2022 (6) TMI 534 - HC - Customs

Criminal conspiracy - import of Iridium Sponge - Undervaluation of imported goods - opportunity to the Petitioner to cross-examine the witnesses given or not - HELD THAT - Admittedly, permission to cross examine the witnesses was denied to the petitioner. It is settled principle of law that order passed without following principles of natural justice is a nullity - In the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT the permission to cross-examine the witnesses was declined by the Adjudicating Authority. The impugned order passed by the Respondent No.2 does not say that there is no material against the Petitioner in the statement of Naishad B. Kapadia. It has simply declined the permission to cross-examine the witness Naishad Kapadia and other witnesses only on the ground that it will not shed any further light. It is not for the authority to conclude in advance whether the cross-examination would be helpful or not or nothing fruitful would be eilicited in cross-examination. This approach of Respondent No.2 is not correct. Without cross-examining the witness it is impermissible for the Authority to say that no fresh light will be shed. It is true that alternative remedy of appeal to the Appellate Tribunal under section 127A of the Customs Act, 1962 is available to the petitioner. However, when the principles of natural justice are violated doors of this Court cannot be closed for the Petitioner on the ground of availability of alternate efficacious remedy. It is the right of every person to cross-examine the witnesses on whom reliance has been placed by the Authorities - it is deemed appropriate to set aside the impugned order and remand the mater to the Respondent No.2 for deciding afresh with the directions that respondent no.2 shall permit the Petitioner to cross-examine the witness Naishad B. Kapadia. Petition allowed by way of remand.

Summary

Issues Involved:
Quashing of order dated 8th May, 2020 | Violation of principles of natural justice | Denial of permission to cross-examine witnesses | Adjudicating Authority's reliance on witness statements | Availability of alternative remedy of appeal

Quashing of Order:
The petitioner sought the quashing of the order dated 8th May, 2020, passed by Respondent no. 2, which dismissed the petitioner's appeal. The facts revealed a criminal conspiracy to defraud the Government by importing Iridium Sponge at an understated value. Statements were recorded under Section 108 of the Customs Act, 1962, and a penalty was imposed on the petitioner. The Settlement Commissioner directed others to pay duty, while the petitioner's request for cross-examination was denied, leading to the impugned order.

Violation of Principles of Natural Justice:
The petitioner argued that Respondent no. 2 violated natural justice by not allowing cross-examination of witnesses, citing the case of M/s. Andaman Timber Industries vs. Commissioner of Central Excise. The respondent contended that denying cross-examination was justified as it would not provide new insights. However, the court emphasized that orders passed without following natural justice principles are nullities, as established in various legal precedents.

Denial of Permission to Cross-Examine Witnesses:
The court highlighted the importance of cross-examining witnesses, as evidenced in the case law of Lalit Kumar Modi v. Special Director, Directorate of Enforcement. The respondent's reliance on witness statements, particularly Naishad B. Kapadia's, was crucial in the case. The court noted that the denial of cross-examination could adversely affect the petitioner, emphasizing the right to cross-examine witnesses relied upon by the authorities.

Adjudicating Authority's Reliance on Witness Statements:
Respondent no. 2 based the impugned order on Naishad B. Kapadia's statement, indicating the Settlement Commission's and respondent's reliance on it. The court stressed that the petitioner's right to cross-examine witnesses, especially Kapadia, was essential for a fair adjudication process. The court found the respondent's refusal to allow cross-examination unacceptable, as it prevented the petitioner from challenging crucial evidence.

Availability of Alternative Remedy of Appeal:
Although an alternative remedy of appeal existed under section 127A of the Customs Act, the court held that the violation of natural justice principles warranted intervention. The court set aside the impugned order and directed a fresh decision, emphasizing the petitioner's right to cross-examine witnesses. The court's decision allowed the petitioner to pursue a fair adjudication process, ensuring the principles of natural justice were upheld.

This detailed analysis of the judgment showcases the court's emphasis on natural justice principles, the right to cross-examine witnesses, and the significance of a fair adjudication process in legal proceedings.