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TMI Blog2023 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority. While imposing the penalties in this manner adjudicating authority has even failed to examine the legal provisions and the case law on the subject. Not a single word is recorded in the impugned order as to why penalty is imposable under Section 112 (a) and/ or section 112 (b) in the impugned order. This clearly shows that the impugned order has been passed in haste without even recording a finding on the basic issues and the legal provisions. The matter needs to be reconsidered by the Original Authority after permitting the cross-examination of the referred two persons before deciding the matter - Matter is remanded to the Original Adjudicating Authority for allowing the cross examination request of the appellant - Appeal allowed by way of remand. - MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) AND MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Vineet Kumar Singh, Advocate for the Appellant Shri Manish Raj, Authorised Representative for the Respondent ORDER This appeal is directed against the Order-In-Original No.02/Commr./2022-23 dated 01.11.2023 of the Commissioner of Customs (Preventive), Lucknow. By the impugned order following has been held:- (i) I order for absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in which it was observed that all the documents which were found from the possession of the said two persons were in the name of Shri Mayank Agrawal appellant before us. 2.3 On 03 bars out of 05 bars marking The Perth Mint Australia 1 Kilo 9950 was found but the bar number on these bars was found erased. On fourth bar marking as RAND Refinery 9950 FINE GOLD 1 KILO 9950 was found but bar number on this bar was alos found erased. On the fifth bar marking was I KILO GOLD 9950 ASSAY CERTIFIED ws found on the bar number as AJ0038812 was found embossed. 2.4 Under a reasonable belief that these gold bars were liable for confiscation they were seized as per the provisions of Section 110 of Customs Act, 1962 and on completion of the investigation a show cause notice dated 02.11.2021 was issued by the Joint Director, DRI, LZU, Lucknow stating as follows: A. (i) Mohammad Sarfaraj Hashmi (Age 43 years) S/o Shri Mohd. Gulab Hashmi, R/o 227, Nakhas Kohna, P S Shahganj Allahabad City, Uttar Pradesh -211003 (Noticee No 1) (ii) Rajwant Singh @ Rajwant Yadav @ Rajwansh Singh Yadav, Age 38 yrs, S/o Shri Indra Gopal Singh, R/o CDA (P) Droupadi Ghat, P S Sadar Bazar Cantonment, Allahabad, Uttar Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o persons have been denied by the Adjudication Authority without assigning any satisfactory reasons. The request and the prayer in this appeal is as follows: Without affording the opportunity of cross examination, the adjudicating authority cannot rely on the statement straightway. When the photographs of gold which were shown to the seller are not a part of RUD, then how the adjudicating authority can rely on such a statement. Mere marking is not conclusive evidence that the seized gold bars were of foreign origin. GST Invoice evidencing purchase of gold bars is conclusive evidence that it was not smuggled. matter needs to be re-adjudicated after allowing the cross examination of the said two persons, as they were neither the panch witnesses nor co-noticee in the case and the reliance is placed on their statements which wer e recorded behind the abc of the appellant. 3.3 Learned A.R. submits that this issue has been discussed and the Adjudication Authority has relied on various decisions to not to allow the cross-examination of these two persons. 4.1 We have considered the impugned order along with the submissions made in the appeal memo and during the course of argument. 4.2 For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the sole basis of his admission i.e. how he has made submission that the Gold Bars supplied by him do not bear any mark, number etc whereas notices themselves have so far not claimed that the seized goods do not bear any mark, number etc. The following case laws may be considered in this regard. 12.1. In the case of Sh. Surjeet Singh Chhabra v. UOI, reported in 1996 taxmann.com 71 (SC)/[1997] 89 ELT 646 (SC)[25-10-1996, it was held that 2. It is contended by learned counsel for the petitioner that the petitioner is entitled to cross- examine the Panch witnesses and the Seizing Officer for the goods seized in contravention of the FERA Customs Duty Act and that the opportunity has not been given. Therefore, it is violative of natural justice. 3 .....perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to crossexamine the witnesses is not violative of principle of natural justice. It is contended that the petitioner had retracted within six days from the confession. Therefore, he is entitled to cross-examine the panch witnesses before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducing the documents cannot even on the principles of Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. The third limb of the case of the appellants also in that view fails and is rejected. 