Custom, Excise & Service Tax Tribunal
Malaram Bishnoi vs Commissioner Of Customs Air ... on 27 November, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Customs Appeal No.40600/2024
(Arising out of Letter dated 5.7.2024 from the office of the Principal
Commissioner of Customs, Chennai - VII Commissionerate, Chennai)
Malaram Bishnoi Appellant
Flat No. 102, 1st Floor, Meru Tower
Tardeo, Mumbai - 400 034.
Vs.
Commissioner of Customs Respondent
Chennai VIII Commissionerate Custom House, 60, Rajaji Salai Chennai - 600 001.
APPEARANCE:
Shri Anil Balani, Advocate for the Appellant Shri Sanjay Kakkar, Authorized Representative for the respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) FINAL ORDER NO. 41505/2024 Date of Hearing: 10.10.2024 Date of Decision: 27.11.2024 The appeal filed by the appellant Shri Malaram Bishnoi is against rejection of cross-examination of six DRI officers and one co-noticee by the competent authority.
2. Facts in brief are that the appellant is alleged to have been an importer / beneficial owner of goods imported by different traders based in Mumbai. The goods include mobile phone accessories, mobile parts and other miscellaneous electronic goods imported from China and they were allegedly grossly undervalued for evading customs duty. These traders with their shops based out of Mumbai were allegedly also actively engaged in 'carrying' business besides import of undervalued 2 C/40600/2024 goods for own consumption. 'Carrying business' is statedly a local trade term loosely translated as functioning in the capacity of an agent for the transport of imported 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 along with interest. Penalties were also sought to be imposed on the appellant / co-noticees. The appellant in his interim reply dated 8.2.2024 denied the allegations and sought for cross-examination of the 6 DRI officers who investigated the case and for cross-examining one other from a Clearing and Forwarding Agency who had printouts of electronic documents with Shri Jamal and Sheik. The department vide their 3 C/40600/2024 communication which is impugned in this appeal has rejected the request for cross-examination. Hence this appeal.
3. Shri Anil Balani, Ld. Counsel appeared for the appellant and Shri Sanjay Kakkar, Ld. Authorized Representative (AR) appeared for the respondent-department. Since the hearing was held in the virtual mode on the request of the representatives, both parties were allowed to file a written summary of the submissions and arguments made during the hearing. The paragraphs below capture the essence of the oral and written pleadings dated 17/10/24 (appellant) and dated 14/10/2024 (revenue).
3.1 The Ld. counsel for the appellant submitted that in the present case, 39 persons have been arrayed as accused out of which 2 accused viz., Shri Sheikh and Jamal are reported to be absconding. During the investigation of the case, statements under Section 108 of Customs Act, 1962 were recorded by the DRI Officers from many persons. Such 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. The failure of DRI to trace the said Shri Sheikh and Jamal raises significant doubts regarding the efficacy and integrity of the investigation conducted in the present case. In Mattox v. United States, the Supreme Court held that under no circumstances shall a criminal defendant be deprived of the right to subject prosecution witnesses to the ordeal of a cross-examination. In Pointer v. Texas, the Court stated: "It cannot seriously be doubted at this late date that the right of cross-examination is included in the right of an accused in a criminal case to confront the witnesses against him." Hence the Ld. 4 C/40600/2024 Counsel submits that they were seeking the opportunity for cross- examination of the DRI Officers to ascertain whether sincere efforts were taken by the Investigating Officers to trace out the said 2 persons were not disclosed 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 Mazdoor Union (Supreme Court); Maneka Gandhi Vs Union of India (Supreme Court); State of M.P. Vs Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623; Union of India Vs T.R. Varma, AIR 1957 SC 882; Meenglas Tea Estate v. Workmen, AIR 1963 SC 1719; M/s. Kesoram Cotton