Debangsu Basak, J
The petitioner has challenged the order in original dated September 6, 2018 passed by the adjudicating authority exercising jurisdiction under the
provision of the Customs Act, 1962 in the present writ petition.
Learned Senior Advocate appearing for the petitioner has submitted that, the petitioner assails the order in original, even though there exists a statutory
alternative remedy with regard thereto, on the ground that the order in original stands vitiated by the breach of principles of natural justice.
Learned Senior Advocate appearing for the petitioner has submitted that, the petitioner was served with a show cause notice dated February 13, 2017.
The petitioner had replied to such show cause notice. In the reply, the petitioner had requested for cross-examination of the witness of the
prosecution. He has referred to the impugned order in original and submitted that, although, the adjudicating authority has noted that, the petitioner
wanted to cross-examine the prosecution witnesses, the adjudicating authority disallowed the same on the ground that, the evidence in adjudication
proceedings need not be like the one in criminal cases. Moreover, according to the adjudicating authority, the circumstantial evidences corroborated
the statements made under Section 108 of the Customs Act, 1962. The persons making the statements under Section 108 of the Act of 1962 made the
same voluntarily and did not retract from the statements. Such witnesses were conversant with the facts of the case and the role of the petitioner.
Moreover, the petitioner did not make out any specific reason or point for seeking cross-examination. Therefore, the request for cross-examination
was denied. He has submitted that, an adjudicating authority cannot deny the right of cross-examination to a noticee in a proceedings under the Act of
1962. He has referred to Section 138B of the Act of 1962 and has submitted that, a statement of a witness will become relevant without cross-
examination, only if, the grounds stipulated in sub-Section (1) thereof stands fulfilled. In the present case, such grounds have not been fulfilled. There
is no finding by the adjudicating authority that, any of the grounds enumerated in sub-Section (1) of Section 138B of the Act of 1962 exists. Therefore,
the decision of the adjudicating authority, in not allowing cross-examination of the witnesses, is wrong. The impugned order therefore stands vitiated
by breach of principles of natural justice.
In support of the contention that, when a cross-examination is denied, the impugned order stands vitiated by breach of principles of natural justice and
renders the impugned order as a nullity, learned Senior Advocate appearing for the petitioner has relied upon 2016 (15) Supreme Court Cases page
785 (Andaman Timber Industries v. Commissioner of Central Excise, Kolkata II), 2005 Volume 10 Supreme Court Cases page 634 (Lakshman
Exports Ltd. v. Collector of Central Excise), 2008 Volume 3 Supreme Court Cases page 279 (New India Assurance Company Ltd. v. Nusli Neville
Wadia & Anr.), 2017 Volume 3 WBLR (Cal.) page 386 (M/s. V.K. Udyog Limited v. Union of India & Anr.), 2017 (353) Excise Law Times 421
(Cal.) (Skyrise Overseas Pvt. Ltd. (earlier known as Saraf Impex Pvt. Ltd.) & Anr. v. The Commissioner of Customs (Port) & Anr.), judgment and
order dated May 8, 2018 passed in W.P. No. 56 of 2018 (Sadguru Forwarders Pvt. Ltd. v. The Commissioner of Customs (Port) Kolkata & Anr.),
judgment and order dated May 14, 2018 passed in W.P. No. 85 of 2018 (Sadguru Forwarders Pvt. Ltd. v. The Commissioner of Customs (Port)
Kolkata, 2018 (362) Excise Law Times 401 (Cal.) (Ankit Kapoor v. the Commissioner of Customs (Port) West Bengal), 2018 (362) Excise Law
Times 439 (Cal.) (Shiva Sahu v. Union of India & Ors.), judgment and order dated September 17, 2018 passed in W.P. No. 448 of 2018 (Lakshman
Lal Das v. The Chief Commissioner of Customs & Ors.), judgment and order dated August 23, 2018 passed in G.A. No. 2241 of 2018, G.A. No. 2242
of 2018, A.P.O.T. No. 57 of 2018 with W.P. No. 56 of 2018 (Commissioner of Customs (Port), Customs House & Anr. v. Sadguru Forwarders Pvt.