12.V. The Hon'ble High Court of Telangana in the case of WP.No.18081 of 2020 of Mr Mohammed Muzzamil And Another vs The Central Board Of Indirect Taxes in its order observed and held as under: . 17.The main contention of the petitioners is that there has been a violation of principles of natural justice by the 2nd respondent by relying on the statements made under Sections 108 of the Customs Act, 1962 without permitting the petitioners to cross-examine them. 25.A Constitution Bench of the Supreme Court in Ramesh Chandra Mehta ( 4 supra) held that the Customs Officer even under the Act of 1962 continues to remain a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to him .... 38. We have also noticed that the petitioners were admittedly given a show-cause notice on 04.04.2016; they gave response there to on 02.03.2017 and 07.10.2019; and their counsel was also given a personal hearing on 02.03.2017 and 09.10.2019. So the contention of the petitioners that there were violation of other principles of natural justice, cannot also be sustained. In the instant case, a show cause notice was issued to the notices and teh notices were duly informed to submit their reply by giving them sufficient opportunity. Further,a number of dates of personal hearings were also fixed to give them an opportunity to submit their view point. The Notice No 3 have submitted their defense reply and also requested for providing them an opportunity to cross examine Shri Rajesh Kumar Gupta, valuer and Shri Rajesh Kumar Gupta, while Noticee No 1 2 vide their written submission dated 21.10.2022 have requested for providing them an opportunity for cross examination of witnesses claiming that the GST invoice was available with them at the time of interception of seized vehicle by the DRI officers. Noticees have never disputed the seizure of recovered Goods under the Fard/ B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e licit movement of the seized Gold, besides as discussed earlier there are ample tangible and corroborative evidence to establish the same. Technical report submitted by Shri rajesh Kumar Gupta is an opinion given by person duly approved by the competent authority and the same has not been contradicted by the rest report of sample given by the CRCL, as discussed supra, negligible amount of variation thereof can not be the basis of cross examination as sought by the Noticees. Therefore, cross examination of Shri Rajesh Kumar Gupta in view of observations made by the Hon ble courts in their various judgments as cited herein above is also not granted. Hence, I do not find any merit to allow the request for cross examination of the persons made by the noticees in the light of discussion held above and also in the light of observation made by the Hon ble courts in their various judgments as discussed supra. 4.3 From the facts as recorded in teh impugned order it is evident that the two persons namely Shri Rajat gupta and Shri Rajesh Kumar Gupta, valuer are neither co-accused in teh matter nor are they the panch witnesses. The persons whose cross examination has been asked by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be allowed to be crossexamined by the co-noticees on the statements made before the customs authorities. If crossexamination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic effort such conoticees by each one refusing to be crossexamined by resorting to Article 20(3) of the Constitution and simultaneously claiming crossexamination of the other co-noticees. We, therefore, hold that the appellants, including the appellant Ashish Kumar Chaurasia were not entitled to claim cross-examination as a matter of right. The appellant Ashish Kumar Chaurasia had, in fact, cross-examined two official witnesses and at the end, he had only sought for time for further hearing. The cross-examination made by the appellant, Ashish Kumar Chaurasia of two officers, A.K. Chaturvedi and Simon has been set out in the impugned order and it is recorded that, various dates of personal hearing was given one after the other but neither Ashish Kumar Chaurasia nor his advocate turned up . I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine qua non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevimanu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of his obligations in at least subjectively applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any Court intendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences in this regard then how by the application of this decision can cross examination request be denied. Mohammed Muzzamil 2021 (376) E.L.T. 46 (Telangana )] 35. Thus there is no doubt that where a plea of violation of principles of natural justice by denying a party an opportunity to cross-examine witnesses is raised in proceedings under the Customs Act, 1962 or similar legislation, the question of prejudice suffered to such party by such denial has to be gone into. If there is no prejudice caused by such denial, no relief can be granted to him. The issues arising in this case are thus answered as above. 