2019 (1) TMI 1735 - AT - Customs

Violation of principles of natural justice - cross-examination of the witnesses not allowed - rejection of transaction value - Rejection of DEPB benefit - confiscation - HELD THAT - There was no dispute on the PMV arrived at on the basis of necessary market inquiry with cloth merchants M/s. Mangalam Textiles and M/s. Teratex. The export value of the goods was ascertained as ₹ 45.80 per yard by adding the transportation charges, packing charges, marking/lebeling, freight and profit margin. Further, he has observed that even though the departmental proceedings is not Court proceedings necessarily requiring the examination and cross-examination of the witnesses, the appellant s request was accepted as per Tribunal s order and since notices sent to the address of the said Mangalam Textiles and Teratex were returned with remark Left , cross examination of the witnesses could not materialize. In nutshell, thus cross-examination of M/s. Mangalam Textiles and M/s. Teratex could not be completed in accordance with the direction of this Tribunal. The findings of the Learned Commissioner (Appeals) relying upon the opinion of M/s. Mangalam Textiles and M/s. Teratex without subjecting them to cross-examination, cannot carry any evidentiary value, hence ought to be discarded. Also, it is found that the Learned Commissioner himself observed that the entire FOB value declared by the appellant has been received and necessary BRC was filed with the Customs. In these circumstances, reducing the DEPB benefit on the basis of PMV, which could not be established by way of cross-examination of the cloth merchants namely, M/s. Mangalam Textiles and M/s. Teratex and confirming consequential action on the basis of said market inquiry, in our opinion, cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Violation of principles of natural justice in not allowing cross-examination of witnesses, rejection of DEPB benefit, jurisdictional issues in DEPB cases.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs regarding the export of Dyed and Printed Fabrics. The Department re-determined the FOB value and proposed a reduction in the DEPB benefit, leading to a show-cause notice for misdeclaration and penalty imposition. The adjudication resulted in confiscation of goods, redemption on payment of fine, and penalty imposition. The appellant appealed, and upon remand by the Tribunal, further proceedings took place. The appellant argued violation of natural justice due to lack of cross-examination of witnesses and rejection of DEPB benefit. The Commissioner's reliance on witness opinions without cross-examination was deemed unsustainable.

In the first round of litigation, the Tribunal remanded the matter due to the violation of natural justice principles. The Commissioner, in the de novo proceedings, acknowledged the PMV determined based on market inquiry but failed to complete cross-examination of witnesses as directed. The reliance on witness opinions without cross-examination was considered lacking evidentiary value. Moreover, the Commissioner's decision to reduce DEPB benefit without establishing PMV through cross-examination was deemed unsound. The Tribunal set aside the impugned order and allowed the appeal, emphasizing the importance of adherence to natural justice principles and evidentiary standards.

The appellant's contentions regarding the realization of export proceeds, rejection of DEPB benefit, and jurisdictional issues in DEPB cases were considered. The Tribunal highlighted the failure to complete cross-examination of witnesses as directed, leading to the rejection of evidentiary value in the Commissioner's reliance on witness opinions. The Tribunal emphasized the significance of establishing PMV through proper procedures and cross-examination, ultimately setting aside the impugned order and allowing the appeal. The decision underscored the importance of upholding principles of natural justice and evidentiary standards in customs matters, ensuring fair adjudication and due process.