2018 (1) TMI 819 - AT - Central Excise

Principles of Natural justice - denial of opportunity to cross-examine in remand proceedings - Held that - The adjudicating authority between September 2014 and February 2015 extended three opportunities to the Appellants for cross-examination of the witnesses however the Appellants did not avail any of the said opportunities - even though they made the claim that they have not received intimation of hearings no evidence has been adduced by them to substantiate the said claim. Also it is not in dispute that on all these occasions the witnesses on whose cross-examinations were sought by the Appellant had been present and reiterated their statements - non-availing of the opportunity of cross-examination extended by the adjudicating authority in the remand proceedings in my opinion has not resulted in violation of principles of natural justice. Appeal dismissed - decided against appellant.

Issues Involved:
1. Imposition of penalties under Section 114(iii) and Section 114AA of the Customs Act, 1962.
2. Alleged fraudulent export of groundnut shells instead of dehydrated white kibbled onions.
3. Denial of cross-examination and alleged violation of principles of natural justice.
4. Evidence of the appellants' involvement in the fraudulent export.

Detailed Analysis:

1. Imposition of Penalties:
The penalties imposed on the appellants under Section 114(iii) and Section 114AA of the Customs Act, 1962 were challenged. The adjudicating authority had imposed penalties of ?5 lakhs and ?8 lakhs on the first appellant and ?4 lakhs on the second appellant. The Tribunal upheld these penalties, finding that the appellants were involved in the fraudulent export activities.

2. Alleged Fraudulent Export:
The case involved the export of groundnut shells disguised as dehydrated white kibbled onions. The overseas buyer, M/s CATZ International, Holland, through their representative M/s Spicexim, Navi Mumbai, complained about the fraud. The investigation revealed that the appellants had impersonated identities, created fictitious firms, and fabricated documents to carry out the fraudulent export. The Tribunal found substantial evidence supporting these allegations, including the creation of a fake firm, procurement of groundnut shells, and the use of fake documents for export.

3. Denial of Cross-Examination and Principles of Natural Justice:
The appellants argued that they were not given a proper opportunity for cross-examination, thus violating the principles of natural justice. The Tribunal noted that the adjudicating authority had provided multiple opportunities for cross-examination, which the appellants did not avail. The Tribunal referred to the judgments in Patel Engineering Ltd. vs. UOI and Manidhari Stainless Wire Pvt. Ltd. vs. UOI, which stated that the right to cross-examine is not absolute and depends on the circumstances. The Tribunal concluded that the appellants' failure to utilize the opportunities provided did not constitute a violation of natural justice.

4. Evidence of the Appellants' Involvement:
The Tribunal examined the evidence presented, including statements from various witnesses and documentary evidence. The ld. Commissioner (Appeals) had found that the appellants had created fictitious firms, fabricated documents, and carried out the fraudulent export. The Tribunal upheld these findings, noting that the appellants could not provide any evidence to rebut the substantial documentary evidence and witness statements. The Tribunal concluded that the appellants were rightly penalized for their involvement in the fraudulent activities.

Conclusion:
The Tribunal upheld the penalties imposed on the appellants, finding that the evidence clearly demonstrated their involvement in the fraudulent export of groundnut shells instead of dehydrated white kibbled onions. The Tribunal also found that the principles of natural justice were not violated, as the appellants were given ample opportunities for cross-examination, which they failed to utilize. The appeals were rejected, and the impugned order was upheld.

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