TMI Blog2023 (9) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... t holding any enquiry, they being not informed of the charges against them nor given any opportunity of being heard in respect of such charges. LAKSHMAN EXPORTS LIMITED VERSUS COLLECTOR OF CENTRAL EXCISE [ 2002 (4) TMI 66 - SC ORDER] has also recognized that, an assessee should be allowed to cross examine the representatives of the prosecution to establish that the goods in question had been accounted for in their books of accounts and appropriate amount of Central Excise had been paid, in proceedings under the Central Excise Act, 1944. The contours of natural justice in the context of seizure of a vehicle by the Customs Department under the provisions of the Customs Act, 1962 had come up on consideration in TAPAN KUMAR BISWAS VERSUS UNION OF INDIA (UOI) AND ORS [ 1995 (7) TMI 429 - CALCUTTA HIGH COURT] . In the facts of that case, the writ petitioner had neither filed show-cause nor took any steps to inspect the documents. In such context, request for cross-examination had been turned down. It had observed that, Section 124 of the Customs Act, 1962 itself provides for the extent of application of the principles of natural justice. In the facts of that case, it had held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross-examined by the appellants - appeal disposed off. - HON BLE JUSTICE DEBANGSU BASAK AND HON BLE JUSTICE MD. SHABBAR RASHIDI For the Petitioner in FEA 2 of 2009 FEA 3 of 2009 : Mr. Farook Razack, Sr. Adv. Mr. Sohail Haque, Adv. Mr. Jaydeb Ghorai, Adv. Mr. Diptesh Ghorai, Adv. For the Petitioner in FEA 25 of 2009 : Mr. Sudhir Kumar Mehta, Adv. For Enforcement Directorate in FEA 2 of 2009, FEA 3 of 2009 FEA 25 of 2009: Mr. Vipul Kundalia, Adv. Mr. Arijit Chakrabarti, Adv. Mr. Anurag Roy, Adv. Mr. Deepak Sharma, Adv. JUDGMENT DEBANGSU BASAK, J. :- 1. Three appeals have been heard analogously as they involve similar issues. 2. Primarily, the issue which has fallen for consideration in the three appeals is whether the adjudicating authority was right in refusing an opportunity of cross-examination of natural persons whose statements recorded under Section 108 of the Customs Act, 1962 had been referred to and relied upon in the adjudication order, or not. 3. Learned Senior Advocate appearing for the appellants in FEA 2 of 2009 and FEA 3 of 2009 hereinafter referred to as the first set of appeal, has submitted that, the appellants p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Senior Advocate appearing for the appellants in the first set of appeal has submitted that, proceedings under the Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Exchange Regulation Act, 1973 (FERA) are quasi criminal in nature. He has relied upon 2008 Volume 16 Supreme Court Cases 537 (Vinod Solanki vs. Union of India) and an unreported decision dated March 3, 2010 passed in FEA No. 15 of 2008 (Sushil Kumar Sharma Vs. Special Director, Enforce Directorate). 7. Learned Senior Advocate appearing for the appellants in the first set of appeal has submitted that, the provisions of Section 138B of the Customs Act, 1962 are not applicable to a proceeding under FERA. He has contended that, conditions enumerated in Section 138B of the Customs Act, 1972 are absent in the facts and circumstances of the present case. He has relied upon ILR 2013 III Del 2269 (Basudev Garg vs. Commissioner of Customs), 2016 SCC OnLine Del 1236 (HIM Logistics Pvt Ltd vs. The Principal Commissioner of Customs), 2017 SCC OnLine KER 21780 (Krishna Brothers and Ors. Vs. Commissioner of Customs) in support of his contention. 8. Learned Senior Advocate appearing for the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in the appeal with regard thereto, learned Advocate for the appellant in the 2nd set of appeal has contended that, the right of cross-examination has been recognised therein. Various High Courts have held the same views. In support of such contention, he has relied upon 2018 (361) ELT 90 (M/s Ambika International vs. Union of India and Another), 2019 (367) ELT 181 (Ummer Abdulla vs. Commissioner of Central Excise), 2018 (362) ELT 385 (Kirit Shrimankar Vs. Commissioner of CGST Central Excise and Another), 2013 (294) ELT 353 (Basudev Garg vs. Commissioner of Customs). 14. Learned Advocate appearing for the Enforcement Directorate (ED) has referred to the facts of the case in respect of the first set of appeals. He has contended that the prayer for cross-examination was dealt with by the Tribunal in its order dated October 27, 2008. He has pointed out that, Mr. Nirmal Kumar Karmakar was asked to appear before the adjudicating officer for cross-examination but he did not appear and being a noticee in the proceeding he remained absent in such proceedings and did not contest the same. He has pointed out that, the Tribunal considered 1997 Supreme Court Cases (508) (Surje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Limited versus Collector of Central Excise) and contended that, the right of cross-examination can be taken away in exceptional circumstances. This view has been upheld by the Supreme Court in 2023 (384) ELT 239 SC (GTC Industries Ltd versus Collector of Central Excise). 