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TMI Blog2018 (3) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... writing, informing the owner of the goods or such person of the grounds on which it has proposed to confiscate the goods or to impose the penalty and on affording an opportunity to make a representation in writing within such reasonable time, as may be specified and also offer the reasonable opportunity of being heard in the matter. Section 124 of the Customs Act, 1962 under which show cause notice has been issued to the petitioner contemplates a notice in writing informing the grounds on which it has proposed to confiscate the goods or impose a penalty and giving an opportunity of making representation in writing within a reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty - Further every departure from principles of natural justice may not result in miscarriage of justice and the Hon'ble Apex Court has at times refused to strikeout an action, not being in conformity with the principles of natural justice, unless the prejudice caused is demonstrated. In the words of the Hon'ble Apex Court, it will be “useless formality”, if the resultant situation would be the same even after due adherence to the principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director and Assistant Manager cum Authorized Signatory at Vapi and Mumbai Head Office of the Petitioners on 3rd / 4th February, 2010 and various documents were seized under the distinct panchanamas and the stock position of raw material and finished goods was recorded. During the course of the investigation, the officers of the department also recorded the statements of various persons including the employees of the petitioner company as also the transporters engaged in transportation of raw materials goods. Premises of all the transporters were also searched during the course of the investigation and certain documents were procured from them by executing panchanamas to M/s. KIL from different consignees and make arrangement for delivery of finished goods as parcel to other transporters for onward transportation. Based on the said material, the show cause notice alleges that the petitioner's company have been habitually indulged in diversion of the imported goods, imported by them on payment of duty and Imported duty free against Advance Authorization / Licences. It was alleged that in order to fulfill export obligation, they are showing fake clearance / deemed exports und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow Cause Notice) should not be confiscated under Section 111 (O) of Customs Act, 1962. iv Customs Duty amounting to ₹ 1,49,08,584/ ( as detailed in Annexure A 13 to the Show Cause Notice), should not be demanded and recovered under proviso to Section 28 (4) of Customs Act, 1962 and the bonds executed by them against the said Advance Authorisations at the time of imports of the said goods be enforced for recovery of the said duty as per the conditions of the Notification No. 91/2004 Cus dtd 10/9/2004 and No. 93/2004 Cus dtd 10/9/2004. v Interest at appropriate rate should not be demanded and recovered on the customs duty evade by them at paras (ii) (iv) vi Penalty should not be imposed under Section 112/114A of the Customs Act, 1962 for (I), (ii), (iii) and (iv) above. 4. The Petitioners by their letter dated 15.12.2015 showed cause to the said notice, responding that there is no diversion of exempted material and requested for dropping of the proceedings initiated against them since the goods were not diverted and it was specifically contended that the entire quantity of PVC Resign was physically brought to the Dadra Factory and the entire quantity was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in their letter dated 15.1.2016 and reiterated in the letter dated 19.01.2016, is not supported by valid reasons. The communication sets out the following reasons : . I find that the request of noticee for permission of cross examination of persons as indicated in their letter dated 15.01.2016 and again vide letter dated 19.01.2016 is not supported by valid reasons. It is noticed that all the relied upon documents including statements of the concerned persons, whose crossexamination has been sought have already been provided to the Noticee and instead of making submission on merits, attempt has been made to delay the proceedings in seeking cross examination without any valid reasons. It is also noticed that it is not obligatory on the adjudicating authority in such quasi judicial proceeding to accede to such unreasonable demands. Reliance was placed on the following judgments : i. Union of India Vs. Rajendra Bajaj (2010 (253) E.L.T. 165 (Bom)] ii. Kanungo Co. Vs. Collector of Customs, Calcutta others (1993(13) E.L.T. 1486 (SC) iii. Fortune Impex Vs. Commissioner of Customs, Calcutta (2001 (138) E.L.T. 556 (Tri Kolkata)] iv. Suman Silk M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntails civil consequences, then such material is to be supplied to the person concerned and if the matter includes documentary evidence, the same must be supplied and if it includes statements of persons or the documents authored by certain persons, then such persons must be made available for cross examination before the Authority. He would thus clamp the impugned rejection as grave injustice and prejudice to the petitioners. The learned counsel would, therefore, pray for issuance of a writ of mandamus, directing the respondents to permit the petitioners to cross examine 11 truck owners/ transporters, whose statements were relied upon in the show cause notice. to allege that the imported goods have not reached the factory of the petitioners. He, therefore, prays for quashing and setting aside the said impugned order/ communication. 