Custom, Excise & Service Tax Tribunal
M/S. Vedanta Limited vs Commissioner Of Customs, Tuticorin on 10 January, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/Misc./41032/2017 & C/42158/2017
(Arising out of Order-in-Original No. C.VIII/10/04/2015-Adjn. dated 29.9.2017 passed by the Commissioner of Customs, Tuticorin)
M/s. Vedanta Limited Appellant
Vs.
Commissioner of Customs, Tuticorin Respondent
Appearance Shri Vipin Kumar Jain and Shri G. Krishnamoorthy, Advocates for the Appellant Shri R. Subramaniyan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 10.01.2018 Final Order No. 40084 / 2018 Per Bench The appeal along with stay application seeking stay of adjudication proceedings came up for hearing on 11.12.2017 and 10.1.2018. On 11.12.2017, the arguments of the appellant was partly heard and adjourned on request of department to this day. After hearing both sides we were of the opinion that the appeal itself can be disposed of as stay of adjudication proceedings would delay the adjudication proceedings unnecessarily and also as there is a direction by the Honble Apex Court to complete the adjudication proceedings.
2. Brief facts are that the appellants were issued show cause notice by Customs Commissioner, Tuticorin dated 13.1.2015 alleging misuse of Advance License for the period 2/2005 to 5/2010 and evasion of customs duty. The appellants filed writ petitions before the Honble High Court of Madras at Madurai Bench, contending that earlier Central Excise authorities upon same allegation sent a draft show cause notice in 2/2011 to the Customs authorities and that customs authorities had communicated their view to the excise authorities that there is no violation of the conditions of the exemption notification and the issuance of the show cause notice is not warranted. The appellants contended that the present show cause notice is only an inverbatim copy of show cause notice prepared earlier by Excise authorities and that the show cause notice now issued by Customs cannot sustain. The order passed by ld. Single Judge of Honble High Court in the writ petition was appealed before the Division Bench. Appellants filed SLP before Honble Apex Court against the order of the High Court of Madras. The Honble Apex Court vide interim order dated 21.4.2017 directed the Commissioner to pass final order after adjudication of show cause notice and keep the order in sealed cover. During such adjudication proceedings, the appellants requested the adjudicating authority to furnish documents to them and also sought cross-examination of some witnesses. The Commissioner of Customs vide letter dated 29.9.2017 rejected both these requests. Aggrieved by the said decision, the appellants have filed the present appeal.
3. On behalf of the appellant, ld. counsel Shri Vipin Kumar Jain and Shri G.Krishnamoorthy appeared and argued the matter. The ld. counsel Shri Vipin Kumar Jain opened his arguments by explaining as to how the appeal filed against letter dated 29.9.2017 is maintainable. Though the appeal is filed against the letter communicating to the appellant the rejection of request for cross-examination as well as rejection of request for furnishing documents, appeal is maintainable being a decision passed by the adjudicating authority under the Customs Act, 1962. To support this argument, he relied upon the decision of the Honble High Court of Kerala in the case of Abdul Khader Vs. CESTAT, Bangalore 2016 (336) ELT 389 (Ker.) and also the decision of the Tribunal in the case of Swiber Offshore Construction Pvt. Ltd. Vs. CC, Kandla 2014 (301) ELT 119 (Tri. Ahmd.). It is argued by the ld. counsel that when the request for cross-examination is denied by the adjudicating authority, the appellant need not wait for the passing of the Final order to raise the ground that appellant is prejudiced by the denial of request for cross-examination. In the case of Visal Lubetech Corporation Vs. Addl. Commissioner of customs, Coimbatore 2016 (342) ELT 201 (Mad.), the jurisdictional High Court had opined that when the appellant during the pendency of adjudication did not appeal against the order of rejection of request for cross-examination, the writ petition filed seeking remedy to set aside the Order-in-Original on the ground of violation of natural justice is not maintainable. That in the said case, the writ petitioners were directed to challenge the Order-in-Original before the Tribunal. The Honble High Court therein had observed that the appellant ought to have appealed against the order rejecting the request for cross-examination during the pendency of adjudication proceedings itself.
