2018 (11) TMI 856 - AT - Customs

Principles of natural justice - opportunity of cross-examine not provided - Imposition of penalty on freight forwarding agency, customs house agent and its proprietors - Ineligible availment of higher drawback - mis-declaration of quantity, description and value - Held that - When the entire case is based on the statement of those employees, the veracity of which was not tested by permitting the appellants to cross examine them, the same cannot be considered as a complete piece of evidence on which reliance can be placed. Such an order passed by the original adjudicating authority and the Commissioner (Appeals) are in gross violation of principles of natural justice and therefore it is a fit case which is required to be remanded back for re-adjudication. Section 128A(3) empowers the Commissioner (Appeals) to make such further enquiry as may be necessary to pass such order as he may think proper - the Commissioner (Appeals) can exercise power vested with adjudicating authority in accepting evidence and making further enquiry as he deems proper after providing opportunity to the appellant to cross examine the witnesses. Appeal allowed by way of remand.

Summary

Issues Involved:
Challenging penalty imposition on freight forwarding agency, customs house agent, and proprietors for mis-declaration of quantity, description, and value to avail higher drawback.

Detailed Analysis:

1. Imposition of Penalty:
The case involves challenging the penalty imposed on a freight forwarding agency, customs house agent, and its proprietors for alleged mis-declaration of quantity, description, and value to avail higher drawback. The exporter, M/s. Orient Export, filed shipping bills for export of readymade garments to Sudan under the drawback scheme. Upon examination, misdeclaration was found, resulting in the redetermination of the export goods' value. The adjudicating authority confiscated the goods and imposed penalties on the appellants. The Commissioner (Appeals) upheld the order, leading to the appeal before the Tribunal.

2. Legal Arguments:
During the appeal hearing, the appellant's counsel raised various points, including the contention that the customs house agent (CHA) should not be prosecuted under the Customs Act. It was argued that a separate procedure exists for violations of the Customs Brokers Licensing Regulation, empowering the Commissioner of Customs to conduct necessary inquiries. Additionally, the absence of the exporter as a party in the proceedings was highlighted, questioning the basis of the alleged acts committed by the appellants.

3. Examination of Evidence:
The department's representative justified the Commissioner (Appeals)'s order by referring to statements from individuals associated with the freight forwarding agency. These individuals were alleged to have intentionally provided incorrect export documents to inflate values for claiming excess drawback. However, the appellants were denied the opportunity to cross-examine these individuals, leading to a lack of verification of the evidence presented.

4. Violation of Natural Justice:
The Tribunal observed that the reliance on statements without allowing cross-examination violated principles of natural justice. The appellants' request for cross-examination was not entertained by the Commissioner (Appeals), leading to an incomplete evidentiary record. The Tribunal deemed this a case requiring remand for re-adjudication to ensure due process and the examination of evidence through cross-examination.

5. Remand Order:
Citing Section 128A(3) empowering the Commissioner (Appeals) to conduct further inquiries, the Tribunal ordered a remand to the Commissioner (Appeals). The direction included providing the appellants with the opportunity to cross-examine principal witnesses and for the Commissioner to adjudicate and pass necessary orders based on a complete examination of evidence. Consequently, the Commissioner (Appeals)'s earlier order was set aside, emphasizing the importance of adhering to principles of natural justice in the adjudication process.