2016 (4) TMI 1074 - HC - Central Excise

Seeking cross-examination of certain witnesses - Petitioner submitted that show cause notice is based on several statements of witnesses including those of the experts and any reliance on such statements without offering such witnesses for cross examination would be opposed to the principles of natural justice. Held that - the reasons cited by the adjudicating authority are completely baseless. Merely because, the concerned witnesses have not retracted their statements would not be a ground to deny cross examination. In fact, this reason does not even take care of the evidence of the expert witnesses. Further what material can the petitioner bring on record through cross-examination if so allowed, is simply not germane to the question of granting or not granting cross examination. The adjudicating authority entered into an arena of presumption while refusing such request on such ground. Having said that, the stand of the petitioners that such cross examination must be granted before the petitioners file final reply to the show cause notice cannot be accepted. The question of offering cross examination of the witnesses whose statements have been recorded by the Department during preliminary inquiry and which statements are sought to be relied upon, would arise during the adjudication proceedings. The correct stage for granting such cross examination would be when the adjudicating authority records the evidence which can start only after the petitioners file their reply. No statutory provisions are pointed out to us in support of the petitioners insistence of cross-examination of witnesses being granted before filing the defence reply. Therefore, it is directed that the petitioners shall file final reply if so desired, latest by 29th February, 2016, upon which, the adjudicating authority shall during the course of the adjudication proceedings, grant cross examination of the witnesses whose statements or reports are sought to be relied upon in the show cause notice and for which the petitioners have made request to the adjudicating authority. - Petition disposed of

Summary

Issues involved:
Challenge to the rejection of cross-examination request by the Commissioner of Customs based on principles of natural justice.

Detailed Analysis:

1. The petitioners challenged the order rejecting their request for cross-examination of witnesses by the Commissioner of Customs. The Commissioner's decision was communicated stating that allowing cross-examination is at the discretion of the Adjudicating Authority, and the witnesses had not retracted their statements. The petitioners argued that the decision violated the principles of natural justice as the show cause notice relied on witness statements. They requested cross-examination to file a final reply.

2. The Department's counsel opposed the petition, stating that cross-examination is not a guaranteed right and can be denied by the adjudicating authority for valid reasons since the proceedings are not akin to legal proceedings in a court of law.

3. The Court noted that the respondents did not intend to disregard the witness statements sought for cross-examination. The petitioners should have the right to cross-examine unless valid reasons exist for denial, as supported by various High Court judgments cited.

4. The Court referenced judgments supporting the right to cross-examine witnesses unless exceptional circumstances exist. The respondents cited decisions where non-granting of cross-examination did not vitiate the final order, and the Supreme Court held that not all informants need to be cross-examined.

5. The adjudicating authority's reasons for denying cross-examination were deemed baseless by the Court. The authority's reliance on witnesses not retracting statements and lack of specified facts post-cross-examination were insufficient grounds. The Court criticized the authority's presumption in refusing cross-examination.

6. The Court clarified that cross-examination should occur during adjudication proceedings, not before filing a final reply. The petitioners were directed to file a final reply by a specified date, after which cross-examination of witnesses would be allowed during adjudication. The impugned order was set aside.

7. The Court emphasized that statutory provisions did not require cross-examination before filing a defense reply. Cross-examination would be granted during adjudication proceedings, starting after the petitioners filed their reply.

8. The Court directed the petitioners to file a final reply by a specified date, after which cross-examination of witnesses would be allowed during adjudication. The impugned order was set aside, and the petition was disposed of accordingly.

9. The Tribunal's time limit for completing adjudication proceedings was extended, and the petitioners were allowed to apply for provisional release of goods pending the completion of adjudication proceedings.