TMI Blog2017 (10) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... be relevant, does not mean it is proved. That statement, like all testimony, must be subjected to the rigours of cross-examination, to be drawn into the evidentiary pool to form a basis for reasoning or conclusion. Section 138B does not say, and could not say, that statements can be taken as proved even without cross-examination. This, however, is how the CESTAT has misunderstood the section. All that the section says is that for want of production of a witness, his Section 108 statement does not automatically cease to become relevant. Questions of relevancy and proof are yet determined by the Indian Evidence Act, and the CESTAT wholly failed to take these into account. The contention of the Learned Counsel for the Appellants that Section 138(B) of the Customs Act applies only to prosecution of offences under the Customs Act and not to departmental adjudication proceedings is not well-founded. A bare perusal of Section 138(B)(1) (set out above) tells us otherwise. It is not possible to hold that the word ‘proceeding’ excludes departmental adjudication proceedings. Indeed, even the CESTAT did not think so, and we see no reason to consider this plea now - Consequently, if there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Having heard learned Counsel on both sides, we are not in the least satisfied that the impugned order can be sustained. The absence of an essential component for penalty adjudication proceedings - the contraband itself - is sought to be substituted by conjecture: it must have existed . Worse yet, the value of the contraband remains unknown to this day, and it is on the rankest speculation, and on one astonishing statement by one officer who plays a central role, viz., that his experience when once he claimed to have held the contraband allowed him to depose to its aggregate value, that the entire edifice of the order is founded. If once there was a witch-hunt against this officer, as he contends, it rather seems to us to now be full-tilt in reverse, with the authorities grasping at any straw. We do not believe that the provisions of the Customs Act, given their ambit, purpose and scope, can be interpreted in this fashion. The interpretation is not just liberal , itself impermissible in a statute of this sort. It is a formless, elasticised interpretation that is adopted, one entirely unknown to our jurisprudence, founded on nothing but inference, surmise and supposition, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax Appellate Tribunal ( CESTAT , the Tribunal ), West Regional Bench, at Mumbai, dismissing the Appellants appeals, five in all. Appeals Nos. C/28 to C/32 of 1995. Those appeals came up from an order-in-original dated 14th October 1994 passed by the 2nd Respondent, the Collector of Customs ( the Collector ). Order in original No 15/Cus/Goa/94. The Collector s order is also under challenge. The CESTAT upheld the Collector s order. 6. The present appeals were admitted on 14th March 2005 on a substantial question of law framed thus: Whether in the facts and circumstances of the case the findings imposing penalty rendered by the Commissioner of Customs-Respondent No.1, and CESTAT are perverse as they are based on the statements of three eye witnesses to the incident, viz., Vincy, Baptista and Sebastian, who were not allowed to be cross-examined by the Appellant? 7. As we have noted, there are other subsidiary questions implicit in this question of law, and we will identify and address those as well. 8. First, as to the Appellants. Churchill Braz Alemao is a former Chief Minister of Goa. Ciabro and Joaquim are his brothers. There was another brother, Alvernaz; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter that very morning, at about 11 am, he received a tip-off at his residence of some suspicious activities involving the Alemaos at the Fatrade/Varca Holiday Beach Resort site. He rushed back. There, he claims he saw a white Contessa no GA-02A-4567, a blue Maruti motor car no DAC 5942 and a black Fiat car at the site. The cars all had dark tinted glasses. 13. Fernandes claims he saw Ciabro Alemao and two canoes with outboard motors approaching Carmona Beach from the high seas. At noon, the canoes touched shore. Each carried four or five persons. They were offloading boxes that looked like heavy-duty vehicle batteries from the canoes. These were apparently of some weight, and had to lifted with bamboo poles and oars. Fernandes recognized Alvernaz Alemao driving the Contessa. Four of the five battery boxes were placed in that car s boot. The fifth went into the blue Maruti. Once all the boxes were loaded, Alvernaz drove off in the Contessa. 14. Fernandes gave chase on his motor cycle, careening down the narrow village roads in pursuit. Along the way, Fernandes seems to have been able to pass on to a good Samaritan a chit containing the Mormugao Customs House number with a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim that Joaquim Alemao, Ciabro Alemao, Reginaldo Rodrigues, Romeo, Roy Miranda, Anton Fernandes, and others came to the spot where the Contessa was, opened its boot, removed the gold and took it away. Churchill Alemao took Alvernaz to Dr. Maurito Rock Furtado s home in Varca. Alvernaz died there. 17. On 7th June 1991, the CBI registered a crime against Costao Fernandes for murdering Alvernaz. 18. On 20th December 1991, the Collectorate of Customs and Central Excise, Goa, issued a show cause notice to the present Appellants for personal penalty and confiscation of the two vehicles and motor scooter. The Alemaos responded on 20th December 1991. On 4th May 1992, they requested cross-examination of 38 witnesses. Only 11 were produced. 