2017 (2) TMI 235 - AT - Customs

Natural justice - offence of fraudulent import - imposition of penalty of ₹ 1 lac each u/s 112 of Customs Act, 1962 - Held that - appellant have requested for cross examination. As regard their statements they have retracted the said statements. Therefore, it was obligatory on the part of the adjudicating authority to provide the cross examination of the witnesses which is mandatory u/s 138(1)(b). The Adjudicating authority, irrespective of any grave offence, was suppose to give cross examination of the witnesses. By not complying the provision of Section 138(b) (1)(b) he has violated the principle of natural justice - matter needs to be remanded to original adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Mis-declaration and undervaluation of imported goods
2. Penalty under Section 112 of Customs Act, 1962
3. Request for cross-examination of witnesses
4. Violation of principle of natural justice

Analysis:

1. The case involved the mis-declaration and undervaluation of electronic goods imported by M/s. Dalal & Sons, CHA, which were falsely declared as paper labels. This mis-declaration led to undervaluation of the goods, resulting in a penalty imposed on the appellants under Section 112 of the Customs Act, 1962 for abetting the offense of fraudulent import.

2. The appellant's counsel requested the adjudicating authority for the cross-examination of witnesses whose statements were used against the appellants. The counsel argued that the confessional statements were retracted by the appellant, and failure to allow cross-examination violated the principle of natural justice. The counsel cited various judgments, including Andaman Timber Industries case, to support the argument for cross-examination.

3. On the other hand, the Assistant Commissioner representing the Revenue reiterated the findings of the impugned order, stating that there were corroborative evidences establishing the appellants' involvement in fraudulent import. The Revenue argued that due to the presence of such evidence, there was no necessity to allow cross-examination of the witnesses. The Revenue also cited several judgments to support their stance.

4. After considering the submissions from both sides and examining the records, the Member (Judicial) found that the appellants had indeed requested for cross-examination, and they had retracted their statements. The Member held that it was mandatory for the adjudicating authority to provide cross-examination of witnesses as per Section 138(1)(b). Citing the Andaman Timber Industries case, the Member concluded that failure to allow cross-examination violated the principle of natural justice. Therefore, the matter was remanded to the original adjudicating authority for fresh denovo adjudication, emphasizing compliance with the provisions of Section 138(b). The appeals were allowed by way of remand, ensuring the principle of natural justice was upheld in the proceedings.