems to have been caused to the appellants as they were not in a position to convince the adjudicating authority and the Appellate Tribunal why the adverse opinion which was in conflict with the first two opinions should have been ignored in absence of opportunity to cross-examine the person who gave such a opinion in writing - It was also not the case of the department that such request was made only with a view to protract the proceedings. Validity of Order - The order impugned travels much beyond the scope of the show cause notice and his clients had no opportunity to explain many relevant aspects which the Tribunal had taken into consideration - it is settled law that a party to whom a show cause notice of this kind was issued must be made aware of the allegations against it - As observed by the Supreme Court in Kaur Singh v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice (Memorandum) and the documentary evidence relied upon, is a result of the investigations conducted against Contessa? (2) Whether the Tribunal was duty bound to follow the Order passed by the Customs, Excise Service Tax Appellate Tribunal ( CESTAT for short) passed in the Appellant's own case holding that there was no misdeclaration or undervaluation, and therefore, there was no question of violation of the provisions of Section 8(3) and Section 8(4) of the erstwhile Foreign Exchange Regulation Act, 1973 ( FERA ) and whether the Tribunal was correct in law in not following the Order of CESTAT in Appellant's own case, when it followed the CESTAT order in the case of Contessa vide order dated 28th November, 2007? (3) Whether the Tribunal was correct in not following the judgment of the Hon'ble Supreme Court in Commissioner of Customs vs. Pentamedia Limited 2006(198) ELT 164 to the effect that the said goods are computer software and therefore, were correctly assessed at nil rate of duty at the time of clearance for home consumption by the Customs authorities, and therefore, when there was no misdeclaration by the Appellants under Section 8(3) and Section 8(4) of FERA an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h their clearing agent M/s. C.S.Narendra and Company, Hyderabad, submitted Bills of Entry bearing different numbers dated 25th April 1998, 29th August 1998 and 22nd August 1998 respectively and all of them consisted of CD ROMs imported by M/s.Vaishal Impex, Ahmedabad. The custom house agent cleared the same from the Air Cargo Complex, Hyderabad and forwarded eleven consignments (120 baggages) covered under the Bills of Entry Nos.4486 to 4496 dated 25th April 1998 through M/s.Speed King Carrier Pvt. Ltd., Chennai, which were received in Ahmedabad by the said firm. 4.2 It is the case of the department that the payments to the custom house agent were made by M/s.Vaishal Impex, Ahmedabad, by way of eight cheques/drafts of the Corporation Bank, Hyderabad, aggregating to Rs.6,17,253/- drawn from the current account no.2361 of the said firm, after receiving payments by cheques of equal amounts drawn from the current account no.2025 of M/s.Adani Exports Limited, Ahmedabad, (Appellant of First Appeal No.2400 of 2008) also maintained with the Corporation Bank, Ahmedabad, around the same time thereby evidencing that the payment made to the custom house agent was by M/s. Adani Exports Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was also found by the department that the CD ROMs were found lacking in interactivity and failed to run on the automatic data processing machine not loaded with an operating system. Accordingly, the department reached to the conclusion that the CD ROMs imported were not computer software so as to claim the benefit of the nil duty under the customs Notification No.11/1997 dated 1st March 1997 as amended by the Notification No.3/19998 dated 11th February 1998. 4.7 It is also the case of the department that out of 30 CD ROMs imported during the contemporaneous period in the name of M/s.Vaishal Impex, 28 titles had also been imported in the name of M/s.Contessa Commercial Company Pvt. Ltd., Kolkata, and all the CD ROMs were having a uniform declared price of US $15 in all the eleven invoices submitted by M/s.Vaishal Impex. The department also reached to the conclusion that the title of the CD ROMs did not appear to have affected its value in the import of the CD ROMs from M/s.Computer Point, Dubai and M/s.Gulf Software, Dubai, and, therefore, identical CD ROMs imported by both the companies from the different exporters of Dubai during that period had the same export price i.e. US $ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that in view of the provisions as contained in Section 49 of the FEMA, the adjudicating authority was bound to take notice of the contravention within the period of two years i.e. from 31st May 2000 to 31st May 2002 and not thereafter. 