2023 (12) TMI 389 - HC - Customs

Maintainability of petition - availability of alternative remedy of filing an appeal - petitioner was not provided an opportunity to cross examine the persons whose statements came to be recorded in the course of the investigation - breach of the principles of natural justice - relevancy of statements u/s 138B of Customs Act - HELD THAT - A plain reading of Section 138 B would show that this provision pertains to the relevancy of statements under certain circumstances which stipulates that a statement made and signed by a person before any Gazetted Custom Officers, may during the course of any inquiry or proceedings under the Customs Act, shall be relevant, for the purpose of proving, in any prosecution for an offence under the Customs Act, the truth of the facts which it contains eventualities as provided for in clauses (a) and (b) of sub-section (1). Sub-section (1)(a) stipulates the eventuality. Section 138B per se does not provide for any cross examination, as the provision deals with relevancy of statements in the facts and circumstances of the case. As to whether an opportunity of cross examination ought to be given in regard to the statements as recorded by the Customs Officer, would be required to be considered in the course of adjudication of the show cause notice. Considering the implications, the provisions of Section 138B would bring about, it is not found that in the facts and circumstances of the case, it can be argued by the petitioner as an absolute principle of law, that an opportunity of cross examination of three witnesses ought to have been granted to the petitioner. Sub-section (1) clearly provides for relevancy of statements as made and signed before the Gazetted Officer of the Customs only in relation to any prosecution for an offence under the Customs Act and not otherwise. Although sub-section (2) makes a provision that the provisions of sub-section (1) are applicable in relation to any proceeding under the Customs Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court, it cannot be countenanced that sub-section makes a blanket provision for cross examination of such persons whose statement have been recorded before any Gazetted Officer of the Customs during the course of any inquiry or proceedings. In fact clause (b) of sub-section (1) makes a contrary indication, when it refers to the statement of the persons who are dead or cannot be found or is incapable of giving evidence or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense, which are eventualities wherein such persons can never be available for cross examination. Sub-section (1) also does not in any manner take away the discretion of the Customs Officer to accord appropriate weightage to the material and / or evidence before him in adjudicating the show cause notice - the contention as urged on behalf of the petitioner cannot be accepted, that Section 138B be read as creating an absolute right of cross examination of such persons on behalf of the noticee in the event the statements are made before any Customs Officer, during the course of any inquiry which are subject matter of consideration in adjudication of the show cause. Even otherwise, it is also important to note that show cause notice was issued in March 2000 and the request for cross-examination was made for the first time on 15 February 2017 i.e. almost after a period of more than 17 years. In the intervening period, the petitioner took recourse for settlement of the show cause notice by approaching the Settlement Commission and the lis in regard to the Settlement Commission ultimately reached the Supreme Court and the Supreme Court granted 3 months time to the petitioner to approach the Settlement Commission - the petitioner now urging a plea of cross-examination not being granted after a period of 17 years, from the date of show cause notice, itself would show the lack of bonafides of the petitioner. On a perusal of the impugned order-in-original which runs into 118 pages and on a holistic reading of the order, it cannot be said that the order is passed only on the statements of three witnesses of which cross-examination has not been granted, but there were various other direct evidences against the petitioner, for the duty liability to be fastened on the petitioner. Thus, the petitioner s plea as urged are after 17 years, cannot be a ground for quashing the order-in-original. In our opinion, the petitioner is resorting to be selective to dodge the proceedings, on raising hyper technical issues, which even otherwise are without merit. There are no merit in this petition - petition dismissed.

Summary

Issues involved:
1. Breach of principles of natural justice.
2. Availability of alternate statutory remedy.
3. Relevancy of statements under Section 138B of the Customs Act.
4. Delay in seeking cross-examination.

Summary:

1. Breach of principles of natural justice:
The petitioner contended that the impugned order-in-original should be set aside due to a breach of principles of natural justice, as they were not provided an opportunity to cross-examine three witnesses whose statements were recorded during the investigation. The court noted that the petitioner had ample opportunity during the adjudication process, including representation by counsel and submission of detailed replies. The adjudicating officer extensively considered the facts and materials on record, including the petitioner's submissions.

2. Availability of alternate statutory remedy:
The respondents argued that the petitioner had an alternate statutory remedy of filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) under Section 129A of the Customs Act. The court observed that the petitioner chose to file the writ petition to avoid the mandatory pre-deposit required for the appeal. The court emphasized that the petitioner should have exhausted the statutory remedy before approaching the High Court.

3. Relevancy of statements under Section 138B of the Customs Act:
The petitioner argued that under Section 138B of the Customs Act, they should have been allowed to cross-examine the witnesses. The court clarified that Section 138B pertains to the relevancy of statements in prosecution for an offense under the Customs Act and does not per se provide for cross-examination. The court held that the provision does not create an absolute right to demand cross-examination and must be considered in the context of the adjudication proceedings.

4. Delay in seeking cross-examination:
The court noted that the show cause notice was issued in March 2000, and the request for cross-examination was made only in February 2017, after a delay of more than 17 years. The petitioner had also approached the Settlement Commission and the Supreme Court during this period. The court found the delay indicative of a lack of bona fides on the petitioner's part.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's contentions. The court held that the impugned order-in-original was not solely based on the statements of the three witnesses but was supported by various other direct evidences. The petitioner's plea was viewed as an attempt to avoid liability by raising hyper-technical issues. The court emphasized the need to exhaust statutory remedies before seeking judicial intervention.