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2024 (10) TMI 1190 - HC - CustomsLevy of penalties u/s 114 and 114AA of Customs Act, 1962 - failure to follow procedure u/s 138B of the Act - wrong interpretation of Section 138B of the Customs Act,1962 - denial of exporter s request to permit the cross examination of the Chemical Examiner - setting aside the order without any remand and opportunity to the Department to allow cross examination - no cogent and convincing reason mentioned by the Adjudicating Authority for denial of cross examination of CRCL officer. HELD THAT - It is clear from the plain reading of the impugned order that the CESTAT had allowed the appeals on the sole ground that the statements, which formed the foundation of the order-in-original dated 23.11.2011 could not be used as relevant for proving the allegations against the respondents, in view of Section 138B of the Act. The exporter was given no opportunity to cross-examine any of the person whose statement was sought to be relied upon. The said persons were not examined by the Court and the Court had not expressed any opinion that the statements ought to be admitted, as contemplated under Section 138B (1) (b) of the Act. The question whether a person against whom a statement is relied upon ought to be given an opportunity to cross-examine the person who has made the statement was the subject matter for consideration by the Coordinate Bench of this Court in BASUDEV GARG, ARUN GUPTA, ANIL GOEL VERSUS COMMISSIONER OF CUSTOMS 2013 (5) TMI 350 - DELHI HIGH COURT where it was held that ' The circumstances referred to in section 9D, as also in section 138B, included circumstances where the person who had given a statement is 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 and expense which, under the circumstances of the case, the court considers unreasonable. It is clear that unless such circumstances exist, the noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi-judicial proceedings.' Undisputedly, there are circumstances where statements can be relied upon notwithstanding that the persons against whom the said statements are relied upon have not been afforded any opportunity to cross-examine the persons, who have made the statements. However, undisputedly, the record does not indicate that any of such circumstances existed in the facts of the present case. It is also material to note that the report of the Chemical Examiner was merely a conclusion and did not contain any analysis on the basis of which the conclusion was drawn. Clearly, in such circumstances, the exporter ought to have been provided an opportunity to cross-examine the Chemical Examiner. Thus, no substantial question of law arises in the present appeals - appeal dismissed.
Issues Involved:
1. Interpretation of Section 138B of the Customs Act, 1962. 2. Justification of the Tribunal's decision to quash the order based on denial of cross-examination. 3. Tribunal's decision to set aside the order without remanding for cross-examination. 4. Validity of the Adjudicating Authority's reasons for denying cross-examination. 5. Necessity of cross-examination in cases involving confessional statements. Detailed Analysis: 1. Interpretation of Section 138B of the Customs Act, 1962: The central issue revolves around the interpretation of Section 138B of the Customs Act, 1962, which pertains to the relevancy of statements made before a gazetted officer of customs. The Tribunal found that the adjudicating authority had relied on statements and a test report without following the prescribed procedure under Section 138B. The provision stipulates that statements can be considered relevant only under specific circumstances, such as when the person who made the statement is unavailable for cross-examination due to reasons like death or incapability. The Tribunal concluded that these circumstances were not present in the case, rendering the statements inadmissible without the opportunity for cross-examination. 2. Justification of the Tribunal's Decision to Quash the Order Based on Denial of Cross-Examination: The Tribunal's decision to quash the order was primarily based on the denial of cross-examination rights to the exporter. The adjudicating authority had not allowed the exporter to cross-examine the Chemical Examiner, whose report was pivotal to the case. The Tribunal emphasized that cross-examination is a fundamental right in quasi-judicial proceedings, especially when the evidence is used against a party. This aligns with precedents set by higher courts, which affirm the necessity of cross-examination to ensure fair proceedings. 3. Tribunal's Decision to Set Aside the Order Without Remanding for Cross-Examination: The Tribunal chose to set aside the order without remanding the matter for cross-examination. This decision was based on the absence of material evidence once the statements and the Chemical Examiner's report were excluded. The Tribunal found no substantial basis to sustain the adjudicating authority's order, thus justifying the setting aside of the order without a remand. 4. Validity of the Adjudicating Authority's Reasons for Denying Cross-Examination: The adjudicating authority had denied cross-examination of the Chemical Examiner without providing cogent reasons. The Tribunal noted that the Chemical Examiner's report lacked detailed analysis and was merely a conclusion. The absence of a detailed report and the denial of cross-examination rights led the Tribunal to question the validity of the adjudicating authority's decision. The Tribunal highlighted that exceptional circumstances must exist to justify the denial of cross-examination, which were not present in this case. 5. Necessity of Cross-Examination in Cases Involving Confessional Statements: The Tribunal addressed the necessity of cross-examination even in cases involving confessional statements. It reiterated that cross-examination is crucial to verify the authenticity and context of such statements. The Tribunal's insistence on cross-examination aligns with legal principles that safeguard the rights of individuals in judicial and quasi-judicial proceedings. The Tribunal found that the absence of cross-examination undermined the reliability of the statements used against the respondents. Conclusion: The Tribunal's decision was rooted in ensuring procedural fairness and adherence to statutory provisions. The denial of cross-examination rights and reliance on insufficient evidence led to the quashing of the adjudicating authority's order. The High Court upheld the Tribunal's decision, dismissing the Revenue's appeals and affirming that no substantial question of law arose in the present appeals.
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