4.13 The adjudicating authority i.e. the Additional Director General, after hearing the parties concerned came to the conclusion that M/s. Adani Exports had gone beyond the scope of a mere facilitator of opening Letter of Credit in the present case. While providing such huge finances for opening LCs, the adjudicating authority reached to the conclusion that no adequate care had been taken by M/s. Adani Exports to safeguard their interest in the event of non-payment of amount by M/s.Vaishal Impex, which was not in confirmity with the prudent business practice. The adjudicating authority also recorded a finding that no securities were insisted upon by M/s.Adani Exports from M/s.Vaishal Impex for advancing such finances. Accordingly, the adjudicating authority recorded a finding that all the appellants were guilty of the charges levelled against them and accordingly in terms of the powers conferred on it under Section 50 of the FERA, 1973 read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd., Adani Exports Limited and its director, Shri Rajesh Adani and has not thought fit to challenge the same. In support of the aforesaid submission, Mr.Trivedi has relied on the following case law. 1. Birla Corporation Ltd. vs. Collector of Central Excise 2005 (186) ELT 266 (SC). 2. Jayaswals Neco Ltd. vs. Commissioner of Central Excise, Nagpur 2006 (195) ELT 142 (S.C.) 3. Jindal Dye Intermediate Ltd. vs. Collector of Customs, Mumbai- 2006(197) ELT 471 (S.C.) 4. Indian Oil Corporation Ltd. vs. Collector of C. Ex., Baroda 2006 (202) ELT 37 (S.C.) 5. Boving Fouress Ltd. vs. Commissioner of Central Excise, Chennai 2006 (202) ELT 389 (S.C.) 6. Commissioner of C. Ex. Hyderabad vs. Novapan Industries Ltd. - 2007 (209) ELT 161 (S.C.) 7. The Punjab University, Chandigarh vs. Vijay Singh Lamba AIR 1976 SC 1441. 5.2 Mr.Trivedi submitted that the way in which the customs authorities are obliged to follow the decision of the licensing authority in the matter of issuance of license, the decision of the customs authorities in the matter of classification and valuation are final vis-a-vis the FERA authorities, more particularly, when the custom authorities are statutory author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar - 2006 SC 1445 5.4 Mr.Trivedi further submitted that the impugned order travels beyond the scope of the show cause notice dated 31st May 2002 and on this ground alone, the order impugned deserves to be quashed and set aside. According to Mr.Trivedi, the observations made in paragraph nos.4, 5, 15, 19 to 26, 31 to 41 of the impugned order are not part of the averments in the show cause notice dated 31st May 2002. To fortify this submission, Mr.Trivedi has placed strong reliance on the following four decisions. 1. Nasir Ahmed vs. Assistant Custodian General Evacuee Property, U.P. - AIR 1980 SC 1157. 2. Kaur Singh vs. Collector of Central Excise, New Delhi 1997 (94) ELT 289 (SC). 3. Raphael Pharmaceuticals Pvt. Ltd. vs. Superintendent of Distilleries 1988 (38) ELT 11 (A.P.). 4. Commissioner of Customs, Mumbai vs. Toyo Engineering India Ltd. - 2006 (201) ELT 513 (SC). 5.5 Lastly, according to Mr.Trivedi, the impugned order deserves to be quashed and set aside on the ground that FERA came to be repealed and FEMA came into operation with effect from 31st May 2000 and by virtue of the provisions contained in Section 49 of FEMA, the adjudicating authority is debarred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority and the Appellate Tribunal. 6.1 Mr.Champaneri, in reply to the first submission canvassed on behalf of the appellants submitted that it is settled law that it is not binding on the Tribunal to follow its own order as it is always open for the department to correct an erroneous view taken, if any, at a later stage. Mr.Champaneri submitted that there is no illegality going to the root of the matter in not following the order passed in Appeal No.61 of 2005 in the case of M/s.Contessa Commercial Company Pvt. Ltd. Each case needs to be judged independently on the facts of that case. There cannot be any estoppel in a taxing statute and the Tribunal is in no manner precluded from taking a stand different than the one taken by the department. 6.2 In reply to the second submission of Mr.Trivedi, as regards the violation of the principles of natural justice, Mr.Champaneri, relying on the Adjudication Proceedings and Appeal Rules, 1974 submitted that the adjudicating officer is not bound to observe the provisions of the Indian Evidence Act, 1872. Mr.Champaneri submitted that it is evident from Rule 3 of the Adjudication Rules framed under Section 79 of FERA that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as thus: (3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. (4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. 10. Section 79 of FERA confers power on the Central Government to make Rules for carrying out the provisions of the said Act. The set of Rules has been framed which has been called 1974 Rules. Rule 3 of the said Rules is as follows: 3. Adjudication proceedings. -(1) In holding an inquiry under section 51 for the purpose of adjudging under section 50 whether any person has committed contravention as specified in section 50, the adjudicating officer shall, in the first instance, issue a notice to such person requiring him to show cause within such period as may be specified in the notice (being not less than ten days from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of that section. 