2021 (12) TMI 969 - HC - Customs

Principles of natural justice - petitioners' request of cross-examination of certain witnesses refused - reason for refusing the request by said communication was that the department had not recorded the statements of the persons mentioned in the petition - HELD THAT - The legal trend is increasingly clear on the question of grant of cross-examination of the witnesses during departmental proceedings including under the statutes such as the Customs Act. If the department relies on any statement of a witness for its final conclusions, cross-examination must be granted. In other words, no part of statements of the witnesses can be relied upon without being tested through cross- examination if so demanded by the noticee. However, this court has always maintained a self-imposed discipline not to interfere with the departmental proceedings at an intermediary stage unless gross injustice or prejudice is demonstrated. As of now, the petitioners have merely received show cause notice, adjudication of which is yet to be done. Whether the department will rely upon the statements of the concerned witnesses in the final adjudication and if so to what extent cannot be foreseen - Petition disposed off.

Summary

Issues:
Challenge to refusal of cross-examination of witnesses by assessing officer.

Analysis:
The petitioners challenged the orders dated 01/11/2021 and 22/11/2021 passed by the assessing officer, which refused the petitioners' request for cross-examination of certain witnesses. The first order cited the reason for refusal as the department not recording the statements of the mentioned persons. However, the second order, dated 22/11/2021, rejected the request on different grounds, stating that the witnesses' statements were recorded under Section 108 of the Customs Act, and no retraction was filed by them during the investigation. The court noted the arguments of the petitioners' counsel contending that the reasons given for refusing cross-examination were invalid. The counsel emphasized that the mere absence of retraction of statements recorded under the Customs Act is not a valid ground for denial of cross-examination. The court agreed with the counsel's contention, emphasizing that if the department relies on a witness's statement for its conclusions, cross-examination must be allowed. The court maintained that no part of a witness's statement can be relied upon without being tested through cross-examination if requested by the noticee.

The court highlighted the legal trend regarding the grant of cross-examination during departmental proceedings, especially under statutes like the Customs Act. It emphasized that if the department bases its conclusions on a witness's statement, cross-examination must be provided. However, the court stated its usual practice of not interfering with departmental proceedings at an intermediary stage unless gross injustice or prejudice is evident. The court noted that the petitioners had only received a show cause notice, and the adjudication was pending. It was uncertain whether the department would rely on the witnesses' statements in the final adjudication. Therefore, the court decided not to interfere with the ongoing proceedings before the customs authorities but allowed the petitioners to raise the legal contention if necessary in the future.

In conclusion, the court disposed of the petition, maintaining that the petitioners could raise the legal contention regarding cross-examination of witnesses if required in the future. The court emphasized the importance of allowing cross-examination when the department relies on a witness's statement and refrained from intervening in the ongoing proceedings unless necessary to prevent gross injustice or prejudice.