19. In 1994, a Customs Case was filed against the Appellants before the Chief Judicial Magistrate for offences punishable under Section 135(1)(i) of the Customs Act, read with Section 3 of the Import and Export Control Act, 1947 and Sections 186, 201, 206, 379 and 120(B) of the Indian Penal Code. 20. On 6th August 1994, the Sessions Court, North Goa, framed charges against Fernandes under Section 302 of the Indian Penal Code for the murder of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the Customs Case filed against the Appellants had failed all the way to the Supreme Court. Of course, the principal reason for the latter, the dismissal of the Customs Case, is that the contraband in question was not produced at all. As we shall see, this is pivotal to the present case, for this lacuna continues, and is sought to be covered up by a reliance on some observations of the Supreme Court in Fernandes entirely separate case regarding the homicide charges against him. C. QUESTIONS RAISED 27. The substantial question of law framed at the time of admission, read in context, throws up subsidiary questions that must be addressed. (a) Can a penalty of improper importation of goods under Section 112 (a) and (b) be imposed without any chemical, physical, or metric examination or actual seizure/confiscation of the alleged contraband gold? (b) Could the Tribunal legitimately have relied on Section 138B of the Customs Act and applied it to departmental adjudication proceedings when the section specifically and clearly applies only to prosecution for offences under the Customs Act? (c) Could the CESTAT have used the observations of the Supreme Court in Fernan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 July 1991, and 21 August 1991 John Arcanjo Rebello Yes 12. 8 August 1991 Antonio Maurlio Rock Furtado Yes 13. 7 July 1991 and 12 July 1991 Veny Fernandes Yes 14. 8 July 1991 Francis Correia Yes 15. 3 July 1991 and 25 July 1991 Quiteria D Silva Not attended 16. 3 July 1991 Treza Mergulhao Not requested for cross examination 17. 3 July 1991 Shalini Peter Not attended 18. 3 July 1991 Eknath Verenkar Not attended 19. 8 June 1991 H. Padmanabha Pai Not attended 20. 6 July 1991 Cruz Rodrigues Yes 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d what Vincy Soares said. Veny Fernandes and Francis Correia narrated a similar chain of events. 31. John Arcanjo Rebello said that on 16th May 1991, when he was standing outside Roy Miranda s house, he saw Gongrette arrive at that house on a scooter. At Roy Miranda s request, he helped them carry a battery-type box from the scooter to the verandah of the house. He stated he was unaware of the contents. During his personal hearing on 5th July 1994, he claims that on 16th May 1991, and even later, he did not meet Roy Miranda or Gongrette. 32. In his statement, Churchill Alemao said that on being told of his brother s wounds, he rushed to the spot. He took Alvernaz to Dr. Maurilio Furtado, who declared him dead. He confirmed that Alvernaz took the Contessa to Varca Beach Resort at 11: 30 am that day. Joaquim Alemao confirmed he went to the Varca Beach Resort site at 7:30 am, but said he saw no Contessa, Maruti or any Bullet motorcycle. Later, told of his brother s injuries, he reached the spot and saw Alvernaz being attended to by Dr. Alvaro. He denied forcing open the boot of the Contessa. Similarly, on being told about his brother s condition, Ciabro too rushed to the spot of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This requires the party to make a representation within a reasonable stated time against the grounds of confiscation or penalty. 124. Issue of show cause notice before confiscation of goods, etc.- No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person- (a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter: Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned, be oral. 37. The Show Cause Notice dated 20th December 1991, required the Appellants, as owners of the vehicles, to show cause against the proposed confiscation of the Contessa, Maruti and the scooter. The reply to the Show Cause Notice dated 27 March 1992 denie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods in question need not be in hand, so to speak; they must nonetheless be shown to have existed, and this is a fact that must be proved. Under Section 2(17), examination is defined in relation to any goods to include measurement and weighment thereof. Section 14 of the Act speaks of valuation of goods for assessment of customs duty payable based on the value. The value is determined at the offer or price of sale of the goods ordinarily at the time of export or import. This would, therefore, require measuring the goods, and an assessment of the quantity and quality based on specific metrics. This must apply to confiscation and penalty too. The value, quantity and quality are not matters to be assumed. They are matters of proof in accordance with the statute. Here, the authorities have only assumed that the gold weighed 250 kgs and was of the value of ₹ 8 crores. The only basis of this is Fernandes statement that in his vast experience, when he lofted one of the gold bars he (and he alone) claims were there, he estimated its value, purity, weight, and that of the whole cargo. Fernandes also accepted that the presence of gold in the other boxes was unascertainable as did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court. (Emphasis added) 42. The CESTAT confused the issues of relevance and proof. A statement may be relevant, but it yet needs to be proved. The fact that a statement