12. It deserves to be noted that Section 49, Clause (3) of FEMA uses the words no adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act. The words used shall take notice of are very significant. Section 51 postulates holding of an inquiry in the prescribed manner. Rule 3 of the Adjudication Proceedings and Appeal Rules 1974 deal with the adjudication proceedings. The Rule stipulates various stages in the adjudication proceedings. Rule 3 lays down that in holding an inquiry under Section 51 for adjudication, the adjudicating officer is required, in the first instance, to issue a notice to such person requiring him to show cause within such period as may be specified in the notice. Thereafter, the adjudicating officer, after considering the show cause/reply, as required under Sub-rule (4) of the said Rule, is required to explain to a person proceeded against or his lawyer or the authorized representative about the contravention and thereafter p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 3(1) or decide whether or not to accept the cause shown by the person and pass consequential orders, either dropping the proceedings or continuing the proceedings. In S.K.Sinha, Chief Enforcement Officer v. Videocon International Ltd. [2008 (2) SCC 492], Supreme Court held as under: 19. The expression cognizance has not been defined in the Code. But the word (cognizance) is of indefinite import. It has no esoteric or mystic significance in criminal law. It merely means become aware of and when used with reference to a court or a Judge, it connotes to take notice of judicially . It indicates the point when a court or a Magistrate takes judicial notice of an offence with a view to initiating proceedings in respect of such offence said to have been committed by someone. 20. Taking cognizance does not involve any formal action of any kind. It occurs as soon as a Magistrate applies his mind to the suspected commission of an offence. Cognizance is taken prior to commencement of criminal proceedings. Taking of cognizance is thus a sine qua non or condition precedent for holding a valid trial. Cognizance is taken of an offence and not of an offender. Whether or not a Magis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Videocon International Limited (Supra) and Nayana Maricair (supra) His Lordship observed in paragraphs 16 and 17 as under: 16. We have reproduced the aforesaid paragraphs from Videocon International Ltd. (supra) as Mr. Mukund has submitted that the said decision is not applicable to the adjudicatory proceeding as it relates to taking of cognizance. It is worth noting that their Lordships have opined that taking cognizance means application of mind by the Magistrate to the suspected commission of an offence and the same is done prior to commencement of criminal proceeding and further taking cognizance is the sine qua non or the condition precedent for holding a valid trial. Quite apart from the above, their Lordships have held that initiation of proceeding must precede commencement of proceeding. Section 51 of FERA deals with holding an enquiry. The enquiry, we are disposed to think, has insegregable nexus with the issue of a show-cause as the rule so mandates. Thus, the reliance placed on by the learned Single Judge on the decision rendered in Videocon International Ltd. (supra) cannot be found fault with. 17. We have already referred to the decisions in Bhaskaran P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we propose to follow the dictum as laid in the decisions referred to above. It may not be out of place to state that dissatisfied with the judgment, the petitioner Star India Pvt. Ltd. had also filed a Special Leave to Appeal (Civil ) No.8491 of 2011 against the judgment and order passed by the Division Bench of the Bombay High Court. The Supreme Court vide order dated 18th April 2011 dismissed the Special Leave Petition keeping the question of law open for being decided in an appropriate case. 15. Having regard to the materials on record and the position of law, we are of the opinion that the adjudicating officer took notice of the alleged contravention of FERA within the period of two years from the commencement of FEMA and had the jurisdiction to adjudicate upon such contravention of FERA under the provisions of the FEMA. Since FERA is repealed with effect from 1.6.2000, no proceedings under FERA can be initiated for the alleged contravention of FERA after 1st June 2000. However, Section 49, Clause (3) of FEMA provides that the adjudicating officer can initiate the proceedings under FEMA in respect of the alleged contravention of FERA, provided the adjudicating officer takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the noticee to show cause why adjudication proceedings should not be held for the alleged contravention of FERA. Since the first notice is the foundation for initiating the adjudication proceedings, the adjudicating officer cannot issue the first notice casually or without forming a prima facie opinion that the provisions of FERA have been contravened. 