Relevancy of Cross Examination Under Customs law- An Analysis

Relevancy of Cross Examination under Customs law has been an intuitive debate with ample of examples in favour of and in against too. Where in certain matters it warrants necessity of cross examination in others demand for it, is a part of dilatory tactics employed by the parties.

Examination in chief, Cross Examination and Re-Examination are important part of judicial proceeding to get to the verified facts of the case so that dispensation of justice accomplishes its aim in earnest spirit. Core principle of justice is that an evidence not testified is not an evidence at all but at the same time these provisions under law create scope of delaying entire course of justice delivery if administered without properly evaluating the facts and circumstances of the case. Read on to understand the relevancy of cross examination under Customs law.

In criminal court proceedings in terms of provisions of Evidence Act, examination of a witness by the adverse party is called cross examination which is followed by Examination-in- chief. In this proceedings witness must speak to facts not his opinions. The object of such proceedings is to get from the witness all the material facts within his knowledge so that he testifies in order to prove the case of the party. The right to cross examine witness, apart from being a natural right is also a statutory right.

Provisions of Examinations of the Facts to the Evidences and its Object

Section 137 of the Evidence Act 1872 provides for 3 types of examination and defines them as “Examination-in-chief.—The examination of a witness by the party who calls him shall be called his examination-in-chief. Cross-examination.—The examination of a witness by the adverse party shall be called his cross-examination. Re-examination.—The examination of a witness, subsequent to the cross-examination by the party who called him, shall be called his re-examination.”

Section 138 of  the Evidence Act 1872 provides for order and directions of such examinations and reads as: “Order of examinations —Witnesses shall be first examined-in-chief, then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts, but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction of re-examination.—The re-examination shall be directed to the explanation of matters referred to in cross-examination; and, if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter.”

Essentially, the section 138 of the Evidence Act confers a right on the adverse party to cross examine a witness who has been examined-in-chief but subject to his agreement. After a party examines his witness, his opponent has the right to cross examine him. Corollary is that cross examination is followed by examination in-chief.  This indicates that cross examination is an integral part of rule of evidence on which criminal jurisprudence proceeds. As per Section 145 of the Evidence Act, a witness may be cross examined as to previous statements made by him in writing or reduced into writing and relevant to matter in question.

Therefore, the main object of cross examination is to bring out the falsity and find out the truth. The purpose of cross-examination is to expose the truth about testimony of the witness.

Absence of Cross examination and its effect

Effect in criminal law- Where after the examination-in-chief of a witness, he is not cross examined by the other party, though he had opportunity of cross-examination, the lapse cannot nullify the evidence of the witness. [Aitha Dubba Rajan v Aitha Pochaiah , AIR , 2007, A.P. 137(141)].

When the accused was denied opportunity of cross examination of witness on earlier statements ( true copies of earlier statements were not given to him), it was held that it causes serious prejudices to the accused and whole proceedings stood vitiated .{ Shobharam Singh v U.O.I 2010, (1) All , LJ 392(396) All}

Where a witness refused to appear for cross-examination  after having been examined in -chief , it was held that his evidence lost all its credibility . This  was held in Paritosh Ghose v Ashim Kumar Gupta , AIR , 2003, NOC 141 (Cal) , 2003 AIHC 291.

Cross-examination under Customs Act

Now adverting to customs law, the source of cross examination lies in the statute in Section 138B.  Relevant portion of section 138B is extracted and reproduced as under;

SECTION 138B. Relevancy of statements under certain circumstances. — (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 interest 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.]

Analysis of Section 138B

Reading of the Section 138B(1) which falls under Chapter XVI – OFFENCES AND PROSECUTIONS- says that 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 in the court of law when the prosecution is launched. In other words the statement recorded by the gazetted officer of customs(which is signed by the person whose statement is recorded)  is a relevant piece of evidence for the proving the case during prosecution proceedings for the violation of any of the provisions of   Section 132, 133, 134, 135, 135A or 136 of the Customs Act, 1962. This is the reason that while recording of the statement, person whose statement is recorded is duly informed during recording of  that his statement may be used in any of the proceedings against him, which may includes criminal as well as civil proceedings.