Mills Ltd. Vs Gangadhar 5 C/40600/2024 & Ors., AIR 1964 SC 708; New India Assurance Company Ltd Vs Nusli Neville Wadia and Anr., AIR 2008 SC 876; Rachpal Singh & Ors. Vs Gurmit Singh & Ors., AIR 2009 SC 2448; Biecco Lawrie & Anr. Vs State of West Bengal & Anr., AIR 2010 SC 142; and State of Uttar Pradesh Vs Saroj Kumar Sinha, AIR 2010 SC 3131); Lakshman Exports Ltd. Vs Collector of Central Excise, (2005) 10 SCC 634; New India Assurance Company Ltd., Vs Nusli Neville Wadia & Anr., AIR 2008 SC 876; K.L. Tripathi Vs State Bank of India & Ors., AIR 1984 SC 273; Union of India Vs P.K. Roy, AIR 1968 SC 850; Channabasappa Basappa Happali Vs State of Mysore, AIR 1972 SC 32; Transmission Corpn. of A.P. Ltd. Vs Sri Rama Krishna Rice Mill, AIR 2006 SC 1445; Rajiv Arora Vs Union of India & Ors., AIR 2009 SC 1100; Commissioner of Central Excise, Allahabad Vs Govind Mills Limited' - 2013 (8) TMI 649
- ALLAHABAD HIGH COURT; Ravindra Prakash Vs Director General, DRI, NEW DELHI [2018 (359) E.L.T. 304 (Bom.); Ramakrishna Agarwala Vs Collector of Customs and Central Excise (1981 ELT page 217); Vaidyanath Agency 1981 ELT page 94 (CBEC); State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623; Union of India Vs T.R. Varma, AIR 1957 SC 882; Meenglas Tea Estate v. Workmen, AIR 1963 SC 1719; M/s. Kesoram Cotton Mills Ltd. v. Gangadhar & Ors., AIR 1964 SC 708; New India Assurance Company Ltd . v . Nusli Neville Wadia and Anr., AIR 2008 SC 876; Rachpal Singh & Ors. v. Gurmit Singh & Ors., AIR 2009 SC 2448; Biecco Lawrie & Anr. v. State of West Bengal & Anr., AIR 2010 SC 142; State of Uttar Pradesh v. Saroj Kumar Sinha, AIR 2010 SC 3131; Lakshman Exports Ltd. v. 6
C/40600/2024 Collector of Central Excise, (2005) 10 SCC 634; A.K. Kraipak and Ors. v. Union of India. The Ld. Counsel further stated that section 137 and 138 of Evidence Act, clearly show that cross- examination is as essential as examination-in-chief for eliciting from a witness material which is to constitute evidence. He referred to ('67) 9 W. E. 587, Gorachand Sircar v. Earn Narain at page 588 in this regard. He referred to the Supreme Court's judgment in Andaman Timber Industries 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 authorities. He referred to the judgment of Hon'ble Supreme Court in Ayaaubkhan Noorkhan Pathan Vs. The State of Maharashtra and others being an order 7 C/40600/2024 dated 08.11.2012 in Civil Appeal No.7728 of 2012; Vulcan Industrial Engineering Co. Ltd., Vs. Union of India [2013 (297) E.L.T. 190 (Guj.)]; Veetrag Enterprises Vs. Commr. of Cus. (Seaport Exports), Chennai reported in 2015 (330) E.L.T. 74 (Mad.); P. Chandra Kumar Vs Commissioner of Customs (P), Calcutta - 2000 (116) E.L.T. 101 (Tribunal); in support of personal hearing and cross-examination pleas. In the facts and circumstances of the case, cross-examination of the various persons asked for by the Appellant is necessary for him to prove his case adequately. The Ld. Counsel stated that the Appellant's Reply to the Show Cause Notice has been withheld pending decision for the cross-examination of DRI Officers and witnesses. This sequencing is crucial as the evidence obtained through cross-examination will form an integral part of the defense submission. The right to effectively defend the Appellant includes the right to gather all relevant evidence before formulating a comprehensive reply. 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 and prejudice the Appellant's case. In Dhirajlal Amritlal Mehta vs UOI [1982 (10) E.L.T. 273 (Bom.)], it was emphasized that cross- examination is crucial for testing the veracity of evidence. In the case of Meenakshi Re-rollers case [2010 (249) ELT255 (Tri.-Mum.)] upheld the importance of proper sequence in adjudication proceedings. He prayed that that the cross-examination of DRI Officers and witnesses be permitted before requiring the submission of reply to the 8 C/40600/2024 Show Cause Notice. This sequence will ensure a fair hearing and complete presentation of our case. The reply will be filed promptly after the completion of cross-examination. This approach will actually expedite the proceedings by ensuring a focused and complete reply based on all available evidence. He hence prayed that their appeal may be allowed.
