2013 (5) TMI 350 - HC - Customs

Request of crossexamination of the persons whose statements have been referred to in the show-cause notice - non-supply of the enquiry report conducted after the conclusion of hearing by the Srilankan authorities - allegation against the appellants that they have imported Ball Bearings of Chinese origin but showed by as from Srilanka in order to evade anti-dumping duty - Held that - There can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd. (2000 (7) TMI 85 - SUPREME COURT OF INDIA) and Laxman Exports Limited (2002 (4) TMI 66 - SUPREME COURT OF INDIA). Apart from this, the decision of this court in J & K Cigarettes Ltd. (2009 (8) TMI 64 - DELHI HIGH COURT) wherein held that before arriving at the opinion, the authority would give opportunity to the affected party to make submissions - affected party can challenge the invocation of provisions of Sec. 9-D of the Act in a particular case by filing statutory appeal, which provides for judicial review clinches the issue in favour of the appellant. Thus set aside the impugned order and remit the matters to the Tribunal for a fresh consideration.

Issues Involved:
1. Denial of the right to cross-examine witnesses.
2. Non-supply of the enquiry report conducted by Sri Lankan authorities after the conclusion of the hearing.

Detailed Analysis:

1. Denial of the Right to Cross-Examine Witnesses:
The appellants contended that their request for cross-examination of the persons whose statements were referred to in the show-cause notice dated 30th April 2004, and relied upon by the Commissioner in the Order-in-Original dated 30th November 2005 and by the Tribunal in its order dated 15th March 2010, was denied. This denial was seen as a violation of the principles of natural justice. The appellants argued that unless exceptions under Section 138B of the Customs Act, 1962 were clearly made out, the statements could not be regarded as relevant and could not form the basis of proving the truth of the facts contained in them.

The Tribunal had dismissed the appellants' plea, stating that the overseas enquiry was not challenged to be motivated and that the evidence gathered was credible. The Tribunal held that the right to cross-examine was not absolute and could be denied if the evidence was cogent and credible. The Tribunal's stance was that the principles of natural justice were not violated as the appellants were given sufficient opportunity to rebut the evidence.

The High Court, however, emphasized that the right to cross-examine is a valuable right in quasi-judicial proceedings, especially when statements are used against the assessee. The Court referred to the Supreme Court's decisions in Swadeshi Polytex Ltd. and Laxman Exports Limited, which upheld the necessity of providing an opportunity for cross-examination. The Court also cited its own decision in J & K Cigarettes Ltd., which interpreted Section 9D of the Central Excise Act, 1944 (analogous to Section 138B of the Customs Act, 1962) to mean that statements could only be relied upon without cross-examination under exceptional circumstances, such as the unavailability of the witness.

2. Non-Supply of the Enquiry Report:
In all appeals except CUSAA No. 7/2010, the appellants raised an additional issue regarding the non-supply of the enquiry report conducted by the Sri Lankan authorities after the conclusion of the hearing. The appellants argued that the show-cause notices were issued on 30th April 2004, and the hearing concluded on 14th October 2004. However, the Commissioner relied on a subsequent report dated 20th July 2005, which was based on an investigation conducted after the hearing. This report and the related documents were not supplied to the appellants, depriving them of the opportunity to respond to the new evidence.

The High Court noted that the reliance on this subsequent report without providing it to the appellants was a denial of their right to a fair hearing. The Court highlighted that the appellants should have been given access to all the material relied upon by the adjudicating authority to ensure a fair opportunity to contest the findings.

Conclusion:
The High Court found that the Tribunal had not adequately considered the provisions of Section 138B of the Customs Act, 1962, which are critical in determining the relevancy of statements in the absence of cross-examination. The Court set aside the Tribunal's order and remitted the matter for fresh consideration, directing the Tribunal to re-evaluate the cases in light of Section 138B and the principles established in J & K Cigarettes Ltd. The Tribunal was also instructed to address the issue of non-supply of the Sri Lankan enquiry report and related documents. The parties were directed to appear before the Tribunal on 7th May 2013 for further proceedings.

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