20. Learned Advocate appearing for the ED has contended that, the right of cross-examination cannot be considered as a mandate in a quasi-judicial proceeding under FERA and could depend upon facts and circumstances of each case. He has contended that, unless the noticee demonstrates prejudice suffered by him for want of the opportunity of cross-examination, question of violation of natural justice does not arise. In support of such contention, he has relied upon 1973 Volume 2 Supreme Court Cases 438 (Kanungo Co versus Collector of Customs and others), 1995 SCC OnLine Cal 485 (Tapan Kumar Biswas versus Union of India and others), 1997 Volume 1 Supreme Court Cases 508 (Surjeet Singh Chhabra versus Union of India and others), 2013 Volume 9 Supreme Court Cases 549 (Telstar Travels Private Ltd and Others versus ED), 2014 SCC OnLine Bom 791 (Patel Engineering Ltd. Vs. Union of India and Another) and 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority or body of men, not coming within the definition of State in Article 12, is charged with the duty of deciding a matter. In such a case, the principles of natural justice require that it must decide such matter fairly and impartially. 96. The rule of natural justice with which we are concerned in these appeals and writ petitions, namely, the audi alteram partem rule, in its fullest amplitude means that a person against whom an order to his prejudice may be passed should be informed of the allegations and charges against him, be given an opportunity of submitting his explanation thereto, have the right to know the evidence, both oral or documentary, by which the matter is proposed to be decided against him, and to inspect the documents which are relied upon for the purpose of being used against him, to have the witnesses who are to give evidence against him examined in his presence and have the right to cross-examine them, and to lead his own evidence, both oral and documentary, in his defence . .. 23. Lakshman Exports Ltd (supra) has also recognized that, an assessee should be allowed to cross examine the representatives of the prosecution to establish that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d company (supra) has dealt with the provisions of Sea Customs Act, 1878 read with Section 3 (2) of the Imports and Exports (Control) Act, 1947. In the context of seizure of goods under the Sea Customs Act, 1878 it has observed that the principles of natural justice do not require that in a matter of seizure of goods under such Act, the persons who gave information should be examined in the presence of the person from whom seizure was made, or should be allowed to be cross-examined by him on the statements made before the Customs Authorities. Nothing has been placed before us to suggest that, the provisions of the seizure procedure under the Sea Customs Act, 1878 and the proceedings under challenge are pari materia. 27. In Debasis Das and others (supra) the Supreme Court has dwelt upon the principles of natural justice in the context of a disciplinary proceedings. It has held that, although post decisional hearing may not be a substitute for a pre-decisional hearing, in given circumstances, post decisional hearing may be substantial compliance of the principles of natural justice particularly when, the delinquent was unable to establish any prejudice caused by a post decisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f principles of natural justice. 32. Mohtesham Mohd. Ismail (supra) has considered proceedings under FERA. It has held that, an adjudicating authority acting under the provisions of FERA exercises quasi-judicial power and discharges judicial functions. It has also observed that an adjudicating authority although an officer of the Central Government, should act as an impartial Tribunal. 33. Haricharan Kurmi and Anr. (supra) has observed that, judicial decisions consistently held that a confession cannot be treated as an evidence which is substantive evidence against a co-accused person. It has noted that, a confession of a co-accused is evidence of a very weak type. It does not come within the definition of evidence as contained in Section 3 of the Evidence Act. It has noted that Section 30 of the Evidence Act, however provides that the Court may take a confession into consideration and thereby act upon it. It has observed that, confession is only one element in the consideration of all the facts proved the case. It has observed that, though confession may be regarded as evidence in that generic sense because of the provisions of Section 30 of the Evidence Act, the fact remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under Section 138-B of the Customs Act. Even otherwise such an evidence is considered to be of weak nature. (See Gopal Govind Chogale v. CCE [(1985) 2 Bom CR 499 : 1984 Mah LR 890] , Bom CR paras 12-14.) 35. Bal Mukund and Others (supra) has considered the permissibility of conviction based on confessional statement of co-accused. It has held that, confessional statement of co-accused cannot be used as substantive evidence against other co-accused in the absence of independent corroboration. 