is made and recorded, and is statutorily said to be relevant, does not mean it is proved. That statement, like all testimony, must be subjected to the rigours of cross-examination, to be drawn into the evidentiary pool to form a basis for reasoning or conclusion. Section 138B does not say, and could not say, that statements can be taken as proved even without cross-examination. This, however, is how the CESTAT has misunderstood the section. All that the section says is that for want of production of a witness, his Section 108 statement does not automatically cease to become relevant. Questions of relevancy and proof are yet determined by the Indian Evidence Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, cannot become inadmissible by reason of the subsequent death of the witness before cross-examination. The absence of cross-examination would undoubtedly affect the value and weight to be attached to the statement of the witness, but it would not render the statement inadmissible or result in its effacement. Further, every case should be viewed individually. The Court mentioned factors that ought to be considered: the nature of the testimony, its probative value, the status of the witness, the relationship or connection with the parties, and any other factor touching the credibility of the witness. It was also held that the Court may also choose not to act upon such testimony unless it is materially corroborated or is supported by the surrounding circumstances. 46. Where does the CESTAT derive the basis of its order? This is the 20th February 1996 judgment of the Supreme Court quashing the prosecution against Costao Fernandes for the murder of Alvernaz Alemao. Costao Fernandes v The State, etc., (1996) 7 SCC 516. The Supreme Court lauded Fernandes efforts against smugglers in the larger interest of society. In its judgment, the Supreme Court did not, and could not have, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly has nothing to do with the universe of adjudication and penalty. Yet, the Tribunal would have us believe that the Supreme Court concluded that there was gold worth ₹ 8 crores in the car Fernandes intercepted; and that the Supreme Court was satisfied with the presence of gold in the battery-type boxes in the Contessa s boot. That question was never before the Supreme Court for decision. 49. The CESTAT approached the matter thus: 24. We have heard both sides extensively. There is no gainsaying the fact that the evidence in this case is only circumstantial. ... ... 25. The circumstances under which the battery type boxes were removed clearly indicate that the boxes contained something very valuable. Nobody would have bothered to remove some trash from the dickey in such a hurry when a grievously injured person was lying in the front seat of the car. It still remains to be seen whether the boxes contained gold. The Commissioner relied on the version given by Costao that he had opened one of the battery type boxes, took out a gold biscuit and showed it to the crowd. He also relied on the statement of Costao where he narrated the conversation between him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to prima facie prove that gold was smuggled and the same was found in the possession of the Accused, (vii) there was a contradiction in the evidence of P.W. 4, Vincent Soares and P.W. 5, Costao Fernandes, regarding the number of boxes that were found in the trunk compartment of the Contessa Car. P.W. 4, Vincent Soares, had stated that two boxes had been removed whereas according to P.W. 5, Costao Fernandes, there were four boxes. (Emphasis added) 52. A Special Leave Petition from this order was dismissed. Therefore, with material that is no better or worse than the CESTAT had, the Supreme Court in the Customs Case Special Leave Petition did not arrive at a conclusion that the Customs Case had any merit, or that the discharge of the accused, Churchill, was unwarranted. That order of the High Court has attained finality. Its findings are directly relatable to the ones raised here; and yet the CESTAT chose to ignore them. Almost exactly the same considerations as arose in the Customs Case arise here; and there is today no better answer than there was in 2003. 53. In Quinn v Leathem Lord Halsbury [1901] AC 495; See also The State of Orissa v Sudhansu S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litical prominence should be only the elite? Or that no tea-vendor may so aspire? We dare say the CESTAT member who wrote this would be rather more reticent today. That statement says far more about the writer s complete lack of understanding of the fundamentals of a democratic republic governed by the rule of law than he imagines. 59. It does not end there. Fernandes is described as a lone ranger and a one man army . This is law, not a film script. Then, in paragraph 8, a conclusion is reached before the facts are marshalled. And then this, in paragraph 10: 10. Costao intercepted the car at Varca village, jumped into the front seat and requested the driver, Alvernaz, to stop the vehicle (such politeness). The latter did not oblige, there was a scuffle, a knife was pulled by Alvernaz and in the ensuing struggle, Alvernaz was grievously hurt. The officer took out the ignition key, opened the dickey, managed to open one of the battery type boxes, pulled out a gold biscuit, showed it to the crowd which had gathered there by then and requested for help and for some water. Neither of which was given. So he threw the gold biscuit back into the dickey, locked it, deflated the ty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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