2021 (4) TMI 691 - HC - Customs

EPCG Scheme - fulfilment of all obligations or not - reliance placed on statements of various persons - request for cross-examination rejected - violation of principles of natural justice or not - HELD THAT - The Hon'ble Supreme Court in a recent decision I.C.D.S. Ltd. vs. Commissioner of Income Tax 2020 (2) TMI 1424 - SUPREME COURT held that if the department wants to rely on the evidence of certain witnesses, it may be necessary to provide opportunity of cross examination of these witnesses to the noticee. This is a self-evident proposition for which no authority is needed. The said decision of the Hon'ble Supreme Court squarely applies to the case on hand. Since this basic right of the petitioners has been denied, the order impugned in these writ petitions will have to be necessarily set aside - the matter is remitted to the file of the first respondent - petition allowed by way of remand.

Summary

Issues:
1. Maintainability of writ petitions challenging differential duty and penalty imposed under EPCG Scheme.
2. Violation of principles of natural justice regarding the request for cross-examination of witnesses.
3. Application of previous judgments related to cross-examination of co-noticees.
4. Denial of basic right to cross-examine witnesses leading to setting aside of the impugned order.

Issue 1:
The petitioner company imported capital goods under the EPCG Scheme and fulfilled obligations, but faced a show cause notice alleging fraudulent misrepresentation. The first respondent imposed differential duty and penalty, leading to the writ petitions challenging the same. The respondents argued that the writ petitions were not maintainable, citing the need to exhaust alternative appeal remedies. However, the court considered the maintainability issue in light of the violation of natural justice principles.

Issue 2:
The petitioner requested cross-examination of witnesses, which was rejected, leading to a claim of a breach of natural justice. The court held that if principles of natural justice are violated, a Writ Court can entertain a petition under Article 226 of the Constitution of India, irrespective of the availability of alternative remedies. The court distinguished the cited decision and allowed the writ petitions due to the violation of natural justice principles.

Issue 3:
The standing counsel referred to a previous order related to cross-examination of co-noticees, which was deemed inapplicable to the current case. The petitioners' request for cross-examination was specific to certain named individuals, whose statements were relied upon by the adjudicating authority. The court emphasized the need for the department to provide an opportunity for cross-examination of witnesses if their evidence is relied upon, as established in a recent Supreme Court decision.

Issue 4:
Due to the denial of the petitioners' right to cross-examine witnesses, the court set aside the impugned order imposing differential duty and penalty. The writ petitions were allowed, and the matter was remitted to the first respondent for affording the petitioners the opportunity to cross-examine the witnesses whose statements were relied upon. The court clarified that the petitioners cannot demand the facilitation of cross-examination of co-noticees, leaving that decision to the petitioners themselves. The writ petitions were allowed with no costs, and connected miscellaneous petitions were closed.