Shiva Sahu vs Union Of India & Ors.

DEBANGSU BASAK, J.

The petitioner has challenged an order in original dated November 29, 2017 passed by the Commissioner of Customs (Airports and Administration),

imposing a penalty of Rs. 1 Crore against the petitioner, under Sections 112(a) and 112(b) of the Customs Act, 1962. Learned Advocate appearing for

the petitioner has submitted that, although the impugned order is appealable, the writ petition is maintainable inasmuch as, the impugned order is

vitiated by breach of the principles of natural justice and that, the adjudicating authority has travelled beyond jurisdiction in imposing the penalty

specified. He has submitted that, the petitioner had requested for cross-examination of the accused nos. 1 and 2 in the proceedings.

Such opportunity was denied to the petitioner. The petitioner was the accused no. 3. He has referred to the impugned order and has submitted that,

the petitioner was absent on May 1, 2017. However, such hearing was fixed for the purpose of allowing the accused nos. 1 and 2, the right of

crossexamination. Such hearing was not fixed for the purpose of crossexamination of the accused nos. 1 and 2 by the petitioner. In any event, the

accused nos. 1 and 2 did not appear on May 1, 2017. Therefore, the petitioner was denied an opportunity of cross-examination of the accused nos. 1

and 2. He has submitted that, the Advocate for the petitioner had requested the adjudicating authority for further date for cross-examination,

subsequent to the hearing dated May 1, 2017. He has referred to the correspondence exchanged in that behalf.

He has submitted that, by an application, received by the adjudicating authority on March 29, 2017, the petitioner had asked for an opportunity to

crossexamine the accused nos. 1 and 2. The petitioner did not appear on May 1, 2017. The next date for hearing was fixed on July 1, 2017 and such

date was intimated by the writing dated June 12, 2017. By a writing dated July 10, 2017 the authorities had shifted the date of hearing on July 12, 2017.

By a letter dated July 10, 2017 the Advocate for the petitioner had renewed the claim of the petitioner to cross-examine the witnesses of the

prosecution. However, such opportunity was not granted. A hearing was taken on October 23, 2017 when the witnesses of the prosecution were not

allowed to be cross-examined by the petitioner.

Referring to Sections 112 of the Customs Act, 1962 learned Advocate for the petitioner has submitted that, Sub-sections (a) and (b) are disjunctive.

Both cannot be applied at the same time. At best, the adjudicating authority could have invoked Section 112(b)(ii) as against the petitioner. Then

assuming that to be so, the adjudicating authority could not have imposed a penalty of Rs.1 Crore against the petitioner. The adjudicating authority has,

therefore, acted beyond jurisdiction vested upon it by law in doing so. He has sought quashing of the impugned order.

On the interpretation of Sections 112(a) and (b) of the Customs Act, 1962, learned Advocate for the petitioners has relied upon a judgment and order

dated April 28, 2016 passed in W.P. No. 279 of 2016 (Gopal Saha v. The Union of India & Anr.) as also the Order dated July17, 2017 passed in W.P.

No. 377 of 2017 (Sri Sunil Tosawar v. The Commissioner of Customs (Preventive), W.B., Kolkata) and an Order dated May 14, 2018 passed in W.P.

No. 85 of 2018 (Sadguru Forwarders Pvt. Ltd. & Anr. v. The Commissioner of Customs (Port), Kolkata.

Learned Advocate appearing for the respondents has submitted that, the adjudicating authority did not act in breach of the principles of natural justice.

The pleas taken by the petitioner are hyper technical in nature. The petitioner was allowed an opportunity to cross-examine the witnesses of the

prosecution on May 1, 2017, when the petitioner was not present at the hearing, to avail of such opportunity. The next date of hearing was October 23,

2017. The petitioner, therefore, cannot claim that no opportunity of personal hearing was given to the petitioner or that, the right of cross-examination

was denied to the petitioner.

On the interpretation of Section 112 of the Customs Act, 1962, learned Advocate for the respondents has relied upon 2007 Volume 10 Supreme Court

Cases 396 (Commissioner of Customs, New Delhi v. Brooks International & Ors.), 2003 Volume 6 Supreme Court Cases page 161 (M/s. Om

Prakash Bhatia v. Commissioner of Customs, Delhi) and 1970 Volume 2 Supreme Court Cases page 728 (Sheikh Mohd. Omer v. Collector of

Customs, Calcutta & Ors.). He has submitted that, Gopal Saha (supra) is contrary to the ratio laid down in the Supreme Court Judgments relied upon

by him. Moreover, Gopal Saha (supra) has since been stayed by the Appeal Court, on an appeal carried therefrom, on February 23, 2017. According

to him, Gopal Saha (supra) does not lay down the correct law on the interpretation of Section 112 of the Customs Act, 1962.