3.1 Adverting to the reasons stated for denying the request for cross-examination, the ld. counsel submitted that in the impugned letter, the adjudicating authority has denied the request for cross-examination stating that all the persons whose cross-examination is sought for are employees of the appellant and that none of them have retracted their statements. He argued that this cannot be a ground for rejecting the request for cross-examination. Section 138B of the Customs Act, 1962 which is pari materia to Section 9D of the Central Excise Act, 1944, provides for grounds on which the statement can be relied without putting to the test of examination of the witness. That none of the circumstances existed in the present case and the rejection of request for cross-examination is on flimsy ground, without legal basis and amounts to violation of natural justice. He relied upon the decision in the case of Mahek Glazes Pvt. Ltd. Vs. Union of India 2014 (300) ELT 25 (Guj.). The decision in Basudev Garg Vs. Commissioner of Customs 2013 9294) ELT 353 (Del.), was relied to argue that cross-examination is a valuable right of noticee in quasi-judicial proceedings which when denied may have adverse consequence upon them. The decision of the Larger Bench of the Tribunal in the case of Gaurav Pharma Ltd. Vs. Commissioner of Central Excise 2015 9326) ELT 561 (Tri. LB) was also relied upon by the ld. counsel to support his argument that the said letter is an appealable order.
3.2 It is submitted by the ld. counsel that in the impugned letter besides rejecting the request for cross-examination, the adjudicating authority has rejected the appellants request to furnish documents sought for by the appellant. The main contention of the appellant throughout the adjudication proceedings was that the show cause notice issued by the Customs Commissionerate was a show cause notice reproduced in verbatim which was earlier prepared by Excise authorities upon which no further steps were taken. That there were office correspondence between Excise and Customs authorities seeking opinion as to whether there is violation of provisions of law as per the draft show cause notice. The appellant, vide letter dated 15.9.2017, had requested the adjudicating authority to furnish the copies of correspondences relating to the above matter. In response to an RTI application the copy of letters dated 13.9.2014 and 9.1.2015 was provided to appellant. The adjudicating authority has rejected the request for supply of documents stating that these communications were made before the issuance of show cause notice and are not relevant as the allegations have been clearly stated in the show cause notice. The ld. counsel argued that the appellant is entitled to receive the copy of documents even though such documents may not be relied upon by the department for issuing the show cause notice. To support this contention, he relied upon the decision of the Honble High Court of Calcutta in the case of M.S. Naina Vs. Commissioner of Customs 2010 (123) ELT 39 (Cal.).
4. The ld. AR Shri R. Subramanian appeared and argued the matter. He submitted that the appeal is filed against a letter and therefore not maintainable. The appeal is not filed against a decision or order passed by the adjudicating authority. The letter was issued to communicate to the appellants the rejection of their request to cross-examine the witnesses and the rejection of the request for supply of documents. Such a letter cannot be treated as an appealable decision or order. The appellants have requested for cross-examination of the witnesses only to delay the adjudication proceedings. The statements of all the persons whose cross-examination is sought for are employees of the appellant. Their statements are not retracted and therefore there is no necessity for cross-examining the witnesses. If aggrieved by the rejection of request for cross-examination, the same can be taken up in the grounds of appeal in case the Order-in-Original is against the appellant. The ld. AR relied upon the decision of the Honble Supreme Court in the case of Kanungo & Co.. Vs. Collector of Customs 1983 (13) ELT 1486 (SC).
4.1 With regard to the issue of rejecting the request for supply of documents, the ld. AR submitted that these documents are not relied upon documents. All the documents which are relied upon for issuing the show cause notice has been supplied to the appellant. The appellant is harping upon irrelevant documents only for delaying the adjudication. Further, these are inter-office communications and the appellants who are parties to proceedings have no right to get copies of the same. It is also argued by the ld. AR that the appellants have not stated clearly as to what are the documents required by them. Appellants submitted an RTI application requesting for copies of correspondence exchanged between Customs and Excise authorities. The department supplied copies of letters dated 13.9.2014 and 9.1.2015. If they are aggrieved that they have not received the entire documents as requested by them, the appellants ought to have filed an appeal under the RTI Act. In the letter dated 15.9.2017, the appellants have not specified the document sought for but have vaguely stated to furnish the entire chain of correspondences. The request therefore has been rightly denied by the adjudicating authority as there is no specific mention of the document sought for by the appellant.