36. Surinder Kumar Khanna (supra) has noted that, the issue whether statement recorded under Section 67 of the Narcotic Drugs and Psychotropic Substances Act, 1985 can be treated as a confessional statement is pending before the Larger Bench. It has observed that even if such statements are treated as confessional statements certain additional features are required to be established before being relied on against co-accused. It has observed that, confession cannot be treated as evidence against co-accused. Confessional statement of co-accused cannot by itself be treated as substantive piece of evidence against another co-accused and can, at best, be used or utilized in order to len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Managing Director (supra) has noted the observations of the Division Bench of our High Court rendered in Jha Shipping Agency (supra). In the facts of that case, it has observed that refusal on the part of the adjudicating authority to permit cross-examination of the experts had violated the principles of natural justice. 43. A Division Bench of our Court in Sushil Kumar Sharma (supra) has considered the issue of natural justice in the context of FEMA. It has observed that, imposition of penalty on persons under FERA and FEMA is a quasi-criminal proceeding. It has also observed that, in order to charge a person penalty, authority concerned must come to a definite fact finding on a preponderance of probability if not beyond reasonable doubt that he had contravened the statutory provision. 44. The Delhi High Court in Basudev Garg (supra) had set aside the impugned order and remanded for fresh adjudication in view of the breach of principles of natural justice. The Delhi High Court in HIM Logistic Pvt Ltd (supra) had set aside the order of the adjudicating authority for not allowing cross-examination of the prosecution witnesses. 45. The Kerala High Court in Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. In Sadguru Forwarders Private Limited (supra) the Single Bench noticing that requests for cross-examination of one of the prosecution witnesses was denied in the adjudication process and no reason for such denial being given in the order of adjudication, had set aside the order of adjudication and permitted the authorities from completing the adjudicating process in accordance with law. The appeal court had held that, the noticee has a right of cross-examination of the prosecution witnesses. 49. The Appeal Court, in Shri Himadri Chakraborty (supra) where the correctness of Sampad Narayan Mukherjee (supra) was questioned has observed that, In the event, the adjudicating authority is of the view that the statement under Section 108 of the Act has to be relied upon then it goes without saying that the respondent shall be entitled to a full-fledged opportunity of cross-examining such of those persons from whom statements under Section 108 of the Act have been recorded. 50. Principles of natural justice have two primary facets, namely, no one should be the judge of his cause and hear the other side. The issues that have been raised in the three appeals pivot aroun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ERA. In arriving at the decision dated January 31, 2005 an adjudicating authority had taken into account document seized on March 14, 1997 from one Mr. Nirmal Kumar Karmakar who admitted payment of money to the appellants in FEA 2 of 2009. An appeal had been carried against the order in original dated January 31, 2005 which was dismissed on October 27, 2008. 55. At both the stages, the appellant had prayed for cross-examination of Mr. Nirmal Kumar Karmakar. The adjudicating authority had rejected such prayer on the ground that, the documents seized from the appellant had corroborated the statements made by Mr. Nirmal Kumar Karmakar. The appellant authority had rejected the prayer for cross-examination by placing reliance on Surjeet Singh Chhabra (supra) and alluding to the fact that although Mr. Nirmal Kumar Karmakar was asked to appear before the adjudicating officer for cross-examination, he did not appear and being a co-noticee in the proceeding he had remained absent from contesting his case before the adjudicating officer. 56. In the adjudication proceedings, the prosecution had relied upon statement made by Mr. Nirmal Kumar Karmakar to bring home the charges as against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uasi criminal nature of the proceedings. Having introduced the statement of Mr. Nirmal Kumar Karmakar and documents seized from him in evidence in the adjudication proceedings, it was incumbent upon the Enforcement Directorate to allow cross-examination of Mr. Nirmal Kumar Karmakar. Not having done so, the proceedings both at the order in original stage as also in the appellate stage have been vitiated by the breach of principles of natural justice. 59. It has been contended that, the appellant in FEA 2 of 2009 has not established any prejudice by the denial of the right of cross-examination. Right of cross-examination has been recognized by judicial pronouncements noted above in proceedings under the FERA which results in an adjudication imposing consequences. In FEA 2 of 2009 the appellant had faced penalties imposed for contraventions of Section 9 (1) (b) and (d) of FERA which had been upheld by the appellate authority. Appellant can be said to be prejudiced for not having been granted the right of cross-examination in as much as the appellant lost the opportunity to establish the truthfulness of the statement made by Mr. Nirmal Kumar Karmakar and the veracity of documents se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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