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TMI Blog2024 (11) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... mported goods belonging to third party into India from China in lieu of a 'carrying fee'. The goods in question would be directly procured from China based suppliers by the 'actual' buyers / shopkeepers, who would then contact such 'carrying' agents to transport the goods to India. In order to allegedly mask their own involvement and higher transaction value of such goods the actual Indian buyer in collusion with the carrying agent and certain CHAs would allegedly use fake / bogus IECs to import these goods. It has also alleged that such traders / importers have also opened companies in Hong Kong in the name of Indian nationals as front firms only and these front firms are being shown as suppliers of goods to India in order to create a middle buyer for routing funds to actual suppliers. Show Cause Notice dated 29.12.2023 was issued to various firms / traders including the appellant alleging that he is the beneficial owner of 50% of the goods imported by four firms and beneficial owner of 25% of the goods imported by seven other firms. For goods imported under 2243 Bills of Entry, differential duties of customs were sought to be recovered from the appellant and other co-noticees alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed in the impugned SCN. In the present case, Section 122A of the Act makes the principles of natural justice applicable to the adjudication proceeding undertaken under the Customs Act. The proceedings, which are conducted before the adjudicating authority, had the trappings of a court, and therefore, the Appellant is necessarily conferred with the right to cross-examine all such persons on whose statement(s)/evidence the Department has sought to place reliance. The Ld. Counsel relied upon the following judgments, Ayaaubkhan Noorkhan Pathan Vs. The State of Maharashtra & Ors., Civil Appeal NO.7728/2012 decided on 08.11.2012 by the Supreme Court; Mehar Singh Vs. Appellate Board Foreign Exchange, Crl. A. 109/1975; Central Govt. represented by the Director, Enforcement Directorate, Foreign Exchange Regulation Act, New Delhi Vs. Fr. Alfred James Fernandez, AIR 1987 Kerala 179; Natwar Singh Vs. Director of Enforcement, 2010 (13) SCC 255; State of Kerala Vs. K.T. Shaduli Grocery Dealer etc. (1977) 2 SCC 777; S.C.Girotra Vs. United Commercial Bank (UCO Bank) and Others, 1995 Supp (3) SCC 212. Munna Lal Vs the State of Uttar Pradesh, (Supreme Court); Delhi Transport Corporation Vs DTC M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries v. CCE, [2015 (324) E.L.T. 641 (S.C.)], wherein he stated that the Hon'ble Supreme Court held that not allowing an assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of such witnesses were made the basis of the impugned order was a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. He stated that it is true that the Criminal Procedure Code and the Indian Evidence Act in term are not applicable to the adjudication proceeding. But then, it is settled law that the Fundamental Principles of criminal jurisprudence are applicable to adjudication proceedings. He stated that in the case of Kanungo & Company (relied upon by the Ld. AR) it was held that, the principles of natural justice do not require that in matters governed by the provisions of the Sea Customs Act, 1878 read with the provisions of the Imports and Exports (Control) Act, 1947, the persons who have given information should be examined in presence of the petitioner or should be allowed to be cross-examined by them on the statements made before the customs authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in Sections 124 and 122 of the Customs Act. The appellant has made the cross-examination of six I.Os and one another as a condition before furnishing a reply to the Show cause Notice. It is felt that such an approach is erroneous as under the Customs law, no such liberty has been granted to any Noticee. Grant of cross-examination is a reasoned-out discretion of adjudicating authority to ensure and balance the issue by weighing the merits and evidence on both sides so that no mis-carriage of justice is occasioned while principles of natural justice are substantially complied with. A view could be taken by the adjudicating authority only after all the facets of the case and at least a preliminary defence is presented in a balanced form. The adjudicating authority would be incapacitated in taking a balanced view without a preliminary reply to the SCN being placed on record by the Noticee. He referred to the following judgments in favour of his stand. Hon'ble High Court Allahabad in the case of Kanpur Cigarettes Ltd. Versus Union of India as reported in 2016 (344) E.L.T. 82 (All.); Tribunal (Pr. Bench), in the case of Miraj Products Pvt. Ltd. Versus Commr. of C. Ex. & Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs, Kanpur [2006 (194) E.L.T. 290 (Tri.-Del.)]; Onida Saka Ltd. v/s Commissioner of Central Excise, Noida [2011 (267) E.L.T. 101 (Tri.Del)]; Union of India Vs. Rajendra Bajaj [2010 (253) E.L.T.165 (Bom.). The Ld. AR stated that since no statement of Investigating / Customs Officer has been recorded in the said case, seeking their cross examination is not permissible in terms of clear language of section 138B(1) of the Customs Act. In fact, cross examination of officers should not be permitted as such officers do not contribute to judicial determination of the issue at hand but only investigate a matter, which is later put to a judicial test. He drew attention to Para 3 of the Statement of Facts and Para E of the Grounds of Appeal, where he felt sweeping allegations have been made against the investigation. It is felt that the petitioner cannot make out a case of cross-examination by tainting the investigation and being silent about his own role. Any such cross-examination must not be permitted as it would amount to intimidation of the investigation, which has its own undesired consequences. Furter such tactics are used to delay the adjudication and must not be permitted. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad reported as 2006 (198) ELT 514 (Tri-Bang); Commissioner of Customs and Central Excise Vs Azad Engg Works, reported as 2006 (2002) ELT 423; A.L Jalaludeen Vs Enforcement Director reported as 2010 (261) ELT 84 (Mad HC); Kanungo & Co. v. Collector, Customs, Calcutta, AIR 1972 SC 2136 = 1983 (13) E.L.T. 1486 (S.C.); Poddar Tyres (Pvt) Ltd. v. Commissioner - 2000 (126) E.L.T. 737; Kumar Jagdish Ch. Sinha Vs Collector - 2000 (124) E.L.T. 118 (Cal H.C.); A.K. Hanbeen Mohamed vs. Collector - 2000 (125) E.L.T. 173 (Mad HC); Shivom Ply N-Wood Pvt. Ltd. Vs Commissioner of Customs & Central Excise, Aurangabad- 2004 (177) E.L.T 1150 (Tri. -Mumbai). The Ld. Counsel further commented on the judgments cited by the appellant and found that they were distinguishable on facts and substance or did not support the appellants case against revenue. He stated that, Abdul Khader Vs CESTAT, Bangalore - 2016 (336) ELT 389 (Ker.); Vedanta Ltd. Vs. CC, Tuticorin -2018 (364) ELT 573 (Tri.-Chennai); Ganpat Rai Shri Ram & Co. 2020 (371) ELT 601 (Tri.-Kolkata); Ranjeev Steels Pvt. Ltd. Vs. Commissioner of C. Ex. & ST., Ludhiana - 2021 (375) ELT 348 (Tri.-Chan.); Dhirajlal Amritlal Mehta - 1982 (10) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority, iv) cross-examination of Investigation/Customs officers and co-noticees involving legal complications aimed at defeating the flow of justice, and v) higher judicial fora have repeatedly emphasized that there is no denial of natural justice when cross-examination is denied and circumstances do not warrant the same. Further it appeared to him that the request for cross-examination appears to be a ploy only to disrupt the adjudication proceedings. Huge revenue of almost a thousand Crore Rupees is involved and the adjudication must not be throttled. It is possible that the same appellants would first delay and disrupt adjudication proceedings and later cite a delay in adjudication and invoke Section 28(9) of the Customs Act to evade the interest of justice. He stated that the Ld. Adjudicating Authority has rightly seen through the design of the appellants in scuttling justice. He hence prayed that the CMP be dismissed and the decision of the Adjudicating Authority, denying the cross-examination of the 6 I.Os and 1 witness be sustained. 4. Heard the Ld. Counsel for the appellant and the Ld. AR for revenue representing the contesting parties. I have also perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Bench of the Hon'ble CESTAT, New Delhi relying upon the decision of the Hon'ble Apex Court in Surjeet Singh Chhabra case vs UOI reported in 1997 (89) ELT 646 (SC), has held that admission made by an assessee binds him and, therefore, failure to give him the opportunity to cross-examine the witnesses was not violative of principles of natural justice. It was specifically held that principles of natural justice do not require that in matters like this, persons who had given information should be allowed to be cross-examined by the co-noticees on the statements made before the Customs authorities. If cross-examination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offence 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 other refusing to be cross-examined by resorting to Article 20(3) of the Constitution and simultaneously claiming cross-examination of other co- noticees. 3. Further, the Hon'ble Apex Court in Kanungo & Co. was followed by the Calcutta High Court in Tap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. The proceedings, which are conducted before the adjudicating authority, had the trappings of a court, and therefore, the Appellant is necessarily conferred with the right to cross-examine all such persons on whose statement(s)/evidence the Department has sought to place reliance. (iv) The Appellant cannot be compelled to reveal his defense strategy prematurely through a reply without having the benefit of cross- examination. The information obtained through cross-examination may substantially alter the nature and scope of the reply. Forcing a reply before cross-examination would unfairly advantage the Department REVENUE (v) Filing of reply to the SCN is not dependent upon Cross examination. The appellants have no vested right in seeking cross-examination. Cross examination not expressly mentioned in Sections 124 and 122 of the Customs Act. (vi) Cross examination can be permitted in the interest of justice, but for this the Adjudicating Authority is required to examine whether cross-examination is an absolute necessity or whether it is a frivolous ploy to unnecessarily protract the litigation. (vii) Statements recorded under Section 108 of Customs Act are voluntary/confessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Collector of Customs, Calcutta vs. Sitaram Agarwala and Another AIR 1966 SC 955 considered the scheme of Sea Customs Act, 1878 as contained in Section 167. . . . This is what the Court had to declare in regard to the aforesaid penalties : "Then comes Ch. XVI dealing with offenses and penalties. Offence enumerated in Ch. XVI are of two kinds; first there are contraventions of the Act and rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by them. These may be compendiously called customs offences. Besides these there are criminal offences which are dealt with by Magistrates and which result in conviction and sentence of imprisonment and/or fine. These two kinds of offences have been created to ensure that no fraud is committed in the matter of payment of duty and also to ensure that there is no smuggling of goods, without payment of duty or in defiance of any prohibition or restriction imposed under Ch. IV of the Act." Thus, this Court has held that there are custom offences and criminal offences. The criminal offences were dealt with by the Magistrate which may culminate in conviction and imposition of imprisonment and or fine. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. (emphasis added) This being so the appellants averment that this investigation may result in prosecution before the Magistrate's Court in which case, persons may be arrayed as "accused" and the persons whose statements are relied upon may be shown in the list of witnesses, has to be understood in the sense that in such an eventuality the procedure in the Magistrates Court can be availed of, to defend their case. When two separate statutes are involved, recourse cannot be had to one statute to seek relief for the procedural requirements of another statute. As stated in Radheshyam Kejriwal (supra), the finding against the person in the adjudication proceeding is not binding on the proceeding for criminal prosecution. This being so, any attempt to import the provisions of the Evidence Act or Cr.P.C into the Customs Act, 1962 fails as the Customs Act is a complete code and all procedures are to be determined as stated therein. 12. I find that the appeal has been filed in an area pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he situation in this case. 16. In Narayan Govind Gavate Vs State of Maharashtra, (1977) 1 SCC 133, the Hon'ble Supreme Court observed :- "10. It is true that, in such cases, the formation of an opinion is a subjective matter, as held by this Court repeatedly with regard to situations in which administrative authorities have to form certain opinions before taking actions they are empowered to take. They are expected to know better the difference between a right or wrong opinion than courts could ordinarily on such matters. Nevertheless, that opinion has to be based upon some relevant materials in order to pass the test which courts do impose. That test basically is: Was the authority concerned acting within the scope of its powers or in the sphere where its opinion and discretion must be permitted to have full play? Once the court comes to the conclusion that the authority concerned was acting within the scope of its powers and had some material, however meagre, on which it could reasonably base its opinion, the courts should not and will not interfere. There might, however, be cases in which the power is exercised in such an obviously arbitrary or perverse fashion, without regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission of an offence. (emphasis added) In such a situation no de facto prejudice has been shown in the present proceedings. 18. Further the appellant cannot direct the manner in which the investigation should be conducted by an investigative agency as it would tantamount to interference with the functioning of the agency. Any facts noticed regarding the efficacy and integrity of the investigation conducted can be brought out in their reply to the SCN, so as to seek a favorable order. 19. The Hon'ble Supreme Court of India in Surjeet Singh Chhabra vs Union Of India & Ors [AIR 1997 SUPREME COURT 2560 / (1997) 89 ELT 646] held that; ". . . But in view of confession 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination of the impugned persons, when no statement has been recorded from the officers incriminating the appellant and the appellant had himself made a confessional statement that is valid evidence. It cannot be held that the decision was unreasonably or capriciously or vague etc. In fact admission is the best piece of substantive evidence that can be relied upon. [See United India Insurance Co. Ltd. and Anr. Vs Samir Chandra Chaudhary, [(2005) 5 SCC 784]]. Though not conclusive, it is decisive of the matter, unless shown to be obtained by inducement, threat, or promise or is proved erroneous. 20. The Adjudicating Authority in his letter dated 05/07/2024 has given a very reasoned reply after application of mind as to why cross-examination of the 7 persons requested by the appellant is being denied. In such circumstances to read a statutory right to cross-examine an individual, into Section 122A of the Customs Act would amount to a "unnatural expansion of natural justice" and to legislate into the section what the legislature itself has left out, which is impermissible. The exercise of discretion by the Adjudicating Authority has been shown to be speaking, principled and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attached to the decision of an Adjudicating Authority, who is in a position to examine the situation and assess the credibility of issues from his own observation. In V. Ramana v. S.P. SRTC and Others [(2005) 7 SCC 338], the Apex Court upon referring to a large number of decisions held : "The common thread running through in all these decisions is that the Court should not interfere with the administrator's decision unless it was illogical or suffers from procedural impropriety or was shocking to the conscience of the Court, in the sense that it was in defiance of logic or moral standards. In view of what has been stated in the Wednesbury's case (supra) the Court would not go into the correctness of the choice made by the administrator open to him and the Court should not substitute its decision to that of the administrator. The scope of judicial review is limited to the deficiency in decision-making process and not the decision." In Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81 where under the Hon'ble Supreme Court observed as under: "38....It has been cautioned that Constitutional Courts are expected to exercise restraint in interferin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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