From the plain reading, it is found that this section provides two conditions under which statements would be relevant. First condition is that if the person whose statement has been recorded is incapacitated by any of reasons of death , not 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”  ( these reasons mentioned in the  Section 138(1)(a))  then in that case his statement ( fact containing in the statement ) would be a relevant piece of evidence to prove the case of prosecution inspite of his absence due to  aforesaid reasons.

For statement to be relevant , another condition is that the person whose  statement has been recorded must be is examined as witness  before the court of law and admitted as an evidence in the interest of justice. [ Section 138B(1) (b)}

As per Section 138(1), law desires to have best evidence which can be either in the  form of documentary evidence or glean from personal knowledge . But there may be the situation under which person whose statement has been recorded may be too old or sick to move or may be insane resulting in unreasonable delay in examination as a witness in court. Temporary illness may not be covered under it. Maternity leave may the reason for unreasonably delayed appearance. In such situation, which is exceptional in nature , Court has discretion to prove the case based on voluntary statement recorded under customs act. In second scenario, he would be examined as witness, and court may admit the statement for proving the case in prosecution. Once examined , cross examination may follows depending upon the facts of the case.

Section 138(2)- Cross Examination in Adjudication proceedings

Now moving to sub-section(2) under whose cross examination is sought and granted/rejected by the Adjudicating Authority  in the interest of justice depending upon the facts of the case  which is the topic for discussion.

Sub-section 138(B)(2) further  lays down that the  provisions given under 138B(1) shall so far as may be,  apply to any other proceedings under the Customs Act. Any other proceedings in its fold also includes the adjudication proceedings. But the language of the section unambiguously says that this provision would be applicable as far as possible in the other proceeding also. It means that applicability of Section 138 B(2) is also  contemplated in case of any other proceedings as envisaged by the legislature, which covers adjudication proceedings also. The sub-section has used the word  “shall so far as may be” which suggest that as far as possible,  cross examination may be permitted by adjudicating authority in the interest of justice. However, it is explicit that it is not mandatory provisions, but at the same time discretion has to be applied cautiously. However, for invocation of this provisions, maximum possibilities may be exhausted.

Though this Section has some resemblance of Section 32 of the Evidence Act, 1872 to the extent of it opening paras.

S 32 Cases in which statement of relevant fact by person who is dead or cannot be found, etc ., is relevant. —Statements, written or verbal, of relevant facts made by a person who is dead, or who cannot be found, or who has become incapable of giving evidence, or whose attendance cannot be procured without an amount of delay or expense which, under the circumstances of the case, appears to the Court unreasonable, are themselves relevant facts in the following cases:—

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Though applicability to the greater extent has been sought however, Section 138B (2) or in any other provisions of the customs act/law has not such explicit arrangement for examination-in-chief, cross examination and re-examination. Further, it is also not mentioned in the  Section 138B(2) that  this provisions  is subject to the Evidence Act.

As stated earlier, Section 138B(2) does not have any mention of word ”cross-examination” but cross examination is sought and granted under this provision only

Distinction between nature of proceedings i.e. civil vis a vis criminal and application

The civil proceedings is distinguished from criminal proceedings from degree of evidence as former proceeds on preponderance of probability and later on standard degree of evidence, so in strict sense applicability of Section 138B(2) is found not plausible in many cases.

There is one more distinction regarding applicability of examination-in-chief, cross examination and re-examination in adjudication proceedings as some of the adjudication is time bound after amendment  of Section 28(9) of the Customs Act, 1962 as stipulated period of determining the case  is six months/ one year  in the cases of Section 28(1)/ 28(4)  from the date of Notice. Extension for further period of six months/ one year is also available if needed . Due to limitation, it is always not feasible to apply rule of evidence in examination/cross examination. Inspite of limitation under Section 28(9)  efforts are made to decide the matter by complying  with the  principal of natural justice. However, in criminal proceedings, there is no such limitation so examination/cross examination is given full effect. Another distinction is that in  criminal proceedings rule of evidence  is fully applied so every evidence is tested on the scale of examination/ cross examination/ re-examination if warranted. As the punishment is stricter in criminal case and extends to imprisonment whereas in civil case liabilities comes to end after adjudication of case, as in all cases prosecution  is not launched, so cross -examination may not be very relevant in each and every case of adjudication. Therefore, cross examination does not occur  frequently . This is only permitted in cases wherein cases are based on mere admission and accordingly permitted, if needed. In case of existence of corroborative evidences in addition to the admission/ confession, denial of cross examination may not result in non-compliance of principal of natural justice, as case is not merely proved by the statement and admission thereof.