Ltd.) and judgment and order dated August 23, 2018 passed in G.A. No. 2234 of 2018 G.A. No. 2235 of 2018, A.P.O.T. No. 56 of 2018 with W.P.
No. 85 of 2018 (Commissioner of Customs (Port), Customs House & Anr. v. Sadguru Forwarders Pvt. Ltd. & Anr.).
Learned Senior Advocate appearing for the petitioner has submitted that, provisions of Section 138B of the Act of 1962 is pari materia as that of
Section 9D of the Central Excise Act, 1944. He has submitted that, Section 138B of the Act of 1962 and Section 9D of the Act of 1944 were
considered by diverse High Courts. The unanimous view of the other High Courts is that, a noticee is entitled to a right of cross-examination in an
adjudication proceedings under the Act of 1962. In support of such contentions, he has relied upon 2013 (294) Excise Law Times 353 (Basudev Garg
v. Commissioner of Customs), 2016 (336) Excise Law Times 15 (HIM Logistics Pvt. Ltd. v. The Principal Commissioner of Customs), 2018 (362)
Excise Law Times 465 (Bom.) (Ciabro Alemao & Ors. v. The Commissioner of Customs, Goa & Ors.), 1994 (69) Excise Law Times 212 (Kallatra
Abbas Haji v. Government of India), 2017 SCC Online Ker. 21780 (Krishna Brothers v. Commissioner of Customs). He has submitted that, the
impugned order be set aside with a direction upon the adjudicating authority to allow cross-examination of the witnesses in respect of those that the
petitioner has applied for cross-examination, in accordance with law.
Learned Additional Solicitor General appearing for the respondents has submitted that, a noticee is not entitled to a right of cross-examination in an
adjudication proceedings. Persons who have made statements under section 108 of the Act of 1982 cannot be allowed to be cross-examined by a
noticee in an adjudication proceedings. A statement made under Section 108 of the Act of 1962 is not evidence. When a person makes a statement
under Section 108 of the Act of 1962 he is not giving evidence as in examination of chief requiring a cross-examination by the noticee. He has drawn
the attention of the Court to the fact that, Section 108 appears in Chapter XIII of the Act of 1962. Chapter XIII deals with searches, seizures and
arrest. Section 138B appears under the Chapter XVI which deals with offences and prosecution. When, a prosecution of any offences committed
under the Act of 1962 is launched, the provisions of Section 138B of the Act of 1962 gets attracted. Provisions of Section 138B of the Act of 1962 are
not attracted to an adjudication proceedings. In support of his contentions, learned Additional Solicitor General, has relied upon 1997 (89) Excise Law
Times 646 (Surjeet Singh Chhabra v. Union of India), 1973 Volume 2 Supreme Court Cases page 438 (M/s. Kanungo & Company v. Collector of
Customs & Ors.) and 1996 Volume 63 ECR 546 (Tapan Kumar Biswas v. Union of India (UOI) & Ors.).
The petitioner is working as a supervisor (office) at the office of the Airport Authority of India. The petitioner is presently under suspension by an
order issued by his appointing authority. The petitioner suffered a show cause notice issued by the customs authorities on February 13, 2017. The
petitioner submitted a reply thereto dated July 24, 2018. In the reply, the petitioner had asked for cross-examination of 11 of the prosecution witnesses.
In aggregate, the petitioner wanted to cross-examine 11 witnesses. More than 11 witnesses were examined by the prosecution in the adjudication
proceedings. The authorities initiated an adjudication proceedings in respect of the show cause notice dated February 13, 2017 and the replies filed by
the noticees with regard thereto. The petitioner is one of the noticees of the show cause notice dated February 13, 2017.
The petitioner was heard by the adjudicating officer. In the course of the hearing, the petitioner reiterated his request for cross- examination. The
adjudicating authority, by the impugned order dated September 6, 2018 had dealt with the request for cross-examination. It noted that, the petitioner
wanted to cross-examine the persons who gave statements under Section 108 of the Act of 1962 and which were relied upon in the show cause
notices. The adjudicating authority held that, evidence in the adjudication proceedings need not be like the one in criminal cases. He found that, they
are enough circumstantial evidences which provide for a reliable basis for corroboration of the statements given under Section 108 of the Act of 1962.
