2022 (8) TMI 182 - AT - Customs

Legality of confirmation of penalty at the reduced rate under Section 114(3) of the Customs Act, 1962 - opportunity of cross examination of some of the officials and witnesses, basing on whose statement penalty was imposed - Violation of principles of natural justice - HELD THAT - It is needless to mention here that through a series of decisions passed by the Hon'ble Supreme Court and the Hon'ble High Courts of our country it has become a settled principle of law that evidence not tested by the cross examination has no probative value and there should be opportunity provided to the opposite parties to cross examination the witnesses. Reliance can be placed in the case of G. BALAJI, VENKATESWARA RAO VERSUS SARAVANASAMY 2020 (7) TMI 810 - MADRAS HIGH COURT where it was held that the plaintiff in the instant case, who could not appear before the court on the ground that his employer refused to grant leave for months and in fact years together, is not entitled to any equitable treatment and his evidence cannot retained for considering its probative value. Even though it is countered by the respondent/Plaintiff that extensive cross examination has been done, it is relevant to note that the learned judge has not chosen to consider or accept the same and has not observed as such. If it is true that extensive cross examination has already been made, the matter need not have been adjourned for about seven hearings for continuation of cross examination. Thus, placing reliance on the statements of the witnesses recorded by the Departmental Officers without providing an opportunity of cross examination to the Appellant is a clear violation of principle of natural justice, for which the order passed by the Commissioner (Appeals) cannot sustain in law and facts. The appeals are allowed by way of remand to the Adjudicating Authority with direction to provide copies of relied upon documents and opportunity of cross examination of those witnesses, so as to complete a de novo proceeding and pass necessary order placing reliance only on the evidence of those witnesses who could be cross examined by the Appellant.

Summary

Issues:
Challenging the legality of confirmation of penalty under Section 114(3) of the Customs Act, 1962 due to lack of natural justice principles followed in the adjudication process.

Analysis:
The appeals were filed against a common order by the Commissioner of Customs (Appeals) challenging the penalty confirmation under Section 114(3) of the Customs Act, 1962. The Appellant's Counsel argued that the penalty was imposed without following natural justice principles, emphasizing the lack of cross-examination opportunities for certain officials and witnesses. The Counsel cited precedents to support the argument. The Authorized Representative for the Respondent defended the order, stating that the statements were made by the Appellant's own people who did not retract their statements. The Member (Judicial) reviewed the case record and the detailed order of the Appellate Authority, highlighting the Appellant's requests for documents and cross-examination opportunities that were not fulfilled. The Commissioner (Appeals) failed to address the non-compliance with natural justice principles regarding cross-examination of witnesses whose statements led to the penalties.

The Member (Judicial) referenced legal precedents emphasizing the importance of cross-examination for evidence validity. Citing a Supreme Court judgment, it was noted that evidence not tested by cross-examination lacks probative value. The judgment highlighted that when a party does not offer themselves for cross-examination, adverse inferences can be drawn. Based on these principles, the Member (Judicial) concluded that reliance on witness statements without providing cross-examination opportunities violates natural justice. Therefore, the order confirming the penalty under Section 114(3) could not be sustained in law and facts.

In the final order, all three appeals were allowed, remanding the case to the Adjudicating Authority. The Authority was directed to provide copies of relied upon documents and allow cross-examination of witnesses. Only evidence from witnesses cross-examined by the Appellant should be considered. Evidence from witnesses unavailable due to legal impediments may be accepted as corroborative. The Adjudication process was to be completed within six months. Consequently, the order confirming the penalty under Section 114(3) at a reduced rate was set aside.