19. Therefore, in our opinion, the words take notice in Section 49, Clause (3) of FEMA are referable to the prima facie opinion formed before issuance of the first notice under Rule 3, Clause (1) of the Appeal Rules. We are not impressed by the submission of Mr.Trivedi, the learned Senior Advocate appearing for the appellants that the notice of the alleged contravention of FERA can be said to have been taken only when the adjudicating officer considers the cause, if any, shown in the first notice and forms an opinion to continue with the adjudication proceedings by issuing a second notice under Rule 3, Clause (3). 20. In the aforesaid context, we may refer to the observations made by the Division Bench of the Bombay High Court in Star India Pvt. Ltd. (supra) with which we are in complete agreement and we propose to follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials placed before him and only when he entertains the prima facie belief that there is contravention of the provisions of FERA he is required to issue show cause notice under Rule 3(1) calling upon the noticee to show cause. Thus, the adjudicating officer takes notice of the alleged contravention of FERA and only thereafter issues first notice under Rule 3(1) and not after the issuance of first notice. 28. The alternative argument of the petitioners that the words take notice has to be interpreted ejusdem generis to the words take cognizance appearing in Section 49(3) of FEMA is also unacceptable. As rightly contended by the counsel for the Revenue, criminal proceedings and adjudication proceedings are independent proceedings. The scope and ambit of the two proceedings are different. That is why the legislature has used two different words, namely, take cognizance in relation to criminal proceedings and and 'take notice' in relation to adjudication proceedings. As held by the Apex Court in the case of Videocon Industries Limited (supra) the words take cognizance may connote to take notice of judicially . In other words, in criminal proceedings 'taking cognizance' by a Magis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 49(3) of FEMA. Where for the same offence the adjudicating officer takes notice and the Magistrate does not take cognizance within two years from the commencement of FEMA, then, the adjudication proceedings would continue and the criminal proceedings would be barred. In such a case even if there is any anomaly on account of the failure to take cognizance within the stipulated period the same cannot be a ground to hold that the two proceedings should be interpreted as ejusdem generis. 30. The alternative contention of the petitioners that assuming issuance of the notice under Rule 3(1) constitutes 'taking notice', then in view of Section 49(5)(a) of FEMA, such notice under Rule 3(1) of the Appellate Rules must be served upon the noticee before 31/05/2002 is also devoid of any substance. Section 49(5)(a) of FEMA does not dilute any of the specific requirements contained in FERA or the Appeal Rules. It merely provides that wherever a notice is required to be served under FERA, the same shall be deemed to have been done or taken under the corresponding provisions of FEMA. The adjudication proceedings under Section 51 of FERA read with Rule 3 of the Appeal Rules provide that the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authorities under the Customs Act, 1962 confirmed the aforesaid show cause notices vide order dated 29.4.2004 in case of M/s.Contessa and vide order dated 23.3.2004 in case of M/s.Vaishal Impex and others i.e. the appellants herein. 27. The final fact-finding authority in respect of Customs, i.e. CESTAT allowed the appeals filed by M/s.Contessa Commercial Pvt. Ltd., M/s.Vaishal Impex, M/s.Adani Exports Ltd. and Shri Rajesh Adani, both on the count of value and description i.e. classification. Appeals have been filed by Customs before the Hon'ble Supreme Court, which are only admitted but no stay has been granted. 28. Based on the very investigation of DRI referred to above, the Special Director, Directorate of Enforcement, New Delhi issued a show cause notice dated 3.11.2000 under Rule 3(1) of the Adjudication Proceedings and Appeal Rules, 1974 read with Section 51 of Foreign Exchange Regulation Act, 1973 read with Section 49 of the Foreign Exchange Management Act, 1999 for the alleged violation of Sections 8 (3), 8 (4), 64 (2), 68 (2) of FERA and punishable under Section 50 of FERA, against M/s.Contessa Commercial Co. Pvt. Ltd., M/s. Adani Exports Ltd., and Shri Rajesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... highly inflated than the actual value of CD ROMs i.e. the value declared by the exporter M/s.Gulf Software, Dubai before Dubai Customs; AND WHEREAS by opening irrevocable documentary L/Cs to the extent of US$ 16,50,000/- on account of M/s.Vaishal Impex, Ahmedabad, favouring M/s.Computer Point, Dubai for the aforesaid import of goods in the aforesaid manner, the said M/s.Adani Exports Ltd., Ahmedabad and its Director Shri Rajesh S. Adani appears to have abetted the said M/s.Vaishal Impex in the aforesaid transaction and to have contravened the provisions of Section 8(3) read with Section 8(4) of the Foreign Exchange Regulation Act, 1973 read with Section 64 (2) and 68 (2) of the said Act and have thereby rendered themselves liable to be proceeded against under section 50 of the Foreign Exchange Management Act, 1999. 