He noted that, the witnesses gave the statements voluntarily and did not retract from the same. The witnesses were conversant with the facts of the
case and the role of the noticee. The petitioner did not make out any specific reason or point for seeking cross-examination. He relied upon M/s.
Kanungo & Company (supra) in denying the right of cross-examination.
The proceedings initiated against the petitioner are under the provisions of the Customs Act, 1962. The preamble to the Act of 1962 states that, the
Act consolidates and amends the law relating to customs. The Act of 1962 deals with goods imported into the country which are prohibited. It
provides for confiscation of goods and conveyances, impose penalty when any goods are imported contrary to any prohibition imposed by any law. It
provides for prosecution of persons who are involved in importing goods which are prohibited by law. The Act of 1962 is divided into 17 Chapters. It
contemplates enquiry, adjudication and prosecution. It stipulates the adjudicating authority, the appellate authority and revisional authority in respect of
any proceedings under the Act of 1962. It provides for prosecution of offenders. Chapter XIII deals with searches, seizures and arrest. Four sections
are relevant for the consideration of the present writ petition. They are Sections 108, 122, 122A and 138B. They are as follows:-
“108. Power to summon persons to give evidence and produce documents. â€
(1) Any gazetted officer of customs shall have power to summon any person whose attendance he considers necessary either to give evidence or to
produce a document or any other thing in any inquiry which such officer is making under this Act.
(2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all
documents or things of a certain description in the possession or under control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct; and all persons so
summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents
and other things as may be required:
Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance
under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal
Code, 1860 (45 of 1860).
122. Adjudication of confiscations and penalties. â€
In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be
adjudged, -
(a) without limit by a Principal Commissioner of Customs or Commissioner of Customs or a Deputy Commissioner of Customs.
(b) where the value of the goods liable to confiscation does not exceed five lakh rupees, by an Assistant Commissioner of Customs or Deputy
Commissioner of Customs.
(c) where the value of the goods liable to confiscation does not exceed fifty thousand rupees, by a Gazetted Officer of Customs lower in rank than an
Assistant Commissioner of Customs or Deputy Commissioner of Customs.
122A. Adjudication Procedure. â€
(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a
party in a proceeding, if the party so desires.
(2) The adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to in sub-section (1), grant time, from time to time,
to the parties or any of them and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during the proceeding.
138B. Relevancy of statements under certain circumstances. â€
(1) A statement made and signed by a person before any gazetted officer of customs 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 kept out of the way by the adverse
party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers
unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to
the circumstances of the case, the statement should 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.â€
Section 108 of the Act of 1962 comes under Chapter XIII. Section 108 of the Act of 1962 empowers any gazetted officer of customs to summon any
person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any enquiry which such
officer is making under the Act of 1962. Section 108 of the Act of 1962 is an enabling provision empowering a gazetted officer of the customs powers
to enforce attendance of persons he considers necessary for the purpose of an enquiry under the Act of 1962. It stipulates that, every such enquiry to
be a judicial proceeding within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860. Section 122 of the Act of 1962 is under
Chapter XIV which deals with confiscation of goods and conveyances and imposition of penalties. Section 122 of the Act of 1962 provides for
adjudication of confiscations and penalties. It stipulates that, in every case under Chapter XIV of the Act of 1962, in which anything is liable to be
confiscated or any person is liable to a penalty such confiscation or penalty may be adjudged by the persons as stipulated therein. Section 122A of the
Act of 1962 lays down the adjudication procedure. It requires the adjudicating authority to give an opportunity of hearing to a party in a proceeding if
such party so desires. Section 122A of the Act of 1962 recognises that, the principles of natural justice are applicable to a proceedings under the Act
of 1962. Principles of natural justice are applicable to any proceeding which affects the interest of any person to such proceeding. Applicability of the
principles of natural justice to a proceedings which affects any interest of any person, is to be read into a statute when it is silent. It can be excluded
by a express provision made in the statute. In the present case Section 122A of the Act of 1962 makes the principles of natural justice applicable to an
adjudication proceeding undertaken under the Act of 1962.