5. Heard both sides.
6. The foremost objection put forward by the Revenue is that the appeal filed against the letter dated 29.9.2017 issued to appellant is not an appealable order. For better appreciation, the relevant portion of the letter impugned herein is reproduced as under:-
2. The request for correspondence between excise and customs is rejected in view of the fact that the communication was made before issuance of the SCN and so irrelevant once the grounds are discussed in the SCN and the noticee has got opportunity to defend on such grounds and when all the relied upon documents of the SCN are supplied. Thus, case law quoted is not relevant to the present case.
3. Further, with regard to cross-examination, all the persons mentioned were the employees of the noticee and none of them have retracted their statements at any point of time. If the noticee finds any inconsistencies in the statements, same can be pointed out in their defense. It is observed that cross-examination of these persons does not serve any purpose for the defense and accordingly same is rejected.
7. In the present case, the order rejecting the cross-examination has been issued in the form of a letter. When the right of the appellant for cross-examination has been taken away by the said decision of the adjudicating authority, merely because the same is issued in the form of a letter and not clothed as an order, it cannot be said that the said letter / decision is not an appealable order. The appellant has relied upon various decisions. The Honble High Court of Kerala in the case of Abdul Khader Vs. CESTAT, Bangalore (supra) has categorically held that the order intimating the denial of cross-examination is an appealable order. The relevant portion of the order is reproduced below:-
The petitioner, challenges an order passed by the Customs, Excise & Service Tax Appellate Tribunal, has approached this Court. Ext. P6 is the order.
2.?The issue is relating to the denial of permission to cross-examine certain witnesses during the course of adjudication proceedings initiated under Section 28 read with Section 124 of the Customs Act.
3.?The petitioner had approached this Court challenging the above order. This Court vide Ext. P4 judgment, directed the petitioner to approach the Tribunal. Thereupon, the petitioner approached the Tribunal.
4.?The Tribunal by impugned order found that the appeal is not maintainable under Section 129A of the Customs Act. It is challenging this order; the petitioner has approached this Court.
5.?Section 129A(1)(a) provides as follows :
(1)?Any person aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order, -
(a) a decision or order passed by the Commissioner of Customs as an adjudicating authority;
6.?The above provision would clearly indicate that any order passed by the Principal Commissioner of Customs or Commissioner of Customs as an adjudicating authority, an appeal would lie before the Tribunal.
7.?In that view of the matter, this Court is of the view that the impugned order is liable to be set aside. Accordingly, Ext.P6 order is set aside. The Tribunal is directed to reconsider the matter afresh after giving an opportunity to the petitioner.
8.?In order to enable the petitioner to move for stay before the Tribunal, further proceedings pursuant to Ext. P1 shall be deferred for a period of one month.
9.?The writ petition is disposed of as above.
8. The Tribunal in the case of Swiber Offshore Construction Pvt. Ltd. (supra) had occasion to consider a similar issue. The facts in the present case are identical to the facts of the said case. The department in the said case had rejected the request for cross-examination and informed the same by letter issued to the appellant therein. The Tribunal held that the said letter which conveys the decision of the adjudicating authority as to the rejection of cross-examination of witnesses was an appealable order. It was also observed by the Tribunal that the rejection of cross-examination tantamount to violation of principles of natural justice. The adjudicating authority was directed to follow section 138B of the Customs Act, 1962. The relevant portion of the order is reproduced below:-
2.3?Vide letter dated 7-10-2013 the Appellant filed preliminary reply denying the allegations and inter alia contending that they reserves right to file final reply after the examination of the witnesses by the Adjudicating Authority in terms of Section 138B(2) of the Customs Act, 1962, who may be summoned and examined under advance intimation to the Appellant and its Advocate so that in case their statements are considered relevant and admitted in evidence by the Adjudicating Authority, the witnesses can be cross-examined on behalf of the Appellant with permission of the Adjudicating Authority. Cross-examination of Chief Chemist (EC), DGH was also sought.
xxx xxxx xxxx xxxx xxxx 2.6?However, the request was rejected again without dealing with any of the submissions made and precedent cited by the Appellant. The rejection of request by the adjudicating authority was recorded and communicated vide Record of Personal Hearing, and hence the appellant has preferred the appeal.
xxx xxxx xxxx xxxx xxxx
6.?We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of Section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on Section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in Section 138B(1)(a) exists. These circumstances mentioned in Section 138B(1)(a) are also contained in pari materia Section 9D(1)(a) and were recorded as follows in J.K. Cigarettes Ltd., 2009 (242) E.L.T. 189 (Del.) -
xxx xxxx xxxx xxxx xxxx
8.?The appellant has also relied on the judgment of Honble Apex Court in Sukhwant Singh v. State of Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of Section 138B(1) exist. The Honble Apex Court was pleased to hold that-
8.?It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides :
138.?Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined.