Supremacy of Principle of Natural Justice results in allowing of cross examination

Still in adjudication proceedings under customs law, highest regard is given to the principle of natural justice under which cross examination is covered. It means adjudicating authority in the interest of justice is required to see whether the same is absolute necessity, so that miscarriage of justice could be avoided to the Noticee or permitting cross examinations would unnecessarily protract the litigation and will not  serve any purpose. Further, it is observed that cross examination also becomes necessary in such situation wherein the outcome of the case only rests upon the statement of the persons whose cross examination has been sought. But when there are other evidences available which proves the guilt of the person (Noticee)( Means proves the confiscation and imposition of penalty) then even denial of cross examination would not neither cause any injustice nor affect the outcome of the case.

 Denial of cross-examination in various conditions  

The following case laws justifies  the denial of cross examination. Following cited  cases have applicability when the person whose cross examination has been sought remain untraceable throughout during investigation and adjudication proceedings, then no purpose would be served to allow cross examination of such person as same would only unnecessarily protract the proceedings.

(i)  In  ARUN GUPTA Versus COMMISSIONER OF CUSTOMS (EXPORT), MUMBAI, 2010 (260) E.L.T. 449 (Tri. – Mumbai) it was held that denial of cross-examination of co-noticees did not cause any violation of natural justice. Cross-examination of co-noticees were  sought by Noticee  only during personal hearing and no effort to produce them though they were known to noticee. Co-noticees  statements were recorded  against noticee during investigation and it  remained  un-retracted.

(ii)  In MAYA MAHAL INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE, MEERUT, 1995 (80) E.L.T. 118 (Tribunal), it was held that summoning of co-noticee for giving notice was not proper.  Cross-examination of co-noticee to be done only, if he wishes – Principles of natural justice not violated for not summoning co-noticee for cross-examination – (Section 33 of the Central Excises & Salt Act, 1944).

Whether Cross Examination of Investigating Officers/ Customs Officers can be permitted by Adjudicating Authority  ?

Many a times cross -examination of Investigating/ Customs Officer is  also sought by the Noticee who has recorded the statement and  conducted the investigation. As per language of Section 138B(1), cross examination of such person would be sought, whose statement has been recorded before the gazetted officer. This section deals with relevancy of statement under certain circumstances of the person whose act is being investigated for rendering the imported/export goods liable for confiscation for the purpose of proving the case. As no statement of Investigating/ Customs Officer has been recorded, so seeking his cross examination is not permissible in terms of clear language of section 138B(1). As literal interpretation is unambiguous so in terms of such plain language, such request of the party generally may not be considered.  Following case law supports the above view.

(i) N.S. MAHESH Versus COMMISSIONER OF CUSTOMS, COCHIN, 2016 (331) E.L.T. 402 (Ker.) W.P. (C) No. 34057 of 2015 (F), decided on 11-11-2015

In this case, Petitioner has  sought  cross-examination of all officers who assessed, audited and examined import consignment. However adjudicating authority has denied the request on ground that no statement of said officers was relied in show cause notice as SCN was issued on basis of documents only and further that no specific reasons was  given for cross-examination during adjudication. Therefore denial of  cross-examination of departmental officers was  upheld and also held that there is  no infirmity in reasoned order of adjudicating authority.

(ii) JSW STEELS LTD. Versus COMMISSIONER OF C. EX., BELGAUM, 2010 (254) E.L.T. 318 (Tri. – Bang.)

In this case JSW Steels  argued that by not allowing them to cross examine a Superintendent of Central Excise, Shri Victor James, they  suffered prejudice. It is alleged that  proceedings were therefore vitiated by failure to comply with principles of natural justice. However, the Court did  not find any substance in this plea.  It was held that the Commissioner adjudicated the classification dispute on the basis of relevant facts ascertained from the assessee. Further, it was held that denial of cross-examination of departmental officer has not violated natural justice as such officers do not contribute to judicial determination of classification Natural justice . [para 9 of the judgement ]

Cross Examination of Investigating Officers is sought without assigning any reason so it was denied

Further, it is observed that cross examination of Investigating Officers are sought without assigning any reason so on this ground alone Adjudicating Authority does not consider the  request of the Noticee.