The Act of 1962 contemplates that, any gazetted officer of the customs can make an enquiry, with regard to any goods imported, which are prohibited
for import, in breach of such prohibition. Under Section 108 of the Act of 1962, any gazetted officer of the customs is entitled to enforce the
attendance of any person to give any evidence or produce a document during such enquiry. The person so summoned can make a statement under
Section 108. The statements made under Section 108 of the Act of 1962 is recognised to be distinct and different from statements recorded by Police
Officer during the course of investigation under the Code of Criminal Procedure. Statements made under Section 108 of the Act of 1962 are
admissible in evidence. They can be used as evidence in any adjudicating or any proceeding for prosecution. The relevancy of the statements made
under Section 108 of the Act of 1962 is dealt with in Section 138B of the Act of 1962. Section 138B of the Act of 1962 appears in Chapter XVI of the
Act of 1962. Chapter XVI of the Act of 1962 deals with offences and prosecution. Chapter XVI of the Act of 1962 allows the authorities to initiate
criminal proceedings against persons who are guilty of the offences specified under such chapter. Section 138B of the Act of 1962 lays down the
relevancy of statements made under certain circumstances. It is an exception to the general law of evidence.
Although the Evidence Act, 1872 is not applicable to a proceeding under the Act of 1962 in the strict sense, the principles thereof are attracted. The
adjudicating authority, the appellate authority and any other authority under the Act of 1962 required to adjudicate upon any proceeding, is obliged to
adhere to the principles of the Evidence Act, 1872 while deciding on any subject. The Evidence Act, 1872 envisages and stipulates that, a statement
made by a witness is relevant and is admissible in evidence only when such witness is offered for cross-examination in the proceeding.
A party to the proceeding, introducing evidence through a natural person in the proceeding, is obliged to offer such witness for cross-examination to
the opposite party. It is for the opposite party to either cross-examine such witness or to decline the same. However, till such time, the witness is
offered for cross-examination to the opposite party, the statement given by such witness, in the proceeding does not become admissible as evidence in
the proceeding. Such statement cannot be treated as evidence. Section 138B of the Act of 1962 carves out few exceptions from such cardinal
principle in a proceeding. Section 138B (1) of the Act of 1962 stipulates that, a statement made and signed by a person before any gazetted officer of
the customs during the course of any enquiry or proceeding under the Act of 1962 shall be relevant, for the purpose proving, in any prosecution of an
offence under the Act of 1962, the truth of the facts which it contains when, the person who made the statement is dead, or cannot be found, or is
incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or
expense which, under the circumstances of the case, the Court considers unreasonable, or when the person who made the statement is examined as a
witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted
in evidence in the interest of justice.
Cross-examination is the norm for making the statement made by a witness relevant for evaluation in the proceedings. Section 138B of the Act of
1962 carves out few exceptions and limits it to a proceeding under the Act of 1962 and a proceeding for prosecution launched before any Court of law
in respect of offences under the Act of 1962. Section 138B (2) stipulates that, the provisions of sub-Section (1) shall so far as may be apply in relation
to any proceeding under the Act of 1962, other than a proceeding before a court, as they apply in relation to a proceeding before a court. In other
words, the exceptions carved out under Section 138B (1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication
under the Act of 1962, as it would apply in a proceeding before a court for the prosecution of any offence under the Act of 1962.