30. Both the aforesaid notices issued under FERA / FEMA, charged the appellants with similar allegation to the effect that Foreign Exchange was acquired for bringing into India the goods of - (i) specific value; and (ii) specific description, but what was brought into India were goods of different value and different quality and hence there was mis-utilisation of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities are the statutory authorities empowered to decide the issue of classification and valuation of goods at the time of import as well as export thereof. We are of the opinion that this aspect ought to have been kept in mind by the appellate Tribunal under FEMA. The case law relied upon by Mr.Trivedi in support of this submission fortifies our view. We may refer to one such decision of the Supreme Court in the case of Indian Oil Corporation Limited v. Collector of Central Excise, Baroda reported in 2006 (202) ELT 37 (SC). We quote paragraphs 9, 10 and 11 as under: 9. Mr. Mohan Parasaran, the learned Additional Solicitor General has fairly conceded that against the order passed by the Tribunal in the case of Hindustan Petroleum Corporation Ltd. (supra), no appeal was preferred by the department and the said order has attained finality. Since no appeal was preferred against the order passed by the Tribunal in Hindustan Petroleum Corporation Ltd.(supra) and the same has become final, the department is not entitled to raise the same point in other cases in view of the decisions of this Court in Union of India Others vs. Kaumudini Narayan Dalal Another reported in (2001) 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples of natural justice. 38. A very strong grievance has been redressed on behalf of the appellants that despite making a specific request before the adjudicating officer for cross-examination of the DRI officers, the same was ignored on the ground that the strict rules of evidence are not applicable in the proceedings of the present nature and, more particularly, considering the provisions of law as contained in Rule 3, Clause (5) of the Adjudication Proceedings and Appeal Rules, 1974, which says that in taking evidence, the adjudicating officer shall not be bound to observe the provisions of the Indian Evidence Act, 1872. To appreciate this submission, it is necessary for us to go in little detail, why such a request for cross-examination had to be made by the appellants. Before looking into this aspect, it is necessary for us to look into the position of law. In M/s. A.S.Motors Pvt. Ltd. v. Union of India and Others reported in 2013 (3) Scale 15, which has been relied upon by Mr.Champaneri, the learned Assistant Solicitor General of India, the Supreme Court in paragraph 8 made the following observations: 8.........Rules of natural justice, it is by now fairly well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly we hold that there is no force in the third contention of the appellant. 40. In State of Kerala v. K.D.Shadhuli Grocery Dealer reported in (1977) 2 SCC 777, the Supreme Court was dealing with the matter arising under the Kerala General Sales Tax Act, 1963 and the issue was whether opportunity of being heard included the right to cross-examine the witness relied upon by the adjudicating authority. The Supreme Court in paragraph nos.2, 3, 4 and 5 of the decision observed as under: 2. Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution, is dispensed not only by judicial or quasi judicial authorities but also by authorities discharging administrative functions. This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotation. It has a variable content depending on the nature of the inquiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the rights affected and the consequences flowing from the decision. It is therefore, not possible to say that in every case the rule of audi alterem partem requires that a particular specified procedure is to be followed. It may be that in a given case the rule of audi alterem partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the inquiry should be permitted to be cross-examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really be in two stages, though the inquiry may be continuous and uninterrupted: the first stage would be the reaching of satisfaction by the Sales Tax Officer that the return is incorrect or incomplete and the second stage would be the making of the best judgment assessment. The first part of the proviso which requires that before taking action under sub-section (3) of section 17, the assessee should be given a reasonable opportunity of being heard would obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under section 17, sub-section (3), follows upon the inquiry and the "reasonable opportunity of being heard" must extend to the whole of the inquiry, including both stages. The requirement of the first part of the proviso that the assessee should be given a "reasonable opportunity of being heard" before making best judgment assessment merely embodies the audi alterem partem rule and what is the content of this opportunity would depend, as pointed out above, to a great extent on the facts and circumstances of each case. The question debated before us was whether this opportunity of being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the entries in the books of account of Hazi Usmankutty and other wholesale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross-examining Hazi Usmankutty and other wholesale dealers with reference to their accounts. Since the evidentiary material procured from or produced by Hazi Usmankutty and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incorrect and incomplete, the assessee was entitled to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross-examination. It can hardly be disputed that cross-examination is one of the most efficacious methods of establishing truth and exposing falsehood. Here, it was not disputed on behalf of the Revenue that the assessee in both cases applied to the Sales Tax Officer for summoning Hazi Usmankutty and other wholesale dealers for cross-examination, but his application was turned down by the Sales Tax Officer. This act of the Sales Tax Officer in refusing to summon Hazi Usm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees or due to animus or business rivalry or such other reasons which can only be established when the persons who are responsible for keeping the accounts are brought before the authorities and allowed to be cross-examined by the assessees. This does not mean that the assessing authority is bound to examine the whole- sale dealers as witnesses in presence of the assessees: it is sufficient if such wholesale dealers are merely tendered by the sales-tax authorities for cross-examination by the assessees for whatever worth it is. In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to cross-examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incorrect and incomplete. 41. In Telestar Travels Pvt. Ltd. v. Special Director of Enforcement reported in 2013 STPL (Web) 125 SC, the Supreme Court while dealing with the matter under FERA discussed at length the issue of giving an opportunity of cross-examination of witness. The Supreme Court in the facts of that case took the view as reflected from the observations made in paragraph 18 of its decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the witnesses is not violative of principle of natural justice. It is contended that the petitioner had retracted within six days from the confession. Therefore, he is entitled to cross-examine the panch witnesses before the authority takes a decision on proof of the offence. We find no force in this contention. The Customs officials are not police officers. The confession, though retracted, is an admission and binds the petitioner. So there is no need to call panch witnesses for examination and cross-examination by the petitioner. 42.1 The aforesaid decision on which strong reliance has been placed by Mr.Champaneri will have no application so far as the case at hand is concerned. This decision is easily distinguishable on facts. What weighed with the Supreme Court was the confession of the petitioner before the custom officials and the Supreme Court accordingly took the view that the confession which is in the form of admission would bind the petitioner and, therefore, the failure to give him the opportunity to cross-examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. The rule that no man shall be condemned unless he has been given prior notice of the allegations against him and a fair opportunity to be heard is a cardinal principle of justice. This rule has been refined and adapted to govern the proceedings of bodies other than judicial tribunals; and a duty to act in conformity with the rule has been imposed by the common law on administrative bodies not required by statute or contract to conduct themselves in a manner analogous to a court. Moreover, even in the absence of any charge, the severity of the impact of a discretionary decision on the interests of an individual may suffice in itself to attract an implied duty to comply with this rule. 46. In our opinion, natural justice means and can only mean that the action of the Tribunal or the authority in question must have been taken in good faith, that the party affected must have an opportunity of explaining or correcting any relevant fact or statement prejudicial to his interests. To put it in other words, the person accused should know the nature of the accusation made; consequently that he should be given an opportunity to state his case, and thirdly, that the Tribunal should act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in functionality and qualify under the category of Computer Software. Sr. No. TITLE NAMES 1. 