9 The learned counsel representing the Revenue would refer to a catena of judgments to canvass the submission that it is not imperative on the part of the adjudicating authority to offer such an opportunity. Learned counsel for the revenue relied upon the judgment of the Hon'ble Apex Court in case of Telestar Travels Pvt. Ltd., vs. Special Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. It is only when a deposition goes through the fire of cross examination that a Court or Statutory Authority may be able to determine and assess its probative value. Using a deposition that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting the right of the citizen. The question, however, is whether failure to permit the party to cross examine has resulted in any prejudice so as to call for reversal of the orders and a de novo enquiry into the matter. The answer to that question would depend upon the facts and circumstances of each case. The learned counsel for the Revenue would also refer to the judgment of the Apex Court in the case of Kanungo and Company vs. Collector of Customs Ors., reported in 1973 (2) SCC 438, which was also referred to and relied upon while deciding the Telestar Travels Pvt. Ltd., cited supra.. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court. 10 For effective adjudication of the controversy in hand and to determine as to whether the petitioners ought to be permitted to avail the opportunity of cross examination, as prayed by them, it would be necessary to dwell upon the statutory scheme under which such a right is claimed. The Petitioner was served with the show cause notice, asking it to show cause as to why certain goods which they are manufacturing and dealing with be not confiscated under section 111 of the Customs Act, 1962 and the custom duty should not be demanded and recovered from them under the proviso to section 24 (4) of the Customs Act. The Customs Act, 1962 is an Act dealing with the law relating to customs, aims at sternly and expeditiously deal with the smuggled goods and curb the dents on the revenue thus caused. The Act contains the provisions for confiscation of goods and conveyance and imposition of penalties, when any goods are imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force. The enactment prescribes a mechanism for levy of, and exemption from payment of custom duties leviable under the Act. Chapter 14 of the Act pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter: Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may at the request of the person concerned be oral. 11. The Adjudication procedure contemplated in Chapter 14, thus mandates the adjudicating authority to follow the principles of natural justice before issuing an order of confiscation of any goods or imposition of any penalty on any person and it mandates issuance of notice in writing, informing the owner of the goods or such person of the grounds on which it has proposed to confiscate the goods or to impose the penalty and on affording an opportunity to make a representation in writing within such reasonable time, as may be specified and also offer the reasonable opportunity of being heard in the matter. Thus what we find is that the principles of natural justice are implicitly engrafted in the said provision with a view to offer an opportunity to the owner of the goods to justify that the goods are not smuggled goods and they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncements the said right has been evolved as part and parcel of the principles of natural justice. The Hon'ble Apex Court in the case of M/s. Barelilly Electricity Supply Co. Ltd. vs. The Workmen and Others, reported in 1971 (2) SCC 617, while applying the principles contained in the Evidence Act to the procedure contemplated under the Industrial Disputes Act and was confined to with an issue about the applicability of the said principles in the proceedings in relation to the workmen and the Hon'ble Apex Court was dealing with an enquiry into misconduct by a public servant in which he complains that he was not permitted to cross examination. In fact though he was allowed to put questions and evidence was recorded in his presence and the procedure prescribed in the Evidence Act of recording the Chief Examination first and then allowing the delinquent to exercise his right to cross examination was not followed but the enquiry officer himself cross examined the witnesses. In this backdrop the Hon'ble Apex Court observed : But the application of principle of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilt and establish his innocence, which he can only do if he is informed of the charges levelled against him and the allegations on which such charges are based; (b) an opportunity to defend himself by cross examining the witnesses produced against him and by examining himself or any other witness in support of his defence and finally (c) an opportunity to make his representation as to why the proposed penalty should not be inflicted on him though this decision will have to be restricted to the peculiar facts of the case. The Hon'ble Apex Court in the case of The State of Jammu and Kashmir and Ors. vs. Bakshi Gulam Mohammad Anr, reported in AIR 1967 Supreme Court 122 , had an occasion to consider the sweep of the principles of natural justice. In paragraph 20 of the said judgment, the Hon'ble Apex Court held that right of natural justice requires that the party against whom allegation is being inquired into should be given a hearing. Right of hearing does not include right to cross examine. Right to cross-examination must depend upon circumstances of each case and also on the statute under which allegations are being enquired into. In State of Kerala vs. K. T. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier judgments made the following observations in para 28 : 28. The meaning of providing a reasonable opportunity to show cause against an action proposed to be taken by the government, is that the government servant is afforded a reasonable opportunity to defend himself against the charges, on the basis of which an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by crossexamining the witnesses produced against him. The object of supplying statements is that, the government servant will be able to refer to the previous statements of the witnesses proposed to be examined against him. Unless the said statements are provided to the government servant, he will not be able to conduct an effective and useful cross examination. 29. . 30. The aforesaid discussion makes it evident that, not only should the opportunity of cross examination be made available, but it should be one of effective cross-examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel could not specify any prejudice. In our view the present appeal should be allowed to the extent that the appellants should be entitled to cross examine the three witnesses whose statements have been relied upon by the respondent in the complaint. The respondent in the complaint have heavily relied upon the statement of Shri Ahmad Sakir, Shri Pratap Ghose and Shri K. Vasudeva. It would be in the fitness of things that to test the veracity of their statements which is relied upon by the respondent the appellants are allowed to cross examine them. 35. However, other than the three witnesses no grounds are made out to cross examine any other person. The request of the appellant to cross-examine Shri Rajeswhar Singh, Assistant Director, the complainant is a request without merits. The said complainant has filed the complaint based on material gathered by the respondent. No. purpose would be served by putting him to cross examination as is sought by the appellants. 15. This Hon'ble Court (Coram : S.C. Dharmadhikari Smt. Bharati H. Dangre, JJ) in writ petition no. 2803 of 2015 decided on 30.01.2018 in case of Lalit Kumar Modi vs. Special Director, Directora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject goods were diverted elsewhere and export obligation has been tried to be fulfilled is the said fake deemed exports by reasonably raising collusion or deliberate mis miss statement or suppressing of the facts which warrant confiscation of the said goods and also rendered the petitioner company liable for penalty under section 112 (a) of the Customs Act, the role played by the various persons / company and the transporters etc. and evasion of central excise duty by the petitioner company is specifically carved out. As far as the transporters are concerned, it is alleged that they have assisted the petitioner to conceal their illicit sale of raw materials. 17. Heavy reliance has been placed on the judgment delivered in the case of Patel Engineering (Supra). Perusal of the facts referred in the said judgments are distinct and the Hon'ble Division Bench of this court was dealing with the very peculiar facts and circumstances of the case and the assessee had filed a bill of entry for clearance of two tower cranes under EPCG license, claiming benefit of the notification dated 1st April, 2003. As per the declaration, the tower cranes were shown as of 1995 make and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral other factors. Further every departure from principles of natural justice may not result in miscarriage of justice and the Hon'ble Apex Court has at times refused to strikeout an action, not being in conformity with the principles of natural justice, unless the prejudice caused is demonstrated. In the words of the Hon'ble Apex Court, it will be useless formality , if the resultant situation would be the same even after due adherence to the principles of natural justice. The question as to what extent the principles of natural justice need to be stretched as they cannot be moulded and are not to be construed with stringent strictness but needs to be dealtwith the flexibility. The principles of natural justice is necessary concomitant in any lis and non violation thereof have been held to be infringement of right to defend effectively and the courts have come upon heavily and have struck down such action. The Hon'ble Apex Court in the case of Canara Bank and Ors. vs. Debasis Das and Ors. (2003) 4 Supreme Court Cases 557 , where the Apex Court has observed thus in paragraph 19 as under : 19. Concept of natural justice has undergone a great deal of change in rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner would rely upon the judgment of the Delhi High Court in the case of Shahid Balwa, Vinod Goenka vs. Directorate of Enforcement, reported in [201 (2013) Delhi Law Times 211 DB] and also on the judgment delivered by the Division Bench of this Hon'ble Court (Coram : S.C. Dharmadhikar and B. P. Colabawalla,JJ) in the case of Nirmal Seeds Pvt. Ltd., vs. The Union of India Anr. (Writ Petition No. 1643 of 2017). The learned counsel would argue that though a right to cross examination is not an indefeasible right, the same could be availed of depending upon the facts and circumstances of each case. 20. In these peculiar circumstances, in order to effectively defend itself the petitioner is entitled to cross examine the said transporters as that would offer the petitioner a reasonable opportunity as contemplated under section 124 (c) of the Customs Act, 1962. The Petitioner company is entitled for the said opportunity since the Revenue Authority specifically relied on the statements of the transporters in support of the show cause notice, proposing confiscation of the goods and levying of penalty and foisting the liability on the petitioner company under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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