3.2 The Ld. AR stated per contra on behalf of Revenue that cross- examination is not expressly mentioned 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 Tax, Udaipur reported in 2019 (369) E.L.T. 1147 (Tri. - Del.); Hon'ble High Court Madras in the case of KIBS Hosiery Mills P. Ltd. Versus Spl. 9
C/40600/2024 Dir., Dte. of Enforcement, New Delhi [W.P. No. 18857 of 2010, decided on 09.12.2014], reported in 2016 (344) E.L.T. 24 (Mad.). He further stated that the source of cross examination lies in the statute in Section 138B of the Customs Act. Sub-section 138(B)(2) above uses the words "shall so far as may be" which suggests the primacy and desirability of exercise of power for permitting cross-examination in the interest of justice. However, it is felt that this exercise of power is not indiscriminate and is to be exercised according to the merits, facts and circumstances of each case in the interest of justice on both sides. It is thus explicit that cross-examination is not a mandatory requirement and the discretion has to be applied cautiously. The relevance of cross examination, the person proposed to be cross-examined, the context, etc. are all important factors that weigh on the mind of the adjudicating authority to examine the issue of cross-examination in taxation disputes, which are civil in nature and preponderance of probability defines the benchmark for appreciation of evidence, distinct from the stringent application of Evidence Act in criminal cases. Statements recorded under Section 108 of Customs Act are voluntary/ confessional in nature. The statement recorded from the appellant, Sh. Malaram Bishnoi under Section 108 of the Customs Act, 1962, contain details, which were exclusively known to him only and thus the statement is to be construed as voluntary. Though Para 10.2 at Page 42 of the Appeal Paper-Book mentions about the retraction of the statement by the appellant-petitioner at the advice of his Advocate, it is to be noted that there is a distinction between retraction and coercion. At no point has any threat or coercion in obtaining the statement been brought on record. Considering that the statement under Section 108 of the 10 C/40600/2024 Customs Act before a Customs Officer is distinct from a statement before a police officer, the request for denial of cross-examination of the Noticee-petitioner, who has made voluntary statement during investigation is justified and supported by the following case laws, Surjeet Singh Chhabra v. UOI, reported in 1997 (89) E.L.T. 646 (S.C.)]; Jagdish Shanker Trivedi Vs. Commissioner 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. He relied on the following judgments in this regard. N.S. Mahesh Versus Commissioner of Customs, Cochin, 2016 (331) E.L.T. 402 (Ker.) W.P. (C) No. 34057 of 2015 (F); JSW Steels Ltd. Versus Commissioner of C. Ex., Belgaum, 2010 11 C/40600/2024 (254) E.L.T. 318 (Tri. - Bang); CESTAT, Delhi in Om International vs CC, New Delhi reported in 2007 (217) ELT 88 (Tri. Del.); Liyakat Shah Vs. Commissioner of C.Ex., Indore-II (Bhopal) [2000 (120) E.L.T.556 (Tribunal)]; Hon'ble Punjab High Court in Ranchodbhai M. Patel vs. Central Board of Revenue, New Delhi reported as 2000 (125) ELT 281 (Punj.); Harinder Pal Singh Shergill v. Commissioner - 2010 (259) E.L.T. A19 (S.C.); GCR No. 3/2006 of Punjab & Haryana High Court as reported in 2010 (255) E.L.T. 188 (P & H) in the case of Harinder Pal Singh Shergill v. Registrar, CEGAT). The Ld. AR stated that there was a lack of proper reasons for requesting the cross-examination of investigating officers. He referred to the following case laws in this regard. Specific Alloys Pvt. Ltd. Vs Commissioner Of Central Tax, Pune-III, 2019 (368) E.L.T. 835 (Bom); Fortune Impex Vs. Commissioner of Customs, Calcutta [2001 (138) E.L.T.556 (Tri. -Kolkata)]. He stated that the view taken