Following case laws supports this view.

(i)  SPECIFIC ALLOYS PVT. LTD. Versus COMMISSIONER OF CENTRAL TAX, PUNE-III, 2019 (368) E.L.T. 835 (Bom.)

In the instant case during adjudication, cross-examination of investigating officers, audit officers and jurisdictional range officers were sought without giving any specific reasons that why their cross-examination was necessary and challenged the Adjudication Order on this ground   Hence, assessee’s/ Noticee  challenge to adjudication order that it did not give reasons for refusal of cross-examination, rejected. It was also held by the High Court that these revenue officers were not the witnesses upon which show cause notices were issued/relied and all documents

Whether filing of reply to the SCN is dependent upon cross examination?

In adjudication proceedings, sometimes Noticee/assessee submit that they would only tender their final reply when the cross examination of the desired persons would be granted. Let us examine whether this stand is having legal backing.

From the perusal of entire customs law, it is observed that no such stipulations has been provided whereby Noticee/ Asessee can put such condition before adjudicating authority. Grant of cross-examination is the discretion of adjudicating authority so that it does not cause absolute mis-carriage of justice and principal of natural justice may be substantially complied with.

Further, as far as the existence of legal provisions are concerned, it is observed that   as per Section 124(b) of the Customs Act, which deals with- issue of show cause notice before confiscation of goods, etc., Noticee is required to submit his reply as he is bounded by the said provision. Section 124(b) reads as under;

SECTION 124. Issue of show cause notice before confiscation of goods, etc. — No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person –

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(b)     is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and

Bare perusal of Section 124 indicates that it has ingredients of principle of natural justice, but it has no such condition which says that only after cross examination written  reply would be filed. Neither the Section 122 of the Customs Act which deals with adjudication and its procedure thereof says anything that reply would be filed only after grant of  opportunity of cross examination during adjudication proceedings. Following case laws supports the aforesaid view.

I. Hon’ble High Court Allahabad in the case of KANPUR CIGARETTES LTD. Versus UNION OF INDIA as reported in 2016 (344) E.L.T. 82 (All.) [Civil Misc. Writ Petition (Tax) No. 6 of 2013, decided on 15-1-2013] has held that “there is no right, procedurally or substantively or in compliance with natural justice and fair play, to make available the witnesses whose statements were recorded, for cross-examination before the reply to the show cause notice is filed”. It also held that “the petitioner cannot insist that the petitioner be first permitted to cross-examine the witnesses and thereafter it would submit its reply”.

II. Tribunal of Delhi in the case of MIRAJ PRODUCTS PVT. LTD. Versus COMMR. OF C. EX. & SERVICE TAX, UDAIPUR reported in 2019 (369) E.L.T. 1147 (Tri. – Del.) [Final Order No. A/52948/2018-EX(DB), dated 13-9-2018 in Application No. E/MISC/50757/2018 in Appeal No. E/51867/2018-DB] in Para 14 held as under:

14. We follow the adjudication of Allahabad Tribunal in Kanpur Cigarette (supra) case that the question of cross-examination of witnesses would arise only when the adjudication proceedings commence after the stage of filing reply to the Show Cause Notice. Neither statutory nor any principle of natural justice requirement exists for allowing cross-examination at a stage of receiving the mere Show Cause Notice.

III.     In another case, Hon’ble High Court Madras in the case of KIBS HOISERY MILLS P. LTD. Versus SPL. DIR., DTE. OF ENFORCEMENT, NEW DELHI [W.P. No. 18857 of 2010, decided on 9-12-2014], reported in 2016 (344) E.L.T. 24 (Mad.) has held that “Noticee were bound to submit their reply to show cause notice, follow procedure contemplated under Act/Rules, and could not device their own procedure as per their whims and fancies”.

No violation of principal of natural justice by denial of cross-examination

In addition to the above, denial of request for cross-examination  has been held as not violating  the principles of natural justice during quasi-judicial proceedings in following case laws;

I. In the case of Kanungo & Co. Vs. Collector of Customs, Calcutta & Others [1993(13) E.L.T. 1486 (S.C.)], wherein it was unequivocally held that for proceedings under Customs Act, the right to compliance to the principles of natural justice does not cover the right to cross examination witnesses. Relevant Para 12 is reproduced wherein the Hon’ble Supreme Court observed as follows –

“In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly, I hold that there is no force in the third contention of the appellant.”