36 . Having perused the impugned order passed by the 2nd respondent, prima facie, it appears to us that the basis for levying penalty against the petitioners were their statements recorded under Section 108 of the Customs Act, 1962, wherein certain confessions appear to have been made by them implicating themselves in the smuggling of cigarettes, which was subject matter of enquiry. 37. Therefore, we are of the opinion that no prejudice has been caused to the petitioners by the action of the 2nd respondent in denying an opportunity to them to cross-examine the other persons wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court. This provision is pari-materia to Section 9(d) of the Central Excise Act, 1944, Act which has been considered by the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. [2016 (340) E.L.T. 0067 (P H)]. Hon ble High Court held as follows: 8. In view of the fact that the case of the petitioners is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, in extenso, thus : 9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 12. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 13. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof. 14. Clause (a) of Section 9D(1) refers to the following circumstances : (i) when the person who made the statement is dead, (ii) when the person who made the statement cannot be found, (iii) when the person who made the statement is incapable of giving evidence, (iv) when the person who made the statement is kept out of the way by the adverse party, and (v) when the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey would, even otherwise, have to be recorded as mandatory. 18. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Supreme Court in C.C. v. Bussa Overseas Properties Ltd., 2007 (216) E.L.T. 659 (S.C.), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd. v C.C., 2001 (137) E.L.T. 637 (T). 25. In the light of the above, respondent no. 2 is directed to adjudicate the show cause notice issued to the writ petitioners by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial authorities in this regard, including the principles of natural justice, in the following manner : (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the show cause notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No. 2 to summon the makers of the said statements, so that the Revenue would examine them in chief, before the adjudicating authority, i.e., before Respondent No. 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e., to Ambika and Jay Ambey in this case. (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court further held in Paragraph 7 as under : ....... 17. The authority concerned is seeking to rely upon certain statements following the various decisions of this Court, the dialect of which is not necessary and the decision of the Apex Court is sufficient enough to bring to the fore the requirement of permitting the cross-examination of witnesses whose statements are sought to be relied upon by the authorities. 4.7 Hon ble Bombay High Court has in case of Rishabh Sanghvi [2019 (367) E.L.T. 614 (Bom.)] held as follows: 6 . In this case, the statements of persons relied upon by the Revenue are not being made available for cross-examination only on account of alleged delay in making application. We are unable to understand how an application seeking crossexamination of the persons being relied upon could be rejected on account of delay in making the application when the impugned order dated 11th September, 2018 itself records that the documents relied upon in the Show Cause Notice were supplied/given to the petitioner on that day itself. Further, there is no time-limit provided in the Act for completion of adjudication proceedings as its object is as to ensure that justice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant and others in respect of the same offense. This only goes to show total lack of understanding of the legal provisions by the adjudicating authority. While imposing the penalties in this manner adjudicating authority has even failed to examine the legal provisions and the case law on the subject. Not a single word is recorded in the impugned order as to why penalty is imposable under Section 112 (a) and/ or section 112 (b) in the impugned order. This clearly shows that the impugned order has been passed in haste without even recording a finding on the basic issues and the legal provisions. Explaining the scope of Section 112 (a) and 112 (b) and the spheres in which these two sections operate Hon b;le Madras High Court has in case of Visteon Automotive Systems India Limited [2018 (9) G.S.T.L. 142 (Mad.)] held as follows: 11 . The provisions contained in Section 111 are clearly directed against the goods. In juxtaposition to this, under Section 112(a) of the Act, any person, who in relation to any goods, does or omits to do any act, which act or omission, would render such goods liable for confiscation under Section 111 of the Act, shall be liable to a penalty, in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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