2017 (11) TMI 1120 - AT - Customs

Applicability of Section 28AAA - export of chilled meat - DEPB credit - The allegations made in the SCN by customs Department are that such scripts where procured by undertaking export of chilled meat in contravention of the relevant provisions of the Foreign Trade Policy (FTP) - case of appellant is that Section 28AAA came into effect w.e.f. 28.05.2012 so the same is not applicable in the instant case - Held that - In the present case, the appellant has exported chilled meat and procured DEPB/VKGUY scrips issued by DGFT - the relevant period involved in the present case is 01.04.2006 to 31.10.2010 and the show cause notice has been issued on 30.05.2011 to the person to whom such scrips were issued. The investigation has revealed that certain blank certificates duly signed by the doctors were found in the appellant s factory at the time of their search along with the relevant seals. The allegation is that the veterinary doctors never supervised such slaughter and hence, all such certificates were not valid but only an empty formality. Cross-examination - the appellant has sought cross-examination of the veterinary doctors whose certificates where recovered during such proceedings - Held that - cross-examination has not been allowed by the adjudicating authority before passing the impugned order. We note that it is a well settled legal principle that the cross examination of witnesses whose statements are admitted as evidence has to be considered in terms of Section 138B of the Customs Act. The said provisions are identical to the provisions of Section 9D of the Central Excise Act, 1944 - cross-examination of the above witnesses will be particularly necessary since the case of revenue is based on the certificates said to have been issued by these doctors. The matter is required to be remanded to the adjudicating authority to pass fresh orders after allowing the cross-examination of the witnesses - appeal allowed by way of remand.

Issues Involved:
1. Applicability of Section 28AAA of the Customs Act, 1962.
2. Applicability of Section 28 of the Customs Act, 1962.
3. Legality of demand raised under Section 28 for the period prior to 28.05.2012.
4. Validity of certificates issued for the export of chilled meat.
5. Requirement of cross-examination of witnesses.

Issue-wise Detailed Analysis:

1. Applicability of Section 28AAA of the Customs Act, 1962:
The appellant argued that Section 28AAA, which came into effect on 28.05.2012, is not applicable to their case. They relied on Explanation 2 of Section 28AAA, which states that the provisions apply to any utilization of the instrument obtained after the Finance Bill, 2012, received the President's assent. The appellant contended that the duty demand raised for the period prior to this date is not sustainable under this section.

2. Applicability of Section 28 of the Customs Act, 1962:
The appellant argued that Section 28 is not applicable to their case, relying on the Tribunal's decision in The Thar Dry Port & Ors. Vs. CC, Jodhpur, which stated that the legal provision regarding the demand of duty from the beneficiary of the instrument was introduced only from 28.05.2012. They also cited the case of CC (E.P.) Vs. Jupiter Exports, which held that duty under Section 28 could only be recovered from a person chargeable to duty, i.e., the importer or exporter.

3. Legality of Demand Raised Under Section 28 for the Period Prior to 28.05.2012:
The Tribunal noted that the relevant period in the present case is from 01.04.2006 to 31.10.2010, and the show cause notice was issued on 30.05.2011. The Tribunal distinguished the present case from The Thar Dry Port case, where the show cause notice was issued after the introduction of Section 28AAA. The Tribunal relied on the Andhra Pradesh High Court's decision in Sravani Impex Pvt. Ltd., which held that the Customs Authorities had the power to issue a show cause notice under Section 28 for repayment of DEPB credit availed by fraud, even for the period prior to the introduction of Section 28AAA.

4. Validity of Certificates Issued for the Export of Chilled Meat:
The Revenue's investigation revealed that blank certificates signed by veterinary doctors were found in the appellant's factory, indicating non-compliance with the Foreign Trade Policy's requirement for ante mortem and post mortem certification by a government-appointed doctor. The appellant argued that the certificates were signed with only two columns left blank and that the DGFT, the competent authority for granting or canceling licenses, had not canceled any licenses.

5. Requirement of Cross-Examination of Witnesses:
The appellant sought cross-examination of the veterinary doctors whose certificates were recovered during the investigation. The Tribunal noted that cross-examination had not been allowed by the adjudicating authority and emphasized the legal principle that cross-examination of witnesses whose statements are admitted as evidence is necessary. The Tribunal referred to decisions of the Bombay High Court and Punjab & Haryana High Court, which supported the requirement for cross-examination.

Conclusion:
The Tribunal upheld the legal validity of the show cause notice issued under Section 28 but set aside the impugned order and remanded the matter to the adjudicating authority. The adjudicating authority was directed to pass fresh orders after allowing the cross-examination of the witnesses and extending effective hearing to all appellants. Additional evidence may be admitted as per law.

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