by the Tribunal has been affirmed by Hon'ble Supreme Court - 2004 (164) E.L.T. 4 (S.C.) & 2004 (167) E.L.T.A. 134 (S.C.); Dipu Das Vs Commissioner of Customs, Kolkata reported as 2010(261) ELT 408 (Tri-Del). The Ld. AR stated that denial of Cross examination of Co- Noticee does not amount to violation of Principles of Natural Justice. In a case where the Noticee failed to provide any cogent and valid reasons for the cross-examination of person(s), who are co-noticees, it is felt that the request could not be accepted. He relied on the following judicial pronouncements in support of revenue's stand. CESTAT, New Delhi in the case of Jagdish Shankar Trivedi Vs. Commissioner of Customs, Kanpur reported as 2006 (194) ELT 290 (Tri. Delhi); N.S. Mahesh Vs CC, Cochin reported in 2016 (331) ELT 402 (Ker.); Laxmi 12 C/40600/2024 Vs Collector of Customs, Lucknow [2001 (138) ELT 1090 (Tri. Delhi)]; Suman Silk Mills Pvt. Ltd. Vs. Commissioner of Customs & C.Ex., Baroda [2002 (142) E.L.T. 640 (Tri.-Mumbai)]; Commissioner of Customs, Hyderabad Vs Tallaja Impex reported in 2012 (279) ELT 433 (Tri.); Patel Engg. Ltd. Vs UOI reported in 2014 (307) ELT 862 (Bom.); Sridhar Paints Vs Commissioner of Central Excise, 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 273 (Bom.); and R.K. Soap & Oil Traders Vs. C.C., New Delhi - 2013 (294) ELT 463 (Tri.-Del.). cited by the 13 C/40600/2024 appellant are solely about the maintainability of an appeal before Hon'ble CESTAT against the decision of the adjudicating authority regarding cross examination. The department has no dispute on this issue and respects this right of the appellant. The following judgments according to him were distinguished on facts, Vedanta Ltd. Vs. CC, Tuticorin -2018 (364) ELT 573 (Tri.-Chennai); Veetrag Enterprises Vs. Commissioner of Customs [2015 (330) ELT 74 Mad]; 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.); R. K. Soap & Oil Traders Vs. C.C., New Delhi - 2013 (294) ELT 463(Tri.-Del.) The Ld. AR stated that in the present case, the Ld. Adjudicating Authority has been extremely fair and transparent in his approach. He has meticulously analysed the situation by seeking the names of witnesses that the appellant intends to cross-examine and then replied to the petitioner, with proper reasoning, justification and legal support. The present case is based on a plethora of documentary evidence, statements, examination of role of middlemen/Customs Brokers, routing of funds, extracts from WhatsApp chats, investigative findings, etc.. In the case of Meenakshi Re-Rollers Pvt.Ltd. vs. Commnr C.Ex. Nagpur - 2010 (249) ELT 255 (Tri.- Mum.); Ashok Kumar Rastogi Vs. Collector of C.Ex. - 1990 (45) ELT 298 (Tri.); Pace International - 2015 (327) ELT 375 (Tri.-Del.); Chandan Tubes & Metals Pvt. Ltd. - 2006 (193) ELT 48 (Tri.-Mum.) are again distinguished on facts and merits, relating to statement of the party was alleged to have been drawn under duress, estimation of quantities of final product, conflicts and contradictions in the panchanama etc, which are not an issue here. In the light of the 14 C/40600/2024 cited judgments the Ld. AR was of the opinion that i) the appellants have no vested right in seeking cross-examination - that too without even furnishing a preliminary reply to the Show cause Notice and making cross-examination as a condition for furnishing the reply,
ii) the statute does not provide an explicit right to the appellants on this count, iii) attending circumstances and cogent reasons for seeking cross-examination have not been expressed by the appellant before the 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 the Appeal Papers, and the judgments cited. While a very large number of 15 C/40600/2024 judgments have been cited by the rival parties only a hand full of judgments that have been relied upon have been made available.