When an adjudicating authority is faced with a proceedings in which, the prosecution introduces evidence of witnesses, then the prosecution is obliged
to offer such witness for cross-examination to the noticee. Likewise, if the noticee introduces any witness in its defence, the noticee is obliged to offer
its witness for cross-examination to the prosecution. Only upon such offers are made, then the evidence of such witness becomes relevant and
admissible as evidence. However, the evidence of such witnesses would also become relevant and admissible, if any of the grounds stipulated in
Section 138B (1) of the Act of 1962 is attracted, in a fact scenario. In a given case, a person making a statement under Section 108 of the Act of
1962 dies prior to the conclusion of the adjudication proceeding and before he can be cross-examined by a noticee, then, the statement of such
witness, will not become irrelevant. The relevancy of such statement, would be saved by virtue of the provisions of Section 138B (1)(a) read with
138B (2) of the Act of 1962. For example, but for the provisions of Section 138B (1)(a) and 138B (2) of the Act of 1962, the statement made by a
person under Section 108 of the Act of 1962 would have become irrelevant, had he died before his cross-examination by the noticee.
In the impugned order, the adjudicating authority has relied upon M/s. Kanungo & Company (supra) in denying the right of cross-examination to the
petitioner. M/s. Kanungo & Company (supra) was rendered by the Supreme Court while considering provisions of Sea Customs Act, 1878 read with
the Imports and Exports (Control) Act, 1947. M/s. Kanungo & Company (supra) was rendered on February 7, 1972. Section 138B of the Act of 1962
was introduced with effect from September 1, 1973. Section 122A was introduced to the Act of 1962 with effect from September 10, 2004. Section
122A requires the adjudicating authority to give an opportunity of hearing to a party in a proceeding, if the party so desires. In the facts of the present
case, the petitioner desired a hearing as well as exercised its right of cross-examination. M/s. Kanungo & Company has held on consideration of the
facts of that case, that there was no breach of natural justice. It has held that, the principles of natural justice do not require that in matters governed
by the provisions of the Sea Customs Act, 1878 read with the provisions of the Imports and Exports (Control) Act, 1947, the persons who have given
information should be examined in presence of the noticee or should be allowed to be cross-examined by them on the statements made before the
customs authorities. As noted above, Section 122A of the Act of 1962 was introduced subsequent to M/s. Kanungo & Company (supra). Surjeet
Singh Chhabra (supra) has held that, where the petitioner seeks cross-examination of the witness who have said that the recovery was made from the
petitioner, necessarily an opportunity is required to be given for the cross-examination of such witness as regards the place at which recovery was
made. However, in the facts of that case, in view of the confessions made, it was held that, there was no breach of principles of natural justice by the
refusal to grant the right of cross-examination. Tapan Kumar Biswas (supra) was rendered on July 17, 1995 prior to the introduction of Section 122A
and 138B to the Act of 1962. It has held that, a proceedee is not entitled to cross-examination any witness. The same cannot be said to be good law in
view of the subsequent pronouncement of the Supreme Court and the introduction of Sections 122A and 138B to the Act of 1962.
Section 122A of the Act of 1962 requires the adjudicating authority to adhere to the principles of natural justice. The question as to whether, principles
of natural justice will include a right of cross-examination or not, has been answered by the Supreme Court in New India Assurance Company Ltd.
(supra). It has held as follows:-
“45. If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross-examine the witness who intends
to prove the said fact has the right to cross-examine the witness. This may not be provided by under the statute, but it being a part of the principle of
natural justice should be held to be indefeasible right.
46. We may also take note of the fact that this Court in Bareilly Electricity Supply Co. Ltd. v. Workmen this Court held as under:
“14….. 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 means
is that no materials can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and
are subjected to cross-examination by the party against whom they are sought to be used.â€
New India Assurance Company Ltd. (supra) has recognized that, an opponent in a proceeding is entitled to cross-examine the witness produced
against him by the prosecution. The right to cross- examine such witness may not be provided under the statute but it is a part of the principles of
natural justice and has been held to be an indefeasible right. New India Assurance Company Ltd. (supra) has recognised that right of cross-
examination is a part of the principles of natural justice and is an indefeasible right. In view of such pronouncement by the Supreme Court, the ratio
laid down in Tapan Kumar Biswas (supra) that, the principles of natural justice do not extend to the cross-examination of the witness cannot be said to
be good law any longer.
The Supreme Court in Lakshman Exports Ltd. (supra) while considering proceedings under the Central Excise Act, 1944 has held that, a noticee has a
right to cross-examine the persons making statements against the noticee.
