2018 (10) TMI 1650 - HC - Customs

Principles of natural justice - cross-examination of witnesses not done whose statements have been relied on - Held that - When the appellant has been called upon to answer to the accusation made against him, it is his right to defend himself reasonably at the earliest opportunity afforded to him, and it would in no way prejudice the Department or stall their inquiry if the prayer is allowed. Waiting till the adjudication process is over and then deciding upon whether any prejudice was caused to the appellant, on grounds of not affording an opportunity to cross-examine the witnesses, whose statements were relied on, would amount to an abuse, in so far as the alleged delinquent being absolved of the consequences merely for reason of a procedural error. In case if the appellant is permitted to cross-examine the witnesses at an earlier stage, it would only help the Department to arrive at a right conclusion as to whether the statements of those witnesses, who had withstood the rigor of being subjected to cross-examination, are to be relied upon in the adjudicating process against the appellant or not. It can never be premature because the statements are already in the file and in case the statements are against the appellant, implicating or accusing him, undoubtedly, it would be used against him. Such statements will definitely not be ignored by the Adjudicatory Authority. The respondents are given an opportunity to the appellant to cross-examine the witnesses, who have given statements against the appellant - appeal allowed.

Issues Involved:
1. Denial of cross-examination of witnesses by the Adjudicating Authority.
2. Reliance on witness statements for adjudication without cross-examination.
3. Principles of natural justice and their application in customs adjudication proceedings.
4. Prematurity of seeking judicial intervention before the conclusion of adjudication proceedings.

Issue-wise Detailed Analysis:

1. Denial of Cross-examination of Witnesses by the Adjudicating Authority:
The appellant firm, engaged in importing and processing betel nuts, sought to quash the proceedings of the Commissioner of Customs, which disallowed their request to cross-examine witnesses whose statements were used against them. The firm argued that the denial of cross-examination was illegal and violated the principles of natural justice. The High Court highlighted that the appellant had a right to defend itself reasonably at the earliest opportunity and that denying this right could lead to procedural errors, rendering the entire proceedings null and void.

2. Reliance on Witness Statements for Adjudication Without Cross-examination:
The case involved allegations of mis-declaration of the country of origin and under-valuation of imported betel nuts. The Customs Authorities relied heavily on the statements of two individuals and their email communications. The appellant contended that the proceedings were initiated based solely on these statements, and they should be allowed to cross-examine the witnesses to test the veracity of their statements. The High Court noted that if the adjudicating authority's order is based on statements without cross-examination, it would be a serious flaw and amount to a violation of natural justice, making the order a nullity.

3. Principles of Natural Justice and Their Application in Customs Adjudication Proceedings:
The High Court referred to the principles of natural justice, particularly the rule of audi alteram partem, which requires that no person should be condemned unheard. The Court emphasized that the opportunity to cross-examine witnesses is a crucial aspect of these principles. It cited the Supreme Court's decision in Andaman Timber Industries, which held that not allowing cross-examination when statements are relied upon is a violation of natural justice. The Court also referred to the case of State of Kerala v. Shaduli, which underscored the importance of cross-examination in ensuring fair proceedings.

4. Prematurity of Seeking Judicial Intervention Before the Conclusion of Adjudication Proceedings:
The learned Single Judge had initially held that the decision to allow cross-examination could only be considered after the conclusion of the proceedings. However, the High Court disagreed, stating that addressing procedural infirmities at an early stage is crucial to prevent nullification of the entire proceedings later. The Court emphasized that allowing cross-examination at the earliest stage would help the Department arrive at a right conclusion and ensure that the principles of natural justice are upheld.

Conclusion:
The High Court set aside the impugned judgment and allowed the appeal, directing the respondents to permit the appellant to cross-examine the witnesses whose statements were recorded by the Adjudicating Authority. The Court held that it is in public interest and the interest of justice to allow such cross-examination, as it would help in arriving at a fair and just conclusion. The Court also directed the appellant to file detailed objections within two weeks of receiving the certified copy of the judgment, ensuring that the adjudicatory process is conducted in accordance with the principles of natural justice.

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