2019 (6) TMI 977 - HC - Customs

Principles of natural justice - cross-examination of witnesses of the prosecution not allowed - production of evidences under Customs Act - HELD THAT - A party to the proceeding, introducing evidence through a natural person in the proceeding, is obliged to offer such witness for cross-examination to the opposite party. It is for the opposite party to either cross-examine such witness or to decline the same. However, till such time, the witness is offered for cross-examination to the opposite party, the statement given by such witness, in the proceeding does not become admissible as evidence in the proceeding. Such statement cannot be treated as evidence. Section 138B of the Act of 1962 carves out few exceptions from such cardinal principle in a proceeding. Section 138B(1) of the Act of 1962 stipulates that, a statement made and signed by a person before any gazetted officer of the customs during the course of any enquiry or proceeding under the Act of 1962 shall be relevant, for the purpose proving, in any prosecution of an offence under the Act of 1962, the truth of the facts which it contains when, the person who made the 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 or expense which, under the circumstances of the case, the Court considers unreasonable, or when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The exceptions carved out under Section 138B(1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication under the Act of 1962, as it would apply in a proceeding before a Court for the prosecution of any offence under the Act of 1962. The Act of 1962 empowers the Customs authorities to make an enquiry, initiate adjudication proceedings and file prosecution. The Act of 1962 allows an appeal against an order-in-original passed in the adjudication proceeding. There are provisions for revision also. When making an enquiry, an officer of the Customs may require attendance of a person to make a statement. He is empowered to require a person to make a statement under Section 108 of the Act of 1962. Such a statement made in the course of an enquiry, and if its limited to the enquiry, then, the question of the person making the statement being open to cross-examination does not arise. However, once an adjudication proceeding is initiated, and a statement made under Section 108 of the Act of 1962 is introduced as a piece of evidence in such adjudication proceedings, then, the person making that statement must be made available for cross-examination to the party against whom such statement has been used in the adjudication proceedings, subject to the provisions of Section 138B of the Act of 1962. In the facts of the present case, the order-in-original records that, the petitioner was disallowed cross-examination of any person making any statement against the petitioner under Section 108 of the Act of 1962. The order-in-original relies upon such statements as evidence. The impugned order-in-original does not record a finding that, any of the conditions specified under Sections 138B(1) of the Act of 1962 stands satisfied thereby making such statements relevant without cross-examination of such witness by the petitioner. The adjudication proceedings conducted by the adjudicating authority and resultant the impugned order-in-original stand vitiated by breach of principles of natural justice - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Breach of principles of natural justice.
2. Right to cross-examine witnesses under the Customs Act, 1962.
3. Relevance and admissibility of statements made under Section 108 of the Customs Act, 1962.
4. Applicability of Section 138B of the Customs Act, 1962 to adjudication proceedings.

Detailed Analysis:

Breach of Principles of Natural Justice:
The petitioner challenged the order-in-original dated September 6, 2018, on the grounds of a breach of principles of natural justice. The petitioner argued that the adjudicating authority denied the right to cross-examine prosecution witnesses, which is a fundamental aspect of natural justice. The court noted that principles of natural justice are integral to adjudication proceedings under the Customs Act, 1962, as per Section 122A, which mandates an opportunity of being heard.

Right to Cross-Examine Witnesses:
The petitioner contended that the adjudicating authority's refusal to allow cross-examination of witnesses who made statements under Section 108 of the Customs Act, 1962, was erroneous. The petitioner cited Section 138B, which stipulates that statements made by witnesses are relevant without cross-examination only under specific conditions. The court emphasized that cross-examination is essential for the admissibility of evidence, and the right to cross-examine is part of the principles of natural justice.

Relevance and Admissibility of Statements:
The court examined the relevance and admissibility of statements made under Section 108 of the Customs Act, 1962. It held that such statements are distinct from those recorded by police officers under the Code of Criminal Procedure and are admissible in evidence. However, for these statements to be considered relevant in adjudication proceedings, the conditions under Section 138B must be met. The court found that the adjudicating authority did not establish that any of the conditions under Section 138B(1) were fulfilled, rendering the statements inadmissible without cross-examination.

Applicability of Section 138B:
The court clarified that Section 138B of the Customs Act, 1962, applies to both adjudication proceedings and prosecutions. It provides exceptions to the general rule of evidence, allowing statements to be relevant without cross-examination under specific circumstances. The court noted that the adjudicating authority failed to justify the denial of cross-examination based on these exceptions.

Conclusion:
The court concluded that the adjudicating authority's refusal to allow cross-examination violated the principles of natural justice, rendering the order-in-original null and void. The court quashed the impugned order and directed the adjudicating authority to proceed afresh, allowing reasonable opportunity for cross-examination of witnesses as requested by the petitioner, subject to the provisions of Section 138B of the Customs Act, 1962. The court emphasized the importance of adhering to natural justice principles in adjudication proceedings and the right to cross-examine as an indefeasible right.

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