In M/s. V.K. Udyog Limited (supra) the Court has held that, in a quasi judicial proceeding, a party to such proceeding is entitled to cross-examine the
witness of the other side when evidence is led through such witness in such proceeding. Skyrise Overseas Pvt. Ltd. (supra) has held that, denying the
right to cross-examine the witness is in breach of principles of natural justice. Sadguru Forwarders Pvt. Ltd. (I) (supra) has quashed the order in
original on the ground that it stands vitiated by breach of principles of natural justice on the refusal of the adjudicating authority to allow cross-
examination of the prosecution witness. Similar view has been expressed in Sadguru Forwarders Pvt. Ltd. & Anr. (II) (supra).
Ankit Kapoor (supra) and Shiva Sahu (supra) have held the same view that, denial of right of cross-examination vitiates the order in original on the
ground of breach of principles of natural justice.
Lakshman Lal Das (supra) has held as follows:-
“In an adjudication proceeding which is adversarial in nature, a party adducing evidence through a natural person is required to allow cross-
examination of such natural person, to the other side. In the present case apparently the prosecution was relying upon evidence adduced by natural
persons in the proceeding. The prosecution, therefore, ought to have allowed such persons to be cross-examined. The petitioner made a request to the
adjudicating authority for an opportunity to cross- examine. Such request was made by the written notes of defence. The adjudicating authority took
such written request on record. However, it did not allow the petitioner to cross-examine the prosecution witness. It did not deal with the request for
cross-examination, in the impugned order. It is not necessary that, a party to a proceeding, specify the reason why it requires the cross-examination of
the witness. When, a contesting party in adversarial litigation adduced evidence through a natural person, it results in a corresponding right to 3 the
opposite party in such adversarial proceeding to cross-examine such natural person. In absence of such cross-examination being allowed or facilitated
the evidence given by such natural person has no evidentiary value and cannot relied upon. The adjudicating authority not having considered the
request for grant of cross-examination of the prosecution witness, the impugned order stands vitiated by breach of the principles of natural justice. The
impugned order is quashed. This order will not prevent the adjudicating authority to proceed a fresh from the stage reached on April 25, 2018 or from
such stage it deems appropriate. It is expected that, the adjudicating authority will keep the request of the petitioner to cross-examine the witnesses
noted in its written notes of defence, in accordance with law.â€
Sadguru Forwarders Pvt. Ltd. (I) (supra) and Sadguru Forwarders Pvt. Ltd. & Anr. (II) (supra) have received the consideration of the appeal court
and were upheld. Andaman Timber Industries (supra) has held that, denial of right of cross- examination of a witness before the adjudicating authority
renders the order in original a nullity. In that case, an investigation was carried out against the assessee under the provisions of the Central Excise Act,
1944. Statement of two buyers were recorded and on that basis a show-cause notice was served upon the assessee. The assessee questioned the
correctness of the statement of such witnesses and demanded the right to cross-examine them. The adjudicating authority did not allow the assessee
the right of cross- examination. The appellate authority rejected the appeal. The Supreme Court in Andaman Timber Industries (supra) has held as
follows:-
“6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those
witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles
of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon
the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-
examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the
adjudicating authority he has specifically mentioned 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 guesswork
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 have 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 be the subject-matter of cross-examination. Therefore, it was not for the
adjudicating authority to presuppose as to what could be the subject-matter of the cross-examination and make the remarks as mentioned above. We
may also point out that on an earlier occasion when the matter came up this Court in CCE vs. Andaman Timber Industries Ltd., order dated 17-3-2005
was passed remitting the case back to the Tribunal with a direction to decide the appeal on merits giving its reasons for accepting or rejecting the
submissions.â€
Section 9D of the Central Excise Act, 1944 is pari materia with Section 138B of the Act of 1962. Section 9D of the Central Excise Act, 1944 is as
follows:-
“Section 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 kept out of the way by the adverse
party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers
unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to
the circumstances of the case, the statement should 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 proceedings under this Act, other than a proceeding under a
Court, as they apply in relation to a proceeding before a Court.â€
Kallatra Abbas Haji (supra) has considered Section 138B of the Act of 1962. It has held as follows:-
“25. True, Section 138B states that a statement made and signed by a person before any gazetted officer of customs is relevant to prove the truth
of the fact it contains in any proceeding under the Act. But these statements are relevant only if the conditions prescribed under clauses (a) or (b) of
Section 138B are satisfied. Here, there is no case that clause (a) applies. If at all, clause (b) alone can be attracted. Under this clause, the statement is
relevant when (a) the person who made the statement is examined and (b) the statement is admitted in evidence after the authority forms an opinion
that in the interest of justice and having regard to the circumstances of the case, it should be so admitted.â€
HIM Logistics Pvt. Ltd. (supra) has considered a case, where the noticee was not granted the right to cross-examine in a proceeding under the Act of
1962. It has held that, the denial of the request for cross-examination vitiates the order in original. It has allowed the noticee to cross-examine the
witnesses. Basudev Garg (supra) has considered Section 138B of the Act of 1962. It has held as follows:-
“13. ……this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that
those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in
Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is
kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the
circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-
examine the persons whose statements are being relied upon even in quasi- judicial proceedings.
