Mulchand M. Zaveri vs Union of India

Akil Kureshi, J. (Oral)—Petitioners have challenged an order dated 6-8-2015 under which the Commissioner of Customs, Ahmedabad rejected the petitioners'' request for cross-examination of certain witnesses. This order was communicated by the Additional Commissioner under the impugned communication which reads as under :

"Please refer to your letter dated 4-7-2015 and also the Personal Hearing held on 4-8-2015 on the subject matter whereby cross-examination of certain persons had been sought for.

The adjudicating authority has analysed your request and has observed that the subject notice was not issued solely based on the statements of these persons. Allowing of cross-examination is absolute discretion of Adjudicating Authority upon analysing the facts and circumstances involved in the case. In judicial and quasi-judicial proceedings, statements of concerned persons are recorded before the competent officer, which forms evidence in offences committed by them under those laws. However, such persons are given liberty to retract the statements with a reasonable time, if the statements are recorded under threat, duress, coercion etc. It is incumbent upon him to initiate the competent authority regarding his retraction with evidences suggesting any unlawful or unfair means or methods, if any, were adopted to extract his confession. In the instant case, it appears that none of the persons has so far retracted the statements recorded by DRI. Therefore, the statements recorded before the investigating officers still stands valid as the Customs officials are not police officers. Further, the notice has also not specified the facts, which are being brought out before the adjudicating authority subsequent to cross-examination of these witnesses, if allowed.

In view thereof, the adjudicating authority has directed the undersigned to communicate that your request for cross-examination cannot be accepted. Therefore, you are requested to file final reply in this matter within 15 days on receipt of this letter".

Learned counsel for the petitioners submitted that the decision of the Commissioner is in gross violation of the principles of natural justice. Show cause notice is based on several statements of witnesses including those of the experts and any reliance on such statements without offering such witnesses for cross-examination would be opposed to the principles of natural justice. Counsel further submitted that in the interim reply that the petitioners filed a request for cross-examination was made so that the petitioners can file final reply after such cross-examination was granted.

On the other hand, learned counsel Shri Ravani for the Department opposed the petition and submitted that cross-examination of witnesses is not a matter of right. For valid reasons, it is always open for the adjudicating authority to refuse to grant such permission since the adjudication proceedings are not legal proceedings before a Court of law.

It is not the case of the respondents that the adjudicating authority wishes to place no reliance on the statements of witnesses for whom the petitioners have sought cross-examination. That being the case, the petitioners would have a right to cross-examine such witnesses except in exceptional cases where the authority would, for proper reasons, be in a position to deny such liberty. This view has been adopted by various High Courts in the following judgments.

(a) In case of Basudev Garg v. Commissioner of Customs reported in 2013 (294) E.L.T. 353 (Del.);

(b) In case of Commissioner of Central Excise v. Kurele Pan Products P. Ltd. reported in 2014 (307) E.L.T. 42 (All.);

(c) In case of Arunodaya Mills Ltd. and Another v. Union of India and Another reported in 1985 (21) E.L.T. 390 (Guj.);

(d) In case of Lachhman Das, Tobacco Dealers v. Union of India reported in 1978 (2) E.L.T. J500 (Del.)

Counsel for the respondents placed reliance on the following decisions :

(a) In case of Shalini Steels Pvt. Ltd. v. Commissioner of Customs & Central Excise, Hyderabad reported in 2011 (269) E.L.T. 485 (A.P.). In such case, however, in context of final order on adjudication, the High Court held that the order would not be vitiated for non-granting the cross-examination of a witness since it did not cause any prejudice to the assessee.

(b) In case of Kanungo & Co. v. Collector of Customs, Calcutta and others reported in 1983 (13) E.L.T. 1486 (S.C.) in which the Supreme Court held that principles of natural justice do not require that in every matter the person who has given information should be examined in presence of the assessee or allowed to be cross-examined in respect of the statements made by the Customs authorities.

The only reasons given by the adjudicating authority for denying such cross-examination are that the witnesses have not retracted their statements. These statements made by the Customs authority which are admissible in evidence stand valid. He also opined that, in the notice he has not specified the facts which may be brought before the adjudicating authority subsequent to cross-examination of these witnesses if allowed. Both the reasons cited by the adjudicating authority are completely baseless. Merely because, the concerned witnesses have not retracted their statements would not be a ground to deny cross-examination. In fact, this reason does not even take care of the evidence of the expert witnesses. Further what material can the petitioner bring on record through cross-examination if so allowed, is simply not germane to the question of granting or not granting cross-examination. The adjudicating authority entered into an arena of presumption while refusing such request on such ground.

Having said that, we cannot accept the stand of the petitioners that such cross-examination must be granted before the petitioners file final reply to the show cause notice. The question of offering cross-examination of the witnesses whose statements have been recorded by the Department during preliminary inquiry and which statements are sought to be relied upon, would arise during the adjudication proceedings. The correct stage for granting such cross-examination would be when the adjudicating authority records the evidence which can start only after the petitioners file their reply. No statutory provisions are pointed out to us in support of the petitioners insistence of cross-examination of witnesses being granted before filing the defence reply.

Under the circumstances, it is directed that the petitioners shall file final reply if so desired, latest by 29th February, 2016, upon which, the adjudicating authority shall during the course of the adjudication proceedings, grant cross-examination of the witnesses whose statements or reports are sought to be relied upon in the show cause notice and for which the petitioners have made request to the adjudicating authority. Impugned order dated 6-8-2015 is set aside. Petition is disposed of in above terms.

In view of these developments, the time-limit provided by the Tribunal for completing adjudication proceedings would be extended to 31st May, 2016. In the meantime, it would also be open for the petitioners to apply to the Tribunal for provisional release of the goods, which application the Tribunal did not decide on merits, by providing the time-limit for completion of the adjudication proceedings.