II. In the case of Suman Silk Mills Pvt. Ltd. Vs. Commissioner of Customs & C.Ex., Baroda [2002 (142) E.L.T. 640 (Tri.-Mumbai)], Tribunal observed at Para 17 that-

“Natural Justice – Cross-examination – Confessional statements – No infraction of principles of natural justice where witnesses not cross-examined when statements admitting evasion were confessional.”

III. In the case of Commissioner of Customs, Hyderabad V. Tallaja Impex reported in 2012(279) ELT 433 (Tri.), it was held that-

“In a quasi-judicial proceeding, strict rules of evidence need not to be followed. Cross examination cannot be claimed as a matter of right.”

IV. In the case of Patel Engg. Ltd. vs UOI reported in 2014 (307) ELT 862 (Bom.) Hon’ble Bombay High Court has held that;

“Adjudication – Cross-examination – Denial of- held does not amount to violation of principles of natural justice in every case, instead it depends on the particular facts and circumstances – Thus, right of cross-examination cannot be asserted in all inquiries and which rule or principle of natural justice must be followed depends upon several factors – Further, even if cross-examination is denied, by such denial alone, it cannot be concluded that principles of natural justice had been violated.” [para 23]

V. Hon’ble Tribunal in its decision in Sridhar Paints v/s Commissioner of Central Excise, Hyderabad reported as 2006(198) ELT 514 (Tri-Bang) has held that:

“……………. denial of cross-examination of witnesses/officers is not a violation of the principles of natural justice, we find that the Adjudicating Authority has reached his conclusions not only on the basis of the statements of the concerned persons but also the various incriminating records seized. We hold that the statements have been corroborated by the records seized” (Para 9)

VI. Hon’ble Punjab and Haryana High Court in its decision in the case of Azad Engg Works v/s Commissioner of Customs and Central Excise, reported as 2006(2002) ELT 423, held that;

“………. It is well settled that no rigid rule can be laid down as to when principles of natural justice apply and what is their scope and extent. The said rule contains principles of fair play. Interference with an order on this ground cannot be mechanical. Court has to see prejudice caused to the affected party. Reference may be made to judgment of Hon’ble the Supreme Court in K.L. Tripathi v. State Bank of India and others, AIR 1984 SC 273”

VII. Hon’ble Tribunal in the case of P Pratap Rao Sait v/s Commissioner of Customs   reported as 1988 (33) ELT (Tri) has held in Para 5 that:

“………. The plea of the learned counsel that the appellant was not permitted to cross-examine the officer and that would vitiate the impugned order on grounds of natural justice is not legally tenable.

VIII. Similarly in A.L Jalauddin v/s Enforcement Director reported as 2010(261) ELT 84 (Mad HC) the Hon High court held that ;

“…. Therefore, we do not agree that the principles of natural justice have been violated by not allowing the appellant to cross-examine these two persons. We may refer to the paragraph in AIR 1972 SC 2136 = 1983 (13) E.L.T. 1486 (S.C.) (Kanungo & Co. v. Collector, Customs, Calcutta)”

Vide following case laws it was held that denial of cross examination does not lead to violation of principal of natural justice.

It is a settled position that proceedings before the quasi-judicial authority is not at the same footing as proceedings before a court of law and it is the discretion of the authority whether  request of cross examination to be allowed in the interest of natural justice. The  following case-laws are relevant  and supports  the above view.

I. Poddar Tyres (Pvt) Ltd. v. Commissioner – 2000 (126) E.L.T. 737: – Wherein it has been held that cross-examination not a part of natural justice but only that of procedural justice and not a ‘sine qua non’.

II. Kumar Jagdish Ch. Sinha v. Collector – 2000 (124) E.L.T. 118 (Cal H.C.): – In this case it has been held that the right to confront witnesses is not an essential requirement of natural justice where the statute is silent and the assessee has been offered an opportunity to explain allegations made against him.

IV. A.K. Hanbeen Motarred vs. Collector – 2000 (125) E.L.T. 173 (Mad HC): wherein it has been held that the strict rule of burden of proof applicable to criminal prosecution may not be applicable to proceedings before Customs authorities.

