2020 (9) TMI 855 - AT - Customs

Levy of penalty under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 - Valuation of Export goods - High Seas Sale - rejection of declared value based on contemporaneous imports - the case of the Appellant is that they had been denied an opportunity of personal hearing by the Adjudicating Authority - principles of natural justice - HELD THAT - Since the statement of Mr. Kuntal Mitra (CHA) has contributed substantially to the case made out by the Department against the Appellant, the Department ought to have granted an opportunity of cross-examination to the Appellant. The process of cross-examination is not a mere empty formality but a part of an assessee s right to put forth a proper defence. The reasoning given by the Department for denying the cross-examination to the appellant, that they failed to appear on the appointed date is not acceptable in as much as the Appellant had made the request for providing cross-examination at the adjudication stage. Hon ble Gujarat High Court in Manek Chemicals Pvt. Ltd. v. Union of India 2015 (12) TMI 1267 - GUJARAT HIGH COURT has held that cross-examination is an integral part of the Principles of Natural Justice. Therefore, by denying an opportunity of cross-examination to the Appellant, the Adjudicating Authority has acted in violation of the Principles of Natural Justice. The matter is remanded to the Adjudicating Authority to allow the Appellant an opportunity for cross-examination of the CHA and pass an order after considering the evidence on record - Appeal allowed by way of remand.

Summary

Issues:
1. Alleged undervaluation of goods leading to evasion of duty.
2. Denial of opportunity of personal hearing and cross-examination.
3. Violation of Principles of Natural Justice.

Analysis:
The Appellant, engaged in trading glass products, sold a consignment to an importer on High seas. The Department provisionally cleared the consignment but later alleged undervaluation compared to contemporaneous imports. A Show Cause Notice was issued, and the Adjudicating Authority confirmed differential customs duty, interest, and penalty. The Commissioner (Appeals) upheld the decision, prompting the appeal before the Tribunal.

The Department accused the Appellant of colluding with the importer to undervalue goods, imposing a penalty under relevant sections of the Customs Act. The Appellant argued that they were denied a personal hearing and the opportunity to cross-examine the Customs House Agent (CHA), crucial to their defense. The Department claimed the Appellant missed the scheduled hearing for cross-examination, but failed to provide evidence supporting their contentions.

The Tribunal noted the importance of cross-examination in the defense of an assessee, citing a previous case where the Gujarat High Court emphasized cross-examination as a fundamental aspect of Natural Justice. Consequently, the Tribunal found the denial of cross-examination to be a violation of Natural Justice principles. The matter was remanded to the Adjudicating Authority to allow the Appellant to cross-examine the CHA and make a decision based on the evidence presented.

In conclusion, the Tribunal disposed of the appeal by ordering a remand for cross-examination, emphasizing the significance of procedural fairness and the right to a proper defense in customs matters.