5. Further the appellant has also referred to certain foreign judgments on cross-examination. I find that as was held by the Hon'ble Allahabad High Court in its judgment in Rishi Kesh Singh & Ors. Vs. The State [AIR 1979 ALL 51 / 1970 CRILJ 132) that where there exists clear decision of the Hon'ble Supreme Court, it is not necessary to make comment on foreign decisions, for the simple reason that the law laid down by the Supreme Court is binding on all within the territory of India. I find that subsequent to the issue of SCN No 250/2023 dated 29/12/2023, the appellant vide email dated 12/04/2024 requested the Adjudicating Authority to permit the cross-examination of 6 Senior Intelligence Officers (SIO) of DRI who had recorded the statements of individuals during the investigations and the Manager-Operations of a Clearing and Forwarding Agency, who had produced certain electronic documents during the investigation.
6. The letter dated 05/07/2024 addressed to the appellant, which have given rise to the present dispute is extracted below;
Please refer to your e mail dated 12.04.2024 wherein you have requested cross examination of the following Persons:
1. Shri Rajeev Sadana, SIO, DRI, New Delhi
2. Shri Ak Sinha, SIO, DRI, New Delhi
3. Shri DP Dinesh, SIO, DRI, New Delhi
4. Shri DP Singh, SIO, DRI, New Delhi
5. Shri D. Bhardwaj, SIO, DRI, New Delhi
6. Shri PV Jayaraman, SIO, DRI, New
7. Shri Bineesh Kumar, Manager-Operations, M/s OPMS Clearing & amp; Forwarding Agencies Pvt Ltd
2. In this regard, it is to bring to your kind attention towards the judgement of the Hon'ble High Court of Kerala at Ernakulam in the case of N. S. Mahesh vs Commissioner of Customs, Cochin reported as 2016 (331) ELT 402 (Ker) has held that if the Adjudicating authority denying cross- examination of co-notice on ground that 16 C/40600/2024 firstly no specific reasons given for such cross-examination and secondly, co-noticee cannot be directed to be a part of proceedings that may incriminate him, there is no illegality in denying the cross-
examination of the co-notice. In the matter of Jagdish Shankar Trivedi Versus (Commissioner of Custom, Kanpur 2006 (141) ELT 290 (Tri-Del), the 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 Tapan Kumar Biswas Vs. Union of India reported as 1996 (63) ECR-546 (Calcutta) in paragraph 17 of the judgment and it was held that in a proceeding under the Customs Act the proceedees are not entitled to cross- examine the witnesses.
3.1 The decision in Ashutosh Ghosh and Another V. Union of India and Others reported in 1977 Criminal Law Journal N.O.C. 67, was also relied upon and it was observed in paragraph 20 of the judgment that the Supreme Court in Ashutosh Ghosh's case has categorically held that a proceedee is not entitled to cross-examine the witnesses. Thus in view of the decisions of the Hon'ble Supreme Court in Kanungo& Co., Ashutosh Ghosh, it is abundantly clear that a notice cannot claim a right to cross-examine notice, have the evidentiary value in view of the above settled law of the Hon'ble Apex Court.
