2008 (1) TMI 349 - AT - Customs

Violation of principle of natural justice - When certain documents are relevant and may be beneficial for raising a defence plea the aggrieved should not be deprived of those documents to meet end of justice whether Defence is genuine or not can be tested only when it is raised not before that wherever cross examination is necessary aggrieved cannot be denied for the same

Summary

Issues Involved:

1. Confiscation of goods under Section 111(j) and (o) of the Customs Act, 1962.
2. Levy of redemption fine in lieu of confiscation.
3. Duty demand and interest on the duty.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
5. Alleged violation of principles of natural justice.
6. Denial of cross-examination and opportunity to defend.
7. Requirement for re-investigation and fair adjudication.
8. Specific case of penalty on a deceased appellant.

Issue-Wise Detailed Analysis:

1. Confiscation of Goods:
The adjudicating authority confiscated goods valued at Rs. 1,59,42,480.30 under Section 111(j) and (o) of the Customs Act, 1962. The authority concluded that the goods imported duty-free by the EOU (first appellant) were diverted to the Domestic Tariff Area (DTA) instead of being used for export, as required by Notification 53/97-Cus dated 3-6-1997. The appellants failed to produce appropriate documentary evidence for the supply of goods, leading to the inference that the import obligations were not fulfilled.

2. Levy of Redemption Fine:
In lieu of confiscation, a redemption fine of Rs. 40,00,000/- was levied. This was justified by the adjudicating authority as the goods had been cleared under bond.

3. Duty Demand and Interest:
The adjudicating authority imposed a duty demand of Rs. 1,02,49,821/- along with interest on the first appellant. This was based on the finding that the imported raw materials were not used for the intended export purposes.

4. Imposition of Penalties:
All eight appellants were imposed a penalty of Rs. 5,00,000/- each under Section 112(a) of the Customs Act, 1962. The penalties were based on the findings of the adjudicating authority that the appellants had violated the conditions of the customs notification and diverted the goods to the DTA.

5. Alleged Violation of Principles of Natural Justice:
The appellants argued that the entire proceeding was conducted in gross violation of the principles of natural justice. They claimed they were denied the opportunity for rebuttal, cross-examination, and appropriate defense. The proceedings were alleged to be biased and conducted behind their backs.

6. Denial of Cross-Examination and Opportunity to Defend:
The appellants highlighted that the adjudicating authority denied cross-examination of key witnesses and failed to requisition vital evidence from the SEZ unit (M/s. B.H. International Pvt. Ltd.). The appellants contended that the investigation was biased and that they were deprived of a fair defense.

7. Requirement for Re-Investigation and Fair Adjudication:
The tribunal acknowledged the need for a fair, just, and reasonable adjudication following due process of justice. It emphasized that the rules of natural justice are not a straightjacket formula and must be adhered to. The tribunal directed that the matter be remanded for re-investigation, allowing the appellants to present their defense and cross-examine relevant witnesses.

8. Specific Case of Penalty on a Deceased Appellant:
In the case of Customs Appeal No. 87/07, the appellant had died during the proceedings. The tribunal noted that penalties cannot be imposed or recovered from deceased individuals. The adjudicating authority was directed to seek a death certificate from the appropriate authority, and if confirmed, the matter would abate.

Conclusion:
The tribunal remanded the matter for re-investigation and fair adjudication, emphasizing the need to follow the principles of natural justice. It directed the adjudicating authority to summon relevant evidence and allow cross-examination to ensure a just outcome. The specific case involving the deceased appellant was instructed to be abated upon confirmation of death.