V. Shivom Ply N-Wood Pvt. Ltd. Vs Commissioner of Customs & Central Excise Aurangabad- 2004(177) E.L.T 1150(Tri. -Mumbai): – wherein it has been held that cross-examination not to be claimed as a matter of right

Statements recorded under Section 108 of the Customs Act are voluntary and confessional in nature, therefore denial of cross examination does not violate principal of natural justice

Request for cross-examination of Noticee who has made voluntary statements during investigation is not acceptable in view of following case laws;

I. In the case of Surjeet Singh Chhabra v. UOI, reported in 1997 (89) E.L.T. 646 (S.C.)], it was held that-

“Customs Officials are not police officers and admission made before them though retracted binds the deponent. In view of voluntary statements recorded and such statements not retracted did not warrant cross-examination when other circumstantial provided reliable basis corroborating the statements. When nothing surfaced that the witnesses had any enmity with appellants, those were not liable to be discarded nor required to be put to cross-examination.”

II. In the case of Jagdish Shanker Trivedi Vs. Commissioner of Customs, Kanpur [2006 (194) E.L.T. 290 (Tri.-Del.)], Tribunal observed at Para 7.2

“Confessional statements of noticee – Retraction thereof, which was otherwise unacceptable, would not entitle them to claim cross-examination of witnesses on aspects which were confessed by them – There is no violation of natural justice principles in such a course…”

III. Hon’ble Delhi Tribunal in the case of Onida Saka Ltd. v/s Commissioner of Central Excise, Noida [2011 (267) E.L.T. 101 (Tri.Del)] in para 4 of its order held that

“…………. since the statements of the persons whose cross-examination has been sought, has not been retracted, there was no necessity for permitting their cross-examination”

Cross Examination sought without indicating specific reason not admissible

When request for cross-examination made by Noticee without indicating specific reason is not admissible in view of following case laws:

I. In the case of Fortune Impex Vs. Commissioner of Customs, Calcutta [2001(138) E.L.T.556 (Tri. -Kolkata)], Hon’ble Tribunal observed at Para 12 that:

“…it is not required that in each and every case, cross-examination should necessarily be allowed. There is no absolute right of cross-examination provided in the Customs Act. The Advocate had given a list of 26 persons for cross-examination without indicating the specific reasons for cross-examining the…it cannot be said that there was violation of principles of natural justice by not allowing the cross-examination of the persons sought by him.”  This view taken by the Tribunal has been affirmed by Hon’ble Supreme Court – 2004 (164) E.L.T. 4 (S.C.) & 2004 (167) E.L.T.A. 134 (S.C.).

II. Hon’ble CESTAT Kolkata in its decision in Dipu Das v/s Commissioner of Customs Kolkata reported as 2010(261) ELT 408 (Tri-Del), has held that;

“……………In adjudication proceedings, cross-examination cannot be claimed as a matter of right on mere asking for it, without furnishing reasons for the same”.

In case of voluntary statements explaining/ disclosing facts of the case  – Cross Examination is not permitted 

Request for cross-examination of Noticee, who has made voluntary statements during investigation explaining facts (where there is no dispute about facts) is not acceptable in view of following case laws:

I. In the case of Union of India Vs. Rajendra Bajaj [2010(253) E.L.T.165 (Bom.)], Hon’ble Bombay High Court, stated in Para 6, which is reproduced herein below –

“the Supreme Court held in K.L. Tripathi v. State Bank of India (1984) 1 SCC 43 that where there is no dispute as to the facts, or the weight to be attached on disputed facts but only an explanation of the acts, absence of opportunity to cross-examination does not create any prejudice in such cases and does not vitiate the decision.”

Denial of cross examination of Co-Noticee does not amount to violation of principle of natural justice

Further, the issue of cross examination of Co-Noticees/ accused is no longer res integra. When Noticee failed to provide any cogent and valid reason for the cross-examination of person, who are co-noticees, then request is not accepted. The following judicial pronouncements also supports above view.