4. The Hon'ble Apex Court in the case of Kanungo Company- [1983 (13) ELT 1486 (SC)) and the Hon'ble High Court of Andhra Pradesh in the case of Shalini Steels Pvt Ltd. (supra) have held that there is no absolute right for cross examination and if sufficient corroborative evidences exist, cross examination of the deponent of the statement is not necessary.
5. It is informed that statement of none of the officers whose cross examination is requested is being relied upon in the investigation.
6. In view of the above settled dictum of law, the said request for cross examination of the 7 witnesses mentioned above is denied by adjudicating Authority.
7. This issues with the approval of competent authority. 17
C/40600/2024
7. The issues raised by the rival parties are as under; APPELLANT
(i) The cross-examination of DRI Officers is imperative to address the critical aspect of the prosecution's case, namely the alleged absconding of the said Sheikh and Jamal, who are purported to be main accused and important co-conspirators in this matter.
(ii) The provisions of Section 122A of the Customs Act, which mandate a grant of reasonable opportunity of being heard before adjudicating a case, encapsulate within it, the right to cross-examine any person on whose testimony/statement reliance is sought to be placed by the Department/complainant.
(iii) The provisions of the Indian Evidence Act, 1872 are also applicable to the adjudication proceedings and therefore the right to cross-examination also stands included in the adjudication proceeding. 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 18 C/40600/2024
(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/confessional in nature. Cross examination is not required when such statements are not retracted and when other circumstantial provided reliable basis corroborating the statements.
(viii) 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.
(ix) The Adjudicating Authority must be furnished cogent and plausible reasons to enable him decide about permission or otherwise for cross-examination
(x) The proceedings before a quasi-judicial authority are not at the same footing as proceedings before a Criminal Court of law. It is the discretion of the authority whether request of cross examination is to be allowed in the interest of natural justice.
(xi) Cases cited by the Appellant are distinguishable on facts and substance.
8. Prima facie I find that the proceedings before the Ld. Adjudicating Authority are in a departmental proceedings and not in a criminal case. A five judge Bench of the Apex Court by a majority 19 C/40600/2024 decision in Thomas Dana Vs The State Of Punjab, [1959 AIR 375 SC] held that there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under s. 167(8) (which was a pre-cursor to the Customs Act, 1962), were not "prosecution" within the meaning of Art. 20 (2) of the Constitution. It held that;
". . . the Chief Customs Officer or any other officer of Customs, does not function as a court or as a Judicial Tribunal. All criminal offences are offences, but all offences in the sense of infringement of a law, are not criminal offences. Likewise, the other expressions have been used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences."
9. In Commissioner of Customs, Calcutta Vs South India Television (P) Ltd [2007-TIOL-126-SC-CUS] the Hon'ble Supreme Court stated;
". . We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. . ."
10. The matter was examined again by the Apex Court in its judgment in Department Of Customs Vs Sharad Gandhi Proprietor [LAWS(SC)-2019-2-277 / CRIMINAL APPEAL NO(S).174 OF 2019 Arising out of SLP (Crl.) No.9159 of 2015). The Hon'ble Court held:
'63. In fact, we find that this Court in the Assistant 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 20 C/40600/2024 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. Thus, this being the scheme of the Sea Customs Act, when Section 5 of the Antiquity (Export Control) Act, 1947 provided that prosecution for contravening Section 3 of the said Act would be without prejudice to the imposition of penalties and ordering confiscation the word 'penalty' could take in both the customs offences and also the criminal offences. If it is interpreted as embracing the criminal offences then the word 'penalty' would also embrace within its scope penalty by way of imprisonment or fine imposed for the commission of a criminal offence after a prosecution before the Magistrate.
(emphasis added)
11. The Hon'ble Supreme Court in Radheshyam Kejriwal vs State Of West Bengal & Anr [2011 (266) ELT 294 (SC)], while examining a similar matter under the Foreign Exchange Regulation Act, 1973 held;
19. . . . . The ratio which can be culled out from these decisions can broadly be stated as follows :-
(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution;
(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other;
(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution;
(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure;
(vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and
(vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be 21 C/40600/2024 allowed to continue underlying principle being the higher standard of proof in criminal cases.