The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief.
Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter. xxx xxxx xxxx xxxx xxxx
12.?The appeals are therefore allowed with direction to the Respondent adjudicating authority to follow Section 138B and to forthwith summon the witnesses for examination under intimation to the appellant, and to offer them for cross-examination by the appellant if their statements are to be considered as relevant and admitted in evidence in the interest of justice. The appellant is also entitled for cross-examination of the Chief Chemist (EC), DGH. The Appellant shall also extend its full co-operation in expediting the adjudication process so that it can be completed within the time as directed by the Honble High Court.
9. A similar view has been taken by the Honble High Court of Delhi in the case of Basudev Garg (supra). The relevant portion of the order is reproduced below:-
14.?The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under :-
29.?Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted.
10. The Honble Madras High Court in the case of Veetrag Enterprises Vs. Commissioner of Customs 2015 (330) ELT 74 (Mad.) has observed as under:
8.?While considering the value of cross-examination, the Apex Court in Ayaaubkhan Noorkhan Pathans case (cited supra) held thus :
Cross-examination is one part of the principles of natural justice :
23.?A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice. A mere reading of the above said proposition clearly shows that the rules of natural justice require that a party must be given the opportunity to adduce all relevant evidence upon which he relies and further that the evidence of the opposite party should be taken in his presence by giving the opportunity of cross-examining the witnesses examined by that party. In the present case, neither any speaking order has been passed nor the respondent justified in not permitting the petitioner to cross-examine the above said eight witnesses. Thus, such attitude of the respondent shows that the petitioner was not given fair opportunity to defend their case, therefore, not providing an opportunity to cross-examine the above said eight witnesses, in my view, would violate the principles of natural justice. Accordingly, the impugned order is set aside and the respondent is directed to permit the petitioner to cross-examine the above said eight witnesses and pass appropriate orders on merits and in accordance with law. Such exercise shall be completed by the respondent within a period of 45 days from the date of receipt of a copy of this order.
9.?In fine, for the reasons stated above, the writ petitions stand allowed. No costs. Consequently, connected miscellaneous petitions are closed.
11. From the above discussions and following the judgments cited above, we are of the considered opinion that the denial of cross-examination is unjustified. The decision relied by the ld. AR in the case of Kanungo & Co. (supra) is on different facts and distinguishable. In the said case, the request was for cross-examination of informer which was declined. Further, the decision was rendered prior to introduction of Section 138B and 9D in the relevant enactments. We therefore direct the adjudicating authority to follow the provisions of section 138B of the Customs Act, 1962 and permit cross-examination of witnesses sought for by the appellant.
12. The next point to be considered is regarding the rejection of request for supply of documents. On perusal of records, we find that the appellant has not requested for any particular document. They filed an RTI application and obtained copies of letters dated 13.9.2014 and 9.1.2015. It is their case that the entire chain of correspondence in regard to the issue of show cause notice has not been provided to them. The appellant could have filed another RTI application or could have pursued the very same application by filing an appeal before the first appellate authority under the RTI Act. Without specifically stating what is the particular document which has to be supplied, the grievance of appellant cannot be entertained. They allege that the department has furnished only selective letters. It is not the case of the appellant that after request to supply a particular document, the department has denied the request. In addition, it is also to be mentioned that these documents are not relied upon documents. The appellant intends to take assistance from these documents to defend their case. On such score, when the department is not put to notice as to what is the document that the appellant seeks to obtain and only a vague request to furnish the entire chain of correspondence between Customs and Excise authorities is made, such request cannot be entertained or allowed. For these reasons, we reject the request of the appellant to direct the respondent to furnish document to them.
13. In the result, the appeal is partly allowed directing the respondent adjudicating authority to follow section 138B of the Customs Act and to permit cross-examination of the witnesses. The impugned order rejecting the request for supply of the documents is upheld. The appeal is disposed of in the above terms. The early hearing application and stay application are disposed of accordingly.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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