I. The Hon’ble Principal Bench of CESTAT at New Delhi in the case of Jagdish Shankar Trivedi Vs. Commissioner of Customs, Kanpur reported as 2006 (194) ELT 290 (Tri. Delhi) has held that “denial of cross examination of co-noticees  / accused does not result in violation of principles of natural justice and cannot be insisted on as a matter of right by them otherwise each of the accused can claim right against testimonial compulsions under Article 20(3) of the Constitution of India and thereby by their joint efforts bring out violation of natural justice.”(para 9)

II. In the case of N.S. Mahesh vs CC, Cochin reported in 2016 (331) ELT 402 (Ker.) Hon’ble High Court upheld denial of “cross-examination of co-noticee. Adjudicating authority denied cross-examination of co-noticee on ground that firstly no specific reasons given for such cross-examination and secondly, co-noticee cannot be directed to be a part of proceedings that may incriminate him. It was held that there is no illegality in aforesaid reasoned order warranting interference by High Court [paras 1, 2]

III. In the case of Laxmi v/s. Collector of Customs, Lucknow [2001 (138) ELT 1090 (Tri. Delhi)] Hon’ble Tribunal held that “Statement of co-noticees corroborated by another person- Denial of permission of cross-examination of co-noticees not violated principles of natural justice (Para 6)”

Denial of cross-examination of Pancha witness and officers does not amount to violation of principal of natural justice

Request for cross-examination of Pancha witness and officers who recorded statements / investigating officer is not acceptable in view of following case laws:

I. Hon’ble CESTAT, Delhi in its decision in the case of Om International vs CC, New Delhi reported in 2007 (217) ELT 88 (Tri. Del.) held that

“………appellants have not been prejudiced in any manner by denial of Cross-examination of seizing officer, panch witnesses and officers, who recorded statement. contents of these statements fully reproduced in show cause notice itself and appellants have been granted ample opportunities to reply the same.

II. In the case of Liyakat Shah Vs. Commissioner of C.Ex., Indore-II(Bhopal) [2000(120) E.L.T.556(Tribunal)]. Relevant portion of the above judgment contained in Para 12, is reproduced herein below –

“Natural justice – Cross-examination is not a mandatory procedure to be allowed in all cases – When the adjudicating authority took the view that cross-examination of seizing officer, where goods seized from godown of assessee when no allegation that officers had not followed proper procedure for effecting seizure, was sought only by way of delaying tactics to avoid justice, his order refusing to allow cross-examination not violative of the principles of natural justice…”.

III.     Hon’ble Punjab High Court in the case Ranchodbhai M. Patel vs. Central Board of Revenue, New Delhi reported as 2000 (125) ELT 281 (Punj.) has  held that:

“Natural justice – Petitioner himself having signed the panchnama made in his presence, production of panchas before him for cross-examination not necessary – Principles of natural justice not violated  – Section 122 of the Customs Act, 1962.”

IV. In  this context , the ratio of the case reported in Harinder Pal Singh Shergill v. Commissioner – 2010 (259) E.L.T. A19 (S.C.), is also relevant  in which Hon’ble Supreme Court has dismissed the Petition for Special Leave to Appeal (Civil) No. 26940 of 2010 filed by Harinder Pal Singh Shergill against the Judgment and Order dated 12-5-2010 in GCR No. 3/2006 of Punjab & Haryana High Court as reported in 2010 (255) E.L.T. 188 (P & H) (Harinder Pal Singh Shergill v. Registrar, CEGAT) by observing that “mere fact of filing long list of 14, witnesses for cross-examination was sufficient to prove that disposal of matter intended to be delayed. The Court also observed that proceedings were delayed by petitioner under one pretext or the other. The facts and circumstances of the instant case are similar to that involved in the case before Hon’ble Supreme Court as mentioned above.

Denial of cross- examination during adjudication proceedings is violative of principal of natural justice

In following case laws it was  held that denial of cross- examination during adjudication proceedings  is violative of principal of natural justice.

I.     In the case of ANDAMAN TIMBER INDUSTRIES Versus Commissioner of Central Excise, Kolkatta – II reported in 2015(324) E.L.T. 641 (SC) , wherein it has been held by the Apex Court that principal of natural justice has been violated by  denial of cross-examination of  two witnesses on the basis of whose statement undervaluation was alleged is a serious flaw committed  by  the adjudicating authority. Request of appellant seeking cross-examination has also not dealt with  in that  Order.  It was also held that Tribunal too erred in guessing that cross-examination of witnesses could not have brought out any material not already available. Relevant para of the said judgement are 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 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 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 before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.