In our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. 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 pertaining to the discretionary jurisdiction of the Adjudicating Authority. Such discretionary, must be exercised within the four-corners of the statute. However it is trite law that an appellate authority cannot dictate the decision of the statutory authority that ought to be made in the exercise of discretion in a given case. In Manjunath Anandappa Urf Shivappa Hanasi vs. Tammanasa and Others [[AIR 2003 SUPREME 22 C/40600/2024 COURT 1391 / 2003 (10) SCC 390], the Hon'ble Apex Court held that, "It is now also well settled that a court of appeal should not ordinarily interfere with the discretion exercised by the courts below." However it is also settled law that if it appears to the appellate authority that in exercising its discretion the lower authority has acted unreasonably or capriciously or has ignored relevant facts or that the decision is arbitrary, vague and fanciful, then it could interfere with the lower authorities exercise of discretion.
13. In Gazi Saduddin v. State of Maharashtra and Another [(2003) 7 SCC 330] the Apex Court held;
"Primarily, the satisfaction has to be of the authority passing the order. If the satisfaction recorded by the authority is objective and is based on the material on record then the courts would not interfere with the order passed by the authority only because another view possibly can be taken. Such satisfaction of the authority can be interfered with only if the satisfaction recorded is either demonstratively perverse based on no evidence, misreading of evidence or which a reasonable person could not form or that the person concerned was not given due opportunity resulting in prejudicing his rights under the Act."
14. The scope of examination of the discretion exercised by the lower authority is hence limited to see whether it has been exercised in a judicial manner that is regulated according to the known rules of law and whether there is any deficiency in decision-making process and not the decision. The issue is hence confined to examining the question of legality of the decision process.
15. I find that the main objective of cross-examination is to challenge the accuracy, credibility, and reliability of the testimony provided by any witness in a proceedings before the Original Authority. Cross- examination of a witness can be requested when his statement is used 23 C/40600/2024 against the appellant in adjudication proceedings which is not the 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 regard to the actual and undeniable facts, or, in other words, so unreasonably as to leave no doubt whatsoever in the mind of a court that there has been an excess of power. There may also be cases where the mind of the authority concerned has not been applied at all, due to misunderstanding of the law or some other reason, to what was legally imperative for it to consider." (emphasis added)
17. I find that this is a case where cross examination is sought mainly of DRI officials who have recorded statements of individuals. The officers have no personal interest in the matter. It is not the case of the appellant that any statement relied upon by the revenue in the SCN, has been made / taken from the said officers / persons and hence an opportunity of cross-examining the maker of the statement should be given. The reason given for the request to cross examine the said officials is to ascertain facts relating to the alleged absconding of the said Sheikh and Jamal and as they have doubts regarding the efficacy and integrity of the investigation conducted. It is also not shown that the said persons are the officers investigating the where abouts of the 24 C/40600/2024 said Shri Sheikh and Jamal or have merely recorded the statements of the individuals. In any case the officers are not a material witness in the lis. The Apex Court in the case of Director of Enforcement vs. M.C.T.M. Corporation Pvt. Ltd.- 2 SCC 471, while examining the functions of officers of the Enforcement Directorate which is akin to the functions of the Customs Officers, held:
"The officers of the Enforcement Directorate and other administrative authorities are expressly empowered by the Act to 'adjudicate' only. Indeed, they, have to act 'judicially' and follow the rules of natural justice to the extent applicable but, they are not 'Judges' of the 'Criminal Courts' trying an 'accused' for commission of an offence, as understood in the general context. They perform quasi-judicial functions and do not act as 'Courts' but only as 'administrators' and 'adjudicators'. In the proceedings before them, they do not try 'an accused' for commission of 'any crime' (not merely an offence) but determine the liability of the contrevenor for the breach of his 'obligations' imposed under the Act. They imposed 'penalty' for the breach of the 'civil obligations' laid down under the Act and not impose any 'sentence' for the 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 25 C/40600/2024 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."