1300 New Cities Mega Metros 2. Bill Board Music Guide 3. Compaign Each Germany 4. Crazy Pool 5. Dinosour Safari 6. Hello Kitty 7. Image Esctasy 8. Pipe Mania 9. Quantam Gate 10. Shadow President 11. Solid Gold 12. Speed Way 13. The Madness of Roland 14. Incyclopedia of Lawman Out Laws 15. Pro Football Handicaper 16. Cooking Companion 17. Astro Force 18. Critical Path 19. Electric Reading Land 20. Hungry Hedgehogs 21. Click Art Select 22. Reflux 23. The Magic Death The samples of the above CD ROMs are being retained by this Council for its records. Thanking you, Yours faithfully, Sd/- (D.P.Gupta) Chief (Coordination) 48. As against that, FERA authority relied on the opinion obtained from National Informatics Center (NIC), a Government of India undertaking, dated 31st July 2001 and the opinion of Software Technology Parks of India dated 18th October 2001. We propose to quote both the opinions. GOVERNMENT OF INDIA Ministry of Information Technology, National Informatic Centre, Gujarat State Unit, Block No.13, 2nd Floo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X, etc.). The content brief as noted is at Annexure-II. 5. In the event if any other Automatic Data Processing Machine not loaded with an Operating System is provided by the Importer/User of the CD that run the said 30 CDs the same can be counter-verified. Your faithfully, For Software Technology Park, Gandhinagar Sd/- Ajay Sharma Director 49. Thus, when there is an apparent conflict between the two sets of opinion, in such circumstances, in our opinion, the appellants were justified in making a request to cross-examine those officers, who had expressed the opinion quite contrary to the one on which the custom authorities had relied upon. We fail to understand what prejudice could have been caused to the department if at all such permission would have been granted. On the other hand, the prejudice seems to have been caused to the appellants as they were not in a position to convince the adjudicating authority and the Appellate Tribunal why the adverse opinion which was in conflict with the first two opinions should have been ignored in absence of opportunity to cross-examine the person who gave such a opinion in writing. It is also not the case of the department that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the crucial question on the decision whereof one way or the other, the matter turned on merits. 51. We may also quote with profit the observations made by a Division Bench of the Kolkata High Court in the case of Jha Shipping Agency v. Union of India reported in 2011 (264) ELT 32 (Calcutta) on which strong reliance has been placed by Mr.Trivedi and with which we are in complete agreement. In paragraph 3, the Bench made the following observations: 3. ........ At the outset the appellant asked for cross-examination of those persons or even if it is not asked, whether the first authority offered to the appellant for cross-examination of those persons ought to have been looked into. Unfortunately this was not done by the Learned Tribunal. According to us if the decision in the justice delivery system results in evil and civil consequences natural justice has to be followed. One of the facets of the natural justice is to afford to the adversary to cross-examine the person or persons whose testimony or statements were relied on in decision making process. This enquiry should have been made by the Learned Tribunal when a complaint was made in this respect. As we have already noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice. We have observed that many of the findings recorded by the Tribunal are much beyond the case set up by the department in the show cause notice. For example, the show cause notice does not set out any particulars in respect of fraud or collusion or conspiracy. We have noticed that in paragraph 4 of the impugned order, it has been observed that the case of M/s.Vaishal Impex was not an isolated case but it was a part of conspiracy played by M/s.Adani Exports Limited in collusion with some other companies with an intention to siphon off the foreign exchange. It has also been observed that M/s.Adani Exports Limited and its associated companies formed a group with M/s.Padmini Polymers Limited to defraud the exchequer by exporting pirated and outdated CD ROMs at a grossly over invoiced/FOB value to earn excessive DEPB credit by purchasing them from M/s.Padmini Polymers Limited. Although there is a reference of M/s.Padmini Polymers Limited in the show cause notice, we do not find any case of conspiracy in the show cause notice. Over and above that, from paragraph 34 upto paragraph 41, there is discussion about the opinion as regards classification of the goods including the price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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