8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.

9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.

II.    Further in the case of Basudev Garg Versus Commissioner of Customs reported in 2013(294) E.L.T. 353 (Del.) wherein it has been held as under:

Adjudication: Statement against the assessee cannot be used without giving them the opportunity of cross examining deponent – Cross examination is valuable right of accused/ noticee in quasi judicial proceeding which can have adverse consequences for them – However, it can be taken away in exceptional circumstances stipulated in Section 9D of Central Excise Act, 1944 and Section 138B of Customs Act, 1962 – unless such circumstances exist, noticee would have right to cross examination (paras 10,14).

Relevant paras of the judgement are reproduced for the sake of reference;

10. Insofar as the general propositions are concerned, there can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd. (supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd. (supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 was in question. The said Section 9D of the Central Excise Act, 1944 reads as under :-

“9D. Relevancy of statement under certain circumstances. – (1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceedings 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 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 interest 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 before a Court, as they apply in relation to a proceeding before a Court.”

11. We may straightaway say that the provisions of Section 9D of the Central Excise Act, 1944 are identical to the provisions of Section 138B of the Customs Act, 1962 which would be applicable in the present case.

12. Section 138B of the Customs Act, 1962 reads as under :-

“138B. Relevancy of statements under certain circumstances. – (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 interest 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.”

It is apparent that both the provisions are identical.

13. This court while upholding the validity of Section 9D of the Central Excise Act, 1944 interpreted its provisions as under:

“12. Bare reading of the above section manifests that under certain circumstances, as stipulated therein, statement made and signed by those persons before any Central Excise Officer of a gazette rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well. In the present case, provisions of Section 9D of the Act were invoked by the Collector holding that it was not possible to procure the attendance of some of the witnesses without undue delay or expense. Whether such a finding was otherwise justified or not can be taken up in the appeal.”

14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, 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.

III.    Further the Hon’ble High Court of Delhi in the case of Felvel International reported in 2016 (332) E.L.T. 416 (Del.),  in Para 42 of the judgment held  as under:

“42.   It is settled law that the denial of opportunity of cross-examination of a witness whose statements have been relied upon in the adjudication order would vitiate the order of adjudication. In Basudev Garg v. Commissioner of Customs – 2013 (294) E.L.T. 353 (Del.), this Court referred to Section 9D of the CE Act and noted that even while upholding its constitutional validity in J & K Cigarettes Ltd v. Collector of Central Excise – 2011 (22) S.T.R. 225 (Del.) = 2009 (242) E.L.T. 189 (Del.), a Division Bench of this Court had observed that the circumstances under which the right of cross-examination can be taken away would have to be ‘exceptional’. This would include circumstances where the person who had given  the statement was dead or cannot be found are is incapable of giving evidence or is kept out the way by adverse party or whose presence cannot be obtained without an element of delay or expense which, under the circumstances the Court considers unreasonable. It was held by the Court in Basudev Garg (supra) that “it is clear that unless such circumstances exist the noticee would have right to cross-examine the persons whose statements are being relied upon even in quasi-judicial proceedings”

Conclusion/ Final words

Cross examination is an integral part of the criminal proceedings. Further, statement recorded by the customs officers (Gazetted officers) is relevant for proving the facts it contains in prosecution proceedings in customs matter. Certain conditions are given in Section 138B(1)(a) wherein in absence of witness due to grounds stated therein statements can be admitted by the Criminal Court for proving the case in the interest of justice. Criminal Court proceedings contains examination of witness, cross- examination and re-examination of witness. This provision has been extended to adjudication proceedings also as far as possible. Adjudicating authority decides the request of cross examination or its denial in the interest of justice and depending on the facts of the case. When case is solely depending upon the statement and no other corroborative evidences are available then in that case, cross-examination is absolute necessity, but when the case has other corroborative evidences which alone proves the offence then in such case denial does not cause prejudice to the Noticee. Further, adjudicating authority has to see whether it was solely for the purpose of delaying the adjudication proceedings and case can be proved by other evidences, it is not imperative to allow cross- examination as same would not violate the principal of natural justice. Therefore, we see many divergent judgements, so cross examination would be permitted depending upon the facts of the case meaning to permit cross examination is a question of fact that question of law.