Ciabro Alemao & Ors. (supra) has considered Sections 108 and 138B of the Act of 1962 and has held as follows:-
“42. The CESTAT confused the issues of relevance and proof. A statement may be relevant, but it yet needs to be proved. The fact that a
statement is made and recorded, and is statutorily said to be relevant, does not mean it is proved. That statement, like all testimony, must be subjected
to recourse of cross-examination, to be drawn into the evidentiary pool to form a basis for reasoning or conclusion. Section 138B does not say, and
could not say, what statements can be taken as proved even without cross-examination. This, however, is how the CESTAT has misunderstood the
section. All that the section says is that for want of production of a witness, his Section 108 statement does not automatically cease to become
relevant. Questions of relevancy and proof are yet to determine by the Indian Evidence Act, and the CESTAT wholly failed to take these into
account.â€
The Act of 1962 empowers the customs authorities to make an enquiry, initiate adjudication proceedings and file prosecution. The Act of 1962 allows
an appeal against an order in original passed in the adjudication proceeding. There is provisions for revision also. When making an enquiry, an officer
of the Customs may require attendance of a person to make a statement. He is empowered to require a person to make a statement under Section
108 of the Act of 1962. Such a statement made in the course of an enquiry, and if its limited to the enquiry, then, the question of the person making the
statement being open to cross-examination does not arise. However, once an adjudication proceeding is initiated, and a statement made under Section
108 of the Act of 1962 is introduced as a piece of evidence in such adjudication proceedings, then, the person making that statement must be made
available for cross-examination to the party against whom such statement has been used in the adjudication proceedings, subject to the provisions of
Section 138B of the Act of 1962. If the conditions prescribed under Section 138B (1) of the Act of 1962 is satisfied, then, the statement made by a
person under Section 108 of the Act of 1962 would become relevant in the adjudication proceedings, notwithstanding, such a person not being cross-
examined by the person who is affected by such a statement.
In the facts of the present case, the order in original records that, the petitioner was disallowed cross-examination of any person making any statement
against the petitioner under Section 108 of the Act of 1962. The order in original relies upon such statements as evidence. The impugned order in
original does not record a finding that, any of the conditions specified under Sections 138B (1) of the Act of 1962 stands satisfied thereby making such
statements relevant without cross-examination of such witness by the petitioner.
In such circumstances, the adjudication proceedings conducted by the adjudicating authority and resultant the impugned order in original stand vitiated
by breach of principles of natural justice. The impugned order in original is quashed.
W.P. No. 25447(W) of 2018 is disposed of by permitting the adjudicating authority to proceed with the show-cause notice dated February 13, 2017
and the reply thereto, in accordance with law. The adjudicating authority will afford reasonable opportunity of cross-examination of the witnesses
which the petitioner seeks to cross-examine, subject to the provisions of Section 138B of the Act of 1962.
It is expected that the adjudication proceedings are disposed of as expeditiously as possible. No order as to costs.
Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.
