2018 (12) TMI 1957 - HC - Customs

Smuggling - Gold Bars - reliability of statements of Mohammed Ibrahim and Siddique Gani - request for cross examination denied - non-speaking order - HELD THAT - The impugned proceedings are adjudicatory in character and they cannot be called as criminal proceedings. The persons against whom the adjudication proceedings are taken under Chapter XIV of the Customs Act cannot be labeled as accused. In this regard the learned senior counsel placed reliance on the decisions of the Hon ble Supreme Court in DIRECTOR OF ENFORCEMENT VERSUS M.C.T.M. CORPORATION PVT. LTD. AND ORS 1996 (1) TMI 351 - SUPREME COURT . No doubt those proceedings pertain to Foreign Exchange Regulations Act 1947. But then the principle laid down in the said decision can be applied with equal force even to proceedings arising under the Customs Act of 1962. A mere look at the order dated 20.02.2018 rejecting the writ petitioner s request for cross examination starts and ends by describing Siddique Gani and Mohammed Ibrahim as co-accused. The opening line reads as With respect to the request for the cross examination of the co-accused and it ends as follows the request for cross examination of the co-accused is denied . Admittedly the said Siddique Gani and Mohammed Ibrahim cannot be called as co-accused - In this case there is absolutely no consideration of the petitioner s request at all. The order is virtually a non-speaking order. The matter is remitted back to the file of the respondent to pass orders afresh in accordance with law - petition allowed.

Summary

Issues:
Show cause notice under section 124 of the Customs Act, 1962 based on statements of co-accused - Rejection of cross-examination request - Imposition of penalty on the writ petitioner - Legality of the orders challenged in the writ petition.

Analysis:
The petitioner received a show cause notice under section 124 of the Customs Act, 1962, based on events involving intercepted individuals possessing smuggled gold bars. The notice implicated the petitioner based on statements of Siddique Gani and Mohammed Ibrahim. The petitioner challenged the notice in W.P.No.26000 of 2017, leading to directions for adjudication without influence from previous proceedings.

Initially, the petitioner contested the reliance on co-accused statements, arguing for substantive material to proceed. Despite a request for cross-examination of Siddique Gani and Mohammed Ibrahim, the request was rejected, and a penalty of Rs.1,00,00,000 was imposed on the petitioner. The petitioner challenged these orders in the writ petition.

During the hearing, the petitioner's counsel highlighted the lack of discussion in the order rejecting the cross-examination request, emphasizing the need for a speaking order. The counsel argued that setting aside the rejection order would invalidate the penalty order, advocating for a fresh consideration by the respondent.

The respondent contended that the petitioner had no right to cross-examine a co-noticee, citing precedents from the High Courts of Delhi and Allahabad. However, the petitioner's counsel emphasized the distinction between criminal and adjudicatory proceedings, invoking a Supreme Court decision applicable to Customs Act proceedings.

The judgment found the rejection order deficient, as it failed to address the petitioner's request adequately and mischaracterized Siddique Gani and Mohammed Ibrahim as co-accused. Consequently, the impugned order was quashed, and the matter remitted for fresh consideration by the respondent, emphasizing the need for a proper assessment of the cross-examination request. No costs were awarded, and the connected petitions were closed.