Referring to Secton112 of the Customs Act, 1962, learned Advocate appearing for the respondents has relied upon Circular No. 34/2013Cus., dated

September 4, 2013 and Circular No. 39(RE-2010)/2009-14 dated August 19, 2011. He has also relied upon 2011 Volume 2 Supreme Court Cases page

74 (Commissioner of Customs (Preventive), Mumbai v. M. Ambalal and Company). Two issues have arisen for consideration in the present writ

petition. Such issues are as follows:-

(i) Whether the impugned order stands vitiated by breach of principles of natural justice?

(ii) Whether provisions of Section 112 of the Customs Act, 1962 allow the adjudicating authority to impose a penalty of an amount of his choice?

The Commissioner of Customs (Airport and Administration) was discharging powers under the provisions of the Customs Act, 1962 while adjudicating

upon a show-cause notice issued to the petitioner. The adjudicating authority is required to adhere to the principles of natural justice in the adjudicating

process. Audi alteram partem is one of the principles of natural justice. The petitioner is the accused no. 3 in the proceedings before the adjudicating

authority. The prosecution seeks to rely upon witnesses of two natural persons against the petitioner in such proceedings. The petitioner had applied

for cross-examination of such witnesses. In accordance with the principles of natural justice, the petitioner is entitled to a right of hearing in the

proceedings before the adjudicating authority. A right of hearing brings within its wake the right of cross-examination of the witnesses produced as

against the petitioner. Cross-examination is the interrogation of a witness which the opponent calls as against the person cross-examining. Obviously

the person who has called a natural person as a witness examines such witness first. It is then the person, against whom the evidence is adduced, has

a right to cross-examine such witness. The right of crossexamination is given to a person against whom the witness had deposed in order to allow

such person to question the creditability of the witness, if the occasion so arises and to illicit the facts of the case from such witness. It allows the

adjudicating authority to form an opinion with regard to the facts placed before it.

In the present case, the petitioner had received a show-cause notice dated August 14, 2015. The petitioner had replied thereto on October 1, 2015. In

the course of the proceedings, the petitioner before the adjudicating authority had, on March 29, 2017 requested for an opportunity to cross-examine to

other noticees in the proceeding. Such prayer was repeated by a letter dated July 10, 2017. It appears from the impugned order that, a hearing was

scheduled on May 1, 2017 when the petitioner did not appear. The two noticees, whom the petitioner wanted to cross-examine, also did not appear on

such dated. Subsequent to May 1, 2017, the petitioner through its Advocate’s letter dated July 10, 2017 requested for cross-examination of the

witnesses of the prosecution. The next date of hearing was on October 23, 2017 when admittedly the petitioner was not allowed the right of cross-

examination.

It appears from the records made available that, the hearing remained inconclusive on May 1, 2017. A request was made by the petitioner by its

Advocate’s letter dated July 10, 2017 for a right of cross-examination. The next date of hearing was on October 23, 2017. The impugned order

does not record that, the right of cross-examination was closed on May 1, 2017. Assuming that the adjudicating authority had closed the right of cross-

examination on May 1, 2017, then also, the adjudicating authority was required to decide on the prayer made by the petitioner to cross-examine the

prosecution witnesses as contained in the letter dated July 10, 2017. The impugned order is silent on such application of the petitioner dated July 10,

2017.

In such circumstances, the irresistible conclusion is that, the petitioner was denied the right of cross-examination by the adjudicating authority without

cogent ground. Consequently, the impugned order suffers from the vice of breach of principles of natural justice. The first issue is answered

accordingly. In view of the first issue being answered in the negative, the impugned order is required to be set aside. In such circumstances, the

answer to the second issue becomes academic. Moreover, the second issue is pending for consideration before the Division Bench in the appeal

carried from Gopal Saha (supra). The second issue is, therefore, not discussed in the present writ petition.

The impugned Order dated November 29, 2017 is set aside. This order will not prevent the authorities from proceeding with the showcause notice and

the reply thereto, in accordance with law, from the stage of hearing of such show-cause notice and the reply. All other points raised by the parties are

kept open. W.P. No. 188 of 2018 is disposed of accordingly.