(emphasis added) As seen from the Appeal Memorandum filed by the appellant, in this case too the appellant Shri Malaram Bishnoi has given a confessional statement but later retracted it. Even though the provisions of The Indian Evidence Act, 1872 apply only to judicial proceedings and have no strict application in quasi-judicial proceedings, if we examine the issue in the light of Section 24 of the said Act, which deals with matter relating to criminal proceedings and has more stringent safeguards, it runs as follows "Section 24 : Confession caused by inducement, threat, or promise, when irrelevant in criminal proceeding :
A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise having reference to, the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds which would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him." (emphasis added) To attract the provisions of this section, the following facts have to be established:
(a) that the confession has been made by an accused, person to a person in authority;
(b) that it must appear to the Court that the confession, has been obtained by reason of any inducement, threat or promise proceeding from a person in authority;
(c) that the inducement, threat or promise must have reference to the charge against the accused person; and 26 C/40600/2024
(d) the inducement, threat or promise, must, in the opinion of the Court, be such that the accused in making the confession believed or supposed that by making it he would pin any advantage or avoid any evil of temporal nature in reference to the proceedings against him.
The section hence makes it clear that mere retraction of a statement is of no avail, unless the conditions stated therein are demonstrated, otherwise the confession does not loose its evidentiary value. Hence the decision of the Ld. Adjudicating Authority cannot be faulted for not permitting the cross examination 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 27 C/40600/2024 has been shown to be speaking, principled and premised on guidelines as laid down by Constitutional Courts.
21. Section 122A of the Customs Act which deals with 'Adjudication Procedure' does not mention that an opportunity of cross-examination should be given, let alone that a reply to the Show-Cause Notice should be given after cross-examination if any. The permission for cross- examination has evolved as a part of the principles of natural justice. But it is not a straight jacket formula, and grant of cross examination is dependent on the discretion of the Adjudicating Authority to be exercised in a judicious way. The appellant is free to make his written submissions to the SCN both prior and post the cross-examination or further, during the personal hearing. So the lack of an opportunity of cross examination should not incapacitate the appellant from submitting his reply to the issues raised in the notice.
22. A large number of judgments have been cited by the rival parties. In Bhavnagar University Vs. Palitana Sugar Mills Pvt. Ltd 2003(2) SCC 111, the Apex Court observed :
"It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision".
I find that it is an accepted principle that it is neither desirable nor permissible to pick out a word or a sentence from a judgment divorced from the context of the question under consideration and treat it to be complete law. None of the judgments cited by the appellant, can serve as a precedent, for this case without advertence to the identical nature of facts. This is a case where cross examination is sought, mainly of officials who have recorded statements of individuals. The statements of the officials have themselves not been recorded or relied upon in the 28 C/40600/2024 SCN. None of the judgments listed above relates to an identical issue. They relate to cross examination of witnesses who have given confessional statements implicating the appellant. Which is not the case here. Evern in the case of the Clearing and Forwarding Official, he has handed over documents that can be verified and made a subject matter of the appellants reply and no prejudice is seen to be caused. I find that the true ratio of each judgment cited above, is an authority in the setting of its own facts and are not directly applicable to this case.
23. Further as held by the Constitutional Courts great weight is to 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 interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision-making process would not suffice."29
C/40600/2024 These judgments would equally be applicable to Appellate Tribunals, more so when the impugned decision denying cross-examination was taken by the officer acting within the scope of his powers. It has been taken judiciously and can't be said to be arbitrary, vague or fanciful. It cannot hence be substituted just because the appellant feels that another view may be possible.
24. For the reasons stated the appeal is rejected and disposed of accordingly.
(Order pronounced in court on 27.11.2024) (M